CIVREV2 (2021-2022)

QUIZ 3. SALES| LEASE| ATP

of

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PART I. SALES

QUESTIONS SUGGESTED ANSWERS

1A contract of sale of a parcel of land is FALSE. A contract of sale is principal,
consensual, formal, bilateral, onerous, nominate, bilateral, a title, onerous,
nominate, principal and commutative commutative, and consensual.

(COS not a formal contract)

2Even if time is of essence, a buyer who FALSE. Time is of essence. (Refer to
already paid 80% of the price and delayed in 1191.)
payment only for 1 month, must be given an
additional period to complete payment of Note: the vendee may pay, even after
purchase price in consideration of equity and the expiration of the period, as long as
justice. no demand for rescission of the contract
is made either judicially or
extrajudicially.
3Shocking gross inadequacy of the price in an FALSE. Gross inadequacy of price does
execution sale executed by a court sheriff may not nullify an execution sale (Hulst vs
invalidate a sale. PR Builders, G.R. No. 156364.
September 3, 2007)
4A vehicle sales proposal stipulating that the TRUE. So long as there is consent,
price of a model 2015 Toyota Vios car 20% of object and consideration agreed upon.
 w/c will be paid as a downpayment in 3 days No need for actual payment to be
and the balance in 36 monthly installments perfected.
and w/ a specific date for pick up is a
perfected contract of sale if signed by the
buyer.
5A written acknowledgment showing that a FALSE. No agreement as to the manner
fishing vessel w/ a price of 900k is now in the of payment.
possession & responsibility of the buyer is a
perfected contract of sale if there is a firm
commitment that documents pertaining to the
sale & agreement of payment are to follow.
6A sale is perfected upon acceptance of a FALSE. An accepted unilateral promise
unilateral promise to sell at a fixed price even to buy or sell a determinate thing for a
if there is no option money paid to support the price certain is binding upon the
promise promissor if the promise is supported
by a consideration distinct from the
price.
7An option contract supported by a separate TRUE
consideration is a non-binding offer that may
be withdrawn at any time before acceptance
by the buyer
8A lessee may not ask for the rescission of the FALSE. Lessee cannot ask for rescission
sale of the leased property where he is living, if it was transferred to another in good
in violation of a stipulated right of 1st priority faith, all he may recover is damages
to buy, even if the right was not annotated on (samplex). If the same property is sold to
the TCT a buyer in bad faith, the sale violates the
right of first refusal and may be rescinded.
The lessee, or the person who is given the
right of first refusal in a contract of lease
can file an action to compel the lessor to
allow him to purchase the property
(specific performance). (Aquino) The
prevailing doctrine therefore, is that a
right of first refusal means identity of
terms and conditions to be offered to the
lessee and all other prospective buyers
and a contract of sale entered into in
violation of a right of first refusal of
another person, while valid, is rescissible.
(Tanay Recreation v. Fausto, G.R. No.
140182)
9To be binding, the right of first refusal FALSE. No need.
stipulated in a lease agreement must also be
supported by an independent consideration A contract of lease may provide for a right
of first refusal in favor of the lessee. In
which case, the consideration for the lease
includes the consideration for the right of
first refusal. (Aquino) Thus, there is no
need for an independent consideration.
10In a lease w/ right of first refusal, the lessor TRUE. When a lease contract contains a
 cannot sell to a 3rd party at the price of P right of first refusal, the lessor has the
5300/sq m after an offer to sell at P 6000/ sq m legal duty to the lessee not to sell the
was declined by the lessee leased property to anyone at any price
until after the lessor has made an offer to
sell the property to the lessee and the
lessee has failed to accept it.

Only after the lessee has failed to exercise

his right of first priority could the lessor
sell the property to other buyers under the
same terms and conditions offered to the
lessee, or under terms and conditions
more favorable to the lessor. (Aquino)
11A perfected contract of sale cannot be TRUE. Ownership is necessary only at
challenged on the ground of the seller’s non- the time of delivery (Article.1459). Thus,
ownership of the thing sold at the time of the sale by non-owner at the time of
perfection of the contract perfection is valid (Memaid).

12X leased to Y a roof deck of its bldg. w/ the FALSE. Sampaguita Pictures v
agreement that any permanent improvements Jalwindor: “The fact that Capitol failed to
made on the property by Y shall belong to X. pay Jalwindor the purchase price of the
Y installed glass jalousies purchased on credit items levied upon did not prevent the
from Z. Upon Y’s failure to pay the transfer of ownership to Capitol and, later,
outstanding balance of the 50%, a levy on the to Sampaguita by virtue of the agreement
glass jalousies is proper in their lease contract. Therefore, the
complaint of Sampaguita to nullify the
Sheriff's sale is well founded, and should
prosper.”
13There is symbolic delivery of a parcel of land FALSE. To be equivalent to actual
upon the execution of a deed of absolute sale delivery, thing must be subject to the
even if the buyer had not acquired actual control of the vendor. Addison vs Felix-
possession thereof because it is occupied by a “if the vendee enjoys its possession due to
3rd party w/ an adverse claim of ownership an opposition of a 3rd person who is in
actual possession..”

14A few days before his death, X sold his land to TRUE. Art 1544 does not apply when the
Y, who in turn sold it to Z. The heirs of X sold two different contracts of sale are made by
the same land to W, who in GF registered the 2 different persons. One of them not being
sale. Z, who took actual possession of the land the owner of the property sold. (Sps
a day after the sale by W, has a better right to Salera v Rodaje)
the land
15In Art 1544, a 2nd buyer may still claim in GF FALSE. “Art 1544 Par 2: Should there
even if the 1st buyer was already in possession be no inscription, the ownership shall
of the property at the time of the sale, if the pertain to the person who in GF was
seller assured the 2nd buyer that the alleged first in the possession..”
buyer is merely a lessee
16The rules on double sale will apply when the FALSE. Rules on double sale do not
deed of absolute sale in installments with a apply if the first transaction is a
downpayment of 20% amounting to 200k was contract/promise to sell.
executed after a contract to sell in favor of
 another buyer who paid 50% (500k) of the
purchase price

17When the consideration is partly in money and TRUE. The contract shall be one of sale
partly in kind, the contract is one of sale if the or barter depending upon the manifest
parties intended it to be a sale even if the thing intention of the parties.
given as part of the consideration is greater in
value than the money given
18An accepted bilateral promise to buy and sell FALSE.
a car at a price less than 500k but not more
than 505k is binding as an executory
agreement of sale
19A unilateral promise to sell is binding as a FALSE
contract of sale if a separate consideration
independent of the price is given
20A conditional contract of sale may be an TRUE
executed contract or an executory contract
21Things under resolutory condition of TRUE
destruction may be objects of a valid sale
22The sale by Pedro to Juan of a losing lotto TRUE
ticket for a past draw date is necessarily void
because the hope of winning is vain.
23Sale of inheritance before partition is void FALSE. Valid even without
because the heir could not predetermine what enumerating the things.
he will receive after partition proceedings.
24Subsequent acquisition of a title by vendor TRUE
w/o title validates the sale even if the
acquisition depends on contingency
25If a 3rd party tasked to give the price of the FALSE. Art. 1469. xxx Should such
sale refuses to fix the price, the court may fix person or persons be unable or
the price unwilling to fix it, the contract shall be
inefficacious, unless the parties
subsequently agree upon the price. If
the third person or persons acted in bad
faith or by mistake, the courts may fix
the price.
26If the price is simulated, the sale shall be FALSE. Article 1471. If the price is
considered a donation. simulated, the sale is void, but the act
may be shown to have been in reality a
donation, or some other act or contract.
27Sale may be rescinded if the inadequacy of the FALSE. Article 1381. The following
price results in lesion by more than ¼ of the contracts are rescissible: (1) Those
value of the thing sold by the owner which are entered into by guardians
whenever the wards whom they
represent suffer lesion by more than
one-fourth of the value of the things
which are the object [of the sale]; (2)
Those agreed upon in representation of
absentees, if the latter suffer the lesion
 stated in the preceding number. xx (See
also Art. 1355, 1470)
28By agreement, an option money may be TRUE. Article 1482. Whenever earnest
considered part of the purchase price should money is given in a contract of sale, it
buyer exercise the option to buy shall be considered as part of the price
and as proof of the perfection of the
contract.
29A verbal sale of parcel of land by an agent is TRUE. A verbal sale of a parcel of land
valid provided that his authority to sell is in is valid and binding, for even a verbal
writing contract of sale produces legal effect
between parties. However, the form of
sale will affect the validity in a sale of a
piece of land or any interest therein
through an agent. The authority of the
agent must be in writing; otherwise, the
sale is void. (Art. 1874)
30A contract of sale is perfected where the FALSE. Art. 1475 - A contract of sale is
acceptance was made if different from the perfected at the moment there is a
place of offer. meeting of minds upon the thing which
is the object of the contract and upon
the price.
31A deterioration of the thing sold at the time of TRUE. Art. 1493 - If at the time the
perfection may render the contract contract of sale is perfected, the thing
inoperative. ​ which is the object of the contract has
been entirely lost, the contract shall be
without any effect. But if the thing
should have been lost in part only, the
vendee may choose between
withdrawing from the contract and
demanding the remaining part, paying
its price in proportion to the total sum
agreed upon.
32If the loss of the thing sold at the time of FALSE. Art. 1493 - If at the time the
perfection was by the fault of the seller, sale contract of sale is perfected, the thing
shall still be valid. ​ which is the object of the contract has
been entirely lost, the contract shall be
without any effect.
33If the loss of the thing sold at the time of FALSE. Seller (Art. 1503, in relation to
perfection was a fortuitous event, the risk is on res perit domino).
the buyer if the sale is conditional.
34The expenses of execution and registration of TRUE. Art. 1487. The expenses for the
the sale are borne by the seller. execution and registration of the sale
shall be borne by the vendor, unless
there is a stipulation to the contrary.
35Before the fall of the hammer in an auction FALSE. Both may withdraw (Art.
sale, a bidder may retract his bid but the 1476).
auctioneer could not withdraw the goods from
the sale.
36A legally separated husband may sell a car to TRUE. If the spouses had been legally
 his wife.
37Without qualification, a sale between persons FALSE. Void if there is no complete
in trust relations is necessarily void.
38Enumerate 3 obligations of seller
separated, there is no more prohibition
for them to sell properties to one
another for they are now governed by
the regime of separation of property
(PINEDA, Sales and other Contracts, p.
108).
transfer of ownership but intention was
merely to make grantee a depository of
the thing subject of contract.
Transfer, deliver, warrant

