RECALL – RFBT [1]

INSTRUCTIONS: Choose/Supply the answer for each of the following. Write your final answers before the number.
You only have 1.5 hours to answer the following. Strictly no erasures allowed.

REGULATORY FRAMEWORK FOR BUSINESS TRANSACTIONS

LAW ON OBLIGATION
1. Statement no. 1: The creditor may be compelled to accept payment in checks as long as the check is negotiable.
Statement no. 2: An obligation payable “should the client die of diabetes” is an obligation subject to a period.
a. Statement No. 1 is false while statement No.2 is true.
b. Statement No. 1 is true while statement No. 2 is true.
c. Both Statement are false
d. Both Statement are true

2. The buyer has the right to the fruit of the thing from:
a. The time the thing is delivered
b. The time the contract is perfected
c. The time the obligation to deliver the thing arises
d. The time the fruits are delivered

3. Statement no. 1: Just before the obligation became due and demandable, the debtor proposed to the creditor
that he would give him a specific car instead of paying 150,000.00, and which proposal was accepted by the
creditor. Here, there is extinguishment of an obligation by way of dacion en pago.
Statement no. 2: After substitution in facultative obligations, the loss of the principal through the fault or
negligence of the debtor shall render him liable for damages in favor of the creditor.
a. Both are true
b. Both are false
c. No. 1 is true, No. 2 is false
d. No. 1 is false, No. 2 is true

4. Meeting in one person of the characteristics of both the debtor and creditor in one and the same obligation
extinguishers the obligation by way of:
a. Novation
b. Compensation or set-off
c. Condonation or remission
d. Merger or confusion

5. Consignation alone, as a special form of payment, may extinguish an obligation under any of the following
instances. Which is the exception?
a. When the creditor is absent, or is unknown or does not appear in the place of payment.
b. When the creditor is capacitated to receive payment
c. When the creditor refuses to issue receipts
d. When there are two or more persons claiming title to one and the same obligation
e. When title to the same obligation has been lost

6. Statement no. 1: in alternative obligations, it is the notice of which prestation to perform made by the debtor shall
convert the alternative obligation into a pure or simple one.
Statement no. 2: In the case of a joint obligation, the co-debtors may be held liable for the share of an insolvent
co-debtor.
a. Both Statement are true
b. Both statement are false
c. Statement no. 1 is true while statement no. 2 is false
d. Statement no. 1 is false while statement no. 2 is true

7. An obligation based on positive law and give right to enforce its performance.
a. Civil Obligation
b. Moral Obligation
c. Legal Obligation
d. Natural Obligation
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8. An obligation wherein various things are due, but the payment of one of them is sufficient to extinguish the
obligation is called:
a. Simple obligation
b. Conjoint obligation
c. Alternative Obligation
d. Facultative Obligation

9. An obligation wherein various things are due but the complete performance of all of them is necessary to
extinguish the obligation
a. Facultative obligation
b. Conjoint obligation
c. Alternative obligation
d. Pure or simple obligation

10. Statement no. 1: “I will give you 10,000.00 if you will not marry X this year”. If by the end of the year, X entered
the convent, my obligation is extinguished.
Statement no. 2: “I will give you 10,000.00 when my means permit me to do so”. This is a conditional obligation
for the benefit of the debtor.
a. Both are true
b. Both are false
c. No. 1 is true; no. 2 is false
d. No. 1 is false; no. 2 is true

11. Change of persons or objects:

a. Solutio indebiti
b. None of the above
c. Novation
d. Confusion

12. Which of the following is not a ground for the extinguishment of an obligation?
a. Remission
b. Merger
c. Compensation
d. Death of creditor
e. None of the above

13. S owns an oil painting. Being in need of money, S sold the painting to B for 1,000.00. After the sale S discovered
that the painting was valuable and worth 5,000.00.
a. B is entitled to the benefit of the contract because it is valid and binding.
b. S may annul the contract on ground of error
c. S may annul the contract on ground of fraud
d. S may rescind the contract on ground of lesion or inadequacy of cause.

