TRUE 1. Price must be certain or ascertainable at the time of the perfection of the contract of sale FALSE 2.

If the third person designated to fix the price is prevented from fixing the price by the fault of one of the parties, any of the parties may seek redress before the courts. False 3. In an auction sale, sale is perfected by the fall of the hammer. True 4. Sales of separate lots by auction are separate contracts of sale.

True 5. If the acceptance is made before withdrawal, it constitutes a binding contract of sale although the option is given without consideration. True 6. If the promise is supported by a consideration distinct and separate from the price, its acceptance will give rise to a perfected contract. False 7. Sale of real property or an interest therein must be in writing in order to give rise to a perfected contract of sale. False 8. Sale of personal property, wherein the price is more than P500, must be in writing to be enforceable. True 9. Where the price is so low as to be shocking to the moral conscience, judicial sale of personal property will be set aside. True 10. Where the low price indicates a vice of consent, sale may be annulled or the contract is presumed to be an equitable mortgage. False 11. Inadequacy of the price in a voluntary contract of sale affects the validity of the sale. True 12. The validity of the sale is not necessarily affected where the law gives to the owner the right to redeem, upon the theory that the lesser the price, the easier it is for the owner to effect redemption. True 13. If the term is CIF, it signifies that the price fixed covers not only the cost of the goods, but the expense of the freight and insurance to be paid by the seller. False 14. If the term of delivery is FOB shipping point, seller bears the loss until the goods reach the buyer. True 15. The seller is still the owner of the goods despite delivery if it is a sale on trial, approval or satisfaction. True 16. In sale or return, ownership passes to the buyer on delivery and subsequent return therof reverts ownership in the seller. True 17. In a sale of movable, when the quantity is more than agreed upon, the buyer may accept what has been delivered, at the contract rate. True 18. In a sale of movable, when the quantity is less than agreed upon, the buyer may accept the goods agreed upon and reject the rest.

False 19. In a sale of immovable, if the entire area could not be delivered, the vendor shall still enforce the contract but with the corresponding decrease in price. True 20. In a sale for a lump sum, the vendor is obligated to deliver all the land included within the boundaries, regardless of whether the real area should be greater or smaller.

A 21. Rhys and Emman entered into a contract whereby Rhys agreed to sell his Honda Jazz car to Emaan for P350,000. Upon the perfection of the contract, Emman advanced the entire purchase price of P350,000 to Rhys. It was, however, stipulated that the Honda Jazz car shall be delivered to Emman at the end of September 2010, after the bar exams. Unfortunately, before the arrival of that date, the car was struck by lightning ads was thus, completely destroyed. Can Emman now recover the P350,000 he had advanced to Rhys?

a. Yes, since the obligation of Rhys to deliver the Honda Jazz car is extinguished, then, the obligation of Emman to pay the price is also extinguished and in conformity with the principle of res perit domino. b. No, because it is Emman who bears the loss since he paid the purchase price even though the Honda Jazz car is yet to be delivered. c. Yes, since it involves specific goods, then the loss is imputable to Rhys for his failure to exercise the diligence of a good father of a family. d. No, since the Honda Jazz car was lost without any fault on the part of Rhys and therefore, Rhys must not suffer because of such fortuitous event.

A 22. RR sold his Sony Bravia Flat Screen TV to Tyntyn for P250,000 to be paid as follows: P100,000 upon delivery of the flat screen TV and the balance at the rate of P50,000 every 2 months thereafter. Before the payment of the remaining balance of P150,000, the Sony Bravia Flat Screen TV was burned when there was big fire in a subdivision where Tyntyns house was situated. The said fire was without the fault of Tyntyn or RR. Is Tyntyn obliged to pay the balance? (3pts)

a. No, because the subject matter was lost without Tyntyns fault. b. Yes, because ownership was already transferred to Tyntyn.

c. No, because there was no agreement between Tynty and RR that Tyntyn will be liable to pay for the balance in case there is loss before the balance is completely paid. d. Yes, because even if Tyntyn is not yet the owner of the said TV, failure to pay the balance will constitute breach of contract on her part B 23. which of the following is not applicable to the main obligation of a seller in a contract of sale?

a. The main obligation of the seller is to transfer the ownership and deliver a determinate thinh. b. the main oligation of the seller is not susceptible to an action for specific performance since it will result to involuntary servitude, which is unconstitutional. c. the main obligation of the seller is a real obligation. d. the main obligation of the seller is an obligation to give.

