COLEGIO DE DAGUPAN

Arellano Street, Dagupan City

School of Business and Accountancy

MIDTERM EXAMINATION
Regulatory Framework for Business Transactions - Sales

1. Barrameda bought a piece of land from Sarmiento for a lump sum of P120,000,00. Aside from
mentioning the boundaries in the contract which is required in the sale of real estate, the contract
also states that the piece of land consists of 1,000 square meters. Before delivery, Sarmiento
discovered that the piece of land actually contains 1,200 square meters.
a. Sarmiento must deliver all the 1,200 square meters; Barrameda must pay P120,000.00
plus an additional amount for the excess of 200 square meters.
b. Sarmiento is required to deliver only 1,000 square meters; Barrameda must pay the
contract price of P120,000.00.
c. Sarmiento must deliver all the 1,200 square meters; Barrameda has to pay only
P120,000.00.
d. Neither party is required to, perform the obligation because of mistake.

2. Sison sold a registered piece of land to Bautista on May 1, 2015 in a public instrument. On May
3, 2015, Sison sold in a private instrument the same, piece of land to Cruz, who took physical
possession of the land. Neither buyer was aware of the sale made to the other.
a. The land belongs to Bautista.
b. The land belongs to Cruz.
c. The land still belongs to Sison, because both sales are void.
d. The land should be divided equally between Bautista and Cruz to give effect to both
sales.

3. On June 1, 2015, Sanchez sold to Borlaza in a private instrument a certain computer. Two days
later, Sanchez orally sold the same computer to Contreras who immediately took possession of
the computer. Neither party was aware of the sale made to the other.
a. The computer belongs to Borlaza.
b. The computer belongs to Contreras.
c. The computer will be co-owned by Borlaza and Contreras to give effect to both sales.
d. Both sales are void. Accordingly, Sison will still be the owner.

4. This refers to an encumbrance imposed upon an immovable for the benefit of another immovable
belonging to a different owner.
a. Easement or servitude
b. Real estate mortgage
c. Pledge
d. Chattel mortgage
5. Three of the following are the requisites in order that the buyer may enforce the seller’s liability
for hidden defects. Which one is not?
a. The defects of the thing sold must not be patent or visible
b. The defects render the thing unfit for the use for which it is intended, or which diminish
its fitness for such use to such an extent that had the buyer been aware thereof, he would
not have bought it.
c. The defects must be existing at the time of sale.
d. The defects must be capable of determination by an expert.

6. Alessandra purchased from Rose Tan's Department Store, two pieces of imported identical
bathrobe, one of which was embroidered with "HIS" and the other with "HERS", which she
planned to give to his friends Jules and Assunta as a wedding present. She inspected the items
very carefully with the assistance of the store clerk before paying for them. While she was
wrapping them shortly after she arrived home, she noticed that the hem of the “HERS" bathrobe
had disintegrated because it was loosely sewn, which damage was not apparent because of the
many colors of the apparel.
a. Alessandra can rescind the sale of both pieces of bathrobe.
b. Alessandra can rescind only the sale of the bathrobe marked "HERS”
c. Alessandra cannot rescind because she should have inspected the item well when she
bought it.
d. Alessandra must pay for both pieces of bathrobe.

7. The vendor shall be liable for the death of the animal sold when the following requisites are
present, except:
a. the disease existed at the time of sale.
b. the disease is the cause of the death of the animal.
c. the disease must be redhibitory.
d. the animal dies within 3 days from the time of purchase.

8. The justified refusal of the buyer to accept the good produces the following effects, except:
a. buyer has no duty to return the goods, unless otherwise stipulated.
b. title to the goods does not pass on to him.
c. buyer shall not be obliged to pay the price.
d. buyer is obliged to constitute himself as depositary until he returns the goods.

9. In three of the following cases, the buyer is not entitled to suspend the payment of the price.
Which one will give him the right to suspend payment?
a. Disturbance in the possession or ownership of the thing purchased.
b. The seller gives him security for the return of the price.
c. It has been stipulated that the buyer shall pay the price notwithstanding any disturbance.
d. The disturbance is a mere act of trespass.

10. A contract of sale with a right to repurchase and other contracts including a contract purporting to
be. An absolute sale shall be presumed to be an equitable mortgage in the following cases, except
when the;
a. price of sale with right to repurchase is unusually inadequate.
b. vendor remains in possession of the thing sold
c. period to repurchase the property is extended.
d. vendee binds himself to pay the taxes due.
11. An owner of a rural land has the right of legal redemption of an adjoining rural land sold if the
following requisites are present, except when the:
a. adjoining rural land is not separated by any apparent servitudes for the benefit of other
estates.
b. land sold does not exceed one hectare.
c. grantee owns another rural land.
d. grantee owns an urban land.

12. This refers to the right of an adjoining owner of an urban land to be given preference to the
purchase of a small piece of urban land which is held for speculation before it is offered for sale
to others.
a. Right of subrogation.
b. Right of redemption.
c. Right of pre-emption.
d. Right of repurchase.