14. A and B are jointly and severally liable to C for 20,000.00. A is a minor.
a. C can collect 20,000.00 from B
b. C can collect 10,000.00 from B
c. C can collect 10,000.00 from A that is the share of B.
d. C can collect 20,000.00 because minority is not a defense

15. Every obligation whose performance does not depend upon a future or uncertain event, or upon a past event
unknown to the parties, is demandable at once. This refers to:
a. Divisible and Indivisible obligation
b. Joint and Solidary obligations
c. Pure obligation
d. Obligations with a period

16. DR promised to give DE, his grandson, a car if the latter will pass the bar examinations. When his grandson
passed the said examinations, which of the following statement is true?
a. DR may refuse to deliver because the condition is purely a potestative one.
b. The obligation is valid because the condition depends upon the sole will of the debtor.
c. Both the obligation and the condition are ineffective because they depend upon the sole will of the donor.
d. The obligation is valid although potestative because they depend upon the sole will of the done.
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17. A, B and C executed a promissory note worded as follows: “We promise to pay to X, Y and Z the sum of
90,000.00 (Sgd.) A, B and C”.
a. A is obliged to pay to X, Y and Z 90,000.00
b. A is obliged to pay to X 30,000.00
c. A is obliged to pay to X 60,000.00
d. A is obliged to pay to X 10,000.00

18. “I’ll give you my car one year after your death.” The obligation is
a. Valid because the event is sure to come
b. Void, not legally possible
c. Valid, the obligation is conditional
d. Valid, but disregard the condition.

19. Statement no. 1: D oblige to give a specific car to C on Dec. 20, 2006. If on the date stated D did not comply with
his obligation, the next day he is considered in default without the need of demand.
Statement no. 2: S sold to B a specific car for 10,000.00. Both parties promise to comply with their obligations
the day after tomorrow. If on the date stated S delivers the car to B, but B is not ready to comply with his
obligation, from thereon he is considered in default without the need of a demand.
a. Both are true
b. Both are false
c. No. 1 is true; No. 2 is false
d. No. 1 is false; No. 2 is true

20. It refers to joint obligation:

a. One which each of the debtors is liable only for a proportionate part of the debt and each creditor is entitled
only for a proportionate part of the credit.
b. One in which each debtor is liable for the entire obligation, and each creditor is entitled to demand the whole
obligation
c. One in which either one of the parties is indispensable and the other is not necessary
d. One in which the obligation of one is a resolutory condition of the obligation of the other, the non-fulfillment
of which entitles the other party to rescind the contract.

21. Conrad and Charlie are jointly indebted to Pete for 100,000.00. Pete assigned his interest to Crispin who
assigned it back Conrad.
a. The debt is totally extinguished by compensation
b. The debt is totally extinguished by merger
c. The debt is partially extinguished by compensation
d. The debt is partially extinguished by merger

22. In three of the following cases, compensation shall not be proper. Which is the exception?
a. Commodatum
b. Gratuitous support
c. Civil liability arising out of criminal offenses
d. Bank deposit

23. The passage of time extinguishing obligations. Which is the exception?

a. Prescription
b. Fulfillment of resolutory condtion
c. Arrival of resolutory period
d. Remission
e. Rescission

24. A is indebted to B for 20,000.00. X is the guarantor of A. B is also indebted to A for 8,000.00. how much will X be
liable as guarantor if B sues A, and cannot pay?
a. 12,000.00
b. 20,000.0
c. 8,000.00
d. X has no liability

25. Statement no. 1: The debtor of a thing cannot compel the creditor to receive a different one, although the latter
may be of the same value or more valuable than that which is due.
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Statement no. 2: In dation in payment, ownership of the thing delivered is transferred to the creditor; while in
cession, it merely authorizes the creditor to convert the property into cash and out of the proceeds to extinguish
the obligation partially.
a. Both are true
b. Both are false
c. No. 1 is true; No. 2 is false
d. No. 1 is false; No. 2 is true

26. I will give you specific car if you will marry X this year, 20016. Which of the following statement in incorrect?
a. If on December 25, X died, without marriage, my obligation is effective because one party is dead, marriage
is impossible to take place.
b. If on December 25, X died, without marriage, my obligation is extinguished because one party is dead.
Marriage is impossible to take place.
c. If the year has ended, no marriage taking place, both parties are alive, just the same my obligation is
extinguished because the time indicated has already elapsed
d. If you marry X on December, my obligation is to give you the car

27. Mr. Debtor owes Mr. Creditor who has two (2) legitimate children, 50,000.00 payable on December 31, 2006.
a. If Mr. Debtor dies before December 31, 2006, Mr. Creditor cannot collect from the heirs of Mr. Debtor.
b. If Mr. Debtor dies before December 31, 2006, Mr. Creditor can collect from the heirs of Mr. Debtor.
c. If Mr. Creditor dies, his two (2) legitimate emancipated children cannot recover from Mr. Debtor his
obligation.
d. If both Mr. Debtor and Mr. Creditor die, the heirs of Mr. Creditor can collect from the heirs of Mr. Debtor.