24. There is a stipulation in a contract of lease that if the lessor should desire to sell the leased premises, the lessee shall have a 30-day exclusive option to purchase the same. However, if it is sold to another, the lessor is bound and obliged to stipulate in the deed of sale that the purchase shall recognize the lease and be bound by all the terms and conditions thereof. What is involved in the said contract of lease? a. An option contract. b. A right of first refusal. c. Both an option contract and a right of first refusal. d. Neither an option contract nor a right of first refusal.

B 25. Tin and Charmee are long time friends. On November 1, 2009, Tin entrusted to Charmee 8 pieces of jewelry. On December 8 of the same year, Charmee decided to buy some items and issued a postdated check in the amount of P320,000. Tin deposited said check with the bank. However, said check was dishonored since the Charmees account had been closed. Tin informed Charmee of the dishonored check, then later Charmee started avoiding Tin. Charmee stressed that the transaction between her and Tin was a sale or return, perfected and consummated on November 1, 2009 when the 8 pieces of jewelry were delivered to her. Which of the ff statements is appropriate? a. On November 1, 2009, the contract entered into was a sale or return

b. On December 8, 2009, the contract entered into was a sale or return c. On November 1, 2009, the contract entered into was a sale on approval d. On December 8, 2009, the contract entered into was a sale on approval III. ESSAY 1. Distinguish Earnest Money from Option Money. (5pts) The following are the distinctions of an option money from an earnest money: 1. Both of them may be paid as considerations for an option contract and a contract of sale respectively; however, 2. Option money is given as separate and distinct consideration, and is not part of the purchase price, earnest money is part of the purchase price; 3. Once the buyer pays the option money to the seller, the former is not bound to pay the balance or purchase the property while , when the earnest money is paid by the buyer, he is obliged to pay the balance of the purchase price; 4. Option money may be a consideration for an option contract, the subject matter of which is the right or privilege to buy the property within a definite time at an agreed period, an earnest money is paid for the purchase of the subject matter o the contract of sale which is the property. 2. Mae offers to buy Xyzas property under the following terms and conditions: P1 million purchase price, 10% option money, the balance payable in cash upon the clearance of the property of all illegal occupants. The option money was promptly paid and Xyza cleared the property of illegal occupants in no time at all. However, when Mae tendered the balance and asked Xyza for the Deed of Absolute Sale, Xyza suddenly had a change of heart, claiming that the deal is disadvantageous to her as she has found out that the property can fetch P 3 million. Mae seeks specific performance but Xyza contends that she has merely given Mae an option to buy and nothing more and offers to return the option money which Mae refuses to accept. a. Will Maes action for specific performance prosper? Explain (5pts) Yes. Maes action for specific performance against Xyza will prosper. In an option contract, there should be a separate and distinct consideration which is not part of the purchase price. In the case at bar, what was entered by the parties is a contract of sale in which Xyza will deliver the determinate thing and transfer ownership to Mae after the latter will give ten percent of the purchase price as downpayment and subsequently clear the property from illegal occupants. These conditions were fulfilled thus a perfected contract of sale was already made by the parties. What was paid by Mae is earnest money and not option money. In a perfected contract of sale, the other party may seek compliance by the other because of their reciprocal obligations. Specific performance is a valid remedy in this case.

b. May Xyza justify her refusal to proceed with the sale by the fact that the deal was financially disadvantageous to her? Explain (5pts) No. Xyza has no valid ground to back-out from the perfected contract of sale if her contention is that the deal was financially disadvantageous to her. Article 19 of the New Civil Code on human relations states that every person in the exercise of his rights and in the performance of his duties shall act with equity, justice, and good faith. In the case at bar, Xyza cannot whimsically withdraw the contract without the consent of the buyer since there was already an agreement between them as to the sale of the property. (No actionable ground. Mere inadequacy not a ground.) 3. Davao Agro-Industrial Coconut Cooperative, Inc., a family corporation owned by the heirs of deceased spouses Aya and Raymond, purchased the land in question for P10,000 from Percy as evidenced by a deed executed by Percy. Some 20 years later, the sellers heirs (Percys children Gil and Globel) intruded into the land and harvested the coconuts found therein. They denied knowledge of the same and alleged that the land claimed was different from that owned and held by Davao Agro-Industrial. The description of the land sold is 2,000 sqm with the words MORE or LESS after the figure, but what was occupied by Davao Agro-Industrial was more than that. And that when the land was surveyed, it turned out that its actual area is 6, 870 sqm. The land sold by Percy was one of lump sum. a. Did the contract of sale involve the 6,870 sqm or just the 2000 sqm? Explain (5pts) The contract of sale involves the 6, 870 square meters of land. In a sale for a lump sum, the vendor is obligated to deliver all the land included within the boundaries regardless of whether the real area should be greater or smaller. In the case at bar, although the surveyor has proven that the boundaries really include a greater area, which is more than 2000, the Davao Agro-Industrial, which is owned by the buyers of Percys property, is the party which has the better right to the property. b. Can the contract of sale be rescinded? Can the price be increased? Explain (5pts) No. the contract of sale is not subject to rescission. It cannot also be increased.For a contract of sale to be rescissible it must be: a. A contract entered into in representation by guardians whose wards suffer lesion by more thatn one-fourth of the value of the property; or