39Delivery by seller’s retention of the thing he is Traditio constitutum possessorium

possessing by another right subordinate to the (Art.1500)
buyer is known as
40When the seller is not the owner, the buyer FALSE . ART.1505(3) Purchases made
who purchased the property in a fair has no in a merchant’s store, or in fairs, or
better title than that of the seller. markets, in accordance with the Code
of Commerce and special laws.
41A negotiable document title of goods indorsed FALSE. A negotiable document of title
in blank may be subsequently indorsed to a is negotiable by delivery if the goods are
specified person but could not be indorsed in deliverable to the bearer, or when it is
blank. indorsed in blank or to the bearer by
the person to whose order the goods are
deliverable or by a subsequent indorsee

A negotiable document, if indorsed in

blank or to bearer, the document
becomes negotiable by delivery. (Art.
1508) De Leon, p. 210-211)
42Where a negotiable document of title was True. Art. 1515. Where a negotiable
transferred for value by mere delivery instead document of title is transferred for
of the required indorsement, transferee may value by delivery, and the endorsement
compel transferor to indorse the document of the transferor is essential for
negotiation, the transferee acquires a
right against the transferor to compel
him to endorse the document unless a
contrary intention appears. The
negotiation shall take effect as of the
time when the endorsement is actually
made
43The validity of negotiation is not affected by FALSE. Transferee must be in GF and
the fact that the owner of the document was without notice of theft by the time of
deprived by theft even if the holder had notice, negotiation.
prior to negotiation, of the unlawful
deprivation Art. 1518. The validity of the
negotiation of a negotiable document of
title is not impaired by the fact that the
negotiation was a breach of duty on the
part of the person making the
 negotiation, or by the fact that the
owner of the document was deprived of
the possession of the same by loss, theft,
fraud, accident, mistake, duress, or
conversion, if the person to whom the
document was negotiated or a person to
whom the document was subsequently
negotiated paid value therefor in good
faith without notice of the breach of
duty, or loss, theft, fraud, accident,
mistake, duress or conversion.

44Transferee of a non-nego document of title to TRUE. Art. 1514. A person to whom a

goods may hold the bailee liable for the document of title has been transferred,
possession of the goods provided that he but not negotiated, acquires thereby, as
notifies the bailee before latter was notified by against the transferor, the title to the
transferor of a subsequent sale of goods. goods, subject to the terms of any
agreement with the transferor. If the
document is non-negotiable, such
person also acquires the right to notify
the bailee who issued the document of
the transfer thereof, and thereby to
acquire the direct obligation of such
bailee to hold possession of the goods
for him according to the terms of the
document.

Prior to the notification to such bailee

by the transferor or transferee of a non-
negotiable document of title, the title of
the transferee to the goods and the right
to acquire the obligation of such bailee
may be defeated by the levy of an
attachment of execution upon the goods
by a creditor of the transferor, or by a
notification to such bailee by the
transferor or a subsequent purchaser
from the transfer of a subsequent sale
of the goods by the transferor.
45In the absence of stipulation, the goods sold FALSE. Seller is bound to send them
must be delivered at any time. within reasonable time.
46If by agreement, seller is required to deliver TRUE
the goods to the buyer, delivery to the carrier
is deemed delivery to the buyer if by the BOL,
the goods are deliverable to the order of the
buyer whether or not seller retains possession
of BOL
47A seller who was conditionally paid with the TRUE
buyer’s personal check can have the rights of
an unpaid seller of goods if the check is
 dishonored.
48An unpaid seller of goods has the right to FALSE. Unpaid seller has right of
retain goods even if the same were already stoppage
delivered to the carrier.
49An unpaid seller has a lien on the goods when FALSE. Unpaid seller has lien on the
the buyer becomes insolvent, provided that the goods regardless of whether or not
seller is still in possession of the goods. goods are in his possession.

TRUE. The unpaid seller of goods loses

his lien upon the possession by the
buyer or his agent.
50Exceptionally, seller may exercise the right of FALSE. No longer in transit.
stoppage in transit even if buyer already
accepted delivery.
51If carrier wrongfully withholds possession FALSE. The goods are no longer in
from the buyer, seller can exercise the right of transit if the carrier wrongfully refuses
stoppage. to deliver the goods to the buyer.
52Right of stoppage in transit may be exercised TRUE. One way of exercising the right
by obtaining actual possession of the goods of stoppage in transitu is by taking
from the carrier. actual possession of the goods.
53Unpaid seller may resell goods without notice TRUE. The Notice of Resale is not
to buyer if the latter has been in default of the essential. However, the failure to give
payment of price for unreasonable time. notice shall be relevant upon the
question whether the buyer has been in
default for an unreasonable time.
(notice is important only to determine
“reasonableness” of the delay) De Leon,
p. 249
54Unpaid seller may rescind the sale where FALSE.
buyer fails to pay the price after a year from
the delivery. Sale of IMMOVABLE - A demand
either judicially or by notarial act is
necessary before an unpaid seller may
rescind the contract even if it has been
expressly stipulated in the contract that
the seller has the right to rescind.
Rabuya, p. 393

Sale of MOVABLE - vendor can rescind

the contract, as a matter of right, if the
vendee, without any valid cause, does
not (1) accept delivery or
(2) pay the price unless a credit period
for its payment has been stipulated De
Leon, p. 363
55Unpaid seller’s right of stoppage in transit is TRUE. Art. 1535.
not affected by a subsequent disposition of
goods by the original buyer except where The unpaid seller’s right of lien or
disposition was with consent of the seller. stoppage in transitu is not affected by
 any sale or other disposition of the
goods which the buyer may have made,
unless the seller has assented thereto.
56Buyer was in need of 1,000 sqm of land TRUE. Art. 1539. In case of sale with a
required by the franchisor required for the statement of area and the seller delivers
opening of a business. He purchased from the less than the agreed area, the buyer
seller at a price of 100,000 per sqm. He may either demand the delivery of the
discovered that the total area delivered to him entire area agreed upon, if possible, of if
was only 975. Buyer can opt to rescind the not possible, either demand for
sale. proportionate reduction of the price or
rescission of the sale if the lack of the
area is NOT LESS THAN 1/10 of the
stated area. also Rabuya, p. 380
57If on the other hand (56) the land has an area FALSE.
of 1,100, the buyer has no other option but to
return the excess area. Under Art. 1540, he may also accept the
whole area provided he pays for the
contract price.
58If a parcel of land believed to be 1,000 sqm FALSE.
was sold at a lump sum of 1 million, buyer
should pay more if the land turns out to be Under Art. 1542, in the sale of real
1,025 to avoid just enrichment. estate, made for a lump sum, there shall
be no increase or decrease of the price,
although there be a greater or less area
or number than that stated in the
contract.
59As a rule, the buyer of goods is not bound to TRUE.
accept delivery by installment
Under Art. 1583, unless otherwise
agreed, the buyer of goods is not bound
to accept delivery thereof by
installments.
60In a cash sale, seller is excused from making TRUE.
delivery if no payment is tendered by the
buyer unless a period for payment is fixed. Under Art. 1524, the vendor shall not be
bound to deliver the thing sold, if the
vendee has not paid him the price, or if
no period for the payment has been
fixed in the contract.
61Rules on double sale will apply to a sale made TRUE.
by the principal and another sale by the agent
to different buyers ​
62A previous buyer who was informed of a First buyer. order : first registrant in
subsequent sale in favor of another buyer good faith; first possessor in good faith;
rushed to the register of deeds to register the person with oldest title - knowledge of
sale in his name. Who has a better right to the the first buyer of the second sale cannot
land if subsequent buyer was in possession of defeat the first buyer's right except only
the same as provided by law. ( first buyer is
always in good faith) memaid
63Warranty against eviction may be validly TRUE. Intencionada (1554)
waived by the buyer with knowledge of risk.
64In case of breach of warranty against eviction, FALSE - 1555(5) damages and interests
buyer may also demand ornamental expenses and ornamental expenses if the sale was
even if the sale was made in GF. made in bad faith
65The warranty against hidden encumbrances FALSE. It will not apply if the
may still apply even if encumbrance is encumbrance is recorded unless there is
recorded. an express warranty that it is free from
all burdens and encumbrances (A1560)
66If an animal sold was classified as condemned, FALSE. No warranty against hidden
there is no warranty against hidden vices defects of animals sold at fairs or public
provided that the animal was examined by an auctions, or if livestock sold as
expert. condemned.
67Disease is presumed covered by warranty if it FALSE. 3 days
causes death 7 days from purchase. ​
682 remedies of buyer in case of breach of1. Rescission
warranty against hidden encumbrances 2. Indemnity

69Requisites of warranty against redhibitory 1. Serious or important defect

vices. 2. Hidden
3. Existing at the time of sale
4. Notice to the defect was given within
reasonable time
5. Action for rescission or reduction of
price must be brought within proper
period - 6 mos, or 40 days from delivery
6. No waiver of warranty
7. Buyer would not have bought it has
he known of the voice
70When may buyer suspend payment after 1. Disturbance in the possession or
delivery ownership of the thing acquired
2. Reasonable grounds to fear such
disturbance (Art. 1950)
71Legal guarantees of seller for payment of price 1. Possessory lien
of buyer 2. Right of stoppage in transit
3. Right to resale
4. Right to rescind (Art. 1526)
72Extinguishment of sale Same grounds by which obligations. in
general are extinguished (Art. 1231)
1. Payment or performance
2. Loss of the
3. Condonation
4. Merger or consolidation
5. Compensation
6. Novation
7. Annulment
8. Rescission
9. Fulfillment of a resolutely condition
10. Prescription

73What is conventional redemption
74Nature of conventional redemption
75Equitable mortgage
76Exercise right of redemption
77A vendee a retro has a right to be subrogated TRUE. Art. 1609. Subrogation
to the vendor's rights and action.
11. Conventional Redemption
12. Legal Redemption
1. Vendor reserves right to repurchase
the thing sold.
2. with the obligation of
a. returning to the vendee the price
of the sale, the expenses of the
contract and any other
legitimate payments made by
reason of the sale, the necessary
and useful expenses made on the
thing sold, and
b. complying with such other
stipulations which may have
been agreed upon (Arts. 1601
and 1616)
1. Purely Contractual
2. Accidental
3. Potestative
4. Power or privilege
5. Person entitled to exercise is
necessarily the owner
6. Real Right
7. Resolutory Condition
8. Gives Reciprocal obligation
9. Reserved at the moment of
perfection of contract
1. Unusually inadequate price of sale
with right to repurchase
2. Vendor remains in possession as
lessee
3. Buyer retains a part of the purchase
price
4. Vendor binds himself to pay taxes
5. Other case - real intent is to secure
payment of a debt/performance of
obligation
The following may exercise right of
redemption:
1. Co-owners
2. Co-heirs
3. Judgment debtors
transfers to the person subrogated the
credit with all the rights thereto
appertaining. This article is logical
because a pacto de retrosale transfers
ownership to the vendee although
subject to the condition of repurchase.
As owner, the vendee, for example,

