COVERAGE: Contract of sales Direction: Read and select the best answer for the following questions. 1. Where shall the reselling be made in case the unpaid seller exercises his right of resale? a. Public sale b. Private sale c. Either public sale or private sale d. Neither public sale nor private sale 2. The unpaid seller is bound to exercise reasonable care and judgment in making the resale. He cannot, directly or indirectly, buy the goods. The following are the effects of resale, except a. The seller shall not be liable to the original buyer for the delivery of the goods. b. The seller may recover damages from the original buyer for any loss occasioned by the breach of the contract of sale. c. The original buyer shall be entitled for any profit made by such resale. d. The new buyer acquires a good title against the original buyer. 3. The following are the requisites for right to rescind the sale to be available to an unpaid seller, except a. The buyer has defaulted in the payment of the purchase price. b. The seller has no right of lien nor has stopped the goods in transitu. c. Title to the goods has passed on to the buyer. d. The grounds must be: 1.) The seller has expressly reserved the right to rescind the sale in case the buyer should make default or 2.) The buyer has been in default in the payment of the price for an unreasonable time. 4. The following are the effect of rescission of contract of sale by the unpaid seller, except a. The seller shall not be liable to the buyer upon the contract of sale. b. The seller may recover from the buyer damages for any loss occasioned by the breach of contract of sale. c. The seller resumes ownership of the goods. d. The buyer shall pay for the purchase price. 5. In a sale of real estate with a statement of its area at the rate of a certain price per unit of measure or number, the vendor shall deliver the area mentioned in the contract of sale. What is the remedy of the buyer if the actual area is less than by an area less than 1/10 of that stated in the contract? a. Ask for proportionate reduction in the price. b. Ask for rescission of the contract of sale. c. Either A or B d. Ask for declaration of nullity of the contract of sale. 6. Using the same data in number 145, what is the remedy of the buyer if the actual area is less than by 1/10 or more of that stated in the contract? a. Ask for proportionate reduction in the price. b. Ask for rescission of the contract of sale. c. Either A or B d. Ask for declaration of nullity of the contract of sale. 7. Using the same data in number 145, what is the remedy of the buyer if the actual area is more than that stated in the contract? I. Accept the area stated in the contract and reject the rest. II. Accept the whole area and pay for them at the contract rate. a. I only b. II only c. Either I or II d. Neither I nor II 8. Using the same data in number 145, what is the remedy of the buyer if the area is the same but a part of the immovable is not of the same quality specified in the contract and the inferior value is 1/10 or less of the price agreed upon? a. Ask for proportionate reduction in the price. b. Ask for rescission of the contract of sale. c. Either A or B d. Ask for declaration of nullity of the contract of sale. 9. 10. Using the same data in number 145, what is the remedy of the buyer if the area is the same but a part of the immovable is not of the same quality specified in the contract and the inferior value is more than 1/10 of the price agreed upon? a. Ask for proportionate reduction in the price. b. Ask for rescission of the contract of sale. c. Either A or B d. Ask for declaration of nullity of the contract of sale Using the same data in number 150, what is the remedy of the buyer if the vendor does not deliver the area within the boundaries in the contract? I. Ask for proportionate reduction in the price. II. Rescind the contract a. I only b. II only c. Neither I nor II d. Either I or II 11. What is the prescriptive period available to the buyer for filing the legal action (action quanti minoris or action for cancellation) regarding contract of sale of tot with lacking area or with poor quality? a. 6 months from the date of delivery b. 12 months from the date of delivery c. 3 months from the date of delivery d. I month from the date of delivery 12. The following are the requisites or elements of double sale, except a. Two or more valid contracts of sale occurred. b. Two or more contracts of sale must pertain to exactly the same subject matter. c. Two or more buyers at odds over the rightful ownership of the subject matter must each represent conflicting interests. d. Two or more buyers at odds over the rightful ownership of the subject matter must each have brought from the very same seller. e. Two or more buyers must have all fully paid the price of the contract of sale. 13. Which contract will be covered by the provision on rule on double sale? a. Contract of sale b. Contract to sell c. Both A and B d. Neither A nor B 14. In case of double sale of personal property, who among the buyers shall be preferred? a. Person who first took possession, actually or constructively, of the property in good faith. b. Person who has oldest title. c. Person who has the latest title. d. Person who first registered the property in good faith. 15. S sold his ring to B who told S that he would obtain delivery of the ring after 3 days. Before the third day, S sold the same ring to X who immediately took physical possession of the ring. X was not aware of the previous sale to B. Who has a better right over the ring? a. B because he has the Older title. b. B because X has not registered the ring in good faith. c. X because he first took possession of the ring in good faith. d. X even if he took possession of the ring in bad faith. 16. S sold his watch to B in a public document. However, B informed S that he would obtain actual delivery of the watch after 3 days. The day after the sale to B, S sold the same watch to X in a private document and X immediately took possession of the watch. X was not aware of the sale to B. Who has a better right over the watch? a. B because he has the older title. b. B because he first took constructive possession of the watch in good faith. c. X because he first took actual possession of the watch in good faith. d. X because X has not registered the watch in good faith. 17. On May 1, S sold his registered/titled lot to X. The deed of sale was in a private instrument. On May 3, S sold the same lot to Y in a public instrument. On May 5, S sold again the said lot to Z in a public instrument. Z immediately registered the sale with Register of Deeds on May 5. X took actual possession of the lot on May 6. X, Y and Z were not aware of the sale made to others. Who among the buyers has the better right? a. X because he first took actual possession in good faith. b. X because he has the oldest title in good faith. c. Y because he first took constructive possession in good faith. d. Z because he is the first registrant in good faith. 18. Using the same data in number 158 but assuming Z is in bad faith, who has the better right? a. Z because he is the first registrant in bad faith. b. X because he first took actual possession in good faith. c. X because he has the oldest title in good faith. d. Y because he first took constructive possession in good faith. 19. Using the same data in number 158 but assuming Z and Y are in bad faith, who has the better right? a. Z because he is the first registrant in bad faith. b. X because he has the oldest title in good faith. c. Y because he first took constructive possession in bad faith. 20. On March l. S sold his unregistered lot to X. The deed of sale was in a private instrument. On May 5, S sold again the said lot to Z in a private instrument. Z immediately registered the sale with Register of Deeds on May 5. X took actual possession of the lot on May 6. X and Z were not aware of the sale made to others. Who between the buyers has the better right? a. X because he has the older title in good faith. b. Z because he first took constructive possession in good faith. c. Z because he is the first registrant in good faith. 21. The following are considered natural elements or implied warranties in a contract of sale, except a. Warranty against eviction b. Warranty against hidden defects c. Warranty against undeclared and non-apparent charge or encumbrance or servitude d. Warranty for merchantability e. Warranty for sale's talk or usual exaggeration in trade 22. The following are the effects if the suspensive condition in a contract of sale subject to a suspensive condition is not fulfilled, except a. The other party may refuse to proceed with the contract of sale. b. The non-performance of suspensive condition may be treated as a breach of warranty. c. The other party may waive the performance of the suspensive condition. d. The contract of sale is perfected if the condition which is not fulfilled is suspensive. 23. The following persons shall not be liable for breach of warranty in a contract of sale, except a. Sheriff b. Auctioneer c. Mortgagee d. Pledgee e. Seller f. Other persons professing to sell by virtue of authority in fact or law. 24. It refers to the deprivation of the vendee of the whole or a part of the thing sold by virtue of a final judgment based on a right prior to the sale or an act imputable to the vendor. a. Breach of contract b. Evasion of sentence c. Eviction d. Damages 25. The following are the requisites in order that the seller's warranty against eviction may be enforced, except a. There must be a final judgment depriving the vendee of the whole or part of the thing sold. b. The vendee must not appeal from the decision or judgment depriving him of the thing sold. c. The deprivation is based on a right prior to the sale or an act imputable to the vendor. d. The vendor must have been notified of the suit for eviction at the instance of the vendee. e. The vendor must have acted in bad faith only. 26. When adverse possession of the thing subject of the contract of sale had been commenced before the sale but the acquisitive prescriptive period is completed after the transfer to the buyer, is the vendor still liable to the buyer in case the buyer is evicted from the property sold by virtue of acquisitive prescription? a. The vendor is not liable for eviction. b. The vendor shall always be liable for eviction. c. The vendor is liable for eviction only if there is expressed warranty for eviction. d. The vendor is liable for eviction even if there is no expressed warranty for eviction. 27. What are the remedies of the buyer should the immovable sold be encumbered with any non-apparent easement or servitude within one year from the discovery of burden or servitude if the one-year period from the execution of deed of sale has already lapsed? I. Rescission of the contract of sale. II. Indemnification for damages within one year from discovery of easement. a. I only b. II only c. Either I or II d. Neither I nor Il 28. The following are the actions or remedies by the seller for breach of contract of sale of goods committed by the buyer, except a. Maintain an action for the price of the goods if the buyer wrongfully neglects or refuses to pay. b. Maintain an action for damages if the buyer wrongfully neglects or refuses to accept and pay for the goods. c. Rescind the contract if the buyer has repudiated the sale or manifested his inability to perform his obligation or has committed a breach of contract, where the goods have not been delivered to buyer. d. Ask for declaration of nullity of the contract of sale. 29. This type of redemption occurs when the vendor reserved the right to repurchase the thing sold with the obligation to return to the vendee the price of the sale, expenses of the contract and necessary and useful expenses made on the thing sold and to comply with other stipulations which may have been agreed upon. This is applicable in a contract of pacto de retro sale or sale with a right to repurchase. a. Legal redemption b. Conventional redemption c. Redemption by operation of law d. Judicial redemption 30. If no period is stated in the agreement for the exercise of right of redemption in pacto de retro sale of immovable, what is the prescriptive period of the right? a. 5 years from the date of the contract. b. 4 years from the date of the contract. c. 10 years from the date of the contract. d. 3 years from the date of the contract. 31. If a period is stated in the agreement for the exercise of right of redemption in pacto de retro sale of immovable, what is the maximum prescriptive period allowed by the law? a. 5 years from the date of the contract. b. 4 years from the date of the contract. c. 10 years from the date of the contract. d. 20 years from the date of the contract. 32. If a period less than 10 years is stated in the agreement for the exercise of right of redemption in pacto de retro sale of immovable, what is the period of the right? a. 5 years from the date of the contract. b. 4 years from the date of the contract. c. 10 years from the date of the contract. d. The period stated in the agreement. 33. If judgment has been rendered by court declaring the contract to be pacto de retro sale of immovable instead of equitable mortgage, what is the period of redemption allowed to the vendor a retro? a. 5 years from the rendition of judgment b. 4 years from the rendition of judgment c. 10 years from the rendition of judgment d. 30 days from the rendition of judgment 34. In a pacto de retro sale, the following are the persons against whom the right of repurchase may be exercised, except a. Against the vendee a retro or original vendee. b. Against the several heirs of the vendee a retro for each heir's share. c. Against one heir of the vendee a retro for the whole property. d. Against every possessor whose right is derived from the vendee a retro even if no mention has made in the second contract of the right to repurchase and even if the right to repurchase is not recorded in the Registry of Property meaning against a purchase in good faith and for value. 35. A co-owner sold his share in an undivided immovable which is essentially indivisible under pacto de retro sale to a third person who subsequently acquires the whole thereof. Which is true? a. Such seller a retro may be compelled by the buyer to redeem the whole property, if the forrner wishes to make use of the right of redemption, b. Such seller a retro may compel the buyer to agree to the partial redemption of the immovable property. c. Both A and B. d. Neither A nor B 36. If several persons or co-owners, jointly and in the same contract, should sell an undivided immovable with a right of repurchase, which is true? a. None of the co-owners may exercise their right to repurchase for more than their respective shares. b. The buyer a retro may demand that the co-owners come to come to an agreement upon the repurchase of the whole thing, and if they fail to do so, the buyer a retro cannot be compelled to consent to a partial redemption. c. Both A and B. d. Neither A nor B. 37. A person sold his immovable property to another person under pacto de retro sale. If that seller a retro left several heirs, which is true? a. None of the heirs may exercise their inherited right to repurchase for more than their respective shares. b. The buyer a retro may demand that the heirs come to come to an agreement upon the repurchase of the whole thing. and if they fail to do so, the buyer a