b. a contract entered into in representation of absentees when the latter suffers lesion of more than one-fourth of the value of the property.

In this case, it is not shown that there was lesion. The price cannot be increased because the contract was binding on their successors and they cannot demand for an additional of what had been agreed upon.

4. Jane owns a house and lot which was leased to Liezel. Liezel was given the right of first refusal. When Jane decided to sell the house and lot to Liezel in the amount of P 5 million; Liezel rejected said purchase price but rather offered to buy the house and lot for P 4.5 million. Jane later on sold the house and lot to Judy for P 5 million. Can Liezel compel Jane to cancel the sale with Judy and sell the house to her? Explain (10pts) No. Liezl cannot compel Jane to cancel the sale with Judy and sell the house to her.

In a right of first refusal, the optionee is merely given the first priority to decide whether to purchase the property or not. It is merely a privilege granted to the optionee by the optioner to be the first to make the acceptance of the offer to the optioner in case the latter would decide to sell the property. Once the offer is rejected, the optioner may now offer the property to others. In case at bar, Liezl has already rejected the offer made by Jane to her. Instead, she made a counter-offer to Judy. Thus, there was no showing that there was a mutual agreement between the parties. There was no acceptance made to Liezl. Judy may now offer the property to others. (Atty Saronas comment: same terms and conditions)

5. Jed gave Rey Mar an option to purchase his apartment for P3 million. Rey Mar offered to buy it at P2.5 miliion but such counter-offer was not accepted by Jad. Jad sold his apartment to Dennis for P3 million. Can Rey Mar compel Jad to cancel the sale to Dennis and execute a Deed of Sale in his favor? (10pts) Ans: No. Rey Mar cannot compel Jad to cancel the sale to Dennis and execute a Deed of Sale in his favor. For an option contract to be valid, there must be a distinct and separate consideration which is not part of the purchase price. In the case at bar, the option to purchase given by Jad to Rey Mar has no separate consideration. Thus the option to purchase cannot be given effect. Absent any distinct consideration for an option contract, Jad is free to sell the property to Dennis or any third person.

6. Jo Anne, who is an engineer, offered her services to manufacture and install a conveyor system which, according to her, would increase production and efficiency of the business of Norliza. Norliza expressed her conformity to the offer made in writing by putting her signature therein. She caused to be added to this offer a note which reads. All specifications shall be in strict accordance with the approved plan made part of this agreement. A few days later, Jo Anne made the demand for the payment of P30,000, which was readily delivered by Norliza in the form of a check. Deducting this payment, there is a balance of P20,000 to be paid by Norliza upon the completion of the installation.

The work was completed in August 2010. Trial runs were made in the presence of Norliza and Jo Anne. As a result of the trial runs, it was discovered that the conveyor system did not function to the defendants satisfaction. The defects had not been remedied so that they came to the parting of the ways. When Jo Anne billed Norliza for the balance of the contract price, Norliza refused to pay for the reason that the conveyor system installed did not serve the purpose for which the same was manufactured and installed. Was there delivery of the conveyors by Jo Anne? Explain. (10pts)

Ans: Yes. There was already delivery made by Jo Anne. There was already constructive delivery made by Jo Anne to Norliza when the conveyors were placed under the control of Norliza. In the case at bar, constructive delivery was effected by Jo Anne when she presented to Norliza the conveyors during the trial runs.

7. Spouses Andrey and Nana were registered owners of a residential land in Bukidnon. They decided to donate the eastern half of the property to Sasha (sister of Nana), who was about to get married. The OCT was delivered to Sasaha. Spouses Andrey and Nana signed a Deed of Absolute Sale prepared by Sasha transferring the ownership of the entire property in favor of Sasha. In the same deed, Sasha accepted such transfer of ownership in her name. the document stated that Spouses Andrey and Nana stated a consideration of P50,000, although they did not actually receive anything of value for such exchange.