78Legal redemption by a co-owner
79A valid assignment of credit transfers title to TRUE. In the case of Sison vs Yap Tico,
the assigned credit to the assignee, even if the SC held that the debtor’s consent is
debtor is unaware thereof.
80Assignor in GF answers for solvency of the FALSE.
debtor, unless insolvency of debtor was prior Art. 1628. assignor does not warrant
to the sale and of common knowledge.
81Legal redemption instances
may transfer or alienate his right to a
third person, mortgage the property,
enjoy the fruits thereof, recover the
property against every possessor, and
perform all other acts of ownership
subject only to the right of
redemption of the vendor.
In the case of Basa vs Aguilar, the
following are the Requisites:
1) there must be co-ownership
2) one of the co-owners sold his
right to a stranger
3) the sale was made before
partition of the co-owned
property
4) the right of redemption must be
exercised by one or more co-
owners within a period of 30
days to be counted from the time
that he or they were notified in
writing by the vendee or by co-
owner vendor
5) vendee must be reimbursed for
the price of the sale
not essential for its perfection; the
knowledge thereof or lack of it affecting
only the efficaciousness or
inefficaciousness of any payment made.
What the law requires is not the
consent of the debtor, but merely notice
to him. A creditor may therefore validly
assign his credit and accessories
without the debtor’s consent.
the solvency of the debtor, unless it has
been so expressly stipulated or unless
the insolvency was prior to the sale and
of common knowledge.
Under Civil Code:
1. Sale of a co-owner of his share to
a stranger (Art. 1620)
2. Sale of adjacent rural lands not
exceeding 1 hectare
3. Sale of adjoining owners of urban
land
4. When a credit or other
incorporeal right in litigation is
 sold
5. Sale of an heir of his hereditary
rights to a stranger

Under Special Laws:

1. Equity of redemption in cases of
judicial foreclosures
2. Right of redemption in cases of
extrajudicial foreclosures
3. Redemption of homesteads
4. Redemption in tax sales
5. Redemption by an agricultural
tenant of land sold by the
landowner
6. Redemption in foreclosure by
rural banks
822 ways of negotiating document title to goods 1. Endorsement and delivery (Art
1509)
2. Delivery (Art 1508)
83Juan entered into a contract of lease with Juan can sublet the property but he
Juana over the latter’s apartment unit at a may not assign his lease rights. Under
monthly rental of P10,000.00 for a term of 5 A1650, when there is no express
years. Can Juan sublet the property or assign prohibition, the lessee may sublet the
his lease rights? thing leased, in whole or in part,
without prejudice to his responsibility
for the performance. However under
A1649, the lessee cannot assign the lease
without the consent of the lessor, unless
there is a stipulation to the contrary.

84A contract of lease is consensual, nominate, False.

bilateral, onerous, and commutative, although Lease cannot be gratuitous. The essence
exceptionally it could be gratuitous. of lease is the transmission of
temporary enjoyment or use of a thing
for a certain period in consideration of
paying rent.
85Dean J and U may enter into a single sale, True. All samplex sabi its true pero
lease and mortgage of the same property in 1 puro no legal basis
and same document without affecting their anyway [e.g. Sales and Lease Back
validity. Agreement where the seller sells its
property to the buyer then the latter
will lease it back to the seller. The seller
will then have an opportunity to
continue using the property during the
lease; mortgage will also be valid since
there is no transfer of ownership but
merely serves as a security]

MULTIPLE CHOICE QUESTIONS

 (RFBT. Correct answers are provided)

1. S sold a residential condominium unit to B at an instalment price of P6,000,000 payable in 50

years at a monthly rental of P10,000 per month. After payment of several instalments totalling
P1,200,000, B defaulted in the payment of remaining instalments which resulted to the
cancelation of the contract of sale after the lapsing of the grace period. What is the amount of
cash surrender value to be received by B from S as a result of cancellation?

A. P600,000
B. P900,000
C. P840,000
D. P960,000

Computation
Under Maceda Law, 10 years instalment will entitle the
buyer to 75% of total amount paid
(P1,200,000 x 75% = P900,000) in case of cancellation

2. In which of the following instances are the goods still in transit which will allow the unpaid
seller to exercise his right of stoppage in transitu in case of insolvency of the buyer?

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.

3. S sold his lot with an area of 100 square meters to B at a selling price of P1,000 per square
meter. After delivery of the lot, B discovered that the actual area is only 91 square meters.
 What is the legal remedy available to B?

A. B may ask for proportionate reduction of price and must pay P91,000 only.
B. B can ask for cancellation of the contract of sale.
C. Either A or B.
D. Neither A nor B.

Computation
(91 square meters x P1,000 = P91,000) Note: Cancellation is allowed only if the lacking area is at
least 10% of stated area

4. A, B, and C are co-owners of a rural lot with an area of 1,000 square meters in the ratio of
6:1:3, respectively. The co-owned lot is bounded by farm lots of D and E with an area of 50
square meters and 75 square meters, respectively. A sold his share of the co-owned lot to F.
Who shall have the preferred right to repurchase the lot sold by A to F?

A. B because his share in the co-owned lot is smaller.

B. B and C with an area of 150 square meters and 450 square meters, respectively
C. D because his adjoining rural lot has smaller area.
D. E because his adjoining rural lot has larger area.

Computation
1,000 x 6/10 = 600 SQM x ¼ = 150SQM to B and 600 SQM x ¾ = 450SQM

5. What is the prescriptive period of the right to file an action based on breach of warranty of sale
of immovable against non-apparent and unregistered burden or servitude?

A. 40 days from the date of contract of sale or from the discovery of burden
B. 6 months from the date of contract of sale or from the discovery of burden
C. 1 year from the date of contract of sale or from the discovery of burden
D. 3 days from the date of contract of sale or from the discovery of burden

6. A and B are legally married and their property regime is governed by absolute community of
property. A orally sold his specific cellphone to B at a price of P500 with a carrying amoun of
P800 after B pointed a gun to A. Delivery of the specific cellphone will happen after three
years. What is the status of the contract of sale?

A. Rescissible
B. Voidable
C. Unenforceable
D. Void

7. 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?
 A. Traditio clavium
B. Traditio longa manu
C. Traditio brevi manu
D. Traditio constitutum possessorium

ENUMERATION

● Requisites on warranty against eviction

◦ Vendee is deprived, in whole or in part, of the thing
purchased
◦ Deprivation is by virtue of a final judgment
◦ Judgment is based on a right prior to the sale or an act
imputable to the vendor
◦ Vendor was summoned in the suir for eviction at the
instance of the vendee:
▪ To enable the seller to prove his claim
▪ To avoid multiplicity of suits
▪ To satisfy due process
◦ No waiver of warranty by the vendee

● Kinds of implied warranties

◦ Warranty that the seller has a right to sell
◦ Warranty against eviction
◦ Warranty against non-apparent burden or servitudes
◦ Warranty against hidden defects or unknown
encumbrance
◦ Warranty against redhibitory defects on animals
◦ Warranties as to fitness or merchantable quality
◦ Warranties for consumer goods

● Exceptions to warranty against animal vices [Warranty

against Redhibitory Defect on Animals]
 ◦ Knowledge of B ;Expert B; Stipulations; Fairs and public
auctions; Livestock sold as condemed
a. ​sale of animals on teams ( 2 or more )
• when only one is defective, only one is redhibited &
not the others
• exception: ​when it appears that purchase of team
will not be done without the defective one
• apply to sale of other things
b. ​sale of animals at fair or public auction
• no warranty against hidden defects
c. ​sale of animals with contagious disease is void
d. ​sale of unit of animal
• void if use / service for which they are acquired has
been stated in the contract and they are found to be unfit
thereof
• prescription of action: ​40 days from date of
delivery to buyer
• if sale is rescinded, animals to be returned in same
condition when they are acquired; buyer shall answer for
injury / loss due to his fault
• buyer may elect between withdrawing from sale or
demanding proportionate reduction of price with
damages in either case

● Persons disqualified to buy

◦ ABSOLUTE INCAPACITY
▪ Minors
▪ Insane or demented persons
▪ Deaf-mutes who do not know how to write
◦ RELATIVE INCAPACITY
1. Sale between spouses – it is void except:
a. The spouses executed a marriage settlement and in
the marriage settlement they agreed for a complete
separation of property regime. Then they can sell to
 each other.
b. If no marriage settlement, they may have obtained
judicial declaration of separation of property. After
that, they can sell to each other.
2. Those mentioned in Article 1491
a. A guardian cannot buy the property of the ward. The
guardian is not actually prohibited from entering into
any and all contracts. It is just that he cannot be the
buyer of a property of his ward.
b. An agent cannot buy without the consent of the
principal a property which he was supposed to sell or
administer.
c. The executors and administrators of the estate
cannot buy a property which is part of the estate.
d. Public officers, judges, their staff, clerk of court,
stenographers and lawyers are prohibited from buying
those properties which are the subject of litigation
during the pendency of the case.

● Exceptions to right to suspend payment

◦ If the vendor gives security for the return of the price
◦ If it has been stipulated that notwithstanding such
contingency, the vendee is bound to make the payment
◦ If the vendor has caused the disturbance or danger to
cease
◦ If the disturbance is a mere act of trespass
◦ If the vendee has fully paid the price

● Goods in transit
◦ STOPPAGE OF GOODS IN TRANSITU – a right which a
seller of goods on credit has to recall them or retake
them while they are in possession of a carrier or other
middleman who received them for delivery to the buyer ,
on discovery of the insolvency of the buyer.
 ▪ Seller must be unpaid
▪ Buyer must be insolvent
▪ Goods must be in transit
▪ Seller or his agent in that behalf must either:
● Actually take possession of the goods sold
● Give notice of his claim to the carrier or other
person in possession of the goods
▪ The carrier or other person in possession must redeliver
the goods to, or according to the directions of, the
seller
▪ The seller must bear the expenses of delivery of the
goods after the exercise of the right

● DOUBLE SALE
o Two or more transactions must constitute valid sales
o They must pertain to exactly the same object or
subject matter
o Tbey must be brought from the same or immediate
seller
o Two or more buyers who are at odds the rightful
ownership of the subject matter must represent
conflictin interest

● SUBLEASE
o A separate and distinct contract of lease wherein the
original lessee becomes a sublessor to a sublessee of
the thing, in whole or in part, without prejudice to his
responsibility for the performance of the contract
toward the lessor.

PART II. LEASE

QUESTIONS SUGGESTED ANSWERS

86Dean J and U may enter into a single sale, T.
lease and mortgage of the same property in 1 This type of agreement is known as
and same document without affecting their lease to own or (rent-to-own). The buyer
validity may lease a home with the option to
purchase it at the end of the rental period
or until the loan’s term expires. The home
is set as the security in the loan.

The nature of sale is the absolute transfer

of ownership; lease is the temporary use of
property, both are principal. While
mortgage is a security and an accessory to
a contract.
87Caveat emptor and venditor apply to voluntary F. Both do not apply to lease of things.
sale, forced sale, and lease of things.
Caveat emptor (let the buyer beware)
Caveat venditor (let the seller beware)
In lease, the obligation is only to
transfer the use of the thing and not
ownership. (temporary in character)
88In a sale of goods, there is a possibility that T.
vendor may be deemed to have complied with In cases of constructive delivery,
the prestation even if he does not delivery the symbolic delivery, Traditio Longa
goods Manu (Long hand), Traditio Brevi
Manu (shorthand), Traditio
Constitutum Possessorium
89Recto law applies to assignment of credit T.
and incorporeal rights Recto law is a remedy available to the
vendor in the sale of personal property
by installment. (Art 1534)
90An informal settler can validly lease but not T.
sell the land and improvement occupied by The lessor need not be the owner of the
him thing leased as long as he can transmit
its enjoyment or use to the lessee since
ownership is not being transferred.
(MA, p. 604)
91A contract of lease is consensual, nominate, F. Principal, not remuneratory
bilateral, onerous, and remunatory.
92Lease of professional services may be implied T. On principle one who performs work
because no specific form is required. or service in favor of another who
impliedly consents thereto and who
benefits thereby, is entitled to
compensation by virtue of an
innominate contract (Art. 1307.) of
facio ut des (I give that you may do) or
of the case of services tacitly contracted
in which case the courts will fix the
reasonable worth of the services
rendered. No one should be enriched by
the work of another unless the services
 are expressly stated to be gratuitous.

93Lease of work, lessee becomes the agent of the F. In lease of work, the lessor performs
lessor but only with respect to the particular a material act for the benefit of his
work performed. employer without representation of the
latter (Art. 1644.), while in agency, the
agent executes a juridical act for and in
behalf of his principal (Art. 1868.)

94Exceptionally, a portion of the town plaza F. The object of the contract must be
which is property for public use may be the within the commerce of men. Hence,
object of lase properties of public dominion cannot be
validly made the subject matter of a
contract of lease, such as public streets
or a public plaza (Rabuya, p. 490)

95Persons enumerated in 1491 are prohibited F. They are only disqualified to lease
from entering into the contract of lease of rural and urban lands (Art. 1464)
service
96A right may also be the object of a contract of F. A lease may either be of things, of
lease and the compensation is referred to as service, or of work
royalty
97The lessee is obliged to answer even for a T. LESSOR (not lessee) is not liable for
mere act of trespass which a 3rd party may mere act of trespass (rabuya, 500-501)
cause on the use of the thing leased but lessee
shall have a different action against intruder
98When lessor repairs the thing leased but the F.
lessee is not satisfied, latter may suspend 1658 – Lessee may suspend payment of
payment of rent. rent in case lessors fail to make
necessary repairs or maintain lease in a
peaceful and adequate enjoyment of
property leased
99If lessee fails to comply with his obligations, F.
lessor may file an action for rescission and He may file an action for rescission with
action for damages only damages or damages only. (Art 1659)
(also refer to memaid 2021 p.614)
100If lessor sells the leased property to a 3rd F.
person in violation of the right of 1st refusal Rescissible only when in BF.
given to lessee, contract is rescissible A deed of sale executed in favor of a
regardless of GF of buyer. third party NOT DEEMED A
PURCHASER IN GOOD FAITH, in
violation of the right of first refusal
granted to the optionee is valid but
rescissible under Arts. 1380-1381(3).

101Lessor has subrogatory right against a sub- F.

lessee for unpaid rent The liability of the sublessee is
subsidiary - he is liable to the lessor
only for rents the lessee failed to pay the
 lessor. (Art 1652; DeLeon p601)
102A lease extendible by mutual agreement would T
simply amount to a right of 1st refusal in favor
of the lessee so that even if a 3rd party would
offer a higher rent, lease in favor of 1 st lessee
will not be extended unless he matches the
offer
103A contract for the lease of vibrator is personal F.
and thus terminated by death of lessee. Not terminated by death of either.
104An implied new lease may result even if there F
is an express stipulation to the contrary
There can be no implied renewal of the lease
where the parties stipulated that there would be no
renewal by implication (Ramon magsaysay award
foundation v. ca)

105An implied new lease is for the same period as F Instead of the original period, period of
the original lease but a guaranty executed by a new lease will be accdg to the character of
3rd person in favor of the lessor shall cease property and mode of payment of rent.
with respect to the new lease
106Failure to pay rentals makes possession F
unlawful
Unless coupled with a refusal on part of
lessor to pay after lawful demand.
107Provision in contract of lease that F.
improvements introduced by lessee will accrue
to lessor upon termination of lease shall be No need to apply rules on sale of property. It is a
governed by rules on sale of property valid stipulation which binds the parties and is the
law between them.
108Lessor may terminate lease when rentals are T ​ ​ ​ ​
not paid without need of court action ​ ​
The parties can stipulate that there can be
extrajudicial ejectment if there would be non-
payment of rentals. ​

109Contract of sale entered in violation of right of T

first refusal is valid
110Lessee in a lease of rural lands has a right to FALSE. Art. 1680. The lessee shall have
reduction of rental on account of sterility of no right to a reduction of the rent on
land and for loss of fruits due to extraordinary account of the sterility of the land leased,
and unforeseen event. or by reason of the loss of fruits due to
ordinary fortuitous events; but he shall
have such right in case of the loss of more
than one-half of the fruits through
extraordinary and unforeseen fortuitous
events, save always when there is a
specific stipulation to the contrary.

Extraordinary fortuitous events are

understood to be: fire, war, pestilence,
unusual flood, locusts, earthquake, or
 others which are uncommon, and which
the contracting parties could not have
reasonably foreseen.

111A provision in a contract of lease that all FALSE. The parties agreed that all
improvements introduced by lessee without improvements introduced by the lessee
reimbursement is not valid would accrue to the benefit of the owner
at the end of the lease, without
reimbursement. This stipulation, not being
contrary to law, morals, public order or
public policy binds the parties and is the
law between them (Lhuiller v. CA, G.R.
No. 128058, December 9, 2000).

112Lease of determinate time ceases upon day T.Art.1669 - If the lease was made for a
fixed without need of demand. determinate time, it ceases upon the day
fixed, without need of a demand.
113Three modes to terminate lease 1. Purchaser of piece of land under
an unrecorded sale
2. Expiration of Period
3. Total destruction due to
fortuitous event
4. Dwelling/building intended brings
imminent and serious danger to
life/health ​ ​ ​
114A contract of lease is consensual, nominate, F. Principal, not remuneratory
bilateral, onerous, and remuneratory Principal, not dependent on any other
contract.
115The term ‘price certain’ must be in money or F. A price certain exists when the same
its equivalent. can be ascertained accdg to customs
and usage of place
116Contract of lease for 99 years is void. F. More than 99 years is invalid
117Exceptionally, a portion of the town plaza F. Town Plazas are properties of public
which is property for public use may be the dominion, to be devoted to public use
object of lease and to be made available to the public
in general. THEY ARE OUTSIDE THE
COMMERCE OF MEN AND
CANNOT BE DISPOSED OF EVEN
LEASED BY THE MUNICIPALITY
TO PRIVATE PARTIES (Cited in
OCAMPO v. HON.CASTANEDA, G.R.
No. L-61311, Sept. 21, 1987)
118Period in a contract of lease for services may F Indefinite period only apply to lease
be definite or indefinite of things
119Persons disqualified to become lessees 1. Guardian
2. Agents
3. Executors/admin
4. PO/E
5. Justices/Judges ​
120Persons enumerated in 1491 are prohibited F 1646 – only disqualified to become
from entering into the contract of lease of lessees of the things under 1491
service
121A right may also be the object of a contract of T
lease and the compensation is referred to as
royalty
122The lessee is obliged to answer even for a T Th lessor is not obliged to answer for
mere act of trespass which a 3rd party may a mere act of trespass which a third
cause on the use of the thing leased but lessee party may cause on the use of the thing
shall have a different action against intruder leased. The lessee shall have a direct
action against the trespasser and not
against the lessor
123When lessor repairs the thing leased but the F 1658 – Lessee may suspend payment
lessee is not satisfied, latter may suspend of rent in case lessors fail to make
payment of rent. necessary repairs or maintain lease in a
peaceful and adequate enjoyment of
property leased
124If lessee fails to comply with his obligations, F
lessor may file an action for rescission and 1. Rescission and damages;or
action for damages only 2. Damages only
125Warranties in contract of lease 1. Lessor’s right to lease thing
2. Lessee enjoy legal and peaceful
possession
3. Fit for use
4. Free from hidden fault/defect

126If lessor sells the leased property to a 3rd F. Rescissible only when in bad faith
person in violation of the right of 1st refusal
given to lessee, contract is rescissible
regardless of GF of buyer.
127Lessor has subrogatory right against a sub- F 1652 – The sub lessee is subsidiarily
lessee for unpaid rent. liable to the lessor for any rent due
from the lessee. However, the sublessee
shall not be responsible beyond the
amount of rent due from him, in
accordance with the terms of the
sublease, at the time of the extrajudicial
demand by the lessor.