retro cannot be compelled to consent to a partial redemption. c. Both A and B. d. Neither A nor B. 38. Co-owners sold an undivided immovable to a single buyer in separate documents under pacto de retro sale. Which is true? a. The buyer a retro may demand that the heirs come to come to an agreement upon the repurchase of the whole thing, and if they fail to do so, the buyer a retro cannot be compelled to consent to a partial redemption. b. Each one of the co-owners may independently exercise the right of repurchase as regards his own share, and the buyer a retro cannot compel him to redeem the whole property. c. Both A and B. d. Neither A nor B. 39. In the exercise of the right of redemption or repurchase, what amount shall be paid by the vendor a retro to the vendee a retro? a. Price of the sale only b. Expenses of the contract and other legitimate payments by reason of the sale only c. Necessary and useful expenses made on the thing sold only d. All of the above 40. If at the time of the execution of the pacto de retro sale there should be on the land, visible or growing fruits, who shall be entitled to those fruits which still exist at the time of redemption by vendor a retro? a. It shall inure to the benefit of the vendor a retro/redemptioner if no indemnity was paid by the vendee a retro when the pacto de retro sale was executed. b. The vendor a retro/redemptioner shall reimburse the amount of the fruits to the vendee a retro. c. The fruits shall be prorated to the vendor a retro and vendee a retro based on the prorated period of possession. d. It shall inure to the benefit of the vendee a retro considering that he has previously obtained possession of the goods. 41. If at the time of the execution of the pacto de retro sale there should be no fruits on the land, who shall be entitled to those fruits which still exist at the time of redemption by vendor a retro? a. It shall inure to the benefit of the vendor a retro/redemptioner if no indemnity was paid by the vendee a retro when the pacto de retro sale was executed. b. The vendor a retro/redemptioner shall reimburse the amount of the fruits to the vendee a retro. c. The fruits shall be prorated to the vendor a retro and vendee a retro based on the prorated period of possession. d. It shall inure to the benefit of the vendee a retro considering that he has previously obtained possession of the goods 42. Who among the following may use the right of redemption in a pacto de retro sale? I. Vendor a retro or his heirs or assignees II. Creditor of the vendor after he has exhausted the property of the vendor by virtue of action subrogatoria a. I only b. II only c. Either I or II d. Neither I nor II 43. This type of redemption is the right to be subrogated upon the same terms and conditions stipulated in the contract, in the place of one who acquires a thing by purchase, or dation in payment, or by any other transaction whereby the ownership is transmitted by onerous title. This refers to the right of a person to repurchase the property transferred by another person by onerous title from the third person in those exceptional instances allowed by law such as right of repurchase by a co-owner, adjoining rural lot owner or adjoining urban lot owner. a. Legal redemption b. Conventional redemption c. Voluntary d. Judicial redemption 44. It refers to the right of adjoining urban land owner to be given the first opportunity to purchase a piece of urban land about to be resold which is so small and so situated that a major portion thereof cannot be used for any practical purpose within a reasonable time, having been bought merely for speculation. a. Right of legal redemption b. Right of legal pre-emption c. Right of first refusal d. Right of legal repurchase 45. The following are the three instances of legal redemption. Which of the following pertains to legal preemption? a. A co-owner of a thing may exercise the right of redemption in case the shares of all the other co-owners or of any of them, are sold to a third person. b. If a piece of rural land not exceeding one hectare is alienated, the adjoining owner shall have the right of legal redemption unless the grantee does not own any rural land. c. If a small piece of urban land which was bought for speculation has been resold, the owner of the adjoining land has a right of redemption at a reasonable price. d. If a small piece of urban land is about to be resold, the adjoining owner shall be given the right to buy the property before it is offered to other. 46. In case there are two or more co-owners who want to exercise the right of legal redemption for a share in the land sold by a co-owner to a third person, who shall be given the right? a. All the remaining co-owners on the basis of proportionate share. b. The first co-owner who want to exercise the right. c. The co-owner with the smallest share. d. The co-owner whose intended use of the land in question appears best justified. 