13. A, B, and C, are co-owners of an undivided parcel of land. On May 1, A sold his share to X; on
June 1, B sold his share also to X; and on July 1, C sold his snare also to X. Each sale was with a
right to repurchase.
a. X may compel A, B and C to come to an agreement to repurchase the whole land.
b. Each co-owner may exercise his right of redemption on the whole property including the
share of the other two co-owners.
c. Each co-owner may exercise his right of redemption only with respect to his share.
d. Any two of the three co-owners may redeem the property proportionately.

14. R,S and T are co-owners of an undivided parcel of land. R sold his 1/3 interest to T in a deed of
absolute sale. Which is correct?
a. S may exercise the right of redemption on the interest sold by R to T.
b. S cannot exercise the right of redemption.
c. The sale made by R to T is voidable.
d. S may redeem only 1/2 of the interest sold by R to T.

15. T steals the goods of O and deposits them in the warehouse of W. W issues to T a warehouse
receipt which by its terms indicates that goods are to be delivered to the order of T. T, thereafter,
negotiates the receipt to H who purchases the document in good faith and for value.
a. H may obtain delivery of the goods from W because H was an innocent purchaser for
value.
b. H can obtain delivery of the goods from W because the issuance of the warehouse receipt
of T conferred a valid title to him over the goods.
c. H can obtain delivery of the goods from W because the acquisition by H of the
warehouse receipts in good faith cured the defect in T's title.
d. H cannot obtain delivery of the goods because he acquired whatever title T had over
such goods which is the title of a thief.
16. O delivered certain goods to C, a common carrier, which issued to O a bill of lading stating that
the goods are to be delivered to bearer. Without O's fault, the bill of lading was·stolen by T who
thereafter negotiated the document by mere delivery to H, a purchaser for value and without
notice of the defect in the titie of T.
a. The negotiation of the bill of lading by T to H is not valid because of T's defective title.
b. The negotiation of the bill of lading by T to H is valid. T's defective title does not
have any effect on the validity of the negotiation.
c. H may not obtain delivery of the goods from C because H acquired whatever title. T had
over the document.
d. H acquired title to the document but not to the goods.

17. D obtained from C a loan amounting to P50,000.00 the same being secured by a mortgage on D's
lot. Thereafter, C assigned his credit right to T with notice to D. Based on the foregoing facts,
which of the' following statements is incorrect?
a. T cannot colect from D if D does not give his consent to the assignment.
b. T can collect from D. D's consent to the assignment is not required.
c. T car collect from D and if D cannot pay, T can foreclose the mortgage on the lot.
d. The notice to D of the assignment is sufficient. D must make his payment to T and no
longer to C.

18. A kind of mortgage which, although lacking some formality, form of words, or requisites
prescribed by law, shows the intention of the parties to charge real property as security for debt
and contains nothing impossible or contrary to law is known as:
a. legal mortgage.
b. equitable mortgage.
c. conventional mortgage.
d. voluntary mortgage.

19. If a movable property is sold separately to two or more different vendees, ownership shall belong
to the person:
a. who in good faith first paid the purchase price in full.
b. who in good faith first recorded the sale in the Registry of Property.
c. who in good faith presents the oldest title.
d. who in good faith first took possession of the property.

20. It is a contract by virtue of the terms of which the parties thereto promise and obligate themselves
to enter into another contract at a future time, upon the happening of certain events, or the
fulfillment of certain conditions.
a. Contract of adhesion
b. Contract of option.
c. Contract of sale
d. Auto-contract
21. D borrowed P50,000.00 from C. The obligation is secured by a mortgage of D's house and lot.
Thereafter, C assigned his credit right to T. Based on the foregoing facts, which of the following
statements is incorrect?
a. The consent of D to the assignment is not required in order that T may collect from D.
b. The assignment of the credit right did not carry with it the assignment of the
mortgage.
c. If D pays C before D was notified of the assignment, D is released from liability.
d. The assignment, to bind third persons, must be in a public instrument and recorded with
the Registry of Property.

22. S sold his farm lot to B with S reserving his right to repurchase the property within five years
from the date of the sale. Based on the foregoing facts, which of the following statements is
incorrect?
a. The sale is subject to a suspensive condition.
b. B may validly sell the lot to a third person against whom S may exercise the right to
repurchase provided the right is registered.
c. B is subrogated to the rights and actions of S.
d. B's ownership of the lot becomes irrevocable if S fails to exercise his right to repurchase
within the period stated.

23. S sold his farm lot to B with S reserving his right to repurchase the property within five years
from the date of the sale. Based on the foregoing facts, which of the following statements is
incorrect?
a. The sale is subject to a suspensive condition.
b. B may validly sell the lot to a third person against whom S may exercise the right to
repurchase provided the right is registered.
c. B is subrogated to the rights and actions of S.
d. B's ownership of the lot becomes irrevocable if S fails to exercise his right to repurchase
within the period stated.