Payments of rent in advance by the

128Obligations of a lessor
sublessee shall be deemed not to have
been made, so far as the lessor's claim is
concerned, unless said payments were
effected in virtue of the custom of the
place
(1) To deliver the thing which is the
object of the contract in such a
condition as to render it fit for the use
 intended; (2) To make on the same
during the lease all the necessary
repairs in order to keep it suitable for
the use to which it has been devoted,
unless there is a stipulation to the
contrary; (3) To maintain the lessee in
the peaceful and adequate enjoyment of
the lease for the entire duration of the
contract.
129Obligations of a lessee (1) To pay the price of the lease
according to the terms stipulated;
(2) To use the thing leased as a diligent
father of a family, devoting it to the use
stipulated; and in the absence of
stipulation, to that which may be
inferred from the nature of the thing
leased, according to the custom of the
place;
(3) To pay expenses for the deed of
lease.
(4) to bring to the knowledge of the
proprietor, within the shortest possible
time, every usurpation or untoward act
which any third person may have
committed or may be openly preparing
to carry out upon the thing leased
130A lease extendible by mutual agreement would T. ARTICLE 1643. In the lease of
simply amount to a right of 1st refusal in favor things, one of the parties binds himself
of the lessee so that even if a 3rd party would to give to another the enjoyment or use
offer a higher rent, lease in favor of 1st lessee of a thing for a price certain, and for a
will not be extended unless he matches the period which may be definite or
offer indefinite. However, no lease for more
than ninety-nine years shall be valid.
131A contract for the lease of vibrator is personal F. A contract of lease is generally
and thus terminated by death of lessee. transmissible to the heirs of the lessor
or lessee. It involves a property right
and, such, the death of a party does not
excuse non performance of the
contract. (Estate of Llenado v. Llenado,
G.R. No. 145736, March 4, 2009).
132An implied new lease may result even if there F. There are 7 instances when there is
is an express stipulation to the contrary NO Implied New Lease, one of which is
when there is a stipulation against
renewal. (Agalo-os v. IAC, G.R. No. L-
67220, May 7, 1987)
133An implied new lease is for the same period as T. Art. 1672. In case of an implied new
the original lease but a guaranty executed by a lease, the obligations contracted by a
3rd person in favor of the lessor shall cease third person for the security of the
with respect to the new lease principal contract shall cease with
respect to the new lease.
134Rights of Lessee 1. Demand delivery of thing
2. Peaceful and adequate enjoyment
for entire duration
3. Sublease (UNL stipulation to
contrary)
4. Choose between proportional
reduction of rent and rescission
of lease if thing is partially
destroyed by fortuitous event
5. Suspend payment
6. Terminate lease if in condition
that brings imminent/serious
danger
7. ask for proportional reduction if
urgent repairs last for more than
40 days ​

135Grounds for ejectment Art. 1673.

(1) When the period agreed upon, or
that which is fixed for the duration of
leases under Articles 1682 and 1687,
has expired;
(2) Lack of payment of the price
stipulated;
(3) Violation of any of the conditions
agreed upon in the contract;
(4) When the lessee devotes the thing
leased to any use or service not
stipulated which causes the
deterioration thereof; or if he does not
observe the requirement in No. 2 of
Article 1657, as regards the use thereof
136Destruction of thing by FE obligates lessor to FALSE. Art 1655 – If the thing leased is
rebuild the thing leased totally destroyed by a fortuitous event,
the lease is extinguished. If the
destruction is partial, the lessee may
choose between a proportional
reduction of the rent and a rescission of
the lease.
137Failure to pay rentals makes possession FALSE. Mere failure to pay rental does
unlawful not make the possession unlawful
unless coupled with a refusal on part of
lessor to pay after lawful demand.
138Provision in contract of lease that FALSE. No need to apply the rules on
improvements introduced by lessee will accrue sales of property. A provision in a
to lessor upon termination of lease shall be contract of lease that the lessor becomes
governed by rules on sale of property the owner of all improvements
introduced by the lessee upon the
termination of the lease is a valid
stipulation. A stipulation that all
 improvements introduced by the lessee
would accrue to the benefit of the
owner at the end of lease without any
reimbursement binds its parties and is
the law between them, the same not
being contrary to law, morals, public
order, and public policy. (Lhuillier v.
CA)
139Lessor may terminate lease when rentals are TRUE. Art. 1659 - If the lessor should
not paid without need of court action not comply with the obligations set
forth in Articles 1654 and 1657, the
aggrieved party may ask for the
rescission of the contract and
indemnification for damages, or only
the latter, allowing the contract to
remain in force.
140Contract of sale entered in violation of right of TRUE. A deed of sale entered in
1st refusal is valid violation of right of first refusal is valid
but rescissible under Art. 1380 to 1381
(3) of the Civil Code. (Guzman,
Bocaling & Co v. Bonnevie)
141Lessee in a lease of rural lands has a right to FALSE. Art. 1680 – The lessee shall
reduction of rental on account of sterility of have no right to a reduction of the rent
land and for loss of fruits due to extraordinary on account of the sterility of the land
and unforeseen event. leased, or by reason of the loss of fruits
due to ordinary fortuitous events; but
he shall have such right in case of the
loss of more than one-half of the fruits
through extraordinary and unforeseen
fortuitous events, save always when
there is a specific stipulation to the
contrary.

Extraordinary fortuitous events are

understood to be: fire, war, pestilence,
unusual flood, locusts, earthquake, or
others which are uncommon, and which
the contracting parties could not have
reasonably foreseen.
142A provision in a contract of lease that all FALSE. A stipulation that all
improvements introduced by lessee without improvements introduced by the lessee
reimbursement is not valid. would accrue to the benefit of the
owner at the end of lease without any
reimbursement binds its parties and is
the law between them, the same not
being contrary to law, morals, public
order, and public policy. (Lhuillier v.
CA)
143Lease of determinate time ceases upon day T. Art. 1669. If the lease was made for a
 fixed without need of demand. determinate time, it ceases upon the day
fixed, without need of a demand.
144In an express trust, acceptance by the trustee is F. Art. 1445. No trust shall fail because
necessary for creation of trust. the trustee appointed declines the
designation, unless the contrary should
appear in the instrument constituting
the trus.
145Acceptance by beneficiary is not necessary for F. Art. 1446. Acceptance by the
the creation of express trust. beneficiary is necessary. Nevertheless, if
the trust imposes no onerous condition
upon the beneficiary, his acceptance
shall be presumed, if there is no proof
to the contrary.
146A trustor may or may not have the capacity to F. Trustor must have capacity.
transfer the property.
147An express trust is created by mere declaration F. It is created by direct and positive
of trustee that he holds property in trust acts of parties.
148Trusts over real property are enforceable in T. Implied trusts take effect by
any form operation of law.
149Trustee can acquire trust property by adverse F. Trustee must perform unequivocal
possession even w/o repudiation of trust. acts of repudiation.
150In order to bind 3rd persons to a trust, same F Personal property – proved by oral
must be in a public instrument. evidence; Real property – public
instrument
151Statute of limitations apply to express trust. F Express trusts do not prescribe as
long as they have not been repudiated
152Constructive trust is imposed by law to carry F. Resulting
out the actual or presumed intent of the parties
if express trust is prejudicial to the interest of
beneficiary
153Resulting trusts are established by law, F Constructive
regardless of intention, in order to prevent
fraud, oppression or unjust enrichment.
154No express trust concerning an immovable T
property or any interest may be proven by
parole evidence
155There is a resulting trust when a donation is T
made to a person but appears thought the legal
estate is transmitted to donee, he nevertheless
is either to have no beneficial interest or only a
part thereof
156There is a constructive trust when land passes T
by succession and causes the legal title to be
put in name of another.
157There is a constructive trust if the price of sale T. Art. 1450. If the price of a sale of
of property is loaned or paid by 1 person for property is loaned or paid by one
benefit of another and conveyance is made to person for the benefit of another and
lender or payor to secure payment of debt the conveyance is made to the lender or
 payor to secure the payment of the
debt, a trust arises by operation of law
in favor of the person to whom the
money is loaned or for whom it is paid.
xxx
158Laches is a defense in resulting trusts unless T. No laches exists in respect of failure
beneficiary had no knowledge of facts to assert a resulting trust of which a
beneficiary has no knowledge or of
which he is not chargeable with
knowledge. [Diaz v. Gorricho]
159n express trusts, statute of limitations does not T. A trustee (express or implied trust)
apply to subsisting and continuing trusts so cannot acquire by prescription
long as there is no denial or repudiation ownership over the property entrusted
thereof to him until and unless he repudiates
the trust [Vda. de Esconde v. CA]
160An oral trust is sufficient in case of trust over T. Express trust over an immovable
personalty need be written for enforceable, not
validity (Art. 1443). By implication, for
a trust over personal property, an oral
trust/agreement is sufficient between
the parties.
161In case of impossible trust, court may T. Under the doctrine of equitable
authorize deviation in interest of trust. deviation, a court may effect a change
in the express administrative provisions
of a trust in order to accomplish the
trust's express purpose.
162No need for trustee to render an account under F. Under ROC, he must render under
oath. oath at least 1x a year until his trust is
fulfilled, unless he is excused, a true
account of the property in his hands
and the management and disposition
thereof, and will render such other
accounts as the court may order.
163Trustor cannot prohibit alienation for a period T
of more than 25 years
164TRUST T

Merger is a mode of extinguishment of

implied or express trust.
165TRUST F It prescribes in 10 years

In an implied trust over a parcel of land, action

to recover must be brought within 5 years
from issuance of title to property

ENUMERATIONS (LEASE)
Characteristics of contract of lease

1. Consensual
2. Bilateral
3. Onerous
4. Commutative
5. Temporary

Who needs SPA to register

1. Husband – wife's paraphernal real estate
2. Father/guardian – minor or ward
3. Manager/administrator

Obligations of a lessor

1. Deliver the thing

2. Necessary repairs
3. Peaceful and adequate enjoyment of lessee
4. Warrant – eviction, hidden defects
5. Not to alter the form to impair its use
6. Permit outgoing lessee to do whatever may be necessary
(lease of rural lands)

Remedies in case of breach of lessor’s obligations

1. Rescission + damages
2. Damages only

Rights of Lessee
1. Demand delivery
2. Peaceful and adequate enjoyment
3. Sub-lease Choose (reduction of rent and rescssion)
4. Suspend payment
5. Terminate lease
6. Ask for proportional reduction of rent
Obligations of Lessee

1. Pay price
2. Pay expenses for deed
3. Use as a DGOAF
4. Notify lessor of every usurpation or untoward act of 3rd
person
5. Notify owner of need for urgent repairs
6. Tolerate works of lessor for urgent repairs
7. Return tjing upon termination
8. Liable for loss or deterioration due to his own F/N
9. Liable for loss or deterioration caused by his household,
guest, vistors

Remedies in case of breach

1. Rescission + damages
2. Damages only
3. Rescission and judicial ejectment
4. Unlawful detainer

Lessee shall have a right to reduction in case of loss of more

than ½ of the fruits

1. Extraordinary and unforeseen FE

2. No stipulataiton
3. Not lost after they have been separated from stalk, root or
trunk

Obligations of sub-lessee

1. Bound to lessor for all acts on use and preservation

2. Subsidiary liable to lessor for any rent due to lessee
EXC to the rule that purchaser of piece of land may
terminate the lease