28. A judicial relation known as negotiorum gestio takes place.

a. When a person voluntary takes charge of another’s abandoned business or property without the owner’s
consent.
b. When something is received and there is no right to demand it and it was delivered through mistake
c. When a person is appointed by a court to take the property of business of another.
d. None of the above.

29. A owes B 2,000.00 demandable and due on September 10, 2006. B on the other hand, owes A 2,000.00
demandable and due on or before September 30, 2006. If B claims compensation on September 10, 2006, can
A rightfully oppose?
a. No. B who was giving the benefit of the term, may claim compensation because he could then choose to
pay his debt on September 10, 2006 which is actually “on or before September 30, 2006.”
b. Yes, A can properly oppose because for compensation to take place, mutual consent of both parties is
necessary.
c. Yes, A c ab properly oppose and if B still refuses to accept his payment made on September 30, 2006, A
can deposit his payment in court.
d. None of the above.

30. Statement no. 1: Merger taking place in the person of the guarantor shall extinguish only the secondary contract
such as the contract of guaranty but not the principal obligation.
Statement no. 2: when the debtor promises to pay his obligation “whenever his means permit him to do so” the
obligations is with a period.
a. Both statement are true
b. Both statement are false
c. Statement no. 1 is true while statement no. 2 is false
d. Statement no. 1 is false while statement no. 2 is true

31. D obliged himself to paint the house of C or to paint the picture of C, in a standing position, using 10 by 10
canvass. Later because of financial reverses, C sold his house to X. which of the following statement is correct?
a. The obligation of D is extinguished because he cannot make a choice.
b. D may paint the picture of C
c. D may cancel the contract and ask for damages
d. None of the above

32. D obliged himself to give a specific car to C on December 25, 2006, stipulating that D is liable even if the thing is
lost due to fortuitous event, and without the need of a demand. On the due date, the car got lost due to fortuitous
event. Which of the following is correct?
a. Obligation remains to subsist, but converted into monetary consideration
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b. C can compel D to deliver another car
c. C can require another person to deliver a car, expenses chargeable to D.
d. Obligation is totally extinguished

33. Statement no. 1: The debtor of a thing cannot compel the creditor to receive a different one, although the latter
maybe of the same value or more valuable than that which is due.
Statement no. 2: In dation of payment, ownership of the thing delivered is transferred to the creditor; while
cession, It merely authorize the creditor to convert the property into cash and out of the proceeds to extinguish
the obligation partially.
a. Both are true
b. Both are false
c. No.1 is true, no. 2 is false
d. No.1 is false, no.2 is true

34. A is obliged to give B his only car on September 1, 2006. On the said date, A did not deliver. On September 2,
2006, an earthquake completely destroyed the car. Is A still liable?
a. No. Considering that no demand to deliver was made by B and the specific thing was lost due to fortuitous
event, the obligation is extinguished.
b. No. the obligation is extinguished, even if the debtor is already in default because the debtor can plead
impossibility of performance
c. Yes. A is already in legal delay thus the obligation to deliver the lost specific thing is converted into
monetary claim for damages.
d. Yes. The creditor can instead demand for a substitute of equivalent value from the debtor.

35. A sold his cow to B for 2,500.00. No date was stipulated for the delivery of the cow. While still in the possession
of A, the cow gave birth to a calf.
a. A is entitled to the calf because it was born before his obligation to deliver the cow arises.
b. A is entitled to the calf as B has not paid the price
c. B is entitled to the calf which was born after the perfection of the contract
d. B, in order to be entitled to the calf, should pay additional cost for the calf to be agreed upon by both parties.

36. The kind of compensation which may only be raised by the creditor and not by the debtor in the obligation to give
gratuitous support:
a. Judicial compensation
b. Conventional compensation
c. Facultative compensation
d. Legal compensation

37. Statement no. 1: Legal compensation takes place by operation of law even if the parties may not be aware of it.
Statement no. 2: The indivisibility of an obligation necessarily implies solidarity.
a. Both statement are true
b. Both statement are false
c. Statement no. 1 is true while statement no .2 is false
d. Statement no. 1 is false while statement no. 2 is true

38. Debtor obliged himself to deliver to creditor 100 cavans of rice on 06/01/2001. On said date, D failed to make
delivery despite repeated demands by C. In this case:
a. C has no remedy under the law
b. C can compel D to deliver 100 cavans of rice plus damages
c. C may ask a third person to deliver 100 cavans of rice to him, the value recoverable from D plus damages
d. None of the above.