Sasha immediately built a fence of permanent structure covering the entire parcel of land. Sasha registered the Deed of Absolute Sale in her favor and obtained in her name a TCT over the entire parcel of land. Was there a valid contract entered into between the Spouses and Sasha? Explain. (10pts)

Ans: Yes. There was a valid contract entered into between the spouses and Sasha.

A contract is perfected if there was already meeting of the minds as to the subject matter and the price or consideration. The consideration must be real. It must not be absolutely simulated such that there was really no intention to pay the price to the seller, and no intention to transfer ownership and deliver the determinate thing to the seller. In the case at bar, although the parties executed a Deed of Absolute Sale and made it appear that there was a sale that happened, it can be shown that they really intended to convey the property to Sasha. There is a contract which was perfected since it can be shown that the parties intended in reality, to enter to a donation, or some other act or contract. In this case, the contract may be subject to reformation to indicate the true intention of the partner.

MULTIPLE CHOICE

C 12. Seller may exercise his special right to resell the goods, except a. if the goods are perishable b. if such right was stipulated by the parties in case buyer defaults in payment c. if no notice was sent by seller to buyer to exercise such right d. if the buyer is in default for unreasonable time

A 13. With regard to defects on animals, which of the following is applicable? a. Even in the case of professional inspection but hidden defect is of such nature that expert knowledge is not sufficient to discover it, defect shall be considered as redhibitory. b. There is a warranty against hidden defects with regard to sale of animals at fair or public action. c. Sale of animals with contagious disease is voidable d. Prescription of action is within 30 days from date of delivery to buyer

D 14. Conventional redemption is presumed to be an equitable mortgage under the following circumstances, except a. Where the price of sale with right to repurchase is unusually inadequate

b. When the vendor remains in possession as lessee or otherwise c. When the vendee binds himself to pay the real estate property taxes on the thing sold d. When there is a doubt as to whether the contract is a contract of sale with right of repurchase or an equitable mortgage

C 15. Which of the following is not an instance of legal redemption: a. Where a credit or other incorporeal right in litigation is sold b. Sale of adjacent urban not exceeding one hectare c. Sale of an heir of his hereditary rights to a stranger d. Sale of a co-owner o his share to a stranger

C 16. Under a lease of Honda Jazz Car, with option to buy, Teen and Bhing agreed that failure of Bhing, the lessee, to pay for three mos rent would entitle Teen to take back the car and the option to buy would be loast. Bhing failed to pay for the last three months of the lease. Teen took back the property and instituted an action to recover the rents corresponding to the three months. Which of the following statements is correct? a. Teen can validly take back the property and recover the rents covering the three months in which Bhing failed to pay, since such arrangement was previously agreed to by the parties b. Teen can validly take back the property and recover the rents covering the three months in which Bhing faile to pay, even if both parties did not have previously agreed to such agreement c. Teen can validly take back the property but she does not have right to recover the rent for the three months in which Bhing failed to pay d. Teen cannot validly take back the property and she cannot also recover the rent for the three months in which Bhing failed to pay

C 17. Dana sold to Mitos a house and lot for P2.5 million payable 1 month after the execution of the Deed of Absolute Sale. It was expressly stipulated in the Deed of Absolute Sale that the sale would ipso facto be of no effect upon the failure of Mitos to pay as agreed. Mitos failed to pay on maturity and Danna sued to declare the contract without force and effect. If Mitos tendered payment before the action was filed by Danna, but subsequent to the stipulated date of payment, which of the following statements is not applicable?

a. The action of Danna will prosper because both parties have expressly agreed that the contract will be automatically rescinded in case there is failure to pay the price. b. The action of Danna will prosper, even without the express agreement that the contract will be automatically rescinded in case there is failure to pay the price, because Mitos is still entitled to a grace period of 30 days as provided for by law. c. The action of Danna will not prosper, even with the express agreement that the contract will be automatically rescinded in case there is failure to pay the price, because Danna should have made a demand, either through a judicial or notarial act. d. The action of Dana will not prosper because the express agreement that the contract will be automatically rescinded in case there is failure to pay the price is contrary to law.

B 18. On, October 1, 2007, Karla sold to Sahara a real estate property worth P 2 million. They agreed on the same date that the amount due shall be paid by Sahara in 10 equal annual installments to be paid beginning on the date the contract of sale was perfected. On 2009, Sahara was not able to make any payment. Which of the following is not applicable under the said circumstances? a. Sahara can pay the balance without interest within the grace period of 1 month b. Sahara can pay the balance without interest within the grace period of 2 months c. If Sahara does not pay, the contract of sale is considered cancelled, and Karla gets to keep the P200,000 d. If Sahara does not pay, the contract of sale is considered cancelled, in which such cancellation shall take effect 30 days from notice and upon payment of P 200,000

D 19. Hanniyah, Noche and Vanessa are co-owners of an urban land, having inherited the same form their wealthy uncle. Jocely owns the adjoining land. Vanessa donated her portion to Aisa and Noche sold his portion to Tippi. Which of the following statements is applicable under this scenario? a. Hanniyah has a right to redeem the portion of Vanessa, which Vanessa donated to Aisa b. Jocelyn has a right to redeem the portion of Vanessa, which Vanessa donated to Aisa c. Hanniyah has a preferred right over Jocelyn to redeem the portion of Vanessa, which Vanessa donated to Aisa.

d. Both Hanniyah and Jocelyn have no right to redeem the portion of Vanessa, which Vanessa donated to Aisa.

C 20. Article 1592 of the New Civil Code provides for a remedy available to the seller in case there is failure to pay the purchase price. However Article 1592 does not apply to the following, except: a. cases covered by RA 6552 b. conditional sale c. contract to sell d. contract of sale of a commercial building

PART II. ESSAY 1. Distinguish a contract of sale from a contract to sell (5pts)

2. Anthony sold his parcel of land at Lanang, Davao City to Lyndon on September 15, 2009. But the Deed of Sale covering the said transaction was not registered with the Registry of Deeds. On December 8, 2009, Anthony sold the same parcel of land to Allan, who thereafter immediately succeeded to register the Deed of Sale with the Registry of Deeds. Allan thereafter obtained a Transfer Certificate of Title oer the property in his own name. a. What are the requisites for the rule on Double Sale, as provided in Article 1544 of the New Civil Code, to apply? (5pts) b. Who has a better right over the parcel of land? Explain. (10pts)

3. Julius purchased from Michael Company a truck, worth P500,000, payable in 10 monthly installments. Julius constituted a Chattel Mortgage on the truck in favor of Michael Company as security for the payment of the balance of the purchase price. Julius failed to pay 3 monthly installments. Thus, the company filed a complaint against Julius to recover the unpaid balance. A writ of attachment was subsequently issued against the properties to Julius. Thereafter, the same truck was sold at a public auction in which the company was the only bidder for P50,000. Since there was still a deficiency of more than P50,000, the court in violation of Article 1484 of the New Civil Code? Explain. (10pts)

4. Blithe and Felai entered in to a contract of sale of a condominium unit for a total price of P 4 million, 25% thereof will be paid upon execution of the deed on October 20, 2009. The remaining 75 % balance of the purchase price will be paid 3 equal annual installments, to begin one year after the execution of the deed. On 2010, Felai failed to pay the installment on due date. a. Can Felai still tender payment despite the lapse of the due date? Explain. (5pts) b. When can Blithe cancel the contract of sale? (5pts)

5. Dianne, a resident of Cebu City, bought computer merchandise from Christ and requested Christ to ship the goods from Davao City to Cebu City. Christ immediately shipped the merchandise but before the goods reached Cebu City, Christ found out that Dianne was insolvent. Christ goes to you and asks for possible courses of action to take against Dianne. What is/are the remedy/ies available to Christ, if any? Explain each remedy briefly. (10pts)

NOTEBOOKS

II. ESSAY FIRST EXAM

1. The following are the distinctions of a contract of sale from dacion en pago: a. in contact of sale, the payment of the purchase price will give rise to a an obligation to transfer ownership and delivery of possession, while in dacion en pago will extinguish the obligation; b. Sale is perfected by mere consent, while in dacion en pago, there must be delivery of the object since it is a real contract; c. In sale, there is no pre-existing obligation, however, in dacion en pago there is a pre-existing obligation; d. In sale, the consideration is the price certain or equivalent but in dacion en pago, the consideration as to the debtor is to extinguish the obligation and as to the auditor is the property or the object which is the substitute.

2. Yes, the action of Ron will prosper. As provided in the New Civil Code especially after the effectivity of the Family Code, any of the spouses is prohibited from alienating or disposing a property which belongs to the conjugal partnership without the consent of the other spouse. Such sale would be void but it will be a continuing offer as to the consenting spouse and the third person and shall be binding if the other spouse will consent or the authority of the court is given.