1. Stipulation to contrary
2. Purchaser knows of the existence of lease
3. Fictitious sale

REQS: Implied new lease

1. Expired terminated
2. No notice to vacate
3. Continued enjoyment for 15 days w/ acquisence of the
lessor

Periods of lease
1. Year to year
2. Month to month
3. week to week
4. day to day

Courts may fix a longer terminated

1. More than 1 year occupation
2. Over 6 months possession, if weekly
3. Over 1 month stay, if daily

Right to ejectment
1. Expiration of period
2. Lack of payment of price
3. Violation of conditions agreed upon
4. Devotion of the thing to any use/service not stipulated
which causes deterioration

Lesssor's options in case of useful improvements

 1. Pay lessee ½ of value of improvements
2. Refuse to reimburse but allow lessee to remove

Obligations of contractor
1. Produce the work
2. Deliver thing
3. Warranty of title
4. Warranty vs hidden defects
5. Pay the price to 3rd party seller
6. Execute work as to qualities agreed upon
7. Remove defect or execute another work

Contract is still liable in case of acceptance of defects

1. Hidden defect + cannot expect
2. ER to recognize
3. ER reserves his rights against contractor for HD

EXC to the rule that contractor cannot claim compensation

if work destroyed before delivery
1. ER delays in receiving
2. Result of poor quality of material

Equitable compensation
1. Cannot complete on account of defect in material furnished
by ER
2. Orders from ER, w/o any fault on contractor

Engineer is liable
1. Drew up plans and specifications
2. Collapsed w/in 15 years from completion
3. Defect in plans/specifications/ground Filed w/in 10 years
following collapse

Contractor and EA are solidarily liable

 1. difice falls w/in 15 years from completion
2. Defects in construction/use of inferior quality materials
3. EA supervised the construction
4. Filed w/in 10 years following collapse

Remedies of contractor in case of increase in costs

1. Withdraw from contracting
2. Demand an increase in price

Requisites of demand in increase of price

1. Change in plans/specifications
2. Authorized by proprietor in writing
3. Additional price to be paid has been determined in writing
by both parties

Contract is rescinded w/o contractor's fault

1. Death of contractor
2. Cannot finish work due to circumstances beyong his
control (de leon)

Kinds of lease
1. Things
2. Works
3. Service

PART III. AGENCY

(already includes Samplex for Partnership & Trust)

QUESTIONS SUGGESTED ANSWERS

166Insolvency, for the purposes of stoppage in FALSE
transitu, must be declared by a court of
competent jurisdiction.
167STI may be exercised even if the ownership in TRUE
the goods may have passed to the buyer.
168Warranty against eviction applies to a tax sale. TRUE
169The sale of a 3-month old calf for
breeding purposes raises an IW of
witness for breeding.
170The sarisari store owner impliedly
warrants fitness for human
consumption of a bottle of Ginebra
sold.
171If a vendee will lease the thing sold
with pacto de recto to the seller, rules
on mutuum apply.
172A verbal assignment of credits
followed by tradition shall have effect
on 3rd persons because the ownership
acquired by the assignee is a real right.
173Among 3 adjoining owners of 5,000
sqm agricultural lot sold to a stranger,
who has the preferred right of
redemption?
174The lessee of a room in a boarding
house is entitled to the continuation of
the same if owner rebuilds.
175In an action for rescission filed by
lessor for non-performance by lessee
of obligations, court has the discretion
to grant lessee a longer period for
performance.
176In an express trust, acceptance by the
trustee is necessary for creation of
trust.
177Acceptance by beneficiary is not
necessary for the creation of express
trust.
178TRUST -
A trustor may or may not have the
capacity to transfer the property.
179TRUST -
An express trust is created by mere
declaration of trustee that he holds
property in trust.
180TRUST -
Beneficiary is the person for whose
benefit the property is held by the
trustee.
181TRUST -
Trusts over RP are enforceable in any
form
182TRUST -
FALSE
TRUE
FALSE. The contract shall be presumed
to be an equitable mortgage when the
vendor remains in possession as lessee
or otherwise.
FALSE. An assignment of credit
produces no effect against third persons
unless it appears in a public
instrument.
Owner of the adjoining land of smaller
area. But if lands have the same area, to
the one who first requested the
redemption.
F
FALSE. Article 1659 follows the
general rule in Article 1191 with the
difference that under the former, there
is no discretion granted to an obligor
for additional time for performance.
F Not necessary (trustee).
F Necessary (beneficiary)
F Trustor must have the capacity.
An express trust is created by mere
declaration of trustee that he holds
property in trust.
T
F
F Trustee must perform unequivocal
 Trustee can acquire trust property by acts of repudiation
adverse possession even w/o
repudiation of trust.
183TRUST - T
In order to bind 3rd persons to a trust,
same must be in a public instrument.
184TRUST - F Express trusts do not prescribe as
Statute of limitations apply to express long as they have not been repudiated
trust.
185PARTNERSHIP - T