47. In case there are two or more co-owners who want to exercise the right of legal redemption for a share in the land sold by a co-owner to another co-owner, who shall be given the right? a. All the remaining co-owners on the basis of proportionate share. b. The first co-owner who want to exercise the right. c. The co-owner with the smallest share. d. None of them. 48. In case of legal redemption whereby a co-owner and adjoining rural or urban land owner is present, who shall be preferred in the exercise of redemption? a. b. c. d. 49. Co-owner Adjoining rural land owner Adjoining urban land owner Owner with the smallest area A rural land owner sold his land not exceeding 1 hectare (10,000 sqm) to another person who owns any other rural land. There are two or more adjacent rural land owners who intend to exercise their right of legal redemption. Who shall be preferred? a. The adjacent rural land owner with smaller area of lot. b. The adjacent rural land owner with larger area of lot c. The adjacent rural land owner whose intended use of the land in question appears best justified. d. The adjacent rural land owner which offers the largest amount 50. An urban land owner sold a piece of land which is so small and so situated that a major portion thereof cannot be used for any practical purpose within a reasonable time, having been bought merely for speculation. There are two or more adjacent urban land owners who intend to exercise their right of legal redemption. Who shall be preferred? a. The adjacent urban land owner with smaller area of lot. b. The adjacent urban land owner with larger area of lot c. The adjacent urban land owner whose intended use of the land in question appears best justified. d. The adjacent urban land owner which offers the largest amount. 51. What is the period for the exercise of the right of legal redemption or legal pre-emption by the co-owner, adjoining rural or urban land owner? a. Within 30 days from the notice given by the prospective vendor or vendor. b. Within 60 days from the notice given by the prospective vendor or vendor. c. Within 90 days from the notice given by the prospective vendor or vendor. d. Within 1 year from the notice given by the prospective vendor or vendor. 52. In which of the following instances of legal redemption is right of legal pre-emption available? a. To an adjacent rural land owner when a rural land owner sold his land not exceeding 1 hectare (10,000 sqm) to another person who owns any rural land. b. To the co-owner when the co-owner sold a portion of the co-owned property. c. To an adjacent urban land owner when an urban land owner sold a piece of land which is so small so small and so situated that a major portion thereof cannot be used for any practical purpose within a reasonable time, having been bought merely for speculation. d. Any of the above. 53. It is a contract which though lacking in formalities nevertheless shows the real intention of the parties to create a specific property to secure the performance of an obligation. a. Contract of sale b. Real estate mortgage c. Chattel mortgage d. Equitable mortgage 54. The following are the instances wherein a contract of sale with a right to repurchase and other contract purporting to be an absolute sale shall be presumed to be an equitable mortgage, except a. When the price of a sale with a right to repurchase is unusually inadequate b. When the vendor remains in possession as lessee or otherwise c. When the period for the exercise of the right of repurchase is extended d. When the purchaser retains for himself part of the purchase price e. When the vendor binds himself to pay the real property taxes on the thing sold f. When the real intention of the parties is that the transaction shall secure the payment of a debt or the performance of any other obligation g. When the buyer filed an action for exact fulfillment to collect the balance of the price 55. In case of doubt in construing a contract which has the characteristics of both sale with right to repurchase and an equitable mortgage, what shall be the general construction of the contract? a. Absolute sale b. Pacto de retro sale c. Equitable mortgage d. Lease 56. What shall be the remedy of the injured party in cases of contracts presumed to be an equitable mortgage? a. Ask for rescission of contract. b. Ask for annulment of contract. c. Ask for declaration of nullity of the contract. d. Ask for reformation of the instrument. 57. It is a contract whereby a person transfers his credit, right or action against a third person to another person for a consideration which is certain in money or its equivalent. a. Contract of sale b. Assignment of credits c. Contract of agency d. Negotiation 58. How is a contract of assignment of credit perfected? a. It is perfected by mere consent being consensual contract. b. If is perfected by delivery of the instrument evidencing credit being real contract. c. It is perfected by the written agreement being formal contract. d. It is perfected by execution of public document evidencing agreement being formal contract 59. What is the formality required by law for assignment of credit involving personal property to bind third persons? a. It must be in writing. b. It must be in a public instrument. c. It must be recorded in chattel mortgage registry. d. It must be recorded in the Registry of Property 60. What is the formality required by law for assignment of credit involving real property to bind third persons? a. It must be in writing. b. It must be in a public instrument. c. It must be recorded in chattel mortgage registry. d. It must be recorded in the Registry of Property 61. UST sold its accounts receivable worth PIM from its students to BPI for P900,000. The students paid UST in the amount of P1M. What is the effect of payment? a. The students are released from the obligation if they pay UST before the knowledge of the assignment. b. The students must still pay BPI the amount of PIM. c. BPI can no longer recover the P1M from UST. d. The basis of liability of UST to BPI is quasi-delict. 