RFBT02 07 Law On Sales Encrypted

No. 125 Brgy.
San Sebastian
Lipa City, Batangas, Philippines
Mobile : 0927 283 8234
Telephone : (043) 723 8412
Gmail : icarecpareview@gmail.com
Regulatory Framework for Business Transactions
Law on Sales
1. Contract of Sales is a contract whereby one of the contracting parties, known as the seller or
vendor, obligates himself to transfer the ownership of and to deliver a determinate thing, and the
other party, known as the buyer or vendee, obligates himself to pay therefore a price certain in
money or its equivalent.
2. Contracting Parties in a Contract of Sale

a. Seller or Vendor refers to the person who obligates himself to transfer the ownership of
and to deliver a determinate thing.
b. Buyer or Vendee refers to the person who obligates himself to pay therefore a price
certain in money or its equivalent.
3. Essential elements of the contract of sale – These are elements necessary for validity and
perfection of contract of sale.
a. Subject matter which should be a determinate thing
i. Requisites of subject matter of a contract of sale
1. It must be within the commerce of men.

2. It must be not contrary to law, morals, good customs, public order or
public policy.
3. It must be determinate.
4. It must be owned by the vendor at the time of delivery.
ii. Things that may become the subject matter of a contract of sale
1. Existing goods owned or possessed by the seller.

2. Goods to be manufactured, raised or acquired by the seller after the
perfection of the contract of sale or “future goods” subject to the condition
that it must materialize. If the future things do not materialize, the
contract of sale will become inefficacious or void for absence of subject
matter which is an essential element of contract of sale.
3. Goods whose acquisition by the seller depends upon the contingency
which may or may not happen.
4. Things subject to resolutory condition which if happens, the contract of
sale will be extinguished.
5. Hereditary rights
6. Undivided interest in co-owned property which will result to co-ownership
on the part of buyer and seller.
iii. Things not allowed to become the subject matter of a contract of sale
making the contract null and void
1. Those contrary to law, morals or public policy.

2. Those outside the commerce of men.
3. Future inheritance
4. Vain hope
1|P a g e RLACO/DSALES/NVALDERAMA
No. 125 Brgy. San Sebastian
Mobile : 0927 283 8234
Telephone : (043) 723 8412
iv. Distinctions between emptio rei speratae and emptio spei
1. Emptio rei speratae is the sale of future thing while emptio spei is a
sale of hope or expectancy.
2. Sale of future harvest is emptio rei speratae while sale of lottery ticket
No. 113 is emptio spei.
3. In emptio rei speratae the thing expected will definitely come into
existence, but its quality or quantity unknown; while in emptio spei it is
not certain that the thing will exist much less its quantity or quality.
4. Emptio rei speratae is subject to the condition that the thing should
exist, so that if it does not, there will be no contract of sale by reason of
the absence of an essential element of subject matter while emptio spei
produces effects even though the thing does not come into existence
because the subject matter is the hope itself.
b. Price certain in money or its equivalent
i. Requisites of price in a contract of sale
1. It must be certain.
2. It must be real
3. It must not be fictitious.
ii. Instances when the price is certain
1. If the parties have agreed upon a definite amount for the sale.
2. If the price is fixed by one of the contracting parties and accepted by the
other.
3. If it be certain with reference to another thing certain.
4. If the price fixed is that which the thing sold would have on a definite day,
or in a particular exchange or market, or when an amount is fixed above
or below the price on such day, or in such exchange or market, provided
said amount is certain.
5. If the determination of the price is left to the judgment of a specified

person or persons.
a. Remedies of the injured party if:
i. The third person is unable or unwilling to fix the price.

1. The contract is inefficacious or null and void
requiring declaration of nullity unless the parties
subsequently agree upon a price certain in
money or its equivalent.
ii. The third person is prevented from fixing the price or

terms by fault of the seller or the buyer.
1. The injured party may ask for damages.
iii. The third person acted in bad faith or by mistake.

1. The injured party may ask the court to fix the
reasonable price.
6. If the price is fixed by the court which price may no longer be changed by
the contracting parties.
Mobile : 0927 283 8234
Telephone : (043) 723 8412
iii. Effects of inadequacy of price in a contract of sale
1. It does not affect a contract of sale, except as it may indicate a defect in

the consent which makes the contract voidable requiring annulment of
contract.
2. It may indicate that the true intention of the parties is actually a contract
of donation or loan with equitable mortgage. Thus, it will require
reformation of instrument.
iv. Effects of simulated price in a contract of sale
1. If the price is absolutely simulated, the contract of sale is void requiring

declaration of nullity.
2. It the price is relatively simulated, the intent of the parties is hidden
requiring reformation of instrument. The stated contract of sale is void but
the intended contract of either donation or loan with mortgage will be
valid.
c. Consent of the contracting parties on the determinate thing and the price certain in
money
i. Moment of perfection of contract of sale
1. At the moment there is a meeting of minds upon the thing which is the
object of the contract and upon the price.
ii. Moment of perfection of contract of sale by auction
1. When the auctioneer announces its perfection by the fall of the

hammer or in any other manner.
a. Rights of auctioneer and highest bidder before the
perfection of contract of sale by auction
i. Before perfection, any bidder may retract his bid.
ii. Before perfection, the auctioneer may generally
withdraw the goods from the sale unless the auction has
been announced without reservation by auctioneer.
b. Obligations of auctioneer and highest bidder after the
perfection of contract of sale by auction
i. After perfection, the winning bidder cannot retract his
bid.
ii. After perfection, the auctioneer cannot withdraw the
goods.
c. Requisites before auctioneer may participate in bidding or
auction
i. The right to bid must have been reserved expressly by
or on behalf of the seller.
ii. The right to bid must not be prohibited by law or
stipulation.
iii. Notice must be given that the sale is subject to a right to
bid by or on behalf of the seller.
d. By bidders or puffers refer to persons employed by the seller to
bid in his behalf, the purpose of which is to raise the price, but
the said persons are not in themselves bound by their bids. The
employment by the seller of by-bidders or puffers without notice
to the other bidders may make the perfected contract of sale
voidable because the consent of the highest bidder is vitiated by
causal fraud.
4. Natural elements of the contract of sale – These are elements which are presumed to exist in
a contract of sale unless validly waived by the contracting parties.
a. Warranty against eviction
b. Warranty against hidden defects
c. Warranty against non-apparent and unregistered servitude or encumbrance in sale of
immovable property
d. Warranty for merchantability
Mobile : 0927 283 8234
Telephone : (043) 723 8412
5. Accidental elements in the contract of sale – These are elements which do not exist in a
contract of sale unless provided by the contracting parties.
a. Place of delivery and payment
b. Time of delivery and payment
c. Terms or conditions of payment
d. Interest of the price
6. Characteristics of a contract of sale

a. Principal – It can exist by itself without being dependent upon another contract.
b. Consensual – It is perfected by mere consent upon the price certain and determinate
thing except in case of sale of a piece of land by the agent in the name of the principal
which is a formal or solemn contract which requires that the authority of the agent to sell
the land must be in writing for the contract to be valid.
c. Bilateral – Both parties are required to perform an obligation.
d. Reciprocal – The object or prestation on one party is the cause or consideration on the
other party.
e. Onerous – Valuable considerations are given by both parties to acquire rights.
f. Commutative – The parties exchange almost equivalent values.
g. Nominate – It has special name given to it by law.
7. Distinctions between contract of sale and dacion en pago

a. In sale, there is no pre-existing credit, while in dacion en pago, there is pre-existing
credit.
b. A sale creates obligations while dacion en pago extinguishes obligations.
c. In sale, there is greater freedom in fixing the price, while in dacion en pago, there is less
freedom in fixing the price because of the amount of the pre-existing credit which the
parties seek to extinguish.
d. In sale, the cause or consideration is the price from the seller’s point of view, and the
delivery of the object from the buyer’s view point, while in dacion en pago, the cause or
consideration is the extinguishment of the obligation, from the debtor’s point of view and
the delivery of the object given in place of the credit, from the creditor’s point of view.
Note: Both contract of sale and dacion en pago are governed by Law on Sales. Both contract of sale and
daction en pago are also considered onerous transfers.
8. Distinctions between contract of sale and payment by cession
a. In sale, there is no pre-existing credit while in payment by cession, there are pre-
existing credits.
b. A sale creates obligations while payment by cession extinguishes obligations.
c. In sale, the cause or consideration is the price from the seller’s point of view, and the
delivery of the object, from the buyer’s point of view while in payment by cession, the
cause or consideration is the extinguishment of the obligation from the debtor’s point of
view and the assignment of the things to be sold from the creditor’s point of view.
d. In sale, there is greater freedom in fixing the price while in payment by cession there is
less freedom in fixing the price because of the fixed amount of the pre-existing credits
which the parties seek to extinguish.
e. In sale, the buyer becomes the owner of the thing transferred upon delivery while in
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.
f. Contract of sale is governed by Law on Sales while payment by cession is governed
by Financial Rehabilitation and Insolvency Act of 2010 (FRIA of 2010), a special law.
9. Distinctions between contract of sale and contract for a piece of work
a. It is a contact of sale if it is for the delivery at a certain price of an article which the
vendor in the ordinary course of business, manufactures or procures for the general
market, whether the same is on hand or not while it is a contract for a piece of work if
the goods are to be manufactured especially for the customer upon his special order and
not for the general market.
b. Contract of sale of movable property with a price of at least P500 or sale of immovable
regardless of price is covered by Statute of Fraud while contract for a piece of work at
a price of P500 is not covered by Statute of Fraud.
Mobile : 0927 283 8234
Telephone : (043) 723 8412
10. Distinctions between contract of sale and contract of barter
a. In a contract of sale, the cause is cash while in a contract of barter, the cause is a
noncash asset.
b. Contract of sale of movable property with a price of at least P500 or sale of immovable
regardless of price is covered by Statute of Fraud while contract of barter of movable
with price of at least P500 or barter of immovable regardless of price is not covered by
Statute of Fraud.
11. Rules for determining whether a contract is one of sale or barter if the cause is a
combination of cash and noncash asset.
a. Determine the manifest or evident intention of the parties.
b. If the evident intention of the parties is not present, apply the following rules:
i. The contract is one of barter if the value of the noncash asset given as part of
the consideration exceeds the cash consideration.
ii. The contract is one of sale if the cash consideration is more than the value of the
noncash asset given as part of the consideration.
iii. The contract is one of sale if the cash consideration is equal to the value of the
noncash asset given as part of the consideration.
12. Distinctions between contract of sale and contract to sell
a. In contract of sale, ownership passes to the buyer upon delivery while in contract to
sell, the title to the goods does not pass to the buyer until some future time and
oftentimes upon payment of the price.
b. In contract of sale, the risk of loss or damage to the goods upon delivery is on the
buyer, under the rule “res perit domino”, or the thing perished with the owner; while in
contract to sell, the risk is borne by the seller after delivery based on the same principle
that the thing perishes with the owner.
c. In contract of sale, the non-payment of the price is a resolutory condition while in
contract to sell, the payment in full of the price is a suspensive condition.
Note: The rule on double sale applies only if both contracts are of sale but such rule does not apply if one
contract is contract of sale while the other contract is contract to sell.
13. Distinctions between contract of sale and agency to sell (consignment sale)
a. In sale, ownership passes to the buyer, while in agency to sell, ownership is retained by
the principal-consignor.
b. In sale, the buyer pays the seller, while in agency to sell, the buyer pays the agent-
consignee and the latter transmits the money to the principal-consignor.
c. In sale, the goods are delivered by the seller to the buyer while in agency to sell, it is
delivered by the agent-consignee to the final consumer.
d. Contract of sale is governed by law on sales while agency to sell is governed by law on
agency.
14. Principles on sale of an undivided share of a specific mass of fungible goods though the
seller purports to sell and the buyer purports to buy a definite number, weight or measure
of the goods in the mass, and though the number, weight or measure of the goods in the
mass is undetermined.
I. If the quantity, number, weight or measure, of the mass is more than the quantity sold, the
parties shall become co-owners of the mass.
II. If the quantity of the mass is less than the quantity sold, the buyer becomes the owner of the
whole mass, with the seller being bound to make good the deficiency from goods of the same
kind and quality, unless a contrary intent appears.
Mobile : 0927 283 8234
Telephone : (043) 723 8412
15. Distinction between Bilateral promise to buy and sell and Unilateral promise to buy or sell
a. Bilateral promise to buy and sell is as good as perfected contract of sale while
unilateral promise to buy or sell accepted by the promissee is binding only if supported
by option money.
b. Policitacion refers to unilateral promise not accepted by the promisee, therefore, it does
not produce any effect.
16. Distinctions between option money and earnest money or arras
a. Option money is intended to reserve the property within the promised period while
earnest money or arras is intended as down payment on the contract of sale.
b. Option money is proof of perfection of contract of option while earnest money or arras
is proof of perfection of contract of sale.
c. Option money is not part of the purchase price while earnest money or arras is part of
the purchase price.
17. Moment of obtaining personal rights by the buyer over the fruits of the determine thing
sold in a contract of sale
a. From the moment of perfection of contract of sale
18. Effect of the complete loss of the object of the contract of sale before the perfection of the
contract or at the moment of perfection of contract of sale
a. The contract of sale is null and void for absence of essential element of subject matter.
19. Alternative remedies of the buyer in case of the partial loss of the object of the contract of
sale at the time of the perfection of the contract of sale
I. Withdrawal from the contract or rescission; or

II. Demanding the remaining part and paying its proportionate price
20. Party who shall bear the risk of the complete loss of the object of the contract of sale after
perfection of contract of sale but before delivery of the subject matter
a. Seller based on the concept of Res perit domino which means that the thing perishes
with the owner
b. Buyer on the basis of Provision of the Civil Code.
21. Effects of the complete loss of the object of the contract of sale after perfection of contract
of sale and after delivery of the subject matter
a. The buyer shall suffer the risk of loss.

b. The buyer must pay the price.
Mobile : 0927 283 8234
Telephone : (043) 723 8412
22. Contracts covered by Recto Law
a. Installments sales of personal property

b. Contracts purporting to be leases of personal property with option to buy, when the lessor
has deprived the lessee of the possession or enjoyment of the thing (Finance Lease)
23. Remedies of vendor or lessor in Recto Law
a. Sole remedy of vendor or lessor if the vendee or lessee fails to pay a single
installment or periodic rental
i. Exact fulfillment of the obligation with right to recovery for deficiency.
b. Alternative remedies of vendor or lessor if the vendee or lessee fails to pay two or
more installments or periodic rentals
i. Exact fulfillment of the obligation with right to recovery for deficiency.
ii. Cancel the installment sale or finance lease resulting to mutual restitution. The
buyer must return the movable sold to the seller while the seller must return all
the installments received from the buyer minus reasonable rent. However, the
vendor or lessor may retain the installments or periodic rentals already received if
there is agreement to that effect provided such agreement is not unconscionable.
The seller is no longer allowed to go after the buyer for the unpaid balance of the
installment price.
iii. Foreclose the chattel mortgage on the thing sold, if one has been constituted
without right to recover any deficiency. Any stipulation for recovery of deficiency
is null and void.
24. Rights of the Buyer in Sale of residential property in installments governed by RA 6552 or
Maceda Law
a. Right to a grace period from the date the installment became due with no interest
which can be exercised only once every five (5) years.
i. For buyer who has paid less than two years of installments, the minimum grace
period is 60 days. (Not less than 60 days)
ii. For buyer who has paid more than two years of installments, the grace period is
one month for every year of installment paid. (One month per year of installment
paid)
b. Right to additional 30 days but with interest, after the expiration of the initial grace
period, before the seller can cancel the contract by notarial act.
c. Right to cash surrender value in case of cancellation by seller.
i. For buyer who has paid less than two years of installments, he is not entitled to
any cash surrender value.
ii. For buyer who has paid two to five years of installments, he is entitled to fifty
percent (50%) cash surrender value.
iii. For buyer who has paid more than five years of installments, he entitled to an
additional five percent (5%) every year aside from the initial fifty percent (50%)
but not to exceed ninety percent (90%) of the total payments made including
downpayment.
Note: Downpayment is not included in the computation of number of years of installments paid by
the buyer.
25. Rights of Buyer of Subdivision or condominium unit under PD 957 also known as
Subdivision and Condominium buyer's Protective Decree
a. In case of noncompliance by the developer with the plan, the buyer may suspend
payment of the price and ask for the cancellation of contract with corresponding demand
for the return of the total amount he has paid including amortization of interest but
exclusive of delinquency interest.
b. The developer shall pay the real property tax before transfer of ownership to buyer
without right of recourse against the buyer.
c. The developer can only collect fees for registration of sale from the buyer.
Mobile : 0927 283 8234
Telephone : (043) 723 8412
26. Persons incapacitated to enter into a contract of sale
a. Those suffering from absolute incapacity to give consent to a contract of sale

i. Minor
ii. Insane
iii. Demented
iv. Deaf-mute who do not know how to read and write
v. Drunken person
vi. Hypnotized person
1. If only one party is incapacitated, the contract of sale is voidable.