39. The kind of compensation which arises by way of proved counterclaim in a case called:
a. Legal compensation
b. Voluntary compensation
c. Judicial compensation
d. Facultative compensation

40. Statement no. 1: Payment made to an incapacitated person is good only up to the extent that he was benefited
or up to the amount that he was able to keep.
Statement no. 2: In obligations arising from quasi-contracts, consent of the parties is not necessary.
a. Both statements are true
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b. Both statements are false
c. Statement no. 1 is true while statement no.2 is false
d. Statement no. 1 is false while statement no. 2 is true

41. Solidary debtors A, B and C owes joint creditors X, Y, Z and W 12,000.00. X, T and Z can collect from A
a. 12,000
b. 6.000
c. 9,000
d. 3,000

42. X, Y and Z solidary bound themselves to pay to solidary creditors A, B and C the amount of 75,000.00. The loan
was secured by a mortgage on B’s land. Out of gratuity, A, in a public instrument, renounced the obligation in
favor of X, with the formality required by law. In this case, which statement is correct?
a. The principal obligation is extinguished
b. The real estate mortgage is extinguished
c. Both the principal obligation and the mortgage are extinguished by remission
d. Both the principal and accessory obligations subsist.

43. Which of the following is not an obligation with a period?

a. Payable soonest
b. An obligation payable little by little
c. Will pay you 10,000.00 “if I like”
d. Payable “within 2 years from today”
e. All of the above

44. In order that fraud may make a contract voidable

a. It may be serious and the parties must be in pari delicto
b. It may be incidental but both parties should not be in pari delicto
c. It should be serious and should not have been employed by both contracting parties
d. It may be incidental but should have been employed by both parties

45. Bernie offered Zo a specific parcel of land at a specified price. Bernie gave Zo 60 days within which to accept.
Zo agreed.
a. Within 60 days, Bernie cannot withdraw but may increase the price
b. There can’t be no withdrawal because the period is binding
c. Bernie may withdraw or increase the price within the 60 day period
d. There can be no withdrawal because there is a perfected option contract

46. “I will give you this book provided that if I like to have it back, you will return the same to me”
a. The obligation is void, because the fulfillment depends upon the will of the debtor
b. The obligation is void, because the fulfillment depends upon the will of the creditor
c. The obligation is valid, because the condition merely causes the loss of rights already acquired.
d. Combination of A and B

47. “I will give you this book provided that if I like to have it back, you will return the same to me”
a. The obligation is void, because the fulfillment depends upon the will of the debtor
b. The obligation is void, because the fulfillment depends upon the will of the creditor.
c. The obligation is valid because the condition merely causes the loss of rights already acquired
d. Combination of A and B.

48. The following, except one, are requisites of payment as a mode of extinguishing an ordinary obligation. Which is
the exception?
a. Complete or full payment
b. Payment in due course when the obligation is due and demandable
c. Payment using negotiable instrument
d. Payment using legal tender, except if payable in foreign currency.

49. Not ground for damages:

a. Culpa
b. Bad faith
c. Dolo causante
d. Mora
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50. Fruits as resulting from spontaneous products of the soil without the intervention of human labor, as well as
animal offspring are:
a. Industrial fruits
b. Civil fruits
c. Natural fruits
d. All of above fruits

LAW ON CONTRACTS

1. Which of the following can be considered as a feature of a void contract?

a. Subject to ratification
b. They exist
c. Action or defense for nullity is subject to prescription
d. None of them

2. L entered into a contract of lease with X. T, the clerk of L, typed the document. Due to T’s negligence, the
document made was that of sale instead of lease.
a. The remedy is annulment
b. Parties may go to court for interpretation
c. Parties may enforce their right because it is enforceable
d. None of the above

3. These persons are bound by contracts:

a. Contracting Parties
b. Assigns or Assign
c. Heirs
d. All of them

4. Who is liable for the loss of the subject matter by fortuitous event?
a. Creditor
b. Debtor
c. Both creditor and debtor
d. None of them

5. S offers to sell his house to B for P100, 000. B asks him if he would accept P80, 000. Which of the following
is correct?
a. Because of ambiguity, both offers are terminated by operation of law.
b. B’s response is a counter- offer effectively terminating the P10, 000 offer and instigating an offer for
P80, 000.
c. B’s response is a more inquiry, the P100, 000 offer by S is still in force.
d. B’s response is a rejection of the P100, 000 offer, and there is no offer for P80, 000 because it is too
indefinite to be an offer.