62. The following are the warranties of the (assignor) vendor in good faith in assignment of credits except a. Existence of the credit at the time of sale b. Legality of the credit at the time of sale c. Solvency of the debtor at the time of sale 63. As a general rule, the assignor of credits is not liable for the insolvency of the debtor of the credit. When may the assignor or vendor in assignment of credits become liable for the insolvency of the debtor? a. When it is expressly stipulated that the assignor warrants the solvency of debtor. b. When the insolvency of debtor was prior to the sale and of common knowledge. c. Either A or B d. Neither A nor B 64. In case the assignor in good faith warrants the solvency of the debtor, what is the prescriptive period of the liability or warranty? a. 1 year from the maturity date of credit or date of assignment whichever is later. b. 6 months from the maturity date of credit or date of assignment whichever is later. c. 40 days from the maturity date of credit or date of assignment whichever is later. d. 3 days from the maturity date of credit or date of assignment whichever is later. 65. Which of the following statements concerning assignment of credits is incorrect? a. The assignment of a credit excludes all the accessory rights, such as a guaranty, mortgage, pledge or preference. b. The vendor in bad faith shall always be answerable for the payment of all expenses, and for damages. c. One who sells an inheritance without enumerating the things of which it is composed, shall only be answerable for his character as an heir. d. Should the vendor have profited by some of the fruits or received anything from the inheritance sold, he shall pay the vendee thereof, if the contrary has not been stipulated. 66. A issued a promissory note which states "I promise to pay P10,000 to B. Sgd. A" in exchange for shabu. B generally indorsed and delivered the note to C in exchange for a cellphone. C is a purchaser of the promissory note in good faith and for value. May C collect from B? a. No because the assignor of credit does not guaranty the solvency of maker. b. No because the assignment of credit is sale of note without recourse. c. Yes because B violated his warranty that the debt is legal. d. None of the above. 67. A issued a promissory note which states "I promise to pay P10,000 to the order of B. Sgd. A" in exchange for cocaine. B generally indorsed and delivered the note to C in exchange for a laptop. C is a purchaser of the promissory note in good faith and for value. May C collect from A? a. No because if the assignor cannot collect, the assignee cannot also collect. b. Yes because a holder in due course holds the instrument free from personal defenses available to prior parties. c. Yes even if he is not a holder in due course. d. None of the above. 68. A issued a promissory note which states "1 promise to pay P10,000 to the order of B. Sgd. A" in exchange for cocaine. B generally indorsed and delivered the note to C in exchange for a laptop. C is a not a purchaser of the promissory note in good faith and for value. May C collect from A? a. No because if the assignor cannot collect, the assignee cannot also collect. b. Yes because a holder in due course holds the instrument free from personal defenses available to prior parties. c. No because a holder in due course is subject to personal defenses available to prior parties. d. None of the above. 69. A issued a promissory note which states "I promise to pay P10,000 to the order of B. Sgd. A" in exchange for cocaine. B generally indorsed and delivered the note to C in exchange for a laptop. C is a not a purchaser of the promissory note in good faith and for value. May C collect from B? a. No because the assignor of credit does not guarantee the solvency of maker. b. No because the assignment of credit is sale of note without recourse. c. Yes because B violated his warranty that the instrument is valid and subsisting. d. None of the above. 70. A issued a promissory note which states "l promise to pay P10,000 to the order of B. Sgd. A" in exchange for cellphone. B qualifiedly indorsed and delivered the note to C in exchange for laptop. C is a purchaser of the promissory note in good faith and for value. May C collect from B if A becomes insolvent? a. Yes even if there is no violation of warranties b. Yes provided notice of dishonor is given to B. c. No because the qualified indorser does not guaranty the solvency of maker. d. None of the above. -End 71.