However if the subject matter is necessary, the incapacitated person
must still pay a reasonable price.
2. If both parties are incapacitated, the contract of sale is unenforceable.
b. Those suffering from relative incapacity
i. Husband and wife

1. As a general rule, the contract of sale between husband and wife is null
and void.
ii. Exceptional instances when husband and wife may validly sell to each
other
1. If there is prenuptial or ante-nuptial agreement of complete separation of

property involving their property regime.
2. If there is judicial separation of property by reason of legal separation
under Family Code of the Philippines.
27. Persons who are prohibited from acquiring by purchase, even at public or judicial auction,
sales in legal redemption, compromises or renunciation
a. The guardian, the property of the person or persons under his guardianship.
b. Agents, the property whose administration or sale may have been entrusted to them,
unless the consent of the principal has been given.
c. Executors and administrators, the property of the estate under administration.
d. Public officers and employees, the property of the State or GOCC under their
administration.
e. Justices, judges, prosecuting attorneys, clerks of court and other officers and employees
connected with the administration of justice, the property and rights in litigation.
Note: The contract of sale is null and void because it is contrary to law. However, in cases of letter a, b
and c, since they involve private interests, the injured party such as ward, principal or heir, may be barred
by estoppel from filing action for declaration of nullity of the contract of sale. On the other hand, in cases
of letter d and e, since they involve public interests, action for declaration of nullity of contract of sale will
still prosper because estoppel never runs against the government or the state. The enumerate persons
are only prohibited from acquiring those properties enumerated but they are not barred from selling
properties their counterpart enumerated persons.
28. Obligations of the vendor or seller

a. To transfer the ownership of the thing sold at the time the subject matter should be
delivered.
b. To deliver the determinate thing sold including the accessions and accessories in the
condition in which they were upon the perfection of the contract.
c. To warrant the thing sold against eviction, hidden defects and non-apparent and
unregistered encumbrances.
d. To take care of the thing sold with the diligence of a good father of a family unless the law
or the stipulation of the parties requires another standard of care.
29. Obligation of the vendee or buyer

a. To pay the price certain in money or its equivalent on the date agreed upon.
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Telephone : (043) 723 8412
30. Delivery is a mode of acquiring ownership whereby the object of the contract is placed in the
control and possession of the vendee. It is the act that transfers ownership from seller to buyer in
a contract of sale. However, the contracting parties may agree that ownership will be transferred
from the seller to the buyer by any other acts such as full payment of the price.
31. Types of Delivery

a. Actual delivery
b. Constructive delivery
32. Examples of constructive deliveries

a. By legal formalities – When the same is made through a public document, the
execution thereof shall be equivalent to the delivery of the thing sold. It applies to both
movable and immovable property.
b. Symbolic delivery (traditio simbolica or traditio clavium) – This is delivery that takes
place by delivering the keys of the place or depository where the movable is stored or
kept.
c. Traditio longa manu – It is the delivery of a movable by mere consent or agreement of

the parties if the thing cannot be transferred to the possession of the vendee at the time
of sale.
d. Traditio brevi manu – It is a delivery that takes place when the vendee is already in the
possession of the thing sold even before the sale and thereafter continues in possession
thereof in the concept of an owner. It applies to movables only.
e. Traditio constitutum possessorium – It is a delivery that takes place when the vendor
continues in possession of the thing sold after the sale but in another capacity such as
that of a lessee or depositary. It applies to both movable and immovable property.
f. Constructive deliveries of intangible assets or incorporeal rights

i. By constructive traditio such as execution of public document.
ii. By placing the titles or certificate of ownership in the possession of the vendee
such as delivering the stock certificate covering the shares of stock sold.
iii. Through the use by the vendee of his rights with consent of the vendor such as
when the seller authorizes the buyer of shares of stock to vote during the
stockholder’s meeting.
33. Distinctions between Sale or return vs. Sale on trial or approval

a. In sale or return, ownership of the thing sold is transferred to the buyer upon delivery
while in sale on trial, delivery does not transfer ownership of the thing sold to the buyer
but instead ownership of the thing sold is transferred to the buyer under any of the
following instances: (a) when the buyer signifies his approval or acceptance of the
goods; (b) when the buyer does an act adopting the transaction; or (c)when the buyer
does not signify his approval or acceptance of the goods but retains the goods without
giving notice of rejection within the time fixed in the contract or within reasonable time,
and such time has expired.
34. Delivery to the common carrier (FOB Shipping Point) - The law presumes that the contract of
sale is FOB Shipping Point which means that delivery to the carrier means delivery to the buyer.
35. As a general rule, a non-owner cannot transfer ownership to his buyer. However, these are
the exceptional instances when the sale of a non-owner transfers ownership to the buyer:
a. When the sale is made with authority or consent of the owner.
b. When the owner is precluded by his conduct from denying the seller’s authority to sell.
c. When the sale is made under the provisions of any factor’s acts, recording laws or any
other provisions of law enabling the apparent owner to dispose of the goods as if he were
the true owner thereof.
d. When the sale is made under a statutory power of sale or under the order of court of
competent jurisdiction.
e. When the purchase is made in a merchant’s store, or in fairs, or markets.
Mobile : 0927 283 8234
Telephone : (043) 723 8412
36. Places wherein the things sold should be delivered

a. Place stipulated in the contract.
b. In case there is no stipulation, place fixed by usage or trade.
c. In the absence of a and b, the seller’s place of business if he has one; if none, the seller’s
place of residence.
d. In the case of specific goods, the place where the goods are located at the time of
37. Time for delivery of the subject matter of a contract of sale

a. At the time agreed upon.
b. In the absence of time agreed upon, within reasonable time from the execution of the
contract.
38. As a general rule, it is the obligation of the vendor to deliver the thing sold to the buyer
after perfection of contract of sale. However, the following are the instances when a
vendor is not bound to deliver the thing sold after perfection of contract of sale:
a. If the vendee has not paid him the price.

b. If no period for payment of the price has been fixed in the contract.
c. If the vendee loses the right to make use of the period.
39. Unpaid seller is one who has not been paid or tendered the whole of the price or who has
received a bill of exchange or other negotiable instruments as conditional payment and the
condition under which it was received has been broken by reason of the dishonor of the
instrument, the insolvency of the buyer, or otherwise. It includes an agent of the seller to whom
the bill of lading has been indorsed, or a consignor or agent who has himself paid, or is directly
responsible for the price, or any other person who is in the position of a seller
40. Rights of an unpaid seller

a. Right to possessory lien on the goods or right to retain them while he is in
possession of them
i. Grounds for right of possessory lien
1. Where the goods have been sold without any stipulation as to credit.
2. Where the goods have been sold on credit, but the credit term has
expired.
3. Where the buyer is insolvent.
ii. Instances when right of possessory lien is no longer available to the unpaid
seller
1. When the seller 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 of the possessory lien.
iii. Note: When the unpaid seller obtains judgment or decree for the price of the
goods, he does not lose his possessory lien or his right to retain them while he is
in possession of them.
b. Right of stoppage in transit refers to the right of the unpaid seller to resume possession
of the goods at any time while they are in transit, and he will them become entitled to the
goods as he would have had if he had never parted with the possession.
i. Ground for right of stoppage in transit
1. Where the buyer is insolvent.
ii. Manners of exercising the right of stoppage in transit
1. By obtaining actual possession of the goods; or

2. By giving notice of his claim to the carrier or other bailee in whose
possession the goods are
10 | P a g e RLACO/DSALES/NVALDERAMA
Mobile : 0927 283 8234
Telephone : (043) 723 8412
iii. Effects of the exercise of right of stoppage in transit
1. The goods are no longer in transit.

2. The contract of carriage ceases and the carrier shall be liable as
depositary or other bailee.
3. The carrier must deliver the goods to or according to the instructions of
the seller.
iv. Instances when goods are still in transit
1. From the time they are delivered to the carrier or other bailee for the
purpose of transmission to the buyer, until the buyer or his agent, takes
delivery of them from such carrier or other bailee.
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.
v. Instances when goods are no longer in transit
1. If the buyer obtains delivery of the goods before arrival at the appointed
destination.
2. If the carrier or other bailee acknowledges to the buyer or his agent, that
he is holding the goods in his behalf, after arrival of the goods at their
appointed destination.
3. If the carrier or other bailee wrongfully refuses to deliver the goods to
buyer or his agent.
c. Right of resale
i. Grounds for right of resale
1. The goods are of perishable nature.

2. The seller has expressly reserved the right to resell the goods in case the
buyer should make default.
3. The buyer has been in default for an unreasonable time.
a. Note: It is not essential to the validity of resale that notice of an
intention to resell the goods be given by the seller to the original
buyer. But if the ground of sale is the buyer has been in default
for an unreasonable time, then, giving notice of intention to
original buyer becomes relevant to determine the
unreasonableness of the default.
ii. Place of Resale

1. Public sale; or
2. Private sale
iii. Effects of Resale

1. The seller shall not be liable to the original buyer for the delivery of the
goods.
2. The seller may recover damages from the original buyer for any loss
occasioned by the breach of the contract of sale.
3. The new buyer acquires a good title against the original buyer.
iv. Note: The unpaid seller is prohibited from participating as a bidder, directly or
indirectly, in the public sale or private sale of the goods.
d. Right to rescind the sale
i. Grounds for right to rescind the sale

1. The seller has expressly reserved the right to rescind the sale in case the
buyer should make default.
2. The buyer has been in default in the payment of the price for an
unreasonable time.
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Telephone : (043) 723 8412
ii. Effects of rescission of sale

1. The seller shall not be liable to the buyer upon the contract of sale.
2. The seller may recover from the buyer damages for any loss occasioned
by the breach of contract of sale.
3. The seller resumes ownership of the goods.
41. Remedies of buyer in sale of real estate with a statement of its area at the rate of a certain
price per unit of measure or number if the vendor delivers the following area:
a. Excess area
i. Accept the whole area and pay for the contract rate; or
ii. Accept the agreed area and reject the excess
b. Lacking area
i. Lacking of Less than 10% of Actual Area
1. Action quanti minoris or proportionate reduction of price; or
2. Action for cancellation but only if the lacking area of less than 10% of
Actual Area is very important
ii. Lacking of 10% or more of Actual Area
2. Action for cancellation whether or not the lacking area of 10% or more of
c. Poor quality
i. Poor Quality of 10% or less of Actual Area
1. Action quanti minoris or proportionate reduction of price
2. Action for cancellation but only if the poor quality of not more than 10% of
ii. Poor Quality of more than 10% of Actual Area
2. Action for cancellation whether or not the poor quality of more than 10%
of Actual Area is very important
Note: Prescriptive period of the action – It shall be filed within 6 months from the date of delivery.
42. Rights of buyer and seller in sale real estate for a lump sum and not at the rate of a certain
sum for a unit of measure or number
a. In sale of real estate for a lump sum and not at the rate of a certain sum for a unit of
measure or number, the vendor is bound to deliver all that it is included within the
boundaries stated in the contract although there be greater or less area or number than
that stated in the contract.
b. The buyer has the obligation to pay the lump sum stipulated in the contract with no
increase or decrease in the price although there be greater or less area or number than
that stated in the contract unless the lacking or excess area is already unconscionable.
43. Requisites of Double Sale

a. There must be a single property involved.
b. There must be two or more contracts of sales.
c. There must be two or more different buyers who rights are conflicting.
d. The buyers must have acquired the same property from the same seller.
44. Preferred buyer in double sale of personal property
a. Actual or constructive possessor in good faith

b. Buyer with the oldest title
45. Preferred buyer in double sale of titled real property
a. Registrant of the sale in good faith

b. Actual or constructive possessor in good faith
c. Buyer with the oldest title
46. Preferred buyer in double sale of untitled real property
a. Buyer with the oldest title
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Telephone : (043) 723 8412
47. Natural elements or implied warranties in a contract of sale

c. Warranty against undeclared charge or encumbrance or unregistered
encumbrances/servitude
48. Eviction refers to the deprivation of the vendee of the whole or a part of the thing sold by virtue of
a final judgment based on a right prior to the sale or an act imputable to the vendor.
49. Requisites in order that the seller’s warranty against eviction may be enforced
a. There must be a final judgment depriving the vendee of the whole or part of the thing
sold.
b. The vendee must not appeal from the decision or judgment depriving him of the thing
sold.
c. The deprivation is based on a right prior to the sale or an act imputable to the vendor.
d. The vendor must have been notified of the suit for eviction at the instance of the vendee.
50. Alternative remedies of buyer in case of partial eviction of the thing sold
a. Ask for rescission of contract of sales; or
b. Enforce vendor’s liability for breach of warranty against eviction (Action for damages)
51. Other Instances of Eviction which makes the seller liable for breach of warranty
a. If the property is sold for non-payment of taxes due and not made known to the vendee
before the sale.
b. In case of judicial sales unless otherwise decreed in the judgment.
52. Two types of Buyer’s waiver of warranty against eviction
a. Waiver Consciente is a type of waiver made by the buyer when he acted in good faith
because he has no knowledge of risk of eviction. The seller is still liable for eviction but
only up to the extent of the value of the object at the time of eviction.
b. Waiver Intentionada is a type of waiver made by the buyer when acted in bad faith
because he has knowledge of risk of eviction. The seller is no longer liable for eviction.
53. Status of Waiver of warranty against eviction
a. Stipulation exempting a vendor from the obligation to answer for eviction is valid if he
acted in good faith.
b. Stipulation exempting a vendor from the obligation to answer for eviction is void if he
acted in bad faith.
54. Liabilities of Vendor in case of Breach of Contract of Sale by reason of eviction
a. Extent of Liability of Vendor who acted in bad faith

i. Value of the thing at the time of eviction.
ii. Income or fruits of the thing.
iii. Cost of suit caused by eviction.
iv. Expenses of the contract if the vendee has paid them.
v. Damages, interests and ornamental expenses.
b. Extent of Liability of Vendor acted in good faith

i. Value of the thing at the time of eviction.
ii. Income or fruits of the thing.
iii. Cost of suit caused by eviction.
iv. Expenses of the contract if the vendee has paid them.
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Telephone : (043) 723 8412
55. Remedies of buyer for breach of warranty against hidden encumbrance or non-apparent
servitude in contract of sale of immovable
a. Within one year from the date of contract

i. Action for damages; or
ii. Action for rescission
b. Within one year from the discovery of servitude after the lapse of the one year
period from the date of contract
i. Action for damages only
Note: Prescriptive period – One year from the date of contract or discovery of servitude
56. Other implied warranties of seller

a. Where the buyer, expressly or by implication, makes known to the seller the particular
purpose for which the goods are acquired, and it appears that the buyer relies on the
seller's skill or judgment (whether he be the grower or manufacturer or not), there is an
implied warranty that the goods shall be reasonably fit for such purpose. (warranty for
particular purpose)
b. Where the goods are brought by description from a seller who deals in goods of that
description (whether he be the grower or manufacturer or not), there is an implied
warranty that the goods shall be of merchantable quality. (warranty for merchantable
quality)
c. In the case of a contract of sale by sample, if the seller is a dealer in goods of that kind,
there is an implied warranty that the goods shall be free from any defect rendering them
unmerchantable which would not be apparent on reasonable examination of the sample.
(warranty for merchantability)
57. Remedies of buyer in case of breach of warranty committed by the seller

a. Accept or keep the goods and set up against the seller the breach of warranty by way of
recoupment or diminution or extinction of the price.
b. Accept or keep the goods and maintain an action against the seller for damages for
breach of warranty.
c. Refuse to accept the goods, and maintain an action against the seller for damages for
breach of warranty.
d. Rescind the sale and refuse to receive the goods or if the goods have already received,
return them or offer to return them to the seller and recover the price of any part thereof
which has been paid.
58. Requisites for enforcement of vendor’s liability against hidden defects

a. The defect must exist at the time of sale.
b. The defect must be hidden.
c. The defect must render the thing unfit for the use for which it is intended or diminishes its
fitness for such use to such an extent that had the vendee been aware thereof, he would
not have acquired it or would have given a lower price for it.
d. The action to enforce it must be made within the period provided by law.
59. Sale of Property without Implied Warranty Against Hidden Defects

a. Sale of second hand item or pre-owned item or pre-loved item
b. Sale by Junk-shop operators
c. Sale in auction
60. Nature of Liability of Seller in sale of property with Hidden Defects

a. The seller is liable for selling object with hidden defect regardless of the awareness of the
presence of defect
b. The seller is liable for selling object with hidden defect regardless of the reason of the
loss of the thing sold.
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Telephone : (043) 723 8412
61. Remedies of Buyer of Breach of Implied Warranties for Merchantability or Hidden Defect
a. Accion redhibitoria is one of the two remedies of the vendee in case of breach of
warranties against hidden defects, of merchantability, of merchantable quality or fitness
for a particular purpose. It refers to the withdrawal from the contract or rescission.
b. Accion quanti minoris is one of the two remedies of the vendee in case of breach of
warranties against hidden defects, of merchantability, of merchantable quality or fitness
for a particular purpose. It refers to demanding a proportionate reduction in the price.
62. Prescriptive period of action based on breach of warranty against hidden defect
a. 6 months from the date of delivery
63. Extent of Liability of Seller in case of loss of thing sold with Hidden Defects
a. The seller acted in bad faith and the cause of loss is the hidden defect
i. Return the price, refund the expenses of the contract and pay damages
b. The seller acted in good faith and the cause of loss is the hidden defect
i. Return the price, refund the expenses of the contract and pay interests of the
price
c. The seller acted in bad faith and the cause of loss is the fault of buyer or fortuitous
event
i. Return the price paid less the value of the thing at the time of loss and to pay
damages.
d. The seller acted in good faith and the cause of loss is the fault of buyer or
fortuitous event
i. Return the price paid less the value of the thing at the time of loss
64. Status of Waiver of warranty against hidden defect
a. Stipulation exempting a vendor from the obligation to answer for hidden defect is valid if
he acted in good faith.
b. Stipulation exempting a vendor from the obligation to answer for hidden defect is void if
he acted in bad faith.
65. Redhibitory defect refers to a defect in an animal and it is of such nature that expert knowledge,
even after a professional inspection has been made, is not sufficient to discover it.
66. Alternative remedies for redhibitory defect of an animal sold together with other animals
not as a pair
a. Accion redhibitoria or Cancellation of sale over the defective animal; or

b. Accion quanti minoris or Proportional Reduction of Price over the defective animal
67. Remedy for redibitory defects of two animals sold together as a pair
a. Accion redhibitoria or Cancellation of the contract of sale
68. Prescriptive period of action based on breach of warranty of animal with redhibitory defect
a. 40 days from the date of delivery
69. Sale of animals without warranty for hidden defects
a. Sale of animals at fairs

b. Sale of animal at public auctions
c. Sale of live stocks as condemned
70. Status of sale of animal suffering from contagious disease
a. Null and void for being contrary to law and public policy
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Telephone : (043) 723 8412
71. Requisites in order for the vendor to be liable in case the animal dies of disease
a. The disease exists at the time of sale.

b. The disease is the cause of death of the animal.
c. The animal dies within 3 days from time of purchase.
72. Instances when the buyer is deemed to have accepted the delivered goods
a. When he intimates to the seller that he is accepting them.