There is partnership when two or more

persons bind themselves to contribute
money, property, reputation or industry
in a common fund, with the intention
of dividing the profits among
themselves.
186A contract of partnership may be F. Public instrument and inventory are
commenced in any form, except when required.
a parcel of land is contributed in which
case the contract must be in a private
or public instrument
187Husband and wife may enter Into a T
partnership for the exercise of a
profession.
188The sharing of gross returns results to a T
prima facie presumption of
partnership.
189A person who not being a partner in F Persons who, not being partners,
fact allows his name to be included in include their names in the firm name do
the firm name may subject himself to not acquire the rights of a partner.
the liabilities of a limited partner. Liable as general partner
190Appraisal of goods contributed to the T
partnership must be based on the value
at the time of the perfection of contract
if different from delivery.
191An industrial partner may engage T
himself in any other business with the
authority of other partners
192An industrial partner may engage F All partners are considered agents,
himself in any other business with the regardless of amount of capital
authority of other partners contributions.
193The capitalist partners may exclude F. Since also a capital owner
from the partnership an industrial
partner who engages himself in a
business without the required authority
even if the industrial partner also
contributed a parcel of land to the
partnership.
194A limited partner is a partner in a
partnership
195A limited partner who is also a general
partner is liable to the creditors of the
partnership only up to his contribution
196Limited partnership is dissolved upon
retirement, death, insolvency, insanity
or civil interdiction of a general
partner.
197A contract of agency to sell personal
property is a real contract that would
require the delivery of the thing sold.
198A partnership is formed even if no
inventory and public instrument of real
properties contributed to the
partnership was made.
199Partnership
Universal partnership of all present
property includes title to all present
and future property as well as future
properties acquired by gratuitious title.
200Partnership
A contract of partnership with a capital
of 3000 pesos must appear in a public
instrument and recorded with the SEC
to be enforceable.
201Partnership
Those prohibited from giving each
other any donation or advantage is
prohibited from entering into any
partnership.
202Partnership
T
F A person who is a general, and also at
the same time a limited partner, shall
have all the rights and powers and be
subject to all the restrictions of a
general partner; except that, in respect
to his contribution, he shall have the
rights against the other members which
he would have had if he were not also a
general partner.
TRUE ARTICLE 1860. The
retirement, death, insolvency, insanity
or civil interdiction of a general partner
dissolves the partnership, unless the
business is continued by the remaining
general partner
FALSE Article 1316. Real contracts,
such as deposit, pledge and
commodatum, are not perfected until
the delivery of the object of the
obligation.
F A contract of partnership is void
whenever immovable property is
contributed thereto, if an inventory of
said property is not made, signed by the
parties, and attached to the public
instrument.
F In a universal partnership of all
present property, the property which
belong to each partners at the time of
the constitution of the partnership,
becomes the common property of all
the partners, as well as the profits
which they may acquire therewith.
F It does not affect the juridical
personality
F Prohibition only applies to universal
partnership
F only applies to losses
 A stipulation excluding an industrial
partner from any share in the profits or
losses is valid.
203Partnership
An industrial partner is exempt from
payment of liabilities to his creditors.
204Partnership
A transfer of a partner’s entire interest
in the partnership to his only partner
dissolves the partnership
205Partnership
In voluntary transfer of a partner’s
interest in the partnership, the assignee
becomes a partner _________ partners’
consent thereto.
Assuming: msising word is 'without'
206A person admitted as partner in an
already existing partnership is also
liable with his individual properties in
all obligations of the partnership
arising before his admission unless
there is a contrary stipulation
207A commission agent cannot sell on
credit goods or items without the
express or implied consent of the
principal.
208An agency ‘coupled with an interest’
survives the grantor’s death
209In case there are two or more
principals, any one of them may
revoke the agency provided the
consent of the other is sought
210Constructive trusts are imposed by the
law to carry out the actual or presumed
intent of the parties if the express trust
is prejudicial to the interest of the
beneficiary
211Resulting trust is established by law
regardless of the intention of the
parties in order to prevent fraud,
F All partners, including industrial
ones, shall be liable pro rata with all
their property for the contracts which
may be entered into in the name and for
account of the partnership.
T
F Their consent is needed for assignee
to become a partner.
F His liability shall be satisfied only out
of partnership property, i.e. out of his
share.
T
T
F Art. 1925. When two or more
principals have granted a power of
attorney for a common transaction, any
one of them may revoke the same
without the consent of the others.
F Constructive trusts are created in
order to satisfy the demands of justice
and prevent unjust enrichment. They
arise against one who, by fraud, duress
or abuse of confidence, obtains or holds
the legal right to property which he
ought not, in equity and good
conscience, to hold.
F Resulting trust is one in which the
intention to create a trust is implied or
presumed in law. Constructive trust is
 oppression or unjust enrichment.
212No express trust concerning an
immovable or any interest therein may
be proved by parol evidence.
213There is resulting trust when a
donation is made to a person but it
appears that although legal estate is
transmitted to the donee, he
nevertheless is either to have no
beneficial interest or only a part
thereof.
214There is a constructive trust when land
passes by succession to any person and
he causes the legal title thereto to be
put in the name of another
215There is constructive trust if the price
of the sale of property is loaned or paid
by one person for the benefit of
another and the conveyance is made to
the borrower but mortgaged to secure
payment of the debt.
216Laches is a defense in resulting trusts
unless the beneficiary had no
knowledge of the facts.
217In express trusts, the statute of
limitations does not apply in subsisting
and continuing trusts so long as there is
no denial or repudiation thereof.
218The sharing of gross returns is
sufficient to establish partnership.
219Special capacity to contract is required
of the parties to a contract of
partnership.
220When an unlawful partnership is
dissolved by a judicial decree, the
profits and unlawful objects shall be
confiscated in favor of the State.
221A partnership of all present property
comprises all that the partners may
acquire by the industry of work during
the existence of the partnership
the one which is imposed by law
regardless of the intention of the parties
to promote justice, frustrate fraud and
prevent unjust enrichment.
T
T
Art 1449 NCC
F Resulting trust.
F Constructive trust is created when
purchase of property leads to its title
being placed in the name of the person
who loaned the purchase price as a
security for payment of the debt and
not when conveyance was made to the
borrower.
T
Whether it is resulting or constructive,
laches constitutes a bar to enforce trust,
and repudiation is not required, unless
there is concealment of facts.
T
GR: action does not prescribe
XPN: there is repudiation and no action
has been filed within 10 years from the
time when beneficiary had been
informed of the repudiation.
F The sharing of gross returns does not
of itself establish a partnership.
F The presence of the essential elements
and the legal capacity of the parties to
enter in a contract is sufficient
T. Art 1770
F Universal partnership of profits and
not all present property. Art 1780
222In case of doubt, the articles of F It shall be considered universal
universal partnership shall constitute a partnership of all profits not properties.
partnership of all present property Art 1781
since it involve less transmission of
rights.
223When a partnership for a fixed term or F Not always, only if it is consistent
particular undertaking is continued with a partnership at will. Art 1785
after the termination of such term or
particular undertaking without any
express agreement, the rights and
duties of the partners remain the same
as they were at such termination for the
same period as initially fixed in the
contract of partnership.
224Important alterations in the immovable F This is a strict act of dominion which
property of partnership, if useful and requires the consent of all. Art 1804
beneficial to the partnership, is by
mere act of administration and may be
made upon the financial majority.
225Strangers are bound to inquire into the F Every partner is an agent of the
existence of any restriction of authority partnership. No need to inquire so long
on the part of the partner. as the act of the partner is apparently
for the carrying on of business of the
partnership in the usual way which he
is a member binds the partnership. Art
1818
226Misappropriation of one partner binds T. Art 1823
the partnership when the partner in the
course of business receives money or
property of a third person and the
money or property so received is
misapplied without the knowledge of
the other partners.
227If a person specially informs another or T
states by public advertisement that he
has given a power of attorney to a third
person, the holder thereby becomes a
duly authorized agent, in the former
case with respect to the person who
received the special information and in
the latter case with regard to any
person even if the latter did not read
the publication when he transacted
with the agent
228A special power of attorney is F Article 1878 (6) provides that a
necessary to make gifts for charity or special power of attorney is needed to
to employees in the business managed make gifts, except customary ones for
by the agent. charity or those made to employees in
the business managed by the agent.
229A special power of attorney is
necessary to loan or borrow money,
unless the latter act be urgent and
indispensable for the improvement or
preservation of the things which are
under administration.
230An agent may be relieved by
agreement from the obligation to make
an accounting
231If the commission agent receives
guaranty commission in addition to
ordinary commission, the agent shall
bear the risk of collection and shall pay
the principal the proceeds of the sale
on the same terms agreed upon with
the purchaser unless the principal
consented to the sale on credit.
232If the third person does not know that
the agent exceeded the scope of his
authority, he may hold the agent liable
as well as the principal, even if he has
not inquired into the authority of the
agent.
233Agency by ostensible authority
consists in the conscious permission of
acts beyond those powers granted.
234If two or more principals have
appointed an agent for a common
transaction or undertaking, they are
jointly liable unless solidarity is agreed
upon
235An agency is not revoked by the
principal’s death if it has been
constituted in the interest of a third
person without notice or knowledge of
the interest.
236An oral trust is sufficient in case of
trust over personalty.
237in case of an impossible trust the court
may authorize deviation in the interest
of the trust.
T
F The agreement is void based on
Article 1891 par. 2. The agent has an
absolute duty to render an accounting
to his principal of all transactions and
material facts that may have some
relevance with the agency.
F General rule still apply even in
consented credit.
F. The third person cannot hold the
principal liable in case the agent has
exceeded his powers, except: a) when
the principal ratifies the contract either
expressly or impliedly or b) when the
principal allowed the agent to act as
though he had full powers (Rabuya);
see also Art. 1898.
T (De Leon, p. 561)
F. Art. 1915 If two or more persons
have appointed an agent for a common
transaction, they shall be solidarily
liable to the agent for all the
consequences of the agency.
F. Art 1930 The agency shall remain in
full force and effect even after the death
of the principal, if it has been
constituted in the common interest of
the latter and of the agent, or in the
interest of a third person who has
accepted the stipulation in his favor
T
T
238There is no need for the trustee to
render an account under oath.
239The trustor cannot prohibit alienation
for a period more than 25 years.
240Merger is a cause for the termination
of an implied or express trust.
241In an implied trust, the action to
recover must be brought within 5 years
from the issuance of title to the
property.
242Partnership
A partner may transfer his interest to
another over the objection of other
partners
243A secret and silent partner is one who
has no voice in the management of the
partnership and is not known to the
partners
244The partnership begins from the
moment it is recorded in the SEC.
245The fruits to the property promised to
be delivered should also be delivered
without exception.
246In case of imminent loss of the
business of the partnership, an
industrial partner shall be required to
contribute additional service to the
partnership.
247An industrial partner can engage in
other business but must not compete
with the partnership, unless otherwise
F
T
T
F. The action to recover must be
brought within 10 years. The obligation
of the trustee in the implied trust is
created by law. It follows that actions to
enforce obligations prescribe within 10
years from accrual of the action.
T
F.
A secret partner is one that takes active
part in the business but is not known to
be a partner by outside parties nor held
out as a partner by the other partners,
while a silent partner is one that does
not take active part in the business
although he may be known to be a
partner, thus he need not be a secret
partner
F.
A partnership begins from the moment of
the execution of the contract, unless it is
otherwise stipulated.
F.
Subject to exceptions. If the partner is
in bad faith, he is liable not only for the
fruits actually produced, but also for
those that could have been produced.
F.
Article 1791 expressly provides that
that industrial partner is exempt from
contributing to the business of the
partnership in case of imminent loss.
F.
Article 1780 expressly provides that the
industrial partner cannot engage in
 stipulated.
248A partner, as agent, cannot assign
partnership property in payment of
partnership debt.
249Partnership
Dissolution terminates the partnership
250Partnership
Insolvency of a partner is one of the
causes for voluntary dissolution of a
partnership.
251Partnership
In case of an agreement between a
partner, the partnership debtors and the
persons continuing the business, a
partner may be discharged from
liabilities.
252Partnership
Creditors of the old partnership are no
longer considered as creditors of the
continued partnership
253Partnership
The individual property of a deceased
partner, whose name is being used by
the continuing partnership, shall be
held liable for debts contracted after
his death.
business for himself, unless the
partnership expressly permits him to do
so.
Art. 1789 - and if he should do so, the
capitalist partners may either exclude
him from the firm or avail themselves
of the benefits which he may have
obtained in violation of this provision,
with a right to damages in either case.
F.
Article 1818 - a partner may assign the
partnership property in trust for
creditors or on the assignee's promise to
pay the debts of the partnership,
provided that it is approved by all the
partners.
F The partnership, although dissolved,
continues to exist until its termination,
at which time the winding up of its
affairs should have been completed and
the net partnership assets are
partitioned and distributed to the
partners
F Involuntary.
F A partner is discharged from any
existing liability upon the dissolution of
the partnership by an agreement to that
effect between himself, the partnership
creditor and the person or partnership
continuing the business;
F In such case, the law makes the
creditors of the dissolved partnership
also creditors of the persons or
partnership continuing the business.
F Exemption from liability to creditors
of a dissolved partnership
254Partnership F He cannot contribute services

A limited partner may contribute

services to the partnership.
255Partnership F With respect to the partnership
creditors.
A limited partner’s surname may
appear in the partnership name but he
becomes a general person with respect
to the partners and third parties.
256Partnership T

A substituted partner is one admitted to

all the rights of a limited partner.
257Partnership T

An assignee of a limited partner

acquires the rights of the assignor.
258An agent may be bound to render
service without compensation provided
there is a special power of attorney.
F. Agent is entitled to stipulated
compensation.
The effect of an SPA is to bind the
principal to render service gratuitously
(De Leon, p. 421)

“The agent may, by contract, bind

himself to render service without
compensation. (Art. 1875.) However, to
bind the principal
to that effect, a special power is
necessary.”
259In all cases, a special power of attorney F It is not necessary if it is urgent and
is necessary to loan or borrow money. indispensable for the preservation of
the things which are under
administration. (De Leon, p. 420)
260A special power to compromise False. Art 1880. A special power to
authorizes submission to arbitration. compromise does not authorize
submission to arbitration.

261Partnership T

There is an implied acceptance if the

principal delivers his power of attorney
to the agent and the latter receives it
without objection

262An agent may be exempted from False.

rendering an accounting
An agent is bound to render an
accounting of his transactions x x x.

263If the principal does not mention the
power to substitute at all, the agent
may appoint one but he is responsible
for the acts of the substitute
264An agency is gratuitous unless
compensation is agreed upon.
265The accomplishment of the object of
the agency extinguishes an agency
even prior to the final accounting
266An agency at will is revoked even if
the revocation is not brought to the
knowledge of the agent.
267Partnership
When a partner by estoppel combines
with another partner and on the
strength of representation, contracted
with a third person, both of them are
liable pro rata.
268Partnership
A partner is a co-owner of the other
partners with respect to the
undistributed net profits of the
partnershi
269Partnership
Winding up may be done by mere
Any stipulation exempting the agent
from the obligation to render an
accounting is VOID. Soriano p. 578)
True.
When the power of attorney does not
expressly authorize or prohibit the
appointment of a substitute (if silent),
the agent may appoint a substitute.
However, he shall be responsible for the
acts of the substitute. (Art. 1892)
False.
Agency is onerous, presumed to be for a
compensation, unless there is proof to
the contrary. (Art. 1875)
True. Art 1919 (5) on modes of
extinguishing agency - by the
accomplishment of the object or
purpose of the agency.
As for accounting, the fiduciary duties
imposed on the agent may continue
even termination of the relationship.
For example, a former agent is under
obligation to account for all profits
arising out of the agency relationship.
De Leon, p. 338
True
A revocation without notice to the agent
will not render invalid an act done in
pursuance of the authority. De Leon, p.
590
T
F. Refers only to specific partnership
property.
T
 assignee in exceptional circumstances.
270Partnership T

A decree of dissolution of a partnership

may be granted upon application of the
purchaser of partnership interest in
case of termination of term or
undertaking.
271Partnership T

Except as necessary for winding up,

dissolution terminates all authority of
partners to act for the partnership
272Partnership F