In the case at bar, Hermione cannot alienate the said property to Luna without the consent of Ron because it is a conjugal property. The forged signature of Ron in the SPA voids the contract between Luna and Hermione since written consent of Ron was not given. It is proper for Ron to ask the court to deliver the Deed of Absolute Sale void. Thus, Hermione is prohibited from alienating their conjugal property without the consent of Ron.

3. No. Lunas action will not prosper. Under Article 1490 of the New Civil Code, the sale between spouses is prohibited and is void except only when they agreed to have a separate or complete separation of property in their marriage settlements or they have obtained a judicial separation of property. The prohibition also extends to common-law spouses for if it is otherwise, they would be put in a better position than those legally married.

In the case at bar, Luna is married to Meville so the prohibition under Article 1490 applies to them. Even if it was found out that their marriage is null and void since they can still be considered a common law spouse at least in this case. The fact that they were not living together as husband and wife at the time Luna acquired it, it would not take them away from the prohibition.

Furthermore, both Luna and Meville are in pari-delicto since both of them are equally guilty in the selling and buying of the property. The court will leave them as they were. Luna is not the correct party to annul the sale since the law provides that only the prejudicial heirs, prior creditors and the state can question the contract.

In sum, the action of Luna will not prosper.

4. The contention of Nick is not correct. As provided by the New Civil Code, sale being a consensual contract is perfected by mere consent. It is a perfected sale if there has been a meeting of the minds as to the object which is determinate and the consideration of the price.

In the present case, Hagrid orally offered the land covered by TCT No. 407123 for P3,000,000 to Albus which Albus has accepted. Therefore, sale is already perfected on March 15, 201 since all the essential elements of the contract which are consent, object and consideration are present.

Nick is not correct in saying that there was no valid contract of sale entered or executed by Hagrid and Albus, since sale is consensual and is valid in whatever forms they are entered into. There is also no need to pay a portion of consideration since this not an option contract but a perfected contract of sale. Nick in this case cannot anymore purchase the land from Hagrid since the sale of Hagrid and Albus is valid or perfected. So Nicks contention is not correct. 5.Harry and Ginny entered into a barter. The New Civil Code provides that when the consideration is partly in money and partly an object, the intention of the party must be looked at or ascertain. However, when the intention of the parties cannot be ascertained, then it shall be considered as sale if the value of the object is equal or lesser than the amount of money given. When the value of the object is greater than the amount in money, it shall be considered as barter.

In this case, Ginny is a buyer and she offered her watch worth P12,000 and cash of P8,000 in exchange of Harrys cellphone worth P20,000. Since Ginnys offer consist in money and in object it shall ascertain their intention. But no intention is indicated or expressed so since the law provides that if the value of the object as in this case is P12,000 and is higher that the money given, it is a barter.

6. No. Potter Research Institute is neither liable for income tax and contractors tax. As held by the Supreme Court in the case of CIR vs CA and Ateneo de Manila, Potter Research Institute has not entered into a contract of sale or a contract for a piece of work so it cannot be liable for any income tax and contractors tax. According to the Supreme Court, in both sale and contract for piece of work, it necessarily includes a transfer of ownership which is not present in this case.

Potter Research Institute like Ateneo de Manila Research Institute, does not sell the copies of their researches and even though they accept sponsorships, they only conduct researches for the benefit of their entities. The copies of their researches do not transfer of are not transferred to any interested agencies thus ownership is retained by the Potter Research Institute. It cannot be held liable for income tax or contractors tax because Potter Research Institute is not engage in selling their research. It is neither a contractor or a manufacturer in this case.

7. According to Article 1458, a contract of sale is where one party, the seller, obligates himself to transfer ownership and deliver possession of a determinate thing, and the other party, the buyer, obligates himself to pay the price certain in money or its equivalent.

ESSAY 2ND EXAM

1. The following are the distinctions of option money from earnest money: a. Option money is a separate consideration in an option contract, while earnest money is part of the purchase price in a contract of sale; b. When option money is given, the optionee is not obliged to pay the purchase price, however, when an earnest money is given, the buyer is obliged to pay the balance of the purchase price; c. Option money is given when the sale is not yet perfected but the option contract is then perfected, but earnest money is given when the sale has been perfected; d. Both the option money and earnest money are considerations. Option money is a consideration in an option contract while earnest money is a consideration in a contract of sale.

2. No, there was no perfected contract of sale. The New Civil Code provides that for a sale to be valid, the 3 essential requites must concur namely consent, object, and consideration.

In the case at bar, object and consideration are present but consent coming from the buyer is lackin. The term noted does not signify the consent of the buyer or an absolute acceptance to the offer.