b. When he does an act in relation to the goods which is inconsistent with the ownership of
the seller.
c. When he retains the goods after the lapse of a reasonable time without intimating to the
seller that he has rejected them.
73. As a general rule, the buyer may inspect the goods. However, the following are the
exceptional instances when the buyer cannot examine the goods
a. When there is an agreement that the buyer cannot examine the goods sold
b. When there is stipulation that the goods shall not be delivered to the buyer until he has
paid the price.
c. When the goods are marked with the words collect on delivery.
74. Effects when the buyer refuses to accept delivery and the refusal is justified such as when
the quantity is not complete or the goods being delivered are different from that stipulated
a. Buyer has no duty to return goods to the seller unless otherwise agreed.
b. The buyer shall not be obliged to pay the price.
c. If the buyer constitutes himself as depositary of the goods, he shall be liable as such.
75. Effects when the buyer refuses to accept delivery and the refusal is unjustified
a. Title to the goods passes to the buyer from the moment the goods are placed at his
disposal.
b. The buyer shall be obliged to pay the price.
76. The time and place of payment of the price of the contract of sale
a. At the time and place stipulated by the contracting parties

b. In the absence of agreement, at the time and place of delivery of the thing.
77. Instances wherein the buyer shall pay interest for the period between the delivery of the
thing and the payment of the price
a. If there is a written stipulation for payment of interest on the price and if the rate is not
provided, it should be 12% before July 1,2013 and 6% afterwards.
b. If the thing sold produces fruits or income since the fruits and income will of the thing sold
will go to the buyer from the moment of perfection of contract of sale.
c. If the buyer is guilty of delay or default which will happen from the time of judicial or
extrajudicial demand for the payment of the purchase price (Compensatory or Legal
Interest will accrue)
78. Grounds for the suspension of the payment of the price by the vendee
a. Disturbance in the vendee’s possession or ownership of the thing purchased.
b. Reasonable grounds to fear such disturbance, by a vindicatory action or foreclosure of
mortgage.
c. Loss of the thing due to the fault of the vendor.
79. Instances wherein the right to suspend payment by the vendee is not available
a. If the vendor gives security for the return of the price.
b. If it has been stipulated that the vendee shall pay the price notwithstanding the existence
of disturbance or danger.
c. If the disturbance is a mere act of trespass.
Mobile : 0927 283 8234
Telephone : (043) 723 8412
80. Ground for vendor’s remedy to sue for immediate rescission of the contract of sale of
immovable
a. If there are reasonable grounds to fear the loss of both the immovable property sold and
its price.
81. Alternative remedies of vendor in case there is reasonable ground to fear the loss of either
the immovable property or its price
a. Fulfillment of the contract with damages or

b. Rescission of the contract with damages.
82. Effects if the buyer failed to pay the price of the contract of sales of immovable at maturity
date and the contract of sale of immovable provides that in case of nonpayment of the
price, the contract of sale is automatically cancelled
a. The contract of sale is not automatically cancelled.

b. The buyer may still pay the price provided notarial or judicial demand for rescission has
not yet been made by the seller.
83. Grounds for immediate rescission of the sale of a movable at vendor’s option
I. If at the time of the delivery of the thing, the vendee does not appear to receive the thing.
II. If at the time of the delivery of the thing, the vendee having appeared, does not pay the price,
unless a longer period is stipulated for its payment.
84. Remedies or Actions by the seller for breach of contract of sale of goods committed by
buyer
a. Assuming the goods have already been delivered to the buyer and the buyer wrongfully
neglects or refuses to pay the price, maintain an action for the price of the goods a.k.a.
file an action to collect a sum of money.
b. If the buyer wrongfully neglects or refuses to accept and pay for the goods, maintain an
action for damages.
c. Assuming the goods have not yet been delivered to the buyer and (1) If the buyer has
repudiated the sale or (2) If the buyer manifested his inability to perform his obligation to
pay the price or (3) If the buyer has committed a breach of contract, rescind the contract
of sale.
85. Alternative Remedies by the buyer if the seller has broken the contract to deliver specific
or ascertained goods by not delivering the goods
a. Bring an action for specific performance plus damages.
b. Action for rescission plus damages.
c. Action for damages.
86. Modes for extinguishment of contract of sale:

a. No-Co-Me-Re-Pa-Lo-Pre-Re-Ful-An
b. Cancellation of sale of personal property payable in installments
c. Resale of the goods by the unpaid seller
d. Rescission of the sale by the unpaid seller
e. Rescission by the buyer in case of partial eviction
f. Rescission by the buyer in case of breach of warranty against hidden defects
g. Rescission by the buyer of sale of animals with redhibitory defects
h. Rescission by the buyer of sale of land with non-apparent servitude or encumbrance
i. Rescission by the buyer of sale of land with lacking area or area with poor quality
j. By redemption, whether conventional redemption or legal redemption
Mobile : 0927 283 8234
Telephone : (043) 723 8412
87. Types of Redemption in a Contract of Sale
a. Conventional redemption is a type of redemption that occurs when the vendor

reserved the right to repurchase the thing sold with the obligation to return to the vendee
the price of the sale, expenses of the contract and necessary and useful expenses made
on the thing sold and to comply with other stipulations which may have been agreed
upon.
i. Period for exercise of right of redemption in conventional redemption or
pacto de retro sale of immovable property
1. If a period is not stated in the contract, it will be 4 years.
2. If a period less than 10 years is stated, follow the stated period.
3. If a period more than 10 years is stated, it will be 10 years because that
is the maximum period.
4. If there is a pending case before the court to determine whether the
contract is one pacto de retro sale or equitable mortgage, it will be 30
days from the decision of the court declaring it to be pacto de retro sale.
ii. Rules in case of exercising conventional redemption in Pacto de retro sale
1. A co-owner of an undivided immovable which is essentially indivisible
who sells his share with a right to repurchase to a third person who
subsequently acquires the whole thereof, may be compelled by the latter
to redeem the whole property, if the former wishes to make use of the
right of redemption.
2. If several persons, jointly and in the same contract, should sell an
undivided immovable with a right of repurchase, none of them may
exercise this right for more than his respective share.
3. If the person who sold an immovable alone has left several heirs,
each heir may redeem only the part which he may have acquired.
4. In cases of 2 and 3, the vendee may demand that the co-owners or co-
heirs come to an agreement upon the repurchase of the whole thing, and
if they fail to do so, the vendee cannot be compelled to consent to a
partial redemption.
5. Each one of the co-owners of an undivided immovable who may have
sold his share separately, may independently exercise the right of
repurchase as regards his own share and the vendee cannot compel him
to redeem the whole property.
b. Legal Redemption is a type of redemption in a contract of sale that is available only in

exceptional cases provided by law. It refers to the right of a third person to repurchase a
real property sold by another person in exceptional cases provided by law. It is defined as
the right to be subrogated upon the same terms and conditions stipulated in the contract,
in the place of one who acquires a thing by purchase, or dation in payment, or by any
other transaction whereby the ownership is transmitted by onerous title.
i. Instances of Legal Redemption or Redemption by operation of Law
1. By a co-owner. A co-owner of a thing may exercise the right of

redemption in case the shares of all the other co-owners or of any of
them, are sold to a third person. All co-owners may exercise on the basis
of their proportionate share.
2. By an adjoining rural lot owner. If a piece of rural land not exceeding

one hectare is alienated to a person who is not landless, the adjoining
rural owner shall have the right of legal redemption unless the grantee
does not own any rural land. Order of Preference:
a. Adjoining rural owner with smallest area
b. Adjoining rural owner who first exercised the right
3. By adjoining urban lot owner. If a small piece of urban land which was
bought for speculation has been resold, the owner of the adjoining land
has a right of redemption at a reasonable price.
a. The adjacent urban land owner whose intended use of the land
in question appears best justified shall be preferred.
Note: It is only the adjoining urban lot owner who has the right of legal
pre-emption which is the right to be given the first opportunity before
being offered to other person.
Mobile : 0927 283 8234
Telephone : (043) 723 8412
Note: A co-owner has better right over adjoining rural or urban lot owner
in the exercise of right of legal redemption.
ii. Period for the exercise of right of legal redemption

1. 30 days from the notice given by the vendor or prospective vendor
88. Instances wherein a contract of sale with a right to repurchase and other contract
purporting to be an absolute sale shall be presumed to be an equitable mortgage thereby
requiring reformation of instrument
a. When the price of a sale with a right to repurchase is unusually inadequate.

b. When the vendor remains in possession as lessee or otherwise
c. When the period for the exercise of the right of repurchase is extended.
d. When the purchaser retains for himself part of the purchase price.
e. When the vendor binds himself to pay the real property taxes on the thing sold.
f. When the real intention of the parties is that the transaction shall secure the payment of a
debt or the performance of any other obligation.
89. Remedy of injured party in equitable mortgage
a. Action for reformation of instrument
90. Assignment of credit is a contract whereby a person transfers his credit, right or action against
a third person to another person for a consideration which is certain in money or its equivalent.
91. Nature of Assignment of Credit as to Perfection of Contract
a. It is a consensual contract perfected by mere consent. It may be entered to in any form,

whether written or oral; or private of public instrument.
92. Formality of Assignment of Credit to bind or to affect third persons
a. For assignment of credit involving personal property, it must be in a public instrument.
b. For assignment of credit involving real property, it must be recorded in the Registry of
Property.
93. Warranties of the vendor in good faith or assignor in assignment of credits
a. Existence of the credit at the time of sale
b. Legality of the credit at the time of sale
94. Exceptional instances when the vendor or assignor of credit is liable for the insolvency of
the debtor of the credit
a. When the assignor expressly warrants the solvency of the debtor of the credit.
i. Prescriptive period of warranty for solvency of debtor in assignment of credit
1. 1 year from the maturity date of credit or date of assignment whichever is
later
b. When the assignor acted in bad faith because the insolvency of the debtor of the credit is
of public knowledge when he assigned the credit.
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Telephone : (043) 723 8412
95. Difference between Assignment of Credit (Sale of Nonnegotiable Promissory Note) by

Assignor and Negotiation of Negotiable Instruments by a General Indorser
a. Assignment is applicable to non-negotiable promissory note while negotiation is

applicable to negotiable promissory note.
b. The transferee in assignment is called an assignee while the transferee in negotiation
is called a holder.
c. The transferor in assignment is called an assignor while the transferor in negotiation is
called a general indorser if there is indorsement.
d. The assignee in assignment is subject to personal defenses available to prior parties
while the holder in due course in negotiation holds the instrument free from personal
defenses available to prior parties.
e. The assignor does not warrant the solvency of maker unless expressly stated while the
general indorser guarantees the solvency of maker as long as notice of dishonor will be
given to him.
Quizzer on Law on Sales
1. It is a contract whereby one of the contracting parties, known as the seller or vendor, obligates
himself to transfer the ownership of and to deliver a determinate thing, and the other party, known
as the buyer or vendee, obligates himself to pay therefore a price certain in money or its
equivalent.
a. Contract of Sales
b. Contract of Agency
c. Contract of Partnership
d. Contract of Pledge
2. The following are the essential elements or the requisites of the contract of sale, except
a. Consent of the contracting parties as to determinate thing and price certain in money or
its equivalent
b. Subject matter which should be a determinate thing
c. Price certain in money or its equivalent
d. Delivery of the subject matter
3. The following are the natural elements of the contract of sale, except
c. Warranty against non-apparent and unregistered servitude or encumbrance
e. Warranty against sale’s talk
4. The following are only considered accidental elements in the contract of sale, except
a. Place of delivery and payment
b. Time of delivery and payment
c. Terms or conditions of payment
d. Price certain in money or its equivalent
5. Which of the following is necessary for the perfection and validity of contract of sale?
a. Essential elements
b. Natural elements
c. Accidental elements
d. All of the above
6. The following are the characteristics of a contract of sale, except

a. Principal – It can exist by itself without being dependent upon another contract.
b. Bilateral – Both the contracting parties have obligations to perform.
c. Reciprocal – The cause of the other party is the object of the other party and vice versa.
d. Onerous – Valuable considerations are given by both parties to acquire rights.
e. Commutative – The parties exchange almost equivalent values.
f. Nominate – It has special name given to it by law.
g. Real – It is perfected by delivery of the subject matter.
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7. The following are distinctions between sale and dacion en pago, except
a. In sale, there is no pre-existing credit, while in dacion en pago, there is pre-existing
credit.
b. A sale creates obligations while dacion en pago extinguishes obligations.
c. In sale, there is greater freedom in fixing the price, while in dacion en pago, there is less
freedom in fixing the price because of the amount of the pre-existing credit which the
parties seek to extinguish.
d. In sale, the cause or consideration is the price from the seller’s point of view, and the
delivery of the object from the buyer’s view point, in dacion en pago, the cause or
consideration is the extinguishment of the obligation, from the debtor’s point of view and
the delivery of the object given in place of the credit, from the creditor’s point of view.
e. A contract of sale is an onerous transfer while dation en pago is considered a gratuitous
transfer.
8. What is the similarity between contract of sale and dacion en pago?

a. The law that governs them
b. The cause of obligation
c. The object of obligation
d. All of the above.
9. The following are the distinctions between sale and payment by cession, except
a. In sale, there is no pre-existing credit while in payment by cession, there are pre-existing
credits.
b. A sale creates obligations while payment by cession extinguishes obligations.
c. In sale, the cause or consideration is the price from the seller’s point of view, and the
delivery of the object, from the buyer’s point of view while in payment by cession, the
cause or consideration is the extinguishment of the obligation from the debtor’s point of
view and the assignment of the things to be sold from the creditor’s point of view.
d. In sale, there is greater freedom in fixing the price while in payment by cession there is
less freedom in fixing the price because of the fixed amount of the pre-existing credits
which the parties seek to extinguish.
e. In sale, the buyer becomes the owner of the property sold to them while in payment by
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.
f. Contract of sale is governed by FRIA of 2010 while cession is governed by Law on Sales.
10. What is the name of the contract if it is for the delivery at a certain price of an article which the
vendor in the ordinary course of business, manufactures or procures for the general market,
whether the same is on hand or not?
a. Contract for a piece of work
b. Contract of pledge
c. Contract of sale
d. Contract of deposit
11. What is the name of the contract if the goods are to be manufactured especially for the customer
upon his special order and not for the general market?
a. Contract for a piece of work
b. Contract of pledge
c. Contract of sale
d. Contract of deposit
12. LA Lakers entered into a contract with Nike Inc to provide two pairs of basketball shoes for Kobe
Bryant and Andrew Bynum. No pair was, however, available at the time of perfection of the
contracts. Kobe wears 10” basketball shoes which Nike normally manufactures for the general
market while Andrew wears 20” basketball shows which will be manufactured specially for
Andrew. What contracts are entered into by the parties?
a. Both contracts of sale
b. Both contracts for a piece of work
c. Contract of sale for Kobe’s shoes and contract for a piece of work for Andrew’s shoes
d. Contract of sale for Andrew’s shoes and contract for a piece of work for Kobe’s shoes
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13. In sale, the cause or consideration is in money while in barter, the cause or consideration is
another thing. However, where the consideration is partly in money and partly in another thing,
the following are the rules to be observed, except
a. The contract shall be one of sale or barter depending upon the manifest intention of the
parties.
b. If the intention of the parties does not clearly appear, the contract is one of barter if the
value of the other thing given as part of the consideration exceeds the monetary
consideration.
c. If the intention of the parties does not clearly appear, the contract is one of sale if the
monetary consideration is more than the value of the other thing given as part of the
consideration.
d. If the intention of the parties does not clearly appear, the contract is one of barter if the
monetary consideration is equal to the value of the other thing given as part of the
consideration.
14. A and B entered into a contract whereby A will deliver his laptop to B while the latter will deliver
P10,000 and a cellphone with a value of P10,000 to A. What is the name of the contract if the
intention of the parties does not clearly appear?
a. Contract of Barter
b. Contract of Agency
c. Contract of Sale
d. Contract of Pledge
15. The following are the distinctions between contract of sale and contract to sell, except
a. In contract of sale, ownership passes to the buyer upon delivery while in contract to sell,
the title to the goods does not pass to the buyer until some future time and oftentimes
upon payment of the price.
b. In contract of sale, the risk of loss or damage to the goods upon delivery is on the buyer,
under the rule “res perit domino”, or the thing perished with the owner; while in contract to
sell, the risk is borne by the seller based on the same principle that the thing perishes
with the owner.
c. In contract of sale, the non-payment of the price is a resolutory condition while in contract
to sell, the payment in full of the price is a suspensive condition.
d. The rule on double sale applies to contract to sell while contracts of sale are not covered
by rule on double sale.
16. The following are the distinctions between contract of sale and agency to sell, except
a. In sale, ownership passes to the buyer, while in agency to sell, ownership is retained by
the principal.
b. In sale, the buyer pays the seller, while in agency to sell, the buyer pays the agent and
the latter transmits the money to the principal.
c. In sale, the goods are delivered by the seller to the buyer while in agency to sell, it is the
agent who delivers the goods to the final consumer.
d. Contract of sale is governed by law on sale while agency to sell is governed by law on
agency.
e. Contract of sale is never covered by statute of fraud while agency to sell is always
covered by statute of fraud.
17. The following are the requisites of the object of a contract of sale, except
a. It must be within the commerce of men.
b. It must be not contrary to law, morals, good customs, public order or public policy.
c. It must be determinate.
d. It must be owned by the vendor at the time of perfection of contract of sale.
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18. The object of a contract of sale must be determinate or specific otherwise there is no sale. When
is the thing considered determinate?
a. When it is particularly designated or physically segregated from all others of the same
class at the time the contract is entered into without the necessity of a new or further
agreement between the parties.
b. When it is particularly designated or physically segregated from all others of the same
class at the time the contract is entered into with the necessity of a new or further
c. When it is particularly designated or physically segregated from all others of the same
class at the time the goods are to be delivered into without the necessity of a new or
further agreement between the parties.
d. When it is particularly designated or physically segregated from all others of the same
class at the time the contract is entered into with the necessity of a new or further
19. On January 1,2012, S sold to B a specific car owned by X for P50,000. S promised to deliver the
car to B on January 11,2012. S bought the car from X on January 10,2012 and delivered it to B
on January 11,2012. Is the contract of sale between S and B valid?
a. No because there is no delivery of the car on January 1,2012 which is an essential
requisite of a contract of sale.
b. No because the seller or vendor shall be the owner of the thing sold at the time of
perfection of contract.
c. Yes even if X is not the owner of the thing sold on January 11,2012 because future thing
can be the object of a contract of sale.
d. Yes because the vendor need not possess the title to the thing sold at the perfection of
the contract but he must have the right to transfer the ownership of the thing at the time
that the thing is to be delivered.
20. On January 1,2012, D borrowed from C P100,000 and as a security D mortgaged his land to C.
On January 2,2012, D sold the same land to X for P50,000 to be delivered on January 5,2012. D
failed to pay the loan. Is the contract of sale between D and X valid?
a. No because D is no longer the owner of the land on January 2,2012.
b. No because D is no longer the owner of the land on January 5,2012.
c. Yes because D is still the owner of the land although it was mortgaged to C.
d. Yes provided D will pay the amount due to C.
21. Future things or things having a potential existence may be the object of a contract of sale.
However, the thing must come into existence; otherwise, the sale will not be effective for not
having a subject matter. The following future things can be the object of a contract of sale, except
a. Wine that a determinate vineyard is expected to produce
b. Milk that a specific female cow may yield during the coming year
c. Next catch of a specific fisherman’s net
d. Future inheritance of an heir
22. The following are the distinctions between emptio rei speratae and emptio spei, except
a. Emptio rei speratae is a sale of hope or expectancy while emptio spei is the sale of future
thing.
b. Sale of future harvest is emptio rei speratae while sale of lottery ticket No. 113 is emptio
spei.
c. In emptio rei speratae the thing expected will definitely come into existence, but its quality
or quantity unknown; while in emptio spei it is not certain that the thing will exist much
less its quantity or quality.
d. Emptio rei speratae is subject to the condition that the thing should exist, so that if it does
not, there will be no contract of sale by reason of the absence of an essential element –
subject matter while in emptio spei produces effects even though the thing does not
come into existence because the subject matter is the hope itself.
23. In case of doubt whether the contract of sale is one of emptio rei speratae or one of emptio spei,
how shall the court generally interpret the type of the contract of sale?
a. Emptio rei speratae
b. Emptio spei
c. Both A and B
d. Neither A nor B
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24. In emptio rei speratae or sale of future things or things having potential existence, what is the
effect to the contract of sale if the said subject matter does not come into existence?
a. The contract becomes ineffective or void for want of subject matter.
b. The seller will never be liable for damages.
c. The contract becomes unenforceable
d. The contract remains to be perfectly valid.
25. S sold a lottery ticket No. 143 to B on January 2,2012. The draw was already made on January
1,2012 and ticket No. 143 did not win. B purchased the ticket with intent to win the jackpot price.
Is the contract of sale between S and B valid?
a. Yes because it involves emptio spei or sale of mere hope.
b. No because the sale of vain hope or expectancy is void.
c. No even if the ticket is considered collector’s item.
d. Yes because the essential elements of contract of sale are present.
26. The following goods may become the subject of a contract of sale, except
a. Existing goods owned or possessed by the seller.
b. Goods to be manufactured, raised or acquired by the seller after the perfection of the
contract of sale or “future goods”.
c. Goods whose acquisition by the seller depends upon the contingency which may or may
not happen.
d. Vain hope /expectancy or future inheritance.
e. Things subject to resolutory condition or resolutory period.
27. S is the sole owner of a condominium unit. S sells ½ undivided interest therein to B. Is the
contract of sale valid?
a. No because the object of a contract of sale must be determinate.
b. No because the object of a contract of sale must be whole interest.
c. Yes the sole owner of a thing may sell an undivided interest therein and such sale shall
produce the effect of making the seller and the buyer co-owners of the thing sold.
d. Yes provided that the condominium unit shall be physically divided.
28. There may be a sale of an undivided share of a specific mass of fungible goods though the seller
purports to sell and the buyer purports to buy a definite number, weight or measure of the goods
in the mass, and though the number, weight or measure of the goods in the mass is
undetermined. Which of the following rules is correct?
III. If the quantity, number, weight or measure, of the mass is more than the quantity sold, the
parties shall become co-owners of the mass.
IV. If the quantity of the mass is less than the quantity sold, the buyer becomes the owner of the
whole mass, with the seller being bound to make good the deficiency from goods of the same
kind and quality, unless a contrary intent appears.
a. I only
b. II only
c. Neither I nor II
d. Both I and II
29. S sells to B 200 sacks of rice from a mass stored in the warehouse of S. The mass, however,
actually consist of 300 sacks of rice. Which of the following statements is correct?
a. The sale is null and void because the object is not determinate.
b. The sale is valid provided B will pay for the excess 100 sacks of corn.
c. The sale is valid, thus, S and B will become co-owners of the whole mass to the extent of
2/3 for B and 1/3 for S.
d. The sale is null and void because there is no consent.
30. S sells to B 300 sacks of yellow corn from a mass stored in the warehouse of S. The mass,
however, actually consists of 280 sacks of yellow corn. Which of the following statements is
correct?
a. The sale is null and void because there is no consent.
b. The sale is null and void because there is no determinate object.
c. B becomes the owner of all the 280 sacks and S is bound to deliver additional 20 sacks
in the absence of contrary agreement.
d. B becomes the owner of all the 280 sacks and S is not bound to deliver the additional 20
sacks.
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31. It is the sum stipulated as the equivalent of the thing sold, and also every incident taken into
consideration for the fixing of the same, put to the debit of the vendee, and agreed to by him. It is
the cause of contract of sale on the part of the seller.
a. Loan
b. Price
c. Debt
d. Money
32. The following are the requisites of the price in a contract of sale, except
a. It must be certain.
b. It must be real.
c. It must have possible equivalent in money.
d. It must be fictitious.
33. The price of the thing sold must be certain, otherwise, the sale is void by reason of the absence
of meeting of minds between the parties. The following are the instances when the price is
certain, except
a. If the parties have agreed upon a definite amount for the sale.
b. If it be certain with reference to another thing certain.
c. If the determination of the price is left to the judgment of a specified person or persons.
d. If the price is fixed by the court.
e. If the price fixed is that which the thing sold would have on a definite day, or in a
particular exchange or market, or when an amount is fixed above or below the price on
such day, or in such exchange or market, provided said amount is certain.
f. If the price is fixed by one of the contracting parties but not accepted by the other
contracting party.
34. The following contracts of sale have prices which are certain and therefore valid, except
a. S sold to B a specific watch for P2,500 which both parties agreed upon.
b. S sold to B a certain ring of which the price is the salary of the faculty member of La Salle
School.
c. S sold to B a specific car the price of which is subject to determination of X, third person.
d. S sold to B 500 shares of ordinary stocks of BPI at the price equivalent to the closing
price of the ALI’s ordinary shares on April 30,2020 at the Philippine Stock Exchange.
35. When may the court fix the price of the contract of sale if the determination of the price is left to
the judgment of a third person?
a. If the third person is unable or unwilling to fix the price.
b. If the third person acted in bad faith or by mistake.
c. If the third person or persons are prevented from fixing the price or terms by the fault of
the buyer or seller.
36. What is the effect to the contract of sale if the determination of the price is left to the judgment of
a third person and such person is unable or unwilling to fix the price?
a. The contract of sale is voidable.
b. The contract of sale is valid and binding.
c. The contract of sale is inefficacious unless the parties subsequently agree upon the price.
d. The contract of sale is rescissible.
37. What is the effect to the contract of sale if the determination of the price is left to the judgment of
a third person, where such third person or persons are prevented from fixing the price or terms by
fault of the seller or the buyer?
a. The contract is voidable.
b. The contract is unenforceable.
c. 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 such as filing an action for damages.
d. The contract is rescissible.
38. S sold to B a specific good. The price of the good cannot be determined. The good has been
delivered to and appropriated by B. What is the obligation of B?
a. B has no obligation because the contract of sale is null and void having no price.
b. B has no obligation because the contract of sale is inefficacious because the price of the
good cannot be determined.
c. B has the obligation to rescind the contract.
d. B has the obligation to pay a reasonable price which depends on the circumstances of
each particular case.
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39. What is the effect of gross inadequacy of price in a contract of sale?

a. It renders the contract of sale null and void.
b. In renders the contract of sale unenforceable.
c. It does not affect a contract of sale, except as it may indicate a defect in the consent
which makes the contract voidable or except as it may indicate that the intention of the
parties is another contract such as donation or loan with equitable mortgage.
d. It does not affect a contract of sale even if the parties really intended a donation or some
other act or contract.
40. What is the effect of simulated price in a contract of sale?

a. It renders the contract of sale null and void.
b. It renders the contract of sale voidable.
c. It renders the contract of sale rescissible.
d. It renders the contract of sale unenforceable.
e. It renders the contract of sale as a valid donation even if the formal or solemn
requirements of donation or other agreement for validity of contract are not complied with.
41. When is a contract of sale perfected?

a. Upon delivery of the object of a contract of sale.
b. At the moment there is a meeting of minds upon the determinate thing which is the object
of the contract and upon the price certain money or its equivalent.
c. Upon payment of the purchase price.
d. Upon the transfer of ownership or title.
42. X and Y are good friends. X sold and delivered his car to Y. It was agreed and understood that on
next Sunday X will name and fix the price of the car. Sunday came, X called Y by telephone and
stated and fixed the price at P150,000. Is the contract of sale perfected?
a. No because the purchase price is not yet paid.
b. No because the title is not registered to the buyer.
c. Yes because the car has already been delivered to Y.
d. No because the price of the sale was left to the discretion of one of the parties, that is,
the seller, and it was not consented by the buyer.
43. Which of the following contracts of sale is null and void?

a. Executory oral sale of real property or any interest therein regardless of the price.
b. Executory oral sale of goods, chattels or things in action the price of which is P500 or
more.
c. Sale of a piece of land by the agent in the name of principal wherein his authority is not in
writing.
d. Sale of a piece of land by a third person in the name of owner but who has not been
given any authority
44. When is a contract of sale by auction perfected?

a. When the highest bidder gives his bid.
b. When the auction things has been delivered to the buyer.
c. When the auctioneer announces its perfection by the fall of the hammer or in any other
manner.
d. When the bid price has been paid.
45. The following are the rights of the parties in an auction sale, except
a. Before perfection, any bidder may retract his bid.
b. Before perfection, the auctioneer may generally withdraw the goods from the sale unless
the auction has been announced without reservation by auctioneer.
c. After perfection, the wining bidder can retract his bid.
d. After perfection, the auctioneer cannot withdraw the goods.
46. The seller may bid at the auction provided the following requisites are present, except
a. The right to bid must have been reserved expressly by or on behalf of the seller.
b. The right to bid must not be prohibited by law or stipulation.
c. Notice must be given that the sale is subject to a right to bid by or on behalf of the seller.
d. The bid of the seller must be the lowest.
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47. By bidders or puffers refer to persons employed by the seller to bid in his behalf, the purpose of
which is to raise the price, but the said persons are not in themselves bound by their bids. What is
the effect of employment by the seller of by-bidders or puffers without notice to the other bidders
in a perfected contract of sale by auction?
a. The sale may be considered voidable.
b. The sale is considered null and void.
c. The sale is unenforceable.
d. The sale is rescissible.
48. Which of the following statements concerning bilateral and unilateral promise to buy and/or sell is
incorrect?
a. Bilateral promise takes place when one party promises to buy and the other party
promises to sell a determinate thing at an agreed price.
b. Bilateral promise is reciprocally demandable since this is as good as a perfected contract
of sale.
c. Unilateral promise not accepted by the promissee (policitacion) does not produce any
effect.
d. Unilateral promise accepted by the promissee is binding upon the promissor even if it is
not supported by a consideration distinct from the price.
49. It refers to the money given as part of the purchase price and as a proof of perfection of the
contract of sale.
a. Option money
b. Earnest money or Arras
c. Perfect money
d. Component money
50. It refers to the consideration paid for the purpose of holding one to his promise to buy or sell a
determinate thing for a certain period of time, which consideration is separate and distinct from
the purchase price. It is a proof of perfection of contract of option.
a. Option money
b. Earnest money or Arras
c. Perfect money
d. Component money
51. S promised to sell his car to B for P100,000 giving B one week to decide whether to buy or not. B
accepts the promise and gives a consideration of P1,000 for the one week period. If B decides to
buy the car, how much should B pay to S?
a. P100,000 because the P1,000 is an earnest money.
b. P99,000 because the P1,000 is an option money.
c. P100,000 because the P1,000 is an option money.
d. P99,000 because the P1,000 is an earnest money.
52. B purchased the car of S for P100,000 payable within 30 days from the date of sale. As a
downpayment, B gives S P1,000 upon the execution of their agreement. How much should B pay
to S on the 30th day?
a. P100,000 because the P1,000 is an earnest money.
b. P99,000 because the P1,000 is an option money.
c. P100,000 because the P1,000 is an option money.
d. P99,000 because the P1,000 is an earnest money.
53. When shall the buyer or vendee acquire personal rights over the fruits of the object of a contract
of sale?
a. From the time the object should be delivered.
b. From the time of the perfection of the contract of sale.
c. From the time of the payment of purchase price.
d. From the time of the delivery of the object of the contract of sale.
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54. On January 1, 2012, Seller and Buyer entered into a contract of sale of a specific cow. The
purchase price shall be paid on January 5,2012 and the cow shall be delivered on January
10,2012. The cow gives birth on January 4,2012. The cow and its young have been delivered on
January 11,2012. Which of the following statements is correct?
a. The buyer has real right over the cow and its young on January 1,2012.
b. The buyer has personal right over the young on January 10,2012.
c. The buyer has personal right over the young on January 5,2012.
d. The buyer has personal right over the young on January 1,2012 and real right over the
cow and its young on January 11,2012.
55. The seller has the duty to preserve the thing after the perfection of contract of sale but before its
delivery. What standard of care should be observed by the seller to preserve the object of
contract of sale?
a. Diligence of a good father of a family or ordinary diligence unless the law or the
stipulation of the parties requires another standard of care.
b. Diligence of a father of a good family unless the law or the stipulation of the parties
requires another standard of care.
c. Extraordinary diligence of a good father of a family unless the law or the stipulation of the
parties requires another standard of care.
d. Extraordinary diligence of a father of a good family unless the law or the stipulation of the
parties requires another standard of care.
56. What is the effect of the complete loss of the object of the contract of sale before the perfection of
the contract of sale or complete loss of the object of contract of sale at the exact moment of
perfection of contract of sale?
a. The seller shall always bear the risks of the loss.
b. The buyer shall pay the purchase price.
c. The buyer shall be liable for the damages.
d. The sale is void or inexistent because of the absence of the object.
57. What shall be the remedy of the buyer in case of the partial loss of the object of the contract of
sale at the time of the perfection of the contract of sale?
III. Withdrawal from the contract or rescission.
IV. Demanding the remaining part and paying its proportionate price.
a. I only
b. II only
c. Either I or II
d. Neither I nor II
58. After the perfection of the contract of sale but before the delivery of the goods to the buyer, who
shall bear the risk of loss of the object of the contract of sale?
a. Buyer because any benefit therefrom during the same period inures to him.
b. Seller because any benefit therefrom during the same period inures to him.
c. Buyer because the ownership of the goods is transferred to the buyer after the perfection
of the contract of sale.
d. Seller because goods remain at the seller’s risk until the ownership of the goods is
transferred to the buyer by actual or constructive delivery.
59. After the perfection of the contract of sale and after delivery of the goods to the buyer, who shall
bear the risk of loss of the object of the contract of sale before the full payment of the price?
a. Buyer because the ownership of the goods is transferred to the buyer after the delivery.
b. Seller because any benefit therefrom during the same period inures to him.
c. Buyer because the ownership of the goods is transferred to the buyer after the perfection
of the contract of sale.
d. Seller because goods remain at the seller’s risk until the ownership of the goods is
transferred to the buyer by full payment of the price.
60. The following are the exceptional instances wherein the goods are at the buyer’s risk
notwithstanding that the ownership is retained by the seller, except
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a. If there is an agreement that the buyer shall suffer the risk of loss despite the retention by
seller of ownership.
b. If ownership (naked title) of the goods is retained by the seller merely to secure the
performance by the buyer of his obligation under the contract but the beneficial
ownership has already been transferred to the buyer.
c. When actual delivery has been delayed through the fault of the buyer.
d. When there is actual or constructive delivery to the buyer.
61. What is the remedy of the buyer if the goods delivered do not correspond with the sample,
description or sale and description in a sale by sample, sale by description or sale by sample and
description?
a. Ask for annulment of contract.
b. Ask for rescission of the contract of sale.
c. Ask for collection of a sum of money.
d. Ask for declaration of nullity of the contract of sale.
62. What contracts are covered by Recto Law?

a. Installment sales of personal property
b. Contract purporting to be leases of personal property with option to buy
c. Either A or B
d. Neither A nor B
63. Under Recto Law, the following are the alternative remedies (selection of one remedy excludes
the other remedies) of vendor (1) in case of installment sales of personal property; or of lessor in
case of (2) contracts purporting to be leases of personal property with option to buy, when the
lessor has deprived the lessee of the possession or enjoyment of the thing, except
a. Exact fulfillment of the obligation with recovery of deficiency, should the vendee or lessee
fail to pay any installment.
b. Cancel the sale or lease should the vendee or lessee fails to pay two or more
installments.
c. Foreclose the chattel mortgage on the thing sold, if one has been constituted without right
to recover any deficiency should the vendee or lessee fails to pay two or more
installments.
d. Action for quanti minoris.
64. S sold his only car to B for P100,000 payable in 10 equal monthly installments of P10,000 each.
As security, B executed a chattel mortgage on the car. What is the remedy of S if B fails to pay
one installment?
a. Exact fulfillment of the obligation with recovery for deficiency.
b. Cancel the sale.
c. Foreclose the chattel mortgage on the thing sold, if one has been constituted without right
to recover any deficiency.
d. Any of the above.
65. Using the same data in number 64, if buyer B defaulted in at least two installments after payment
of several installments, may the seller cancel the contract of sale?
a. Yes and the buyer is still required to pay the price.
b. Yes and the seller may still recover the unpaid price.
c. Yes and the buyer must return the thing to the seller and the seller must generally return
the installments already received minus reasonable rent.
d. Yes and the buyer and seller cannot agree to the forfeiture of installment already
received even if such agreement is not unconscionable.
66. Using the same data in number 64 and assuming B fails to pay two or more installments, can S
foreclose the chattel mortgage on the car and recover any deficiency from the foreclosure?
a. Yes S can foreclose the chattel mortgage but cannot recover any deficiency even if there
is stipulation for the recovery.
b. No S cannot foreclose the chattel mortgage and cannot recover any deficiency.
c. Yes S can foreclose the chattel mortgage and can recover any deficiency even without
stipulation for the recovery.
d. Yes S can foreclose the chattel mortgage and can recover any deficiency only if there
stipulation for the recovery.
67. Using the same data in number 64 and assuming the foreclosure of the chattel mortgage results
to excess, who shall be entitled to the excess?
a. Buyer in the absence of contrary stipulation
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b. Seller in the absence of contrary stipulation