After dissolution, a partner can bind

the partnership by any transaction
which would bind the partnership if
dissolution had not taken place,
provided the other party to the
transaction had extended credit to the
partnership after dissolution.
273Partnership F Where a person enters into a new
contract with a third person after
Dissolution necessarily discharges a dissolution, the new contract generally
partner of liability for obligations will bind the partners. Each of them is
incurred thereafter. liable for his sharr of any liability
created by the acting partner as if the
partnership had jot been dissolved
274Partnership F Not insolvent

Unless otherwise agreed, the partners

who have not wrongfully dissolved the
partnership or the legal representative
of the last surviving insolvent partner,
has the right to wind up the partnership
affairs, provided, however, that any
partner, his legal representative or his
assignee, upon cause shown, may
obtain winding up by the court.
275Partnership T

When partnership agreement is

rescinded on the ground of fraud or
misrepresentation, partners who are not
guilty shall have the right to
subrogation for any payments made by
them of partnership liabilities.
 ALABANG Quiz #3
(April 1,2022) -T/F
(No answer key provided. If you have alternative answers, pa-share nalang
po)

1 The failure of a vendee to take exclusive True. It is one of the badges of fraud (
possession of the object of sale may indicate Orsal vs Alisbo G.R.No. L-13310)
that the sale was fraudulent.
2 Consumable goods may not be the subject False. ART. 1645. Consumable goods
matter of a contract of lease cannot be the subject matter of a
contract of lease, except when they are
merely to be exhibited or when they
are accessory to an industrial
establishment.
3 Proof of large indebtedness is not a vice of Same ba ang BADGES at VICES of
fraud. fraud??? Assuming na same…

False. GONZALEZ v. JOSE

MCMICKING - proof of large
indebtedness is one of the badges of
fraud.

Others are: (9 Badges of Fraud)

1. The fact that the consideration
of the conveyance is fictitious or
is inadequate.
2. A transfer made by a debtor
after suit has been begun and
while it is pending against him.
3. A sale on credit by an insolvent
debtor.
4. Evidence of large indebtedness
or complete insolvency.
5. The transfer of all or nearly all
of his property by a debtor,
especially when he is insolvent
or greatly embarrassed
financially.
6. The fact that the transfer is
made between father and son,
where others of the above
circumstances are present.
7. The failure of the vendee to take
exclusive possession of the
property sold.
8. Gross disparity between the

4 The fulfillment of a joint obligation to
deliver a carabao requires the concurrence
of all debtors
5 If an earnest money is already paid, a
contract of sale is already perfected
6 Payment of natural obligation by a solidary True.
debtor gives him the right against his co-
debtors for their respective shares
price and the value of the
property
9. At the time of the conveyance,
the vendee was living with the
vendor and the former knew
10. that there was judgment
against the latter.
True. Even though the GR is that in
joint obligations, each debtor is only
liable for their proportionate share, if
the prestation is one incapable of
partial delivery, all debtors must
deliver simultaneously.
False. The payment of an earnest
money does not cause the perfection of
the contract, but the meeting of minds
between the parties as to the
thing/object of the contract and the
purchase price.
GR: Fulfillment or performance is
voluntary when the obligor knew that
the obligation cannot legally be
enforced.

XP: Payment by mistake, the obligor

believing the obligation to be a civil
one, may be recovered on the principle
of solutio indebiti. De Leon, p. 825

7 Art.1544 of the Civil Code on double sale False. Article 1544 has no application
will also apply to sales involving to lands not registered with the
unregistered land. Torrens system. If the sale is not
registered, it is binding only as
between the seller and the buyer; it
does not affect innocent
third persons. De Leon, p. 269

8 The rule on relativity of contracts applies to False.

a contract entered into by the gestor in
negotiorum gestio.
In the quasi-contract of negotiorum
gestio, the owner is bound in a proper
case, by contracts entered into by the
“gestor’’ (unauthorized manager).

This is inconsistent with the rule on

negotiorum gestio which provides that
contracts take effect only between the
 parties, their assigns and heirs. (De
Leon, p. 475; p. 446)

9 A contract of lease may be for an indefinite True. The period may be definite or
period. indefinite. In any case, the period is
temporary, not perpetual.

10 The power to administer property must be in False. It must appear in a public

a public document to be enforceable. document only for the convenience of
the parties.

Basis: Art. 1358. Must be in a public

document HOWEVER the contracts
covered by this article are valid and
enforceable
though not embodied in a public
document or instrument or in writing.

The public document is required only

for the convenience and greater
protection of the parties and
registration is needed only to make the
contract effective as against third
persons. (De Leon, p640)
11 A contract between a minor and insane is False. It is unenforceable.
VOID. ​
12 The lessor is obliged to answer even for a False. The lessor is not obliged to
mere act of trespass which a third party may answer for a mere act of trespass
cause on the use of the thing leased but the which a third person may cause on the
lessee shall have a direct action against the use of the thing leased; but the lessee
intruder. shall have a direct action against the
intruder. (Article 1664, CC)
13 A representation that a product being sold is False. Article 1340. The usual
the best in the world even if it is not, is exaggerations in trade, when the other
fraudulent. party had an opportunity to know the
facts, are not in themselves fraudulent.
14 Upon annulment of the contract, a minor has True. When the defect of the contract
no obligation to make restitution of what consists in the incapacity of one of the
had been received without proof that he was parties, the incapacitated person is not
benefited thereby. obliged to make restitution except
insofar as he has been benefitted.
15 In an equitable mortgage, a separate action F. In the case of Rosario v Alvar, the
for reformation of instrument is necessary Court held that the filing of a separate
before foreclosure as a court declaration that complaint for reformation of
the parties’ intention was to execute an instrument is no longer necessary
equitable mortgage is not equivalent to a because it would only be redundant
reformation of the instrument and a waste of time
16 The lessor has a direct action against a sub- T. Lessor may bring direct action
 lessee for unpaid rent against sub-lessee (action directa)
17 A sale by guardian of a parcel of land F. Art. 1381 The following contracts
belonging to his ward without judicial are rescissible:
approval where the ward suffered (1) Those which are entered into by
lesion/damage equivalent to ⅓ of the value guardians whenever the wards
of the property is not rescissible whom they represent suffer
lesion by more than one-fourth
of the value of the things which
are the object
thereof ​ ​ ​
​
18 Statement of willingness to buy
a T. REQUISITES OF A VALID
determinate car is a valid offer OFFER:
i. Offeror must have a serious
intention to
become bound by his offer;
ii. Terms of the offer must be
reasonably
certain, definite and complete, so that
the parties and the court can ascertain
the terms of the offer;
iii. The offer must be communicated
by the offeror to the offeree, resulting
in the latter’s knowledge.
19 Vices of consent that affects cognition FALSE. Incapacity not included.
includes incapacity, error and fraud
The vices of consent are the following:
a) Violence
b) Intimidation
c) Mistake
d) Fraud
e) Undue influence

Incapacity is not included.

20 In a potential sale transaction, the prior FALSE. First Optima Realty Corp. vs.
payment of earnest money even before the Securiton Security Services. In a
property owner can agree to sell his property potential sale transaction, the prior
can be used to bind the owner to the payment of earnest money even before
obligations of a seller under an otherwise the property owner can agree to sell
perfected contract of sale. his property is irregular and cannot be
used to bind the owner to the
obligations of a seller under an
otherwise perfected contract of sale.
21 There is simulation if the disagreement F.
between the true and apparent will, or intent Both parties must bind themselves
is not by agreement of all the parties but
exists only in 1 of them.
22 The principal has a subrogatory right against T (Samplex answer)
a sub-agent for damages incurred through
 the latter’s fault.
23 A threat to file a disbarment case against a
lawyer if he will not issue a promissory note
for the return of attorney’s fees collected
will constitute vitiation of consent
24 An action for annulment must be filed
within 4 years from the perfection of the
contract if consent was vitiated by violence.
25 Exceptionally, contracts may have as objects
future things such as future inheritance.
26 Where the contract is entirely illegal and
both parties are equally guilty, there may be
an action by one against the other.
27 In Art. 1544, a second buyer may still claim
good faith even if the first buyer was
already in possession of the property at the
time of the sale, if the seller assured second
buyer that the alleged first buyer was merely
a lessee.
28 When there is vice of consent, the contract
is rescissible.
29 Non-payment of rent for 2 months by a False. (samplex answer)
student boarder is a valid ground for
ejectment RA. No. 6953 provides, failure to
deposit the rent for three (3) months
shall constitute a ground for
ejectment.
Under Art. 1893. “…the principal may
furthermore bring an action against
the substitute with respect to the
obligations which the latter has
contracted under the
substitution.”
F
(from contracts quiz bank)
False. Art. 1391
False.
No contract may be entered into upon
future inheritance (samplex)
Article 1347 of the New Civil Code
provides that All things which are not
outside the commerce of men,
including future things, may be the
object of a contract. All rights which
are not intransmissible may also be the
object of contracts. No contract may
be entered into upon future
inheritance except in cases expressly
authorized by law. All services which
are not contrary to law, morals, good
customs, public order or public policy
may likewise be the object
of a contract.
True. Art. 1411
True. A second buyer will only be
deemed in bad faith if at the time he
registered his sale, he knew that the
property had already been sold to
someone else.
False. If there is a vice of consent, the
contract is voidable.
30 There is simulation if the disagreement False. (samplex answer)
between the true and apparent will, or intent Both parties must bind themselves.
is not by agreement of all the parties but
exists only in one of them.
31 A contract entered into by an agent True. Art. 1403
exceeding his authority is unenforceable.
Alt: GR: The contract is VOID if the
principal does not ratify the contract
and the party with whom the agent
contracted is aware of the limitations
of the authority granted by the
principal.

The agent becomes personally liable if

he undertook to secure the ratification
by the principal. (Art. 1898)
32 It is lawful for X to wash the clothes of Y False. (samplex answer)
for a week in payment of the former’s
obligation to the latter in the amount of Art. 1232 provides that payment
P500. means NOT only the delivery of money
but also the performance, in any other
manner, of an obligation. As long as
the performance was done voluntarily
on the part of the debtor it does not
constitute involuntary servitude and
hence, may be a valid way
of fulfilling and extinguishing the
obligation
33 Where both parties are guilty in entering F (samplex answer)
into an illegal contract, the party who is Both parties have no cause of action
incapable of giving consent may still file an against each other.
action to recover what he has given.
This is the principle of in pari delicto
which is primarily governed by Art.
1411, if the acts constitute a criminal
offense, and Art. 1412, if otherwise,
under the NCC. (Constantino v. Heirs
of Constantino, G.R. No. 181508)
When both parties are at fault, neither
may recover what he has given by
virtue of contract, or demand
performance of the other’s
undertaking (Art. 1412 (1), NCC)