In one of its decided case, the Supreme Court held that the word Noted is not an express and absolute acceptance by the offeree. It could have been different if what was stated was approved. No perfected contract of sale.

3. No, the contention of Draco is not correct. A valid subject matter must be a possible thing, licit and determinate or at least determinable. A determinate subject matter is physically segrated or particularly designated. However a determinable subject matter is valid if it is capable of being made determinate and no further agreement is needed by the parties. The subject matter in this case is determinable. Marcissa sold to Lucius 3 hectares of land which is part of the 7.5 hectare parcel of land covered by TCT No. T-10,185. It may bot be determinate but it is determinable because the subject matter which is the 3 hectares has the capacity to be made determinate and there is no need for a new or further agreements by the parties even if no exact location. Draco is not correct in saying that there was no valid subject so the sale is void.

4. There was no perfected contract of sale. As provided by law, there is a perfected contract of sale when there is a c concurrence of the 3 essential elements which are consent, subject matter and price or consideration. The price must be or maybe in money or its equivalent and also it must be certain or ascertainable. The price must also include the manner of payment for it to be valid. In this case, Albus and Hagrid had not agreed as to the manner of payment of th eP1,000,000. Therefore, since it is essential part of price, there was no perfected contract of sale.

5. a.) Simulation of contract is different from gross inadequacy of price. A simulation of contract happens when the parties have no intention to be bound by such contract as to the price. The buyer has no intention to pay the price and the seller has no intention to receive the same. A simulated contract make it appear that a certain price has been paid when in reality it was not. Gross inadequacy of price happens when the price paid is inadequately low than the value of the thing sold as to be shocking to the moral conscience.

In simulation of contract, price is not real or lacking, while in gross inadequacy of price, there is a price given but grossly inadequate compared to the value of the thing sold.

b.) Yes. There was a valid contract of sale between Harry and Ronald. As provided by the New Civil Code, the price or consideration must be in money or its equivalent, it must be real and it must also certain or ascertainable. In the present case, all essential elements are present. As to the price, Harry sold the mortgaged property to Ron for P1,000 and the assumption o f mortgage in Hogmead. Here, the price or consideration is not just the P1,000 but also for Ron to assume the mortgage of the said property. It was partly in money and partly the assumption of mortgage and this is allowed by law since the price can be in money or its equivalent.

6. the contract involves an option contract. An option contract is a privilege given by the offerror to the offeree the right to buy a certain property in a fixed price at a certain period. Generally, there must be a consideration given separate from the purchase price. However, if it is accepted prior to its withdrawal it becomes no consideration. In the case at bar, Hermione offered to sell her parcel of land to Flew for P37 million within 2 years from January 2, 1995. All the elements of an option contract is present in this case. In an option contract, the offeree shall not offer the property to others until the lapse of the given period or is not exercised by the offeree.

ESSAY - FINAL EXAM 1. a. The following are the distinctions between a contract of sale from contract to sell: 1.) In contract of sale, delivery of the object transfers ownership to the buyer, however in a contract to sell, the seller reserves ownership until the full payment of the purchase price.

2.) in contract of sale, it is perfected upon concurrence of cause, object, and consideration. Consent is an essential element. However, in contract to sell, consent is not yet present because seller withholds consent not until the receipt of purchase price in whole.

3.) in contract of sale, payment of the full purchase price is not an essential element that will perfect the sale, but in a contract to sell, the payment of the full purchase price is a suspensive condition.

b. the ownership of the subject house and lot should be transferred to spouses Geller. In case of double sale an immovable property, the New Civil Code provies that preference shall be given to the buyer who first register the same in good faith, or to the buyer who first possess or have possession on the said property or the one who presents the oldest title. The preference is on the said order. Double sale also requires that there are two buyers of the same property which is sold by the same seller and that it is only applicable to contract of sale. In the case at bar, based on the preference listed in case of double sale, spouses Tribbiani would seem to be the preferred buyer because she took actual possession first but the rule on double sale will not apply to this case because spouses Tribbiani entered a contract to buy and sell to spouses Bing. Therefore, law on double sale is not applicable. Spouses Geller is the real owner because when Spouses Bing executed a Deed of Sale, it was a constructive delivery which according to law on sales, is a valid transfer of ownership. Spouses Geller is the owner of the subject property because ownership is transferred upon delivery.

2. a. Yes, there was a delivery of the conveyors by Ross to Rachel. As provided in the New Civil Code, there is delivery of possession is transferred to the vendee either actual or constructive. Intention to transfer possession is also important in delivery.