c. Government
d. Neither Buyer or Seller
68. Using the same data in number 64 and assuming B fails to pay two or more installments; can S
ask for the exact fulfillment of the obligation and recover any deficiency from the sale by
execution?
a. No S cannot ask for the fulfillment of the contract of sale because it is available only
when one installment is not paid.
b. Yes S can ask for the fulfillment of the contract of sale but cannot recover any deficiency
from the sale by execution under any circumstances.
c. Yes S can ask for the fulfillment of the contract of sale and can recover any deficiency
from the sale by execution even without stipulation.
d. Yes S can ask for the fulfillment of the contract of sale and can recover any deficiency
from the sale only if there is stipulation.
69. Using the same data in number 64 and assuming B fails to pay two or more installments; can S
ask for the exact fulfillment of the obligation and recover any deficiency from the sale by
execution through the foreclosure of chattel mortgage on the car?
a. No S cannot ask for the fulfillment of the contract of sale because it is available only
when one installment is not paid.
b. Yes S can ask for the fulfillment of the contract of sale but cannot recover any deficiency
from the sale by execution under any circumstances.
c. Yes S can ask for the fulfillment of the contract of sale and can recover any deficiency
from the sale by execution only but not further through foreclose of chattel mortgage
because they are alternative remedies.
d. Yes S can ask for the fulfillment of the contract of sale and can recover any deficiency
from the sale only if there is stipulation.
70. Using the same data in number 64 except from the fact that the chattel mortgage was executed
over the piano of B and not over his car. S foreclosed the mortgage over the piano and there is
deficiency. Can S recover the deficiency?
a. Yes provided there is stipulation to that effect.
b. Yes even without stipulation to that effect.
c. No because that will be contrary to law.
d. No even without stipulation to that effect.
71. S sold his ring to B for P50,000 under the following terms: down payment of P30,000 and the
balance payable at month end. As security, B executed a chattel mortgage on the ring. B
defaulted in the payment of the balance. By reason thereof, S foreclosed the chattel mortgage on
the ring. However, only P15,000 was realized in the foreclosure sale. Can S still proceed against
B to collect the deficiency of P5,000?
a. No because Recto Law prohibits recovery of deficiency.
b. Yes if deficiency has been agreed upon contrary to Recto Law.
c. Yes because Recto Law does not apply to sale on straight term and the general rule is
that if the foreclosure sale in chattel mortgage results in deficiency, the same may be
recovered by the creditor.
d. No because recovery of deficiency is only available in execution sale.
72. Sale of real property in installments governed by RA 6552 or Maceda Law covers the following,
except
a. Sale of residential property
b. Sale of residential condominium
c. Sale of residential apartments
d. Sale of industrial lots, commercial buildings and sales to tenants of agricultural land
under RA 3844
73. Under Maceda Law, the following are the rights of a buyer of residential real property in
installments when he has paid installments of less than 2 years but defaulted in the succeeding
installments, except
a. Right to a grace period of not less than 60 days from the date the installment became
due with no interest.
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b. Right to additional 30 days but with interest, after the expiration of the 60-day grace
period, before the seller can cancel the contract by notarial act.
c. Right to sell or assign his rights provided under letter A and B.
d. Right to reinstate the contract by updating the account during the grace period and before
actual cancellation of the contract.
e. Right to pay in advance any installment or the full unpaid balance of the purchase price
any time without interest and to have such full payment of the purchase price annotated
in the certificate of title covering the property.
f. Right to receive the cash surrender value of the payments on the property equivalent to
50% of the payments made in case the contract is properly cancelled by the seller.
74. Under Maceda Law, which of the following statements concerning the rights of a buyer of
residential real property in installments who has paid at least 2 years installments but defaulted in
succeeding installments is incorrect?
a. He has the right to pay, without additional interest, the unpaid installments due within the
total grace period earned by him which is hereby fixed at the rate of one month grace
period for every one year of installment payments made.
b. He can exercise the right to pay within the grace period allowed by law only once in every
5 years of the life of the contract and its extensions, if any.
c. If the contract is canceled, the buyer shall have the right to the cash surrender value of
the payments on the property equivalent to fifty percent of the total payments made, and,
after five years of installments, an additional five percent every year but not to exceed
ninety percent of the total payments made.
d. The actual cancellation of the contract shall take place after thirty days from receipt by
the buyer of the notice of cancellation or the demand for rescission of the contract by a
notarial act and upon full payment of the cash surrender value to the buyer.
e. The buyer has the right to suspend payment of any installment at any time.
75. A sold a residential house and lot at a price of P10,000,000 payable at P4,000,000 downpayment
and the balance of P6,000,000 payable in 50 years at P10,000 per month to B. After total
payments of P4,180,000, B defaulted on the next installment. What is the grace period earned by
B to pay the defaulted installments without additional interest?
a. 60 days
b. 30 days
c. 90 days
d. 45 days
and the balance of P6,000,000 payable in 50 years at P10,000 per month to B.. After total
payment of P4,480,000, B defaulted on the next installment. What is the grace period earned by
a. 60 days
b. 4 months
c. 3 months
d. 5 months
payment of P4,840,000, B defaulted on the next installment. What is the grace period earned by
a. 60 days
b. 7 months
c. 6 months
d. 5 months
payments of P4,180,000, B defaulted on the next installment. After payment total payments of
P4,120,000, B defaulted on the next installment. After following the necessary procedures
required by law, the contract of sale is properly cancelled. How much cash surrender value is B
entitled from A?
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a. P4,060,000
b. P2,160,000
c. P4,000,000
d. P0
payments of P4,360,000, B defaulted on the next installment. After following the necessary
procedures required by law, the contract of sale is properly cancelled. How much cash surrender
value is B entitled from A?
a. P2,000,000
b. P2,240,000
c. P180,000
d. P2,180,000
a. P2,000,000
b. P2,240,000
c. P180,000
d. P2,180,000
a. P4,400,000
b. P3,600,000
c. P4,200,000
d. P3,900,000
payment of P7,000,000, B defaulted on the next installment. After following the necessary
procedures required by law, the contract of sale is cancelled. How much cash surrender value is
B entitled from A?
a. P6,300,000
b. P6,500,000
c. P7,000,000
d. P5,600,000
83. PD 957 also known as Subdivision and Condominium buyer's Protective Decree provides for the
following protection of the buyers, except
a. No owner or developer shall levy upon any lot or buyer a fee for an alleged community
benefit. Fees to finance services for common comfort, security and sanitation may be
collected only by a properly organized homeowners association and only with the
consent of a majority of the lot or unit buyers actually residing in the subdivision or
condominium project.
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b. The owner or developer cannot deny any person free access to any government office or
public establishment located within the subdivision or which may be reached only by
passing through the subdivision.
c. The owner or developer of a subdivision without access to any existing public road or
street must secure a right of way to a public road or street and such right of way must be
developed and maintained according to the requirement of the government and
authorities concerned.
d. The owner or developer of a subdivision project or condominium project shall initiate the
organization of a homeowners association among the buyers and residents of the
projects for the purpose of promoting and protecting their mutual interest and assist in
their community development.
e. The owner or developer has the obligation to pay the real property taxes on the
subdivision and condominium sold even after the transfer of ownership to the buyers.
84. Under PD 957, what is the right of the buyer when the developer failed to develop the subdivision
or condominium project according to the approved plans and within the time limit for complying
with the same?
a. The installment already paid by the buyer shall be forfeited in favor of the owner or
developer.
b. The buyer may, after due notice to the owner or developer, desists from further payment
and he may ask for the reimbursement of the total amount paid including amortization
interests but excluding delinquency interests, with interest thereon at the legal rate.
c. The buyer has no right to ask for the reimbursement already paid.
d. The seller can automatically cancel the contract of sale because of the non-payment.
85. Under PD 957, the owner or developer shall deliver the title of the lot or unit to the buyer upon full
payment of the lot or unit. What fee can be collected by the owner/developer from the buyer?
a. Only those expenses required for the registration of the deed of sale in the Registry of
Deeds.
b. All expenses of the contract of sale.
c. Expenses of the contract of sale and real property taxes during the pendency of payment.
86. Under PD 957 also known as Subdivision and Condominium buyer's Protective Decree, who shall
pay the Real estate tax and assessment on a lot or unit being developed before the passage of
title to buyer?
a. Developer or owner of the project but with right of recourse for reimbursement from the
buyer.
b. Owner or developer without recourse for reimbursement from the buyer.
c. Buyer of the unit.
d. Developer and buyer equally.
87. As a general rule, all those who may oblige themselves may enter into a contract of sale. What is
the status of a contract of sale entered into by persons having absolute incapacity such as
minors, insane or demented persons and deaf mutes who do not know how to write with a
capacitated person?
a. Voidable
b. Rescissible
c. Unenforceable
d. Null and void
88. What is the status of a contract of sale entered into by persons having absolute incapacity such
as minors, insane or demented persons and deaf mutes who do not know how to write with
another incapacitated person?
a. Voidable
b. Rescissible
c. Unenforceable
d. Null and void
89. S, a capacitated person, sold to B, a minor, a chicken joy. May S demand from B the payment of
the purchase price?
a. No because the contract of sale is voidable since B is an incapacitated person.
b. Yes because even the contract of sale is voidable ideally, the subject matter, food is a
necessary.
c. Yes even the price is unreasonable.
d. No because the contract of sale is void.
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90. As a general rule, what is the status of the contract of sale between a husband and wife?
a. Voidable because they are suffering from absolute incapacity.
b. Void because they are suffering from relative incapacity.
c. Rescissible if there is lesion.
d. Unenforceable if it is not in writing.
91. As an exception to the general rule, when may the husband and wife validly sell property to each
other?
a. When an absolute separation of property was agreed upon in the marriage settlements.
b. When there has been a judicial separation of property under by virtue of decree of legal
separation under Family Code.
c. Either A or B.
d. Neither A nor B.
92. A and B are legally married starting January 1, 2010. A sold in writing his specific car at a price of
P10,000 to B after the latter pointed a gun to A. What is the status of contract of sale?
a. Voidable
b. Void
c. Unenforceable
d. Rescissible
93. A and B are legally married and governed by property regime of complete separation. A sold in
writing his specific car at a price of P10,000 to B after the latter pointed a gun to A. What is the
status of contract of sale?
a. Voidable
b. Void
c. Unenforceable
d. Rescissible
94. Without the consent of the husband, the wife sold their car, a conjugal/community property to a
third person. What is the status of the contract of sale?
a. It is unenforceable subject to ratification.
b. It is voidable because of vitiation of consent.
c. It is rescissible because of lesion to the husband.
d. It is null and void because of lack of consent of husband but the contract constitutes a
continuing offer to the husband.
95. The following persons are prohibited from acquiring by purchase, even at public or judicial
auction, sales in legal redemption, compromises or renunciation, except
a. The guardian, the property of the person or persons under his guardianship.
b. Agents, the property whose administration or sale may have been entrusted to them,
unless the consent of the principal has been given.
c. Executors and administrators, the property of the estate under their administration.
d. Public officers and employees, the property of the State or GOCC under their
administration.
e. Justices, judges, prosecuting attorneys, clerks of court and other officers and employees
connected with the administration of justice, the property and rights in litigation.
f. Wife, the exclusive or capital property of his husband if there is judicial separation of
property.
96. The following are the obligations of the vendor in a contract of sale, except
a. To deliver the determinate thing sold including the accessions and accessories in the
condition in which they were upon the perfection of the contract.
b. To warrant the thing sold against eviction and hidden defects and unregistered
encumbrances.
c. To take care of the thing sold before delivery to the buyer with the diligence of a good
father of a family or ordinary diligence unless the law or the stipulation of the parties
requires another standard of care.
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d. To transfer the ownership of the thing sold at the time of the perfection of the contract of
sale.
97. In a contract of sale, when is the ownership or title of the thing sold transferred from the seller to
the buyer?
a. Upon the perfection of contract of sale.
b. Upon payment of the purchase price.
c. Upon actual or constructive delivery of the thing sold.
d. Upon execution of private instrument or private deed of sale.
98. In a contract of sale, may the parties agree that full payment of the price will be the act that
transfers ownership from the seller to the buyer?
a. No because it is contrary to Law on Sales.
b. Yes by reason of autonomy of contract.
c. No because it will be unfair to the buyer.
d. Yes but only if there is approval by the court.
99. It is a mode of acquiring ownership whereby the object of the contract is placed in the control and
possession of the vendee, either actually or constructively. It is the operative act that transfers
ownership of the determinate thing from the seller to the buyer in a contract of sale.
a. Delivery either actual or constructive
b. Payment of purchase price
c. Perfection of contract
d. Execution of document
100. The following are the examples of constructive deliveries in a contract of sale, except
a. Traditio by legal formalities – When the same is made through a public document, the
execution thereof shall be equivalent to the delivery of the thing sold. It applies to both
movable and immovable property.
b. Symbolic delivery (Traditio simbolica or Traditio clavium) – This is delivery that takes
place by delivering the keys of the place or depository where the movable is stored or
kept.
c. Traditio longa manu – It is the delivery of a movable by mere consent or agreement of
the parties if the thing cannot be transferred to the possession of the vendee at the time
of sale.
d. Traditio brevi manu – It is a delivery that takes place when the vendee is already in the
possession of the thing sold even before the sale and thereafter continues in possession
thereof in the concept of an owner. It applies to movables only.
e. Traditio constitutum possessorium – It is a delivery that takes place when the vendor
continues in possession of the thing sold after the sale but in another capacity such as
that of a lessee or depositary. It applies to both movable and immovable property.
f. Tradition solvendi – It is a delivery that takes place by delay.
101. S and B entered into a contract of sale of a specific coconut. S and B pointed over that
particular coconut. What type of constructive delivery is present?
a. Traditio simbolica or clavium
b. Traditio longa manu
c. Traditio brevi manu
d. Traditio constitutum possessorium
102. S and B entered into a contract of sale of a specific watch. They executed a public
instrument over the sale. What type of contructive delivery is present?
d. Traditio by legal formalities
103. S and B entered into a contract of sale of a specific car. S delivered the key of the car to
B. What type of constructive delivery is present?
d. Traditio by legal formalities
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104. B rented the specific truck of S. After the end of the contract, S sold the property to B. As
a result of sale, B continues to have possession of the property. What type of constructive
delivery is present?
105. S sold his house and lot to B. After the sale, B leaseback the property to S. What type of
constructive delivery is present?
106. Intangible assets or incorporeal property cannot be the subject of actual or physical
delivery. The following are the different modes of constructive delivery of incorporeal property or
intangible assets, except
a. By constructive traditio such as execution of public document.
b. By placing the certificate or tangible evidence of ownership in the possession of the
vendee such as delivering certificate evidencing the incorporeal property from the seller
to the buyer.
c. Through the use by the buyer of the rights pertaining to incorporeal property with the
consent of the seller.
d. Through pledging of the intellectual property by the pledgor to the pledgee.
107. In sale or return, when is the ownership of the goods transferred from seller to the buyer?
a. Upon payment of purchase price.
b. Upon delivery of the goods.
c. Upon approval by the buyer.
d. Upon return of the goods to the seller
108. In sale on trial/approval, the ownership of the goods is transferred from seller to the buyer
under any of the following instances, except
a. When the buyer signifies his approval or acceptance of the goods.
b. When the buyer does an act adopting the transaction.
c. When the buyer does not signify his approval or acceptance of the goods but retains the
goods without giving notice of rejection within the time fixed in the contract or within
reasonable time, and such time has expired.
d. When the goods are delivered to the buyer.
109. On January 1, S delivered an electronic calculator to B under a sale or return

arrangement. S gave B up to May 7 to return the electronic calculator. Before May 7, the
calculator was destroyed by fire. Should B pay for the purchase price?
a. No because B is not yet the owner of the calculator.
b. No because the calculator is destroyed through fortuitous event.
c. Yes because B becomes the owner of the calculator upon delivery.
d. Yes if the fire is due to the fault of B.
110. Using the same data in preceding number except the fact that the arrangement is a sale
on trial or approval, should B pay the purchase price?
a. No even if the fire is due to the fault of B.
b. Yes even if B signifies his approval before the fire.
c. No if B does not signify his approval before the fire because B is not yet the owner.
d. Yes because B becomes the owner of the calculator upon delivery.
111. When the goods are already delivered to the carrier or other bailee for purpose of
transmission to the buyer, who owns the goods after the receipt by the carrier or other bailee as a
general rule?
a. Buyer
b. Seller
c. Carrier
d. Other bailee
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112. When the goods are sold and delivered by a person who is not the owner thereof, what
title is acquired by the buyer as a general rule?
a. He acquires no better title that the seller had.
b. He acquires a perfectly valid title.
c. He acquires a voidable title.
d. He acquires a rescissible title.
113. As a general rule, a non-owner seller cannot transfer ownership of the determine thing
sold to the buyer in a contract of sale. However, the following are the exceptional instances when
a non-owner seller may transfer title of the determinate thing to the buyer, except
a. When the sale is made with authority or consent of the owner.
b. When the owner is precluded by his conduct from denying the seller’s authority to sell.
c. When the sale is made under the provisions of any factor’s acts, recording laws or any
other provisions of law enabling the apparent owner to dispose of the goods as if he were
the true owner thereof.
d. When the sale is made under a statutory power of sale or under the order of court of
competent jurisdiction.
e. When the purchase is made in a merchant’s store, or in fairs, or markets.
f. When the sale of personal property is made by a thief or robber to a purchaser in good
faith and for value.
114. S stole the ring of O and sold the same ring to B for P500 who does not have any
knowledge that the ring was stolen. Which of the following statements is correct?
a. B acquires title to the ring if he is a purchaser in good faith.
b. O cannot recover the ring from B if he will not reimburse B for P500.
c. O can recover the ring from B even if he will not reimburse B for P500.
d. B will acquire title to the ring if he will not be prosecuted
115. Using the same data in preceding number but assuming B was able to purchase the
stolen ring at a public sale in good faith for P1,000. Which statements is correct?
a. O cannot recover the ring from B even he is willing to reimburse B for P1,000.
b. O can recover the ring from B but he must reimburse B for P1,000.
c. B cannot obtain good title from the goods even if he is in good faith.
d. B will have better right than O in any instances.
116. Using the same data in preceding number and suppose the ring found its way in a jewelry
store and it was from that jewelry store that B bought the ring in good faith. Which of the following
statements is true?
a. O can recover the ring from B upon payment of purchase price.
b. B does not acquire title over the ring because it was stolen.
c. B acquires title to the ring because the purchase is made from a merchant’s store, fair or
market.
d. O has better title over the ring as against B.
117. Lebron is the registered owner of a vacant lot. Kevin stole the certificate of title of the
registered lot of Lebron and through connivance with a notary public, he was able to execute a
notarized deed of sale through forging the signature of Lebron. With connivance with a Registry
of Deeds, Kevin was able to transfer the title of the lot to his name. Afterwards, Kevin sold the
said lot to Carmelo who acquired the said lot after inspecting the title and the vacant lot. Carmelo
is a purchaser in good faith and for value. Which of the following statements is correct?
a. The contract of sale between Kevin and Carmelo is void because it is the product of a
previous void contract.
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b. Lebron can recover the land from Carmelo because the title acquired by Carmelo is that
of a thief even without reimbursing Carmelo.
c. Lebron can recover the land from Carmelo provided he will reimburse him for the price
Carmelo paid.
d. Lebron cannot recover the land from Carmelo because a forged document or deed of
sale, in case of registered lot, can be a root of a valid title if the title is already in the hand
of a purchaser for value and in good faith.
118. Manny, a Filipino, sold his private land to Ippo, a Japanese national. The contract of sale
has already been executed. Which of the following statements is correct?
a. The contract of sale is void because it is violative of Constitutional provision against
ownership of private land by foreigners. Therefore, Manny cannot ask for declaration of
nullity because of principle of pari delicto.
b. The contract of sale is unenforceable because it is violative of Constitutional provision
against ownership of private land by foreigners.
c. Ownership of the land will transfer to Ippon and the contracts can no longer be avoided
since the contract is already executed.
d. Manny can still recover the land by filing an action for declaration of nullity because the
principle of pari delicto is not applicable in the case since it will frustrate the state policy to
reserve the land to Filipinos.
119. Naruto, a Filipino, sold his private land to Hinata, a Japanese national. Afterwards, Hinata
sold the said private land to Kakashi, a Filipino. Which of the following statements is correct?
a. Both contracts of sale are subject to declaration of nullity because they are violative of
Constitutional provision against ownership of private land by foreigners.
b. Both contracts of sale are unenforceable because they are violative of Constitutional
provision against ownership of private land by foreigners.
c. Ownership of the land will transfer to Kakashi and the contracts cannot be avoided since
the land is finally with a Filipino.
d. The second contract of sale is void because it is the product of the first contract of sale.
120. S, a minor of 17 years, sold his watch for P1,500.00 to B, 30 years old. The guardian of S
was not aware of the sale; hence, no action for annulment has yet been filed. Subsequently, B
sold the watch to T, who acquired it in good faith. Which of the following statements is correct?
a. T acquires no title to the watch because the seller’s title is voidable.
b. T acquires good title to the watch even if he buys it in bad faith.
c. T acquires good title to the watch even if the voidable title of the seller has been avoided
before the time of sale as long as T acquires the watch in good faith, for value and
without notice of seller’s defect of title.
d. T acquires good title to the watch even if the seller’s title is voidable provided the same
has not been avoided at the time of sale and T acquires the watch in good faith, for value
and without notice of seller’s defect of title.
121. The following are the rules on the place of delivery of the goods in a contract of sale,
except
a. Place stipulated in the contract.
b. In case there is no stipulation as to the place of delivery, place fixed by usage or trade.
c. In the absence of a and b, the seller’s place of business if he has one; if none, the seller’s
place of residence.
d. In the case of specific goods, the place where the goods are located at the time of
e. In the absence of a and b, the buyer’s place of business if he has one; if none, the
buyer’s place of residence.
122. In case the time for the delivery of goods is not stipulated, what is the time for its
delivery?
a. At the end of the month.
b. At the end of the year.
c. At the end of the day.
d. Within reasonable time from the execution of the contract.
123. In the absence of stipulation to the contrary, who shall bear the expenses of delivery and
incidental expenses to putting the goods into a deliverable state?
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a. Buyer and Seller equally