24. Mother Lilly purchased from Santiago Farms four horses with different colors: a white, a gray, a
black, and a brown, which Mother Lilly intended to use in a movie to be starred in by four movie
actors each one of whom represents one of the colors. Each horse was certified to be fit by the
veterinarian who was hired. by the parties to examine them. Mother Lilly paid a separate price for
each of the horses. During the filming of the movie, the brown horse was always sick and could
not function as the three others. It was subsequently discovered that it was suffering from an
incurable heart ailment.
a. Mother Lilly may ask for the rescission of the sale of the brown horse only since she paid
a separate price for each of the horses.
b. Mother Lilly may ask for the rescission of the sale of all the horses.
c. Mother Lilly may not ask for rescission of the sale of any horse because she freely
entered into the contract of sale.
d. Mother Lilly is bound by the sale of all the four horses and must honor such contract
because the veterinarian certified that all horses were fit.
25. S sold a specific parcel of land separately to the following persons: on July 1, 2015, to X, in a
public document; on July 5, 2015 in a private document to Y, who took physical possession of the
land; and on July 9, 2015, to Z, who registered the sale with the Register of Deeds. Neither X, Y
nor Z was aware of the sale made to the other two buyers. Who is the owner of the parcel of land?
a. X, because he was the first purchaser.
b. Y, because he took physical possession.
c. Z, because he registered the sale.
d. S, because the multiple sales he made rendered each sale a void contract.

26. In which of-the following cases is the seller not obliged to make any payment to the buyer for
breach of warranty against eviction?
a. When such warranty has not been agreed upon.
b. When there was no stipulation exempting the seller from liability.
c. When there was a stipulation exempting the seller (who was in good faith) from breach of
warranty and the waiver was made by the buyer without knowledge of the risks of
eviction.
d. When there was a stipulation exempting the seller (who was in good faith) from
breach of warranty and the waiver was made by the buyer with knowledge of the
risks of eviction.

27. S and B executed a deed of absolute sale involving a parcel of land supposedly containing 2,000
square meters. B paid a lump sum of P2,200,000.00 for the purchase. Based on the foregoing
facts, which of the following statements is correct?
a. If the parcel of land is actually 2,200 square meters in area, S has to deliver only 2,000
square meters thereof and B must pay P2,200,000.00 as agreed upon.
b. If the parcel of land is actually 1,800 square meters in area, S must deliver only 1,800
square meters and B has to pay only the price equivalent to 1,800 square meters.
c. If the parcel of land actually contains 2,200 square meters, S must deliver all of
2,200 square meters with B still paying the amount of P2,200,000.00.
d. If the parcel of land actually contains 2,200 square meters, S must deliver all of 2,200
square meters but B must pay a proportionate amount for the additional 200 square
meters in addition to the price of P2,200,000.00.

28. "Under the “Realty Installment Buyer Act", the buyer of real estate on instaliment payments may
pay an installment defaulted without additional interest if he has paid at least two years of
installments: The law is applicable to sales/transactions involving:
a. industrial lots.
b. commercial buildings.
c. residential lots.
d. sales to tenants under the Land Reform Law.

29. It is an affirmation of fact or any promise by the seller relating to the thing which has a natural
tendency to induce the buyer to purchase the same, relying on such promise or affirmation.
a. Condition
b. False representation
c. Warranty
d. Seller's talk
30. A and B are co-owners of a rural lot not exceeding 1 hectare. The lot is surrounded on its four
sides as follows: on the North, by the road; on the East, by the lot of X consisting of 2 hectares;
on the South, by the lot of Y consisting of 2 1/2 hectares; and on the West, by Z's lot consisting of
2 3/4 hectares. A sells his undivided interest in the agricultural lot to T, who owns several
hectares of rural land in the area. Who has the right of legal redemption over the undivided
interest in the lot sold by A to T?
a. B
b. X
c. Y
d. Z

31. Goods are deemed no longer in transit

a. If the goods are rejected by the buyer for a valid reason and the carrier or other bailee
continues in possession of them, even if the seller has refused to receive them back.
b. From the time they are delivered to a carrier by land, water or air for the purpose of
transmission to the buyer.
c. From the time they are delivered to a bailee for the purpose of transmission to the buyer
until the buyer or his agent in that behalf, takes delivery of them from such bailee.
d. If the carrier or other bailee wrongfully refuses to deliver the goods to the buyer or
his agent in that behalf.

32. X sold to V orally a parcel of land for P200,000. X effected the delivery of the land. The payment
of the price was to be made three months later. At the end of three months period
a. V may refuse to pay claiming in his defense the Statute of Frauds
b. V may return the parcel of land to X
c. X can collect from V because the contract has already been executed
d. V may refuse to pay on the ground that there is no written contract to support the sale.