In the case at bar, the very fact that there was a trial run of the conveyors made in the presence that there was delivery. Conveyors are now transferred or is in the possession of Rachel.

b. The case for breach of warranty against hidden defects filed against Ross will not prosper. The law provides that hidden defects in case of warranty against hidden defects shall be present at the time of delivery and that the buyer shall immediately inform the seller of such hidden defects. The prescription or prescriptive period to file such breach of warranty against hidden defect shall be within 6 months after the delivery. In the case at bar, delivery was made on July 31, 2009 while Rachel only set up the case for breach of warranty against hidden defects on March 31, 2010. The period to bring the action has already prescribed.

3. Monica has two options available: First, she can still pay the installment for year 2010 with 2 month grace period. Second, if she failed to pay within the grace period, the sale will be cancelled and 50% of her total payment shall be given back to her.

The Maceda Law provides that in case of sale on installment of a real property, if the vendee have paid at least 2 years of the installment, the vendee shall be given 1 month grace period for every year of installment if she has failed to pay the remaining installment. Provided, she exercised this option only once in every 5 year in the said installment period. So in the first option, Monica has 2 months grace period to pay the unpaid installment since she already completed paying the 2 year installment.

As to the second option, the Maceda Law also provides, that if vendee fails to pay in the given grace period, the said sale shall be rescinded after 30 days of notarial notice of rescission. The vendee shall receive back the 50% of total payment with 5% interest of every year provided she completed paying the 5 years installment. Since Monica did not reach 5 years of installment, she will just get the 50% of the total payment.

4. No. the court cannot order Chandler to pay Joeys Garage the deficiency of P30,000 plus interest. Based on Artilce 1484 of the New Civil code or known as the Recto Law, in case of a movable property sold in installments, the seller has 3 options or remedies if buyer failed to pay installment at least twice. First, to exact fulfillment if vendee failed to pay. Second, rescind the contract if vendee failed to pay installment. Third, foreclose the property if there is a mortgage to secure the payment of the property. In case of foreclosure, the seller cannot demand for the deficiency to the vendee.

In the case at bar, Joeys Garage opted to choose the third option which is foreclosure. The law is also clear that the options available are alternative and not cumulative. Since, foreclosure was the option by Joeys Garage, the can be foreclosed and sold at public auction but Joeys Garage cannot claim for the deficiency because the law attaches bar to the said option. The law does not allow Joeys Garage to claim for deficiency as well as interest.

FALSE 1. If not all elements are present for Article 1544 of the New Civil Code to apply, the principle of prior tempore, potior jure should apply.

FALSE 2. If the first sale occurred when land is not yet registered and the second sale is done when land is already registered, appy first in time, priority in right. FALSE 3. If sale is made by a non-owner, action to annul is proper. TRUE 4. If sale is made by a non-owner, title passes by operation of law to grantee when person who is not owner of the goods sold delivers it and later on acquires title thereto. TRUE 5. Stoppage in transit can be exercised by giving notice of claim to carrier/bailee in possession of the goods. FALSE 6. Stoppage in transit can be exercised by giving notice to buyer. TRUE 7. In applying Article 1484 of the New Civil Code, if the seller chooses foreclosure, no further action against buyer to recover any unpaid balance of the price. FALSE 8. In applying Article 1484 of the New Civil Code, if seller chooses specific performance, seller is forever precluded from pursuing the other two remedies. FALSE 9. If an immovable is sold by installment and buyer paid less than 2 years installment, the first grace period is 60 days from date installment became due. TRUE 10. If an immovable is sold by installment and buyer paid less than 2 years installment, the second grace period is 30 days from notice of cancellation/demand for rescission. FALSE 11. The implied warranty that seller has a right to sell refers to the perfection stage of the contract of sale. FALSE 12. The implied warranty that seller has a right to sell is applicable to sheriff, auctioneer, mortgagee and pledge. TRUE 13. Warranty against eviction is applicable even if the buyer is evicted in part from the subject matter of sale. TRUE 14. There is no breach of warranty against eviction if there is yet no final judgment which requires the buyer to be evicted from the subject matter of sale. TRUE 15. Legal redemption may be exercised if any of the co-heirs sell his hereditary rights to a stranger before partition. 16. legal redemption may be exercised if any of the co-owners sell his share to a third person TRUE 17. In the absence of any agreement, the period of redemption shall be 4 years from the date of the contract. FALSE 18. If there is any agreement between the parties that the period of redemption shall be 12 years, such agreement is void.