b. Seller
c. Buyer
d. Government
124. As a general rule, the seller shall deliver the thing sold upon perfection of contract of sale.
The following are the instances when a vendor is not bound to deliver the thing sold even after
the perfection of contract of sale, except
a. If the vendee/buyer has not paid him the price.
b. If no period for payment of the price has been fixed in the contract.
c. If the vendee/buyer loses the right to make use of the period such as becoming insolvent.
d. If a period has been fixed for the payment of the price.
125. What are the rights of the buyer when the quantity or quality of goods delivered is
different from that which the seller contracted to sell?
I. Reject the goods.
II. Accept the goods and pay the contract rate of the delivered goods.
a. I only
b. II only
c. Either I or II
d. Neither I nor II
126. When the quantity delivered is more than that which the parties agreed upon, the
following are the rights of the buyer, except
a. Accept the goods agreed upon and reject the rest.
b. Accept the whole of the goods delivered and pay for them at the contract rate.
c. Reject the whole of the goods if they are indivisible.
d. Reject the whole of the goods if they are divisible.
127. When the seller delivers the goods agreed upon but are mixed with goods of different
description, what are the rights of the buyer?
I. Accept the goods agreed upon and reject the rest, if the sale is divisible.
II. Reject the whole of the goods, if the sale is indivisible.
a. I only
b. II only
c. Neither I nor II
d. Either I or II
128. He is one who has not been paid or tendered the whole of the price or who has received
a bill of exchange or other negotiable instruments as conditional payment and the condition under
which it was received has been broken by reason of the dishonor of the instrument, the
insolvency of the buyer, or otherwise. It includes an agent of the seller to whom the bill of lading
has been indorsed, or a consignor or agent who has himself paid, or is directly responsible for the
price, or any other person who is in the position of a seller.
a. Unpaid seller
b. Unsatisfied buyer
c. Satisfied seller
d. Satisfied buyer
129. The following are the rights of the unpaid seller, except
a. Possessory lien, or a lien on the goods or right to retain the goods while he is in
possession of them.
b. Right of stoppage in transitu.
c. Right of resale.
d. Right to rescind the sale.
e. Right to declare the sale null and void.
130. The following are the grounds for the exercise by the unpaid seller of his possessory lien
or right to retain the goods, except
a. Where the goods have been sold without any stipulation as to credit.
b. Where the goods have been sold on credit, but the credit term has expired.
c. Where the buyer is insolvent.
d. Where the goods have been sold on credit or on account and the credit term has not yet
expired.
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131. The unpaid seller loses his right to possessory lien on the goods in the following cases or
these are the instances when the unpaid seller can no longer exercise his right to retain the
goods, except
a. When the seller 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.
b. When the buyer or his agent lawfully obtains possession of the goods.
c. By waiver of the possessory lien.
d. When the seller obtains judgment or decree for the price of the goods.
132. It refers to the right of the unpaid seller to resume possession of the goods at any time
while they are in transit, and he will them become entitled to the goods as he would have had if
he had never parted with the possession. This right is available after the unpaid seller has parted
with the possession of the goods and the buyer is or becomes insolvent.
a. Possessory lien, or a lien on the goods or right to retain them while he is in possession of
them.
b. Right of stoppage in transitu.
c. Right of resale.
d. Right to rescind the sale.
133. What is the only ground before the unpaid seller may exercise his right in stoppage in
transitu?
a. When the goods are perishable in nature
b. When the goods are sold without stipulation as to credit
c. When the buyer is or becomes insolvent
d. When the goods have been sold on credit but the term has expired
134. Right of stoppage in transitu is exercised by obtaining actual possession of the goods or
by giving notice of his claim to the carrier or other bailee in whose possession the goods are. The
following are the effects of the exercise of right of stoppage in transitu, except
a. The goods are no longer in transit.
b. The contract of carriage ceases and the carrier shall be liable as depositary or other
bailee.
c. The carrier must deliver the goods to or according to the instructions of the seller.
d. The carrier must deliver the goods to the buyer.
135. When notice of stoppage in transitu is given by the seller to the carrier, or other bailee in
possession of the goods, he must redeliver the goods to, or according to the directions of, the
seller. Who shall pay for the expenses of the delivery?
a. Seller
b. Buyer
c. Seller and buyer proportionately
d. Carrier
136. When are the goods still in transit which will allow the unpaid seller to exercise his right to
stoppage in transitu?
I. From the time they are delivered to the carrier or other bailee for the purpose of transmission
to the buyer, until the buyer or his agent, takes delivery of them from such carrier or other
bailee.
II. 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.
a. I only
b. II only
c. Neither I nor II
d. Either I or II
137. The following are the instances when goods are no longer in transit and therefore the
unpaid seller can no longer exercise his right of stoppage in transitu, except
a. If the buyer obtains delivery of the goods before arrival at the appointed destination.
b. If the carrier or other bailee acknowledges to the buyer or his agent, that he is holding the
goods in his behalf, after arrival of the goods at their appointed destination.
c. If the carrier or other bailee wrongfully refuses to deliver the goods to 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 receive them back.
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138. The following are the grounds for the exercise of right of resale by the unpaid seller,
except
a. The goods are of perishable nature.
b. The seller has expressly reserved the right to resell the goods in case the buyer should
make default.
c. The buyer has been in default for an unreasonable time.
d. The buyer becomes insolvent.
139. The following are the requisites for right of resale to be available to an unpaid seller,
except
a. The buyer has defaulted in the payment of the purchase price.
b. The seller has no right of lien nor has stopped the goods in transitu.
c. Title to the goods has passed on to the buyer.
d. The grounds must be those provided by law.
140. It is not essential to the validity of resale that notice of an intention to resell the goods be
given by the seller to the original buyer. When shall the giving of notice of an intention to resell be
relevant in the exercise by the unpaid seller of right to resell?
a. When the goods are of perishable nature.
b. When the buyer becomes insolvent
c. When the seller has expressly reserved the right to resell the goods in case the buyer
should make default.
d. When the buyer has been in default for an unreasonable time.
141. Where shall the reselling be made in case the unpaid seller exercises his right of resale?
a. Public sale
b. Private sale
c. Either public sale or private sale
d. Neither public sale nor private sale
142. The unpaid seller is bound to exercise reasonable care and judgment in making the
resale. He cannot, directly or indirectly, buy the goods. The following are the effects of resale,
except
a. The seller shall not be liable to the original buyer for the delivery of the goods.
b. The seller may recover damages from the original buyer for any loss occasioned by the
breach of the contract of sale.
c. The original buyer shall be entitled for any profit made by such resale.
d. The new buyer acquires a good title against the original buyer.
143. The following are the requisites for right to rescind the sale to be available to an unpaid
seller, except
a. The buyer has defaulted in the payment of the purchase price.
b. The seller has no right of lien nor has stopped the goods in transitu.
c. Title to the goods has passed on to the buyer.
d. The grounds must be: 1.) The seller has expressly reserved the right to rescind the sale
in case the buyer should make default or 2.) The buyer has been in default in the
payment of the price for an unreasonable time.
144. The following are the effect of rescission of contract of sale by the unpaid seller, except
a. The seller shall not be liable to the buyer upon the contract of sale.
b. The seller may recover from the buyer damages for any loss occasioned by the breach of
contract of sale.
c. The seller resumes ownership of the goods.
d. The buyer shall pay for the purchase price.
145. In a sale of real estate with a statement of its area at the rate of a certain price per unit of
measure or number, the vendor shall deliver the area mentioned in the contract of sale. What is
the remedy of the buyer if the actual area is less than by an area less than 1/10 of that stated in
the contract?
a. Ask for proportionate reduction in the price.
c. Either A or B
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146. Using the same data in number 145, what is the remedy of the buyer if the actual area is
less than by 1/10 or more of that stated in the contract?
c. Either A or B
147. Using the same data in number 145, what is the remedy of the buyer if the actual area is
more than that stated in the contract?
I. Accept the area stated in the contract and reject the rest.
II. Accept the whole area and pay for them at the contract rate.
a. I only
b. II only
c. Either I or II
d. Neither I nor II
148. Using the same data in number 145, what is the remedy of the buyer if the area is the
same but a part of the immovable is not of the same quality specified in the contract and the
inferior value is 1/10 or less of the price agreed upon?
c. Either A or B
149. Using the same data in number 145, what is the remedy of the buyer if the area is the
same but a part of the immovable is not of the same quality specified in the contract and the
inferior value is more than 1/10 of the price agreed upon?
c. Either A or B
150. In sale of real estate for a lump sum and not at the rate of a certain sum for a unit of
measure or number, the vendor is bound to deliver all that it is included within the boundaries
stated in the contract although there be greater or less area or number than that stated in the
contract. What amount shall be paid by the vendee or buyer?
a. The lump sum stipulated in the contract with increase in the price if the area is greater
than that stated in the contract.
b. The lump sum stipulated in the contract with decrease in the price if the area is less than
that stated in the contract.
c. The lump sum stipulated in the contract with no increase or decrease in the price
although there be greater or less area or number than that stated in the contract.
151. Using the same data in number 150, what is the remedy of the buyer if the vendor does
not deliver the area within the boundaries in the contract?
I. Ask for proportionate reduction in the price.
II. Rescind the contract
a. I only
b. II only
c. Neither I nor II
d. Either I or II
152. What is the prescriptive period available to the buyer for filing the legal action (action
quanti minoris or action for cancellation) regarding contract of sale of lot with lacking area or with
poor quality?
a. 6 months from the date of delivery
b. 12 months from the date of delivery
c. 3 months from the date of delivery
d. 1 month from the date of delivery
153. The following are the requisites or elements of double sale, except
a. Two or more valid contracts of sale occurred.
b. Two or more contracts of sale must pertain to exactly the same subject matter.
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c. Two or more buyers at odds over the rightful ownership of the subject matter must each
represent conflicting interests.
d. Two or more buyers at odds over the rightful ownership of the subject matter must each
have brought from the very same seller.
e. Two or more buyers must have all fully paid the price of the contract of sale.
154. Which contract will be covered by the provision on rule on double sale?
a. Contract of sale
b. Contract to sell
c. Both A and B
d. Neither A nor B
155. In case of double sale of personal property, who among the buyers shall be preferred?
a. Person who first took possession, actually or constructively, of the property in good faith.
b. Person who has oldest title.
c. Person who has the latest title.
d. Person who first registered the property in good faith.
156. S sold his ring to B who told S that he would obtain delivery of the ring after 3 days.
Before the third day, S sold the same ring to X who immediately took physical possession of the
ring. X was not aware of the previous sale to B. Who has a better right over the ring?
a. B because he has the older title.
b. B because X has not registered the ring in good faith.
c. X because he first took possession of the ring in good faith.
d. X even if he took possession of the ring in bad faith.
157. S sold his watch to B in a public document. However, B informed S that he would obtain
actual delivery of the watch after 3 days. The day after the sale to B, S sold the same watch to X
in a private document and X immediately took possession of the watch. X was not aware of the
sale to B. Who has a better right over the watch?
a. B because he has the older title.
b. B because he first took constructive possession of the watch in good faith.
c. X because he first took actual possession of the watch in good faith.
d. X because X has not registered the watch in good faith.
158. In case of double sale of registered or titled immovable property, who among the buyers
shall be preferred?
a. Person who in good faith first registered the sale.
b. Person who first took possession in good faith.
c. Person who presents the oldest title in good faith.
d. Person who has the latest title.
159. On May 1, S sold his registered/titled lot to X. The deed of sale was in a private
instrument. On May 3, S sold the same lot to Y in a public instrument. On May 5, S sold again the
said lot to Z in a public instrument. Z immediately registered the sale with Register of Deeds on
May 5. X took actual possession of the lot on May 6. X, Y and Z were not aware of the sale made
to others. Who among the buyers has the better right?
a. X because he first took actual possession in good faith.
b. X because he has the oldest title in good faith.
c. Y because he first took constructive possession in good faith.
d. Z because he is the first registrant in good faith.
160. Using the same data in number 159 but assuming Z is in bad faith, who has the better
right?
a. Z because he is the first registrant in bad faith.
b. X because he first took actual possession in good faith.
c. X because he has the oldest title in good faith.
d. Y because he first took constructive possession in good faith.
161. Using the same data in number 159 but assuming Z and Y are in bad faith, who has the
better right?
a. Z because he is the first registrant in bad faith.
b. X because he has the oldest title in good faith.
c. Y because he first took constructive possession in bad faith.
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162. On March 1, S sold his unregistered lot to X. The deed of sale was in a private
instrument. On May 5, S sold again the said lot to Z in a private instrument. Z immediately
registered the sale with Register of Deeds on May 5. X took actual possession of the lot on May
6. X and Z were not aware of the sale made to others. Who between the buyers has the better
right?
a. X because he has the older title in good faith.
b. Z because he first took constructive possession in good faith.
c. Z because he is the first registrant in good faith.
163. The following are considered natural elements or implied warranties in a contract of sale,
except
c. Warranty against undeclared and non-apparent charge or encumbrance or servitude
e. Warranty for sale’s talk or usual exaggeration in trade
164. The following are the effects if the suspensive condition in a contract of sale subject to a
suspensive condition is not fulfilled, except
a. The other party may refuse to proceed with the contract of sale.
b. The non-performance of suspensive condition may be treated as a breach of warranty.
c. The other party may waive the performance of the suspensive condition.
d. The contract of sale is perfected if the condition which is not fulfilled is suspensive.
165. The following persons shall not be liable for breach of warranty in a contract of sale,
except
a. Sheriff
b. Auctioneer
c. Mortgagee
d. Pledgee
e. Seller
f. Other persons professing to sell by virtue of authority in fact or law.
166. It refers to the deprivation of the vendee of the whole or a part of the thing sold by virtue
of a final judgment based on a right prior to the sale or an act imputable to the vendor.
a. Breach of contract
b. Evasion of sentence
c. Eviction
d. Damages
167. The following are the requisites in order that the seller’s warranty against eviction may be
enforced, except
a. There must be a final judgment depriving the vendee of the whole or part of the thing
sold.
b. The vendee must not appeal from the decision or judgment depriving him of the thing
sold.
c. The deprivation is based on a right prior to the sale or an act imputable to the vendor.
d. The vendor must have been notified of the suit for eviction at the instance of the vendee.
e. The vendor must have acted in bad faith only.
168. When adverse possession of the thing subject of the contract of sale had been
commenced before the sale but the acquisitive prescriptive period is completed after the transfer
to the buyer, is the vendor still liable to the buyer in case the buyer is evicted from the property
sold by virtue of acquisitive prescription?
a. The vendor is not liable for eviction.
b. The vendor shall always be liable for eviction.
c. The vendor is liable for eviction only if there is expressed warranty for eviction.
d. The vendor is liable for eviction even if there is no expressed warranty for eviction.
169. Which of the following are other instances when seller is liable for breach of warranty
against eviction?
I. If the property is sold for non-payment of taxes due and not made known to the vendee
before the sale.
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II. In case of judicial sales unless otherwise decreed in the judgment.

a. I only
b. II only
c. Both I and II
d. Neither I nor II
170. Which stipulation exempting a vendor to answer for eviction is considered void?
a. Stipulation exempting a vendor from the obligation to answer for eviction even he is in
good faith.
b. Stipulation exempting a vendor from the obligation to answer for eviction if he is in good
faith.
c. Stipulation exempting a vendor from the obligation to answer for eviction if he acted in
bad faith.
d. Stipulation exempting a vendor from the obligation to answer for eviction because it is
contrary to public policy to waive a natural element.
171. If there is stipulation exempting the vendor from the obligation to answer for eviction and
the vendor acted in bad faith because he had knowledge at the time of the sale of the existence
of the fact, to what extent shall the vendor be liable to the vendee in case of eviction?
I. Value of the thing at the time of eviction.
II. Income or fruits of the thing.
III. Cost of suit caused by eviction.
IV. Expenses of the contract if the vendee has paid them.
V. Damages, interests and ornamental expenses.
a. I, II and III
b. I, II, III and IV
c. II, III, IV and V
d. I, II, III, IV and V
172. It refers to the waiver of the warranty against eviction made by the buyer without the
knowledge of the risk of eviction. Thus, the seller remains to be liable in case of eviction because
the buyer acted in good faith.
a. Waiver consciente
b. Waiver intencionada
c. Waiver sobrente
d. Waiver alluna
173. It refers to the waiver of the warranty against eviction made by the buyer with the
knowledge of the risk of eviction. Thus, the seller is no longer liable in case of eviction because
the buyer acted in bad faith.
c. Waiver sobrente
d. Waiver alluna
174. In case of doubt or ambiguity, the waiver by the vendee/buyer of the warranty against
eviction is presumed to be
c. Waiver sobrente
d. Waiver alluna
the vendor acted in good faith and the waiver by vendee/buyer is without the knowledge of the
risk of eviction also known as waiver consciente, what shall be the liability of the vendor in case
of eviction?
a. Vendor shall be liable for value of the things at the time of eviction plus income or fruits.
b. Vendor shall be liable for value of the things at the time of eviction.
c. Vendor shall be liable for value of the things, income or fruits and damages and interest.
d. Vendor shall not be liable for anything.
the vendor acted in good faith and the waiver by vendee/buyer is with the knowledge of the risk of
eviction also known as waiver intencionada, what shall be the liability of the vendor in case of
eviction?
a. Vendor shall be liable for value of the things at the time of eviction plus income or fruits.
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b. Vendor shall be liable for value of the things at the time of eviction.
c. Vendor shall be liable for value of the things, income or fruits and damages and interest.
d. Vendor shall not be liable for anything.
177. Where no warranty against eviction has been agreed upon or there was no stipulation
exempting the vendor from liability and the vendor acted in bad faith, to what extent shall the
vendor be liable to the vendee in case of eviction?
a. I, II and III
178. Where no warranty against eviction has been agreed upon or there was no stipulation
exempting the vendor from liability and the vendor acted in good faith, to what extent shall the
vendor be liable to the vendee in case of eviction?
a. I, II and III
179. What shall be the remedies of the buyer if the vendee loses, by reason of eviction, a part
of the thing sold of such importance, in relation to the whole, that he would not have bought it
without said part?
I. Rescission of the contract
II. Enforcement of the vendor’s liability for eviction
a. I only
b. II only
c. Either I or II
d. Neither I nor II
180. It is an encumbrance imposed upon an immovable for the benefit of another immovable
belonging to a different owner.
a. Easement or servitude
b. Mortgage
c. Pledge
d. Lien
181. The following are the requisites for vendor’s liability should the immovable sold be
encumbered with easement or servitude, except
a. The easement must be non-apparent or hidden.
b. It must not have been mentioned in the agreement.
c. It must be of such nature that it must be presumed that the vendee would not have
acquired the immovable had he been aware thereof.
d. It must be registered.
182. What is the prescriptive period for the warranty against hidden or non-apparent burden,
encumbrances or servitude on immovable?
a. 6 months from the execution of deed of sale or discovery of encumbrance or burden
b. 40 days from the execution of deed of sale or discovery of encumbrance or burden
c. 1 year from the execution of deed of sale or discovery of encumbrance or burden
d. 3 days from the execution of deed of sale or discovery of encumbrance or burden
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183. What are the remedies of the buyer should the immovable sold be encumbered with any
non-apparent easement or servitude within one year from the execution of the deed of sale?
I. Rescission of the contract of sale.
II. Indemnification for damages.
a. I only
b. II only
c. Either I or II
d. Neither I nor II
184. What are the remedies of the buyer should the immovable sold be encumbered with any
non-apparent easement or servitude within one year from the discovery of burden or servitude if
the one year period from the execution of deed of sale has already lapsed?
I. Rescission of the contract of sale.
II. Indemnification for damages within one year from discovery of easement.
a. I only
b. II only
c. Either I or II
d. Neither I nor II
185. Which of the following statements is incorrect?

a. Where the buyer, expressly or by implication, makes known to the seller the particular
purpose for which the goods are acquired, and it appears that the buyer relies on the
seller's skill or judgment (whether he be the grower or manufacturer or not), there is an
implied warranty that the goods shall be reasonably fit for such purpose. (warranty for
particular purpose)
b. Where the goods are brought by description from a seller who deals in goods of that
description (whether he be the grower or manufacturer or not), there is an implied
warranty that the goods shall be of merchantable quality. (warranty for merchantable
quality)
c. In the case of a contract of sale by sample, if the seller is a dealer in goods of that kind,
there is an implied warranty that the goods shall be free from any defect rendering them
unmerchantable which would not be apparent on reasonable examination of the sample.
(warranty for merchantability)
d. In the case of contract of sale of a specified article under its patent or other trade name,
there is warranty as to its fitness for any particular purpose, unless there is a stipulation
to the contrary. (warranty for particular purpose)
186. In case of breach of warranty for merchantability committed by the seller, the buyer may,
at his election bring any of the following alternative actions, except
a. Accept or keep the goods and set up against the seller the breach of warranty by way of
recoupment or diminution or extinction of the price.
b. Accept or keep the goods and maintain an action against the seller for damages for
breach of warranty.
c. Refuse to accept the goods, and maintain an action against the seller for damages for
breach of warranty.
d. Rescind the sale and refuse to receive the goods or if the goods have already received,
return them or offer to return them to the seller and recover the price of any part thereof
which has been paid.
e. Ask for annulment of the contract of sale plus damages.
187. The following are the requisites for enforcement of vendor’s liability against hidden
defects, except
a. The defect must exist after the date of sale.
b. The defect must be hidden.
c. The defect must render the thing unfit for the use for which it is intended or diminishes its
fitness for such use to such an extent that had the vendee been aware thereof, he would
not have acquired it or would have given a lower price for it.
d. The action to enforce it must be made within the period provided by law.
188. Which of the following statements concerning liability of vendor for hidden defects is
incorrect?
a. The vendor shall be liable to the vendee for any hidden faults or defects in the thing sold,
even though he was not aware thereof.
b. The vendor shall not be liable if there is a stipulation exempting him from such defects
and he was not aware thereof.
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c. The vendor shall be liable to the vendee for any hidden faults or defects in the thing sold
only if he was aware thereof.
d. The vendor shall be liable for hidden defects even there is stipulation exempting him from
such defects if he was aware thereof.
189. This is one of the two remedies of the vendee in case of breach of warranties against
hidden defects, of merchantability, of merchantable quality or fitness for a particular purpose. It
refers to the withdrawal from the contract or rescission.
a. Accion quanti minoris
b. Accion redhibitoria
c. Accion pauliana
d. Accion subrogatoria
190. This is one of the two remedies of the vendee in case of breach of warranties against
hidden defects, of merchantability, of merchantable quality or fitness for a particular purpose. It
refers to demanding a proportionate reduction in the price.
a. Accion quanti minoris
b. Accion redhibitoria
c. Accion pauliana
d. Accion subrogatoria
191. When the thing sold and delivered to buyer contains hidden defect and there is no waiver
of the warranty against hidden defect, when shall the seller be liable for the loss of the thing sold
with hidden defect?
a. The seller shall only be liable if the reason of the loss is the hidden defect.
b. The seller shall only be liable if the reason of the loss is a fortuitous event.
c. The seller shall only be liable if the reason of the loss is the fault of buyer.
d. The seller shall be liable regardless of the reason of the loss.
192. What shall be the extent of liability of the vendor in case of loss of the thing with hidden
defects wherein the vendor was aware of the defect and the cause of the loss is the defect?
a. Return the price, refund the expenses of the contract and pay damages.
b. Return the price and refund expenses of the contract.
c. Return the price, refund the expenses of the contract and pay interest of the price.
d. Return the price.
defects wherein the vendor was not aware of the defects and the cause of the loss is the defect?
a. Return the price, refund the expenses of the contract and pay damages.
b. Return the price and refund expenses of the contract.
c. Return the price, refund the expenses of the contract and pay interest of the price.
d. Return the price.
defects wherein the vendor was aware of the defect and the cause of the loss is a fortuitous event
or the fault of the vendee?
a. To return the price paid and to pay damages.
b. To return the price paid less the value of the thing at the time of loss and to pay
damages.
c. To return the price paid less the value of the thing at the time of loss.
d. To pay damages.
defects wherein the vendor was not aware of the defect and the cause of the loss is a fortuitous
event or the fault of the vendee?
a. To return the price paid and to pay damages.
b. To return the price paid less the value of the thing at the time of loss and to pay
damages.
c. To return the price paid less the value of the thing at the time of loss.
d. To pay damages.
196. What is the prescriptive period of the accion redhibitoria, accion quanti minoris or all other
actions to enforce the seller’s liability for hidden defect?
a. 1 year from the delivery of the thing sold
b. 1 month from the delivery of the thing sold
c. 6 months from the delivery of the thing sold
d. 3 months from the delivery of the thing sold
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197. It refers to a defect in an animal and it is of such nature that expert knowledge, even after
a professional inspection has been made, is not sufficient to discover it.
a. Hidden defect
b. Apparent defect
c. Known defect
d. Redhibitory defect
198. If two or more animals are sold together, whether for a lump sum or for a separate price
for each of them, the redhibitory defect of one shall only give rise to its redhibition. What are the
remedies of the buyer?
I. Accion redhibitoria over the defective animal.
II. Accion quanti minoris over the defective animal
a. I only
b. II only
c. Neither I nor II
d. Either I or II
199. If the redhibitory defect of one animal shall give rise to the redhibition of all the animals
sold, including the sound one, what shall be the remedy of the buyer?
I. Acction redhibitoria for all the animals
II. Accion quanti minoris over the defective animal
a. I only
b. II only
c. Neither I nor II
d. Either I or II
200. What is the prescriptive period of redhibitory action in case of sale of animal with
redhibitory defect?
a. 30 days from the delivery of animal to the vendee.
b. 20 days from delivery of animal to the vendee.
c. 40 days from delivery of animal to the vendee.
d. 10 days from delivery of animal to the vendee.
201. In which of the following sale of animals will there be no warranty for hidden defects?
a. Sale of animals at fairs
b. Sale of animal at public auctions
c. Sale of live stocks as condemned
d. Any of the above
202. What is the status of the contract of sale when the animals are suffering from contagious
diseases or when the animals are found to be unfit for the use or service for which they were
acquired as stated in the contract?
a. Void
b. Voidable
c. Rescissible
d. Unenforceable
203. The following are the requisites in order for the vendor to be liable in case the animal dies
of disease, except
a. The disease exists at the time of sale.
b. The disease is the cause of death of the animal.
c. The animal dies within 3 days from time of purchase.
d. The disease is redhibitory.
204. The vendee has the obligation to accept the delivery of the thing sold. The following are
the instances when the buyer is deemed to have accepted the goods, except
a. When he intimates to the seller that he is accepting them.
b. When he does an act in relation to the goods which is inconsistent with the ownership of
the seller.
c. When he pays the purchase price.
d. When he retains the goods after the lapse of a reasonable time without intimating to the
seller that he has rejected them.
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205. May the seller compel the buyer to accept delivery of goods in installments?
a. No, as a general rule, unless there is a stipulation for installment delivery.
b. No under all instances.
c. Yes, as a general rule, unless there is a stipulation to the contrary.
d. Yes under all instances.
206. If there is stipulation for installment delivery, and the seller makes defective deliveries in
respect of one or more installments, or the buyer neglects or refuses without just cause to take
delivery of or pay one or more installments, what are the remedies of injured party?
I. Refuse to proceed with the contract and sue for damages for breach of the entire contract.
II. Claim compensation for damages if the breach is severable.
a. Either I or II
b. Neither I nor II
c. I only
d. II only
207. May the buyer examine the goods before accepting them?
a. No, as a general rule, unless there is a stipulation for examination.
b. No under all instances.
c. Yes, as a general rule, unless the exceptional cases apply.
d. Yes under all instances.
208. The following are the exceptional instances when the buyer cannot examine the goods
before accepting them, except
a. When there is an agreement that the buyer cannot examine the goods before accepting
them.
b. When there is stipulation that the goods shall not be delivered to the buyer until he has
paid the price.
c. When the goods are marked with the words collect on delivery.
d. When the usage of trade permits examination.
209. The following are the effects when the buyer refuses to accept delivery and the refusal is
justified such as when the quantity is not complete or the goods being delivered are different from
that stipulated, except
a. Buyer has no duty to return goods to the seller unless otherwise agreed.
b. Title to the goods passes to the buyer
c. The buyer shall not be obliged to pay the price.
d. If the buyer constitutes himself as depositary of the goods, he shall be liable as such.
210. The following are the effects when the buyer refuses to accept delivery and the refusal is
unjustified, except
a. Title to the goods passes to the buyer from the moment the goods are placed at his
disposal.
b. The buyer shall be obliged to pay the price.
c. The seller may consign or deposit the determinate thing to the court after valid tender of
payment to the buyer.
d. The buyer shall be considered a depositary.
211. The vendee has the obligation to pay the price of the thing. The time and place of
payment of the price shall be that which is stipulated. In the absence of stipulation, when and
where shall the payment of price be made?
a. At the end of the month and at the residence of the seller.
b. At the perfection of the contract and at the residence of the seller.
c. At the time and place of delivery of the thing.
212. As a general rule, the buyer is not liable to pay interest after the delivery of the goods
despite nonpayment of the price. The following are the instances wherein the buyer shall pay
interest for the period between the delivery of the thing and the payment of the price, except
a. If there is written stipulation or agreement for payment of interest and if the rate is not
provided, it should be 12% before July 1,2013 and 6% afterwards.
b. If the thing sold produces fruits or income.
c. If the buyer is in default, from the time of judicial or extrajudicial demand for the payment
of the purchase price.
d. If the seller is in default in accepting payment.
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213. The following are the grounds for the suspension of the payment of the price by the
vendee, except
a. Disturbance in the vendee’s possession or ownership of the thing purchased.
b. Reasonable grounds to fear such disturbance, by a vindicatory action or foreclosure of
mortgage.
c. Loss of the thing due to the fault of the vendee.
214. The following are the instances wherein the right to suspend payment is not available,
except
a. If the vendor gives security for the return of the price.
b. If there is reasonable grounds to fear disturbance in the vendee’s possession or
ownership.
c. If it has been stipulated that the vendee shall pay the price notwithstanding the existence
of disturbance or danger.
d. If the disturbance is a mere act of trespass.
215. When shall the vendor be entitled or allowed to sue for immediate rescission of the
contract of sale of immovable?
a. If there are reasonable grounds to fear the loss of the immovable property sold and its
price.
b. If there are reasonable grounds to fear the loss of the immovable property sold.
c. If there are reasonable grounds to fear the loss of the price.
216. In case there is reasonable ground to fear the loss of the immovable property or its price
in a contract of sale of immovable, what shall be the remedy of vendor?
a. Exact fulfillment of the contract with damages only.
b. Rescission of the contract with damages only.
c. Immediate rescission of the contract.
d. Exact fulfillment of the contract with damages or rescission of the contract with damages
217. This agreement is considered void as it is against law and public policy. It refers to an
agreement between the vendor and the vendee in the sale of an immovable that rescission of the
contract shall of right take place if the vendee fails to pay the price at the time agreed upon.
a. Pactum commissorium
b. Pacto de retro sale
c. Pactum agentum
d. Pacto solidarium
218. May the buyer of an immovable still pay the purchase price after his default in the
maturity date if the contract of sale stipulates that rescission of the contract shall of right take
place if the buyer fails to pay the price at the time agreed upon?
a. Yes provided the payment is before the demand for rescission judicially or by notarial act
by the seller.
b. No because the contract provides that rescission shall of right take place.
c. Yes even if the contract is cancelled by final judgment.
d. No because the buyer is already guilty of delay.
219. Which of the following are the grounds for immediate rescission of the sale of a movable
at vendor’s option?
III. If at the time of the delivery of the thing, the vendee does not appear to receive the thing.
IV. If at the time of the delivery of the thing, the vendee having appeared, does not pay the price,
unless a longer period is stipulated for its payment.
a. I only
b. II only
c. Either I or II
d. Neither I nor II
220. The following are the actions or remedies by the seller for breach of contract of sale of
goods committed by the buyer, except
a. Maintain an action for the price of the goods if the buyer wrongfully neglects or refuses to
pay.
b. Maintain an action for damages if the buyer wrongfully neglects or refuses to accept and
pay for the goods.
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c. Rescind the contract if the buyer has repudiated the sale or manifested his inability to
perform his obligation or has committed a breach of contract, where the goods have not
been delivered to buyer.
221. What action shall be filed by the buyer if the seller has breached the contract to deliver
specific or ascertained goods?
a. Bring an action for declaration of nullity of contract.
b. Bring an action for specific performance plus damages.
c. Bring an action for annulment of contract.
d. Bring an action for rescission of contract.
222. The following are the modes for extinguishment of contract of sale, except
a. No-Co-Me-Re-Pa-Lo-Pre-Re-Ful-An
b. Cancellation of sale of personal property payable in installments
c. Resale of the goods by the unpaid seller
d. Rescission of the sale by the unpaid seller
e. Rescission by the buyer in case of partial eviction
f. Rescission by the buyer in case of breach of warranty against hidden defects
g. Rescission by the buyer of sale of animals with redhibitory defects
h. Rescission by the buyer of sale of land with non-apparent servitude or encumbrance
i. Rescission by the buyer of sale of land with lacking area or area with poor quality
j. By redemption, whether conventional redemption or legal redemption
k. Fulfillment of suspensive condition or arrival of suspensive period in a contract of sale
223. This type of redemption occurs when the vendor reserved the right to repurchase the
thing sold with the obligation to return to the vendee the price of the sale, expenses of the
contract and necessary and useful expenses made on the thing sold and to comply with other
stipulations which may have been agreed upon. This is applicable in a contract of pacto de retro
sale or sale with a right to repurchase.
a. Legal redemption
b. Conventional redemption
c. Redemption by operation of law
d. Judicial redemption
224. If no period is stated in the agreement for the exercise of right of redemption in pacto de
retro sale of immovable, what is the prescriptive period of the right?
a. 5 years from the date of the contract.
b. 4 years from the date of the contract.
c. 10 years from the date of the contract.
d. 3 years from the date of the contract.
225. If a period is stated in the agreement for the exercise of right of redemption in pacto de
retro sale of immovable, what is the maximum prescriptive period allowed by the law?
d. 20 years from the date of the contract.
226. If a period less than 10 years is stated in the agreement for the exercise of right of
redemption in pacto de retro sale of immovable, what is the period of the right?
d. The period stated in the agreement.
227. If judgment has been rendered by court declaring the contract to be pacto de retro sale of
immovable instead of equitable mortgage, what is the period of redemption allowed to the vendor
a retro?
a. 5 years from the rendition of judgment
b. 4 years from the rendition of judgment
c. 10 years from the rendition of judgment
d. 30 days from the rendition of judgment
228. In a pacto de retro sale, the following are the persons against whom the right of
repurchase may be exercised, except
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a. Against the vendee a retro or original vendee.

b. Against the several heirs of the vendee a retro for each heir’s share.
c. Against one heir of the vendee a retro for the whole property.
d. Against every possessor whose right is derived from the vendee a retro even if no
mention has made in the second contract of the right to repurchase and even if the right
to repurchase is not recorded in the Registry of Property meaning against a purchase in
good faith and for value.
229. A co-owner sold his share in an undivided immovable which is essentially indivisible
under pacto de retro sale to a third person who subsequently acquires the whole thereof. Which
is true?
a. Such seller a retro may be compelled by the buyer to redeem the whole property, if the
former wishes to make use of the right of redemption.
b. Such seller a retro may compel the buyer to agree to the partial redemption of the
immovable property.
c. Both A and B.
d. Neither A nor B
230. If several persons or co-owners, jointly and in the same contract, should sell an
undivided immovable with a right of repurchase, which is true?
a. None of the co-owners may exercise their right to repurchase for more than their
respective shares.
b. The buyer a retro may demand that the co-owners come to come to an agreement upon
the repurchase of the whole thing, and if they fail to do so, the buyer a retro cannot be
compelled to consent to a partial redemption.
c. Both A and B.
d. Neither A nor B.
231. A person sold his immovable property to another person under pacto de retro sale. If that
seller a retro left several heirs, which is true?
a. None of the heirs may exercise their inherited right to repurchase for more than their
respective shares.
b. The buyer a retro may demand that the heirs come to come to an agreement upon the
repurchase of the whole thing, and if they fail to do so, the buyer a retro cannot be
c. Both A and B.
d. Neither A nor B.
232. Co-owners sold an undivided immovable to a single buyer in separate documents under
pacto de retro sale. Which is true?
a. The buyer a retro may demand that the heirs come to come to an agreement upon the
repurchase of the whole thing, and if they fail to do so, the buyer a retro cannot be
b. Each one of the co-owners may independently exercise the right of repurchase as
regards his own share, and the buyer a retro cannot compel him to redeem the whole
property.
c. Both A and B.
d. Neither A nor B.
233. In the exercise of the right of redemption or repurchase, what amount shall be paid by the
vendor a retro to the vendee a retro?
a. Price of the sale only
b. Expenses of the contract and other legitimate payments by reason of the sale only
c. Necessary and useful expenses made on the thing sold only
d. All of the above
234. If at the time of the execution of the pacto de retro sale there should be on the land,
visible or growing fruits, who shall be entitled to those fruits which still exist at the time of
redemption by vendor a retro?
a. It shall inure to the benefit of the vendor a retro/redemptioner if no indemnity was paid by
the vendee a retro when the pacto de retro sale was executed.
b. The vendor a retro/redemptioner shall reimburse the amount of the fruits to the vendee a
retro.
c. The fruits shall be prorated to the vendor a retro and vendee a retro based on the
prorated period of possession.
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d. It shall inure to the benefit of the vendee a retro considering that he has previously
obtained possession of the goods.
235. If at the time of the execution of the pacto de retro sale there should be no fruits on the
land, who shall be entitled to those fruits which still exist at the time of redemption by vendor a
retro?
a. It shall inure to the benefit of the vendor a retro/redemptioner if no indemnity was paid by
the vendee a retro when the pacto de retro sale was executed.
b. The vendor a retro/redemptioner shall reimburse the amount of the fruits to the vendee a
retro.
c. The fruits shall be prorated to the vendor a retro and vendee a retro based on the
prorated period of possession.
d. It shall inure to the benefit of the vendee a retro considering that he has previously
obtained possession of the goods.
236. Who among the following may use the right of redemption in a pacto de retro sale?
I. Vendor a retro or his heirs or assignees
II. Creditor of the vendor after he has exhausted the property of the vendor by virtue of action
subrogatoria
a. I only
b. II only
c. Either I or II
d. Neither I nor II
237. This type of redemption is the right to be subrogated upon the same terms and conditions
stipulated in the contract, in the place of one who acquires a thing by purchase, or dation in
payment, or by any other transaction whereby the ownership is transmitted by onerous title. This
refers to the right of a person to repurchase the property transferred by another person by
onerous title from the third person in those exceptional instances allowed by law such as right of
repurchase by a co-owner, adjoining rural lot owner or adjoining urban lot owner.
a. Legal redemption
b. Conventional redemption
c. Voluntary
d. Judicial redemption
238. It refers to the right of adjoining urban land owner to be given the first opportunity to
purchase a piece of urban land about to be resold which is so small and so situated that a major
portion thereof cannot be used for any practical purpose within a reasonable time, having been
bought merely for speculation.
a. Right of legal redemption
b. Right of legal pre-emption
c. Right of first refusal
d. Right of legal repurchase
239. The following are the three instances of legal redemption. Which of the following pertains
to legal pre-emption?
a. A co-owner of a thing may exercise the right of redemption in case the shares of all the
other co-owners or of any of them, are sold to a third person.
b. If a piece of rural land not exceeding one hectare is alienated, the adjoining owner shall
have the right of legal redemption unless the grantee does not own any rural land.
c. If a small piece of urban land which was bought for speculation has been resold, the
owner of the adjoining land has a right of redemption at a reasonable price.
d. If a small piece of urban land is about to be resold, the adjoining owner shall be given the
right to buy the property before it is offered to other.
240. In case there are two or more co-owners who want to exercise the right of legal
redemption for a share in the land sold by a co-owner to a third person, who shall be given the
right?
a. All the remaining co-owners on the basis of proportionate share.
b. The first co-owner who want to exercise the right.
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c. The co-owner with the smallest share.

d. The co-owner whose intended use of the land in question appears best justified.
241. In case there are two or more co-owners who want to exercise the right of legal
redemption for a share in the land sold by a co-owner to another co-owner, who shall be given
the right?
a. All the remaining co-owners on the basis of proportionate share.
b. The first co-owner who want to exercise the right.
c. The co-owner with the smallest share.
d. None of them.
242. In case of legal redemption whereby a co-owner and adjoining rural or urban land owner
is present, who shall be preferred in the exercise of redemption?
a. Co-owner
b. Adjoining rural land owner
c. Adjoining urban land owner
d. Owner with the smallest area
243. A rural land owner sold his land not exceeding 1 hectare (10,000 sqm) to another person
who owns any other rural land. There are two or more adjacent rural land owners who intend to
exercise their right of legal redemption. Who shall be preferred?
a. The adjacent rural land owner with smaller area of lot.
b. The adjacent rural land owner with larger area of lot
c. The adjacent rural land owner whose intended use of the land in question appears best
justified.
d. The adjacent rural land owner which offers the largest amount.
244. An urban land owner sold a piece of land which is so small and so situated that a major
portion thereof cannot be used for any practical purpose within a reasonable time, having been
bought merely for speculation. There are two or more adjacent urban land owners who intend to
exercise their right of legal redemption. Who shall be preferred?
a. The adjacent urban land owner with smaller area of lot.
b. The adjacent urban land owner with larger area of lot
c. The adjacent urban land owner whose intended use of the land in question appears best
justified.
d. The adjacent urban land owner which offers the largest amount.
245. What is the period for the exercise of the right of legal redemption or legal pre-emption by
the co-owner, adjoining rural or urban land owner?
a. Within 30 days from the notice given by the prospective vendor or vendor.
b. Within 60 days from the notice given by the prospective vendor or vendor.
c. Within 90 days from the notice given by the prospective vendor or vendor.
d. Within 1 year from the notice given by the prospective vendor or vendor.
246. In which of the following instances of legal redemption is right of legal pre-emption
available?
a. To an adjacent rural land owner when a rural land owner sold his land not exceeding 1
hectare (10,000 sqm) to another person who owns any rural land.
b. To the co-owner when the co-owner sold a portion of the co-owned property.
c. To an adjacent urban land owner when an urban land owner sold a piece of land which is
so small so small and so situated that a major portion thereof cannot be used for any
practical purpose within a reasonable time, having been bought merely for speculation.
d. Any of the above.
247. It is a contract which though lacking in formalities nevertheless shows the real intention of
the parties to create a specific property to secure the performance of an obligation.
a. Contract of sale
b. Real estate mortgage
c. Chattel mortgage
d. Equitable mortgage
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248. The following are the instances wherein a contract of sale with a right to repurchase and
other contract purporting to be an absolute sale shall be presumed to be an equitable mortgage,
except
a. When the price of a sale with a right to repurchase is unusually inadequate
b. When the vendor remains in possession as lessee or otherwise
c. When the period for the exercise of the right of repurchase is extended
d. When the purchaser retains for himself part of the purchase price
e. When the vendor binds himself to pay the real property taxes on the thing sold
f. When the real intention of the parties is that the transaction shall secure the payment of a
debt or the performance of any other obligation
g. When the buyer filed an action for exact fulfillment to collect the balance of the price
249. In case of doubt in construing a contract which has the characteristics of both sale with
right to repurchase and an equitable mortgage, what shall be the general construction of the
contract?
a. Absolute sale
b. Pacto de retro sale
c. Equitable mortgage
d. Lease
250. What shall be the remedy of the injured party in cases of contracts presumed to be an
equitable mortgage?
a. Ask for rescission of contract.
b. Ask for annulment of contract.
c. Ask for declaration of nullity of the contract.
d. Ask for reformation of the instrument.
251. It is a contract whereby a person transfers his credit, right or action against a third person
to another person for a consideration which is certain in money or its equivalent.
a. Contract of sale
b. Assignment of credits
c. Contract of agency
d. Negotiation
252. How is a contract of assignment of credit perfected?

a. It is perfected by mere consent being consensual contract.
b. If is perfected by delivery of the instrument evidencing credit being real contract.
c. It is perfected by the written agreement being formal contract.
d. It is perfected by execution of public document evidencing agreement being formal
contract.
253. What is the formality required by law for assignment of credit involving personal property
to bind third persons?
a. It must be in writing.
b. It must be in a public instrument.
c. It must be recorded in chattel mortgage registry.
d. It must be recorded in the Registry of Property
254. What is the formality required by law for assignment of credit involving real property to
bind third persons?
a. It must be in writing.
b. It must be in a public instrument.
c. It must be recorded in chattel mortgage registry.
d. It must be recorded in the Registry of Property
255. UST sold its accounts receivable worth P1M from its students to BPI for P900,000. The
students paid UST in the amount of P1M. What is the effect of payment?
a. The students are released from the obligation if they pay UST before the knowledge of
the assignment.
b. The students must still pay BPI the amount of P1M.
c. BPI can no longer recover the P1M from UST.
d. The basis of liability of UST to BPI is quasi-delict.
256. The following are the warranties of the (assignor) vendor in good faith in assignment of
credits except
a. Existence of the credit at the time of sale
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b. Legality of the credit at the time of sale

c. Solvency of the debtor at the time of sale
257. As a general rule, the assignor of credits is not liable for the insolvency of the debtor of
the credit. When may the assignor or vendor in assignment of credits become liable for the
insolvency of the debtor?
a. When it is expressly stipulated that the assignor warrants the solvency of debtor.
b. When the insolvency of debtor was prior to the sale and of common knowledge.
c. Either A or B
d. Neither A nor B
258. In case the assignor in good faith warrants the solvency of the debtor, what is the
prescriptive period of the liability or warranty?
a. 1 year from the maturity date of credit or date of assignment whichever is later.
b. 6 months from the maturity date of credit or date of assignment whichever is later.
c. 40 days from the maturity date of credit or date of assignment whichever is later.
d. 3 days from the maturity date of credit or date of assignment whichever is later.
259. Which of the following statements concerning assignment of credits is incorrect?

a. The assignment of a credit excludes all the accessory rights, such as a guaranty,
mortgage, pledge or preference.
b. The vendor in bad faith shall always be answerable for the payment of all expenses, and
for damages.
c. One who sells an inheritance without enumerating the things of which it is composed,
shall only be answerable for his character as an heir.
d. Should the vendor have profited by some of the fruits or received anything from the
inheritance sold, he shall pay the vendee thereof, if the contrary has not been stipulated.
260. The following are the distinctions between assignment of non-negotiable promissory note
and negotiation by general indorsement of negotiable promissory note, except
a. Assignment is applicable to non-negotiable promissory note while negotiation is
applicable to negotiable promissory note.
b. The transferee in assignment is called an assignee while the transferee in negotiation is
called a holder.
c. The transferor in assignment is called an assignor while the transferor in negotiation is
called a general indorser if there is indorsement.
d. The assignee in assignment is subject to personal defenses available to prior parties
while the holder in due course in negotiation holds the instrument free from personal
defenses available to prior parties.
e. The assignor does not warrant the solvency of maker unless expressly stated while the
general indorser guarantees the solvency of maker as long as notice of dishonor will be
given to him.
f. Assignment of credit is governed by negotiable instruments law while negotiation is
governed by law on sales.
261. A issued a promissory note which states “I promise to pay P10,000 to B. Sgd. A” in
exchange for shabu. B generally indorsed and delivered the note to C in exchange for a
cellphone. C is a purchaser of the promissory note in good faith and for value. May C collect from
A?
a. No because if the assignor cannot collect, the assignee cannot also collect.
b. Yes because C is a purchase in good faith and for value.
c. Yes because C gave a valuable consideration for the note.
d. None of the above.
exchange for shabu. B generally indorsed and delivered the note to C in exchange for a
cellphone. C is a purchaser of the promissory note in good faith and for value. May C collect from
B?
a. No because the assignor of credit does not guaranty the solvency of maker.
b. No because the assignment of credit is sale of note without recourse.
c. Yes because B violated his warranty that the debt is legal.
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263. A issued a promissory note which states “I promise to pay P10,000 to the order of B.
Sgd. A” in exchange for cocaine. B generally indorsed and delivered the note to C in exchange
for a laptop. C is a purchaser of the promissory note in good faith and for value. May C collect
from A?
b. Yes because a holder in due course holds the instrument free from personal defenses
available to prior parties.
c. Yes even if he is not a holder in due course.
for a laptop. C is a not a purchaser of the promissory note in good faith and for value. May C
collect from A?
b. Yes because a holder in due course holds the instrument free from personal defenses
available to prior parties.
c. No because a holder not in due course is subject to personal defenses available to prior
parties.
for a laptop. C is a not a purchaser of the promissory note in good faith and for value. May C
collect from B?
a. No because the assignor of credit does not guarantee the solvency of maker.
b. No because the assignment of credit is sale of note without recourse.
c. Yes because B violated his warranty that the instrument is valid and subsisting.
exchange for cellphone. B generally indorsed and delivered the note to C in exchange for laptop.
C is a purchaser of the promissory note in good faith and for value. May C collect from B if A
becomes insolvent?
a. No because the assignor of credit does not guarantee the solvency of maker.
b. Yes provided notice of dishonor is given to B.
c. Yes because C is a purchase in good and for value.
Sgd. A” in exchange for cellphone. B generally indorsed and delivered the note to C in exchange
for laptop. C is a purchaser of the promissory note in good faith and for value. May C collect from
B if A becomes insolvent?
a. No because the assignor of credit does not guaranty the solvency of maker.
b. Yes provided notice of dishonor is given to B because a general indorser guarantees the
solvency of maker.
c. Yes even if notice of dishonor is not given to B.
Sgd. A” in exchange for cellphone. B qualifiedly indorsed and delivered the note to C in exchange
for laptop. C is a purchaser of the promissory note in good faith and for value. May C collect from
B if A becomes insolvent?
a. Yes even if there is no violation of warranties
b. Yes provided notice of dishonor is given to B.
c. No because the qualified indorser does not guaranty the solvency of maker.
-END-
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No. 125 Brgy.

Regulatory Framework for Business Transactions

2. Contracting Parties in a Contract of Sale

a. Subject matter which should be a determinate thing

i. Requisites of subject matter of a contract of sale

1. It must be within the commerce of men.

1. Existing goods owned or possessed by the seller.

1. Those contrary to law, morals or public policy.

iv. Distinctions between emptio rei speratae and emptio spei

b. Price certain in money or its equivalent

i. Requisites of price in a contract of sale

ii. Instances when the price is certain

3. If it be certain with reference to another thing certain.

5. If the determination of the price is left to the judgment of a specified

a. Remedies of the injured party if:

i. The third person is unable or unwilling to fix the price.

ii. The third person is prevented from fixing the price or

iii. The third person acted in bad faith or by mistake.

iii. Effects of inadequacy of price in a contract of sale

1. It does not affect a contract of sale, except as it may indicate a defect in

iv. Effects of simulated price in a contract of sale

1. If the price is absolutely simulated, the contract of sale is void requiring

i. Moment of perfection of contract of sale

ii. Moment of perfection of contract of sale by auction

1. When the auctioneer announces its perfection by the fall of the

6. Characteristics of a contract of sale

7. Distinctions between contract of sale and dacion en pago

8. Distinctions between contract of sale and payment by cession

9. Distinctions between contract of sale and contract for a piece of work

10. Distinctions between contract of sale and contract of barter

a. Determine the manifest or evident intention of the parties.

12. Distinctions between contract of sale and contract to sell

16. Distinctions between option money and earnest money or arras

a. From the moment of perfection of contract of sale

I. Withdrawal from the contract or rescission; or

a. The buyer shall suffer the risk of loss.

22. Contracts covered by Recto Law

a. Installments sales of personal property

23. Remedies of vendor or lessor in Recto Law

c. Right to cash surrender value in case of cancellation by seller.

26. Persons incapacitated to enter into a contract of sale

a. Those suffering from absolute incapacity to give consent to a contract of sale

1. If only one party is incapacitated, the contract of sale is voidable.

2. If both parties are incapacitated, the contract of sale is unenforceable.

b. Those suffering from relative incapacity

i. Husband and wife

1. If there is prenuptial or ante-nuptial agreement of complete separation of

28. Obligations of the vendor or seller

29. Obligation of the vendee or buyer

31. Types of Delivery

32. Examples of constructive deliveries

c. Traditio longa manu – It is the delivery of a movable by mere consent or agreement of

f. Constructive deliveries of intangible assets or incorporeal rights

33. Distinctions between Sale or return vs. Sale on trial or approval

36. Places wherein the things sold should be delivered

37. Time for delivery of the subject matter of a contract of sale

a. If the vendee has not paid him the price.