33. On January 15, 2010, X sold for P2M her house and lot to V. It was agreed that delivery of the
house and lot, and the payment therefore, would be made on March 10, 2010. Unfortunately, Z a
stranger negligently set the house on fire on February 25, 2010, and the house was completely
destroyed. Which is correct?
a. V is not required to pay the P2M since the contract had no subject matter.
b. X must still deliver the lot but is excused from delivering the house, while V must
still pay the P2M
c. X must deliver the lot while V should pay only the amount equivalent to the value of the
lot.
d. X need not deliver the lot while V need not pay the P2M

34. Action by the vendee against the vendor to nullify the sale due to some vices or defects which
render the object of sale unfit for the use intended or knowledge of which the vendee should not
have bought the thing
a. Accion quanti minoris
b. Accion reinvidicatoria
c. Accion pauliana
d. Redhibilitory action
35. The redhibitory action based on the faults or defects of animals must be brought within
a. 30 days from delivery to the vendee
b. 40 days from delivery to the vendee
c. 45 days from delivery to the vendee
d. 6 months from delivery to the vendee

36. A sold to B a parcel of land for P3.8M. The sale is evidenced by a memorandum of agreement of
sale written in the Bicolano dialect. One week later, A sold the same parcel of land to C for P4M.
This is evidenced by a formal deed of sale. Upon buying the property, C, who was aware of the
first sale immediately took possession of the lot. When informed of the second sale, B
subsequently registered an adverse claim to the property. Later, C registered the deed of sale in
her favor. The parcel of land shall belong to
a. B because he has got an older title
b. C because he is the first to register
c. C because he is the first to take possession
d. No one as both sales are void

37. Voluntary renunciation made by the buyer of his right to warranty against eviction where in case
the buyer is evicted, the seller is liable to the value of the thing at the time of eviction.
a. Waiver intentionada
b. Waiver consciente
c. Waiver cursunada
d. Waiver inocente

38. A contract of sale whereby the seller acquires the right to redeem or repurchase the object of the
sale from the buyer within a certain period agreed upon
a. Equitable mortgage
b. Absolute sale
c. On sale or return
d. Pacto de retro sale

39. X sold to V her Yamaha organ. It was agreed that X would fix the price a week later. At the
agreed time, X named the price P10,000. V agreed. Was the sale perfected?
a. No, because the price was left to the discretion of one of the contracting parties
b. No, because at the time of sale the price was not fixed
c. Yes, because the price fixed by one of the parties was accepted by the other
d. Yes, because there was agreement that X would fix the price

40. Not an implied warranty in a contract of sale

a. Right to sell the thing at the time of perfection of the contract
b. Reasonably fit for the purpose they are acquired
c. Merchantable in quality
d. Free from charges or encumbrances not declared or known to the buyer
41. Vi imported radios from Taiwan and asked for 220 volts radios. The radios arrived clearly labeled
220 volts and Vi sold them to the public as such. Later the customer complained that the radios
have been mislabeled by the manufacturer and that they were good only for 110 volts. As a
consequence
a. Vi is liable to the vendees for any hidden defects even though he is not aware.
b. Vi is not liable because he is in good faith
c. Vi is not liable under the principle of “caveat emptor” or let the buyer beware
d. The vendees may hold the manufacturer liable but not Vi because Vi specifically asked
for 220 volts

42. A sold his only car to B for P300,000 to be paid as follows: P150,000 upon delivery of the car to
B and the balance at P10,000 per month until full payment of the purchase price. Later the car
gets burned in the possession of B through fortuitous event and without B’s fault, before full
payment of the balance. Is B obliged to pay the balance?
a. No, because the car was lost through fortuitous event and without B’s fault, hence B’s
obligation is extinguished.
b. No, because the loss should be borne by the seller as this an installment sale so until the
buyer pays the full amount of the price of the sale, A remains to be the owner.
c. Yes, but A must give another car to B because of the principle “genus nunquam peruit”
or generic thing never perishes
d. Yes, because the principle “res perit domino” or the thing perishes with the owner.

43. X offers to V 100 electric fans for P80,000 payable in 60 days with 12 % interest per annum. V
accepted the offer by telegram provided that interest is reduced to 6%. If there is no further
communication between X and V relating to the terms
a. The contract is perfected because of the acceptance by V
b. There is no contract yet between X and V because V made a counter offer
c. The contract is perfected under the terms of X
d. There is no contract yet unless v gives earnest money

44. X sold her specific car to V for P200,00 payable in 5 equal installments. X delivered the car to V
but a mortgage was constituted on the car to answer for the unpaid installments. V paid the first 2
installments but failed to pay the last 3 installments. X foreclosed the mortgaged property and
sold it at public auction for P100,000. Which is correct?
a. X can recover from V the balance of P20,000 even if there is no stipulation to that effect
b. X can recover from V the balance of P20,000 if there is stipulation to that effect
c. X cannot recover the deficiency except if there is stipulation to that effect
d. X cannot recover the deficiency even if there is stipulation to the contrary

45. A seller sold to a buyer a piece of jewelry at a price of P25,000. The contract provides that the
buyer will pay the seller cash, P20,000 and for the balance, the buyer will give the seller a micro
oven worth P5,000. What is the nature of the contract?
a. Sale
b. Partly sale partly barter
c. Barter
d. Commodatum
46. X leased to V a 5 Freezer for two years at a lease rental fee of P1,000 per month and signed an
option in favor of V to buy the freezers at the end of the term of the lease at P50,000. All rental
fee paid are to be considered as partial payment of the sale. After 12 months V was able to pay
the rental fee for 9 months and was in arrears for three months. X terminated the lease contract
and repossessed the freezers. The consequence of the transaction is
a. X can collect the rental fees for three months which are in arrears.
b. X can collect the rental fees for the unexpired 12 months of the lease contract.
c. When X took possession of the generator, he has no further action against V
d. X in terminating the lease and repossessing the generator is obliged to refund the 9
months rental fee, paid by V even if there is a stipulation to the contrary.

47. B bought from S a second hand motor vehicle, which upon inspection by B had some mechanical
troubles. After the sale, the car broke down due to engine trouble requiring an overhaul of the
engine. Is S liable for breach of warranty against hidden defect?
a. No, because the defect was not hidden but apparent upon inspection by B it being a
second hand car.
b. Yes, because there was no waiver of warranty against hidden defect
c. Yes, because the seller was in bad faith
d. No, because it was the fault of the buyer in buying a used car

48. S sold to B his car with the agreement to deliver the same one-week after the sale on January 10,
2001. In this case:
a. S may demand within reasonable time from the sale the payment of the price from
B
b. S can demand payment only after he has delivered the car to B.
c. B may demand delivery of the car even before the expiration of the one-week period
agreed upon once he pays the price
d. Payment and delivery shall take place only after one week from sale

49. A sold to B his dog with the agreement that delivery shall be after one week from sale and the
payment of the price after two weeks from delivery. If the dog shall produce offspring, it shall
belong to:
a. If the puppy shall If produced before the sale, it shall pertain to the seller;
b. exist before the actual delivery, it shall pertain still to the seller
c. The fruits that shall exist after delivery will only be the ones to pertain to the buyer
d. The fruits after the sale but before delivery shall pertain to the buyer if so stipulated by
the parties to the sale

50. A, offered to sell to B 100 cartons of sardines at a specified price which was accepted by B and
subsequently delivered his letter of acceptance. In view of the shortage of the catch or sardines,
A failed to deliver the commodities it had offered for sale. B decided to sue A. Which is correct?
a. The acceptance of the offer only created an option to buy
b. The absence of consideration distinct from the price makes the contract without any
obligatory force
c. The acceptance of the offer to sell by showing the intention to buy for a price certain
creates a bilateral contract to sell and buy
d. The acceptance of the offer to sell constitutes a binding contract of sale provided the
 option was supported by a sufficient consideration

51. S sold to B a thing with waiver of warranty against eviction. Eviction took place subsequently.
Is S still liable for breach of warranty against eviction?
a. No, if it was waiver intencionada
b. No, if it were waiver consciente
c. Yes, even if it was waiver intencionada
d. No, provided the seller was in good faith in entering into the contract of waiver of
warranty against eviction

52. S sold to B a thing without knowledge that the thing suffered from a hidden defect. The parties
agrees on the waiver of the warranty by the buyer. Is the seller still liable for breach of warranty?
a. No, because of the valid waiver of warranty
b. No, but he must return the price to the buyer without damages
c. Yes, because the waiver refers only to liability for damages.
d. Yes, if the seller was in bad faith at the time the waiver was made.

53. B bought from S a second hand motor vehicle, which upon inspection by B had some mechanical
troubles. After the sale, the car broke down due to engine trouble requiring an overhaul of the
engine. Is S liable for breach of warranty against hidden defect?
a. No, because the defect was not hidden but apparent upon inspection by B it being a
second hand car.
b. Yes, because there was no waiver of warranty against hidden defect
c. Yes, because the seller was in bad faith
d. No, because it was the fault of the buyer in buying a used car

54. S sold to B his dog without knowledge that the animal was suffering from a disease at the time of
the sale. Is the seller liable for breach of warranty against redhibitory defect of animals?
a. No, because the seller was in good faith when he sold the animal.
b. Yes, if he were aware of the hidden fault or defect.
c. No, because animals unlike things easily can contact some illness
d. Yes, and good faith is not defense to avoid liability
55. I. The debtor’s consent is required for the validity of the assignment of the credit made by his
creditor to another person.
II. Warranty against eviction is inherent in a contract of sale; hence, it is an essential element
thereof.
a. True; True
b. True; False
c. False; False
d. False; True

56. I. A debtor who has paid his creditor before he learns of the assignment of his debt shall be
released from his liability
II. Dacion en pago partakes of the nature of a sale; hence, there is more freedom in fixing the
price of the thing conveyed.
a. True; True
b. True; False
c. False; False
d. False; True

57. I. For an assignment of credit to be binding against third persons if a movable property is
involved, the same must be in a public instrument and recorded in the Registry of Property
II. A contract for a piece of work must comply with the Statute of Frauds. Accordingly, it must be
in writing to be enforceable if the price is P500.00 or more.
a. True; True
b. True; False
c. False; False
d. False; True

58. I. In case of doubt, a contract purporting to be a sale with a right to repurchase shall be construed
as an equitable mortgage.
II. A sales contract requires the delivery of the thing sold for its perfection.
a. True; True
b. True; False
c. False; False
d. False; True

59. I. In conventional redemption, the creditors of the vendor may make use of the right of
redemption against the vendee although they have not exhausted the properties of the vendor.
II. If the consideration received for a thing is another thing and a monetary consideration and the
intention of the parties does not clearly appear, the contract will be considered a contract of barter
if the value of the property consideration is greater than the monetary consideration.
a. True; True
b. True; False
c. False; False
d. False; True

60. I. A stipulation that the sale of an immovable is automatically rescinded upon the default of the
buyer in the payment of the price is valid.
 II. In a contract to sell, the full payment of the price is a suspensive condition which upon
fulfillment will require the execution of a contract of sale.
a. True; True
b. True; False
c. False; False
d. False; True

61. I. The buyer may suspend the payment of the price of the thing, purchased by reason of trespass
on the thing.
II. It is not necessary that the vendor of a thing must be the owner thereof at the time of sale as
long as he can transfer its ownership to the buyer upon delivery.
a. True; True
b. True; False
c. False; False
d. False; True

62. I. The buyer is obliged to pay interest on the price of the goods for the period between the
delivery of the goods and the payment of the price if the thing sold produces fruits or income.
II. The sale of hope or expectancy is valid even if the thing hoped for does not come into
existence.
a. True; True
b. True; False
c. False; False
d. False; True

63. I. If the buyer is justified in refusing to accept the goods, he shall be obliged to hold the goods as
depositary.
II. If the sale of a piece of land is made through an agent, the authority of the agent must be in
writing for the sale to be valid.
a. True; True
b. True; False
c. False; False
d. False; True

64. I. Acceptance of the goods by the buyer generally discharges the seller from his liability for any
breach of warranty.
II. In a sale by auction, any bidder may retract his bid before the sale is perfected.
a. True; True
b. True; False
c. False; False
d. False; True
65. I. If a “by-bidder” or “puffer” is employed by a seller without notice in sale by auction, the sale
may be treated as fraudulent by the buyer.
II. The sale of animals suffering from contagious diseases is voidable.
a. True; True
b. True; False
c. False; False
d. False; True

66. I. When animals are sold as a pair, the vendee may ask for the rescission of the sale of both
animals although only one of them suffers from a redhibitory defect.
II. The ownership of the thing sold is transferred upon the perfection of the contract of sale.
a. True; True
b. True; False
c. False; False
d. False; True

67. I. A unilateral promise to buy or sell a determinate thing at a certain price is binding upon the
promissor if the promise is supported by a consideration distinct from the price.
II. The vendor shall be liable generally for any defect on the thing sold even if he was not aware
thereof.
a. True; True
b. True; False
c. False; False
d. False; True

68. I. As a rule, the vendor shall not be liable for a non-apparent easement that is recorded in the
Registry of Property.
II. Earnest money is part of the purchase price of a thing; hence, deductible from the total selling
price.
a. True; True
b. True; False
c. False; False
d. False; True

69. I. In sale of real property where the buyer has defaulted after paying at least 2 years installments,
he shall be entitled to pay, without additional interest, the unpaid installments. due within the
grace period earned by him.
II. The vendor's liability for breach of warranty against eviction may be validly waived by the
vendee. However, the vendor will still be liable if the waiver was made by the vendee without
knowledge of the risks of eviction.
a. True; True
b. True; False
c. False; False
d. False; True
70. I. In order that the buyer may enforce the seller's liability for breach of warranty against eviction,
the judgment depriving the buyer of the thing must first be appealed by the buyer.
II. The purchase by a guardian of the property of the person under his guardianship is valid.
a. True; True
b. True; False
c. False; False
d. False; True

71. I. The buyer shall be entitled to the fruits of the thing sold from the time of the perfection of the
contract.
II. If the same immovable is sold to two or more persons who are all in good faith, ownership
shall belong to the buyer who first paid its price.
a. True; True
b. True; False
c. False; False
d. False; True

72. I. If real estate is sold for a lump sum, the vendor is bound to deliver all that is included within
the boundaries stated in the contract although the actual area is greater than that stated in the
contract.
II. The delivery of incorporeal property may be made through the exercise by the vendee of his
rights with the consent of the vendor.
a. True; True
b. True; False
c. False; False
d. False; True

73. I. If goods are sold on “sale or return”, the risk of loss of the thing sold remains with the seller
after its delivery to the buyer.
II. When an unpaid seller exercises his right of stoppage in transitu, the contract of carriage
ceases, the carrier becoming liable as a depositary.
a. True; True
b. True; False
c. False; False
d. False; True

74. I. An unpaid seller exercising his right to resell the goods may buy the goods either directly or
indirectly.
II. If a period has been fixed for the payment of the price which has not yet arrived, the seller in
the meantime is bound to deliver the thing sold.
a. True; True
b. True; False
c. False; False
d. False; True
75. I. If the goods sold are in the possession of a third person, the seller is deemed to have delivered
the goods to the buyer if the third person acknowledges to the buyer that he holds the goods in the
buyer's behalf.
II. A negotiable document of title becomes non-negotiable if it is stamped with the mark “non-
negotiable”.
a. True; True
b. True; False
c. False; False
d. False; True

76. I. The delivery of an order document of title without any indorsement does not constitute
negotiation.
II. A bearer document of title becomes an order document of title if it is specially indorsed.
a. True; True
b. True; False
c. False; False
d. False; True

77. I. A warehouse receipt is also a contract-between the warehouseman and the depositor of the
goods.
II. When a thing is purchased from a merchant's store fair or market, the buyer acquires title to
the thing although the seller may have stolen it or acquired it from a thief.
a. True; True
b. True; False
c. False; False
d. False; True

78. I. The delivery of specific goods to a carrier or other bailee for the purpose of transmission to the
buyer generally transfers ownership of the goods to the buyer.
II. In “sale on approval”, the buyer becomes the owner of the thing upon delivery, but he may
revert such ownership to the seller by returning it.
a. True; True
b. True; False
c. False; False
d. False; True

79. I. The expenses for the execution and registration of the sale shall be borne by the vendee, unless
there is a stipulation to the contrary.
II. If the building should have been sold to different vendees the ownership shall be transferred to
the person who may have taken possession thereof in good faith.
a. First statement is true, second statement is false.
b. First statement is false, second statement is true.
c. Both statements are true.
d. Both statements are false
80. I. Option money is considered as part of the purchase price while earnest money is not.
II. The Maceda Law refers to the sale of personal property by installments while the Recto Law
refers to the sale of real property by installments.
a. First statement is true, second statement is false.
b. First statement is false, second statement is true.
c. Both statements are true.
d. Both statements are false

81. If the object of the contract is specially made or manufactured at the specific order of another, it
is a contract for a piece of work. This is
a. English rule
b. Massachusetts rule
c. New York rule
d. Chicago rule

82. If the article already exists and subsequently acquired by another, it is a contract of sale, and if
the article is still to be manufactured at the instance of another, it is a contract for a piece of work.
This is
a. English rule
b. Massachusetts rule
c. New York rule
d. Chicago rule

83. On June 1, 2015, S sold to B 50 units of machines which were scheduled to arrive from Japan the
following day on board the vessel “MT Nippon Maru". The sale was evidenced by an invoice
identifying each machine by serial number. Each machine was priced at P10,000.00. Unknown to
the parties, 30 units were damaged beyond repair by seawater on May 31,2015. Based on the
foregoing, which of the following statements is incorrect?
a. B may rescind the whole contract.
b. B may demand delivery of the remaining 20 units and pay the price therefor.
c. S may require payment of the whole shipment from B since S was not aware of the
damage caused on the machines at the time of sale.
d. S has no option to rescind the whole contract or require payment of the remaining 20
units.

84. S stole a ring belonging to O. Subsequently, the ring was offered for sale at a public auction
where X, who was not aware that the ring was stolen, bought it. A few weeks later, O saw the
ring and recognized it as his. Based on the foregoing information, which of the following
statements is correct?
a. O may recover the ring from X without reimbursing X since O was unlawfully deprived
of the ring.
b. O may recover the ring from X but he has to reimburse X since X acquired title to
the ring.
c. O may no longer recover the ring even if he is willing to reimburse X.
d. X did not acquire title to the ring since the auctioneer had no valid title thereto.
85. On June 1, 2015, Sanchez sold to Borlaza in a private instrument a certain computer. Two days
later, Sanchez orally sold the same computer to Contreras who immediately took possession of
the computer. Neither party was aware of the sale made to the other.
a. The computer belongs to Borlaza.
b. The computer belongs to Contreras.
c. The computer will be co-owned by Borlaza and Contreras to give effect to both sales.
d. Both sales are void. Accordingly, Sison will still be the owner.

86. The Recto Law applies to which of the following examples of sale?
a. Sale of a car on straight term.
b. Sale of house and lot on installment.
c. Sale of car on installment where the buyer constituted a mortgage on his truck.
d. Sale of a piano on installments where the buyer constituted a chattel mortgage on
the piano.

87. B purchased from S a laptop computer worth P100,000.00. The terms of sale provide for a down
payment of P20,000.00 with the balance payable in 8 equal monthly installments. To secure the
balance, S required B to execute & chattel mortgage on the laptop computer and a real mortgage
on B's lot. B complied with all the requirements but defaulted in the payment of the third and
fourth installments. These remedies are available to S except one. Which is it?
a. Cancel the sale.
b. Exact fulfillment of the obligation.
c. Foreclose the real mortgage and thereafter recover any deficiency from B.
d. Foreclose the chattel mortgage and thereafter foreclose the real mortgage in case of
deficiency.

88. P, who was in Hong Kong, made an overseas call to A, his friend, to sell P's lot in Quezon City
immediately as P needed cash. Accordingly, A sold the lot to B. The deed of sale was in a public
document. The sale of P's lot is:
a. valid.
b. rescissible.
c. unenforceable.
d. void.

89. Which of the following contracts of sale is void?

a. Oral sale of a piece of land made through an agent whose authority is in a public
instrument.
b. Sale of a piece of land in a public instrument made through an agent whose
authority was given orally by the principal.
c. Sale of a piece of land in a private instrument made through an agent whose authority is
in a public instrument.
d. Sale of a piece of land in a public instrument made through an agent whose authority is in
a private instrument
90. One of the following is not included as an example of relative incapacity.
a. Demented persons
b. Executors and administrators, the property of the estate under administration
c. Public officers and employees, the property of the State, the administration of which has
been entrusted to them
d. Justices, judges, and other officers and employees connected with the administration of
justice, the property in litigation before the court within whose jurisdiction they exercise
their respective functions

91. LA Lakers entered into a contract with Nike Inc to provide two pairs of basketball shoes for Kobe
Bryant and Andrew Bynum. No pair was, however, available at the time of perfection of the
contracts. Kobe wears 10" basketball shoes which Nike normally manufactures for the general
market while Andrew wears 20" basketball shows which will be manufactured specially for
Andrew. What contracts are entered into by the parties?
a. Contract of sale for Andrew's shoes and contract for a piece of work for Kobe's shoes
b. Both contracts of sale
c. Contract of sale for Kobe's shoes and contract for a piece of work for Andrew's
shoes
d. Both contracts for a piece of work

92. On January 1, 2012, Seller and Buyer entered into a contract of sale of a specific cow. The
purchase price shall be paid on January 5, 2012 and the cow shall be delivered on January 10,
2012. The cow gives birth on January 4, 2012. The cow and its young have been delivered on
January 11, 2012. Which of the following statements is correct?
a. The buyer has real right over the cow and its young on January 1, 2012.
b. The buyer has personal right over the young on January 5, 2012.
c. The buyer has personal right over the young on January 1, 2012 and real right over
the cow and its young on January 11, 2012.
d. The buyer has personal right over the young on January 10, 2012.

93. In case of doubt whether the contract of sale is one of emptio rei speratae or one of emptio spei,
how shall the contract be generally interpreted to?
a. Both A and B
b. Neither A nor B
c. Emptio spei
d. Emptio rei speratae

94. The following are the essential elements or the requisites of the contract of sale,except
a. Consent of the contracting parties as to determinate thing and price certain in money or
its equivalent
b. Delivery of the subject matter
c. Subject matter which should be a determinate thing
d. Price certain in money or its equivalent

95. The following are only considered accidental elements in the contract of sale,except
a. Place of delivery and payment
b. Price certain in money or its equivalent
c. Time of delivery and payment
d. Terms or conditions of payment
96. Future things or things having a potential existence may be the object of a contract of sale.
However, the thing must come into existence; otherwise, the sale will not be effective for not
having a subject matter. The following future things can be the object of a contract of sale, except
a. Wine that a determinate vineyard is expected to produce
b. Future inheritance of an heir
c. Next catch of a specific fisherman's net
d. Milk that a specific female cow may yield during the coming year

97. A and B are legally married and governed by property regime of absolute separation. A sold in
writing his specific ring price of P10,000 to B after the latter pointed a gun to A. What is the
status of contract of sale?
a. Unenforceable
b. Voidable
c. Rescissible
d. Void

98. The following are the characteristics of a contract of sale,except

a. Real - It is perfected by delivery of the subject matter.
b. c. Reciprocal - The cause of the other party is the object of the other party and vice
versa.
c. Bilateral - Both the contracting parties have obligations to perform.
d. Principal - It can exist by itself without being dependent upon another contract.

99. S sold his only car to B for P100,000 payable in 10 equal monthly installments of P10,000 each.
As security, B executed a chattel mortgage on the car. If B defaulted in at least two installments
after payment of several installments, can S ask for the exact fulfillment of the obligation and
recover any deficiency from the sale by execution through the forclosure of chattel mortgage?
a. b. Yes S can ask for the fulfillment of the contract of sale but cannot recover any
deficiency from the sale by execution under any circumstances.
b. No S cannot ask for the fulfillment of the contract of sale because it is available only
when one installment is not paid.
c. Yes S can ask for the fulfillment of the contract of sale and can recover any
deficiency from the sale only if there is stipulation.
d. Yes S can ask for the fulfillment of the contract of sale and can recover any
deficiency from the sale by execution only but not further through foreclose of
chattel mortgage because these are alternative remedies.
 100. S,a minor of 17 years, sold his watch for P1,500.00 to B, 30 years old. The guardian of S
was not aware of the sale; hence,no action for annulment has yet been filed. Subsequently, B sold
the watch to T, who acquired it in good faith.Which of the following statements is correct?
a. T acquires good title to the watch even if the seller's title is voidable provided
the same has not been avoided at the time of sale and T acquires the watch in
good faith, for value and without notice of seller's defect of title.
b. T acquires no title to the watch because the seller's title is voidable.
c. T acquires good title to the watch even if the voidable title of the seller has been
avoided before the time of sale as long as T acquires the watch in good faith, for
value and without notice of seller's defect of title.
d. T acquires good title to the watch even if he buys it in bad faith.

Prepared by:
____________________________
KIM JOSEPH B. VISPERAS, CPA
Instructor

Noted by:
____________________________
DANIEL T. GONZALES, CPA, MDM
Dean, SBA