6. Example No. 1: G, guardian of W, sold W’s house valued at P50, 000 for P37, 500 or a lesion by one-fourth
of the value.
Example No. 2: S sold his house valued to P50, 000 for only P10, 000 because S did not know the true
value of the house.
a. Both contracts are rescissible.
b. Only No. 1 is rescissible.
c. No. 2 is voidable because there is an error or mistake.
d. Both contracts are valid and enforceable.

7. B1 Company bought out a competitor, B2 Corporation, with a stipulation that B2 Corporation should not
thereafter engage in any business in the Philippines unless consented to and approved by B1 Company.
RECALL – RFBT [8]
a. The stipulation is void because it is contrary to public policy.
b. The stipulation is defective but subject to ratification.
c. The stipulation is valid because the parties are free to enter into any business in the Philippines unless
consented to and approved by B1 Company.
d. The stipulation is unenforceable as there was no showing that the was done in writing

8. Which of the following contract is not valid?

a. Mutual promise to marry entered into orally
b. Sale of immovable property orally entered into
c. One of parties in a contract is incapable of giving consent
d. None of the above

9. D forced C to lend him P10, 000. The promissory note is in writing.

a. The contract is rescissible because the contract is fraudulent
b. Contract remains to be valid
c. The contract is void
d. C cannot demand payment from D because the contract is unenforceable

10. Example 1 – S sold to B in a private instrument his land. Later, B wanted to have the sale registered, but
registration requires a public instrument. In here, B may compel S to execute the needed public instrument.
Example 2 – S sold to B orally his specific land. After B paid S the price of the sale, he want to registered
the land in his name but he needed a public instrument of sale. In here B may compel S to execute the
needed public instrument.
a. Both examples are also
b. Only 1 is true
c. Only 2 is true
d. Both examples are true

11. In a contract of sale executed by S and B, it appears S sold his motor vehicle to B and B bought it for P10,
000. It turned out however, S has three motor vehicles. Gallant valued P80, 000: Hi-Ace van valued P70,
000; and a Jeep valued P60, 000. Which of the following is correct?
a. The contract shall be reformed because there was mistake
b. The parties can ask for interpretation because the word Motor vehicle is ambiguous.
c. There is no contract.
d. The parties can ask for annulment of the contract

12. An agreement is restraint of trade.

a. Void
b. Perfectly valid
c. Voidable
d. Unenforceable

13. Three of the following are rescissible, which is not?

a. Sale of property under litigation made defendant without the knowledge of plaintiff and authority of the
court.
b. Those made to defraud creditors when the creditors has no other means to recover his claim
c. Those agreed upon in representation of absentees, if the absentee suffers lesion by more than ¼ of the
value of the property subject of the contract.
d. None of the above

14. S and M agreed in print that, debtor for P3, 000 will work as a servant of M without pay until she could find
money with which to pay her debt. Meantime, S absconded re obligation and failed to comply with her
promise. Under this premise, which of the following statements is correct?
a. The agreement to work as a servant is void because it is immoral
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b. To act as a servant without pay is unconstitutional because this is equivalent to involuntary servitude
c. The obligation to pay is enforceable because this is in accordance with law
d. All of the above

15. Which of the following contracts is not required to appear in a public document?
a. Acts and contracts which have for their object the creation, transmission, modification or extinguishment
of real rights over immovable property, sales of real property or of an interest.
b. The cession, repudiation or renunciation of hereditary rights
c. The power to administer property
d. Sale of immovable property
e. None of the above.

16. In order that a stipulation in favor of a third person in a contract would be valid and binding upon the parties
thereto, three of the requisites are mentioned in the following enumeration. Which among them is not a
requisite?
a. There must be a stipulation in favor of a third person.
b. That there must be an existing agency between either of the contracting parties and the third person.
c. The contracting parties must have clearly and deliberately conferred a favor upon that third person.
d. The third person communicated his acceptance to the obligor before its revocation.

17. Statement No. 1: Dolo incidente entitles the person against whom, it was employed the right to seek the
annulment of the contract.
Statement No. 2: A stipulation pour autrui is an exception to the rule on relativity of contracts.
a. Both are true c. No. 1 is true; No. 2 is false
b. Both are false d. No. 1 is false; No. 2 is true

18. Example No.1: W, 16 year old, sold his house valued at P1 M for P50, 000 or a lesion by more than one-
fourth of the value of the said house.
Example No. 2: S sold his house valued at P1 M for only P400, 000 because S did not know the true value
thereof.
a. Both examples are unenforceable
b. No. 1 is rescissible; while No. 2 is unenforceable
c. Both contracts are binding
d. No. 2 is unenforceable

19. S owns an oul painting. Being in need of money, S sold the painting to B for P1, 000. After the sale it was
discovered that the painting was valuable and worth P5, 000.
a. B is entitled to the benefit of the contract because it is valid and binding.
b. S may rescind the contract on ground of lesion or inadequency of cause
c. S may rescind the contract on ground of fraud
d. S may annul the contract on the ground the error

20. “A”, bachelor lawyer, raped W twice. Upon learning this, “F” the father of W, was able to force A to marry W
under pain of being sued in court and dibarred from the practice of his law profession. Which statement is
correct?
a. There was no defect, the marriage was perfectly valid
b. The marriage may be annulled on the ground of force or violence
c. The marriage may be annulled on the ground of threat of intimidation
d. The defective marriage may, however, be ratified

21. Statement No. 1: If the cause is not stated in the contract it is presumed that it is unlawful.
Statement No. 2: the action for rescission is subsidiary, it cannot be instituted except when there is no other
legal means to obtain reparation for damages suffered.
a. Both are true c. No. 1 is true; No. 2 is false
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b. Both are false d. No. 1 is false; No. 2 is true

22. In an “invitation to bud”, B proposes the following:

“I will buy the property for P10, 000 if the bid of any other offerrors or bidders shall be considered the best
terms of amount and conditions, I am to equal that offer”.
a. The offer is speculative, because it cannot be considered as against another offer which is certain.
b. The offer is considered a counter offer
c. The advertiser is not bound to accept the highest bidder.
d. This is a continuing offer which is very certain

23. In the preceding question, which of the following statements is correct?

a. If there is no more offer made, the contract is perfected on the offer of B because he will be considered
as the highest bidder
b. However, if another bidder, X, bid P15, 000, he will be considered as the highest bidder and the
contract is perfected.
c. In letter (b), if X increase his bid for P20, 000, and no more bid equals his bid, the contract is perfected
for P20, 000
d. Answer not given

24. Reluctantly and against her good sense and judgment, Rosemarie entered into a contract for the delivery of
5 tables to Corazon for a price of P15, 000. Contract is:
a. Void c. Unenforceable
b. Voidable d. Valid

25. G was appointed guardian of S, the latter being 16 years old. S sold his parcel of land in writing to B valued
at P100, 000 for P75, 000, suffering lesion by ¼ pf the value. What is the status of the contract:
a. Rescissible c. Enforceable
b. Unenforceable d. Voidable

26. One of the stipulations contained in the contract between M Company and its employees is that the
company shall pay a bonus to employees of the company who shall continue its employment for at least 2
consecutive years, unless be quits or is discharged before the expiration of the period of 2 years. X, an
employee of the company was discharged without just cause, one week before the completion of the two-
year period.
a. X is not entitled to the bonus because his discharge was in accordance with the contract.
b. X is entitled to the bonus because the debtor company has voluntarily prevented the happening of the
condition.
c. X is not entitled to the bonus, because the employer’s right to terminate is superior than the right of the
employee to be employed.
d. X is entitled to the bonus whether the discharge is with or without cause.

27. Statement No. 1: if one party was mistaken and the other acted fraudulently or inequitably in such a way
that the instrument does not show their true intention, the former may ask for the annulment of the
instrument.
Statement No. 2: The statement of a false cause in contracts shall render them void, if it should not be
proven that they were founded upon another caused which is true and lawful.
a. Both are true c. No. 1 is true; No. 2 is false
b. Both are false d. No. 1 is false; No. 2 is true

28. Must be in writing to be enforceable:

a. Lease of land for 12 months
b. Lease of care for 18 months
c. Both of a and b
d. None of a and b
RECALL – RFBT [11]

29. Which of the following is not a requisite for the validity of a contract?
a. Consent d. Cause or consideration
b. Object e. None of the above
c. Delivery of the thing

30. D owes C P500. However, C’s right has already prescribed. Notwithstanding the knowledge of thus fact, D
paid the amount. Realizing this mistake, D wants to recover the amount he paid.
a. D can be made to recover on ground of mistake.
b. D can be made to recover on the ground that his obligation is not legally enforceable.
c. D can be made to recover because this will enrich C at the expense of D.
d. D cannot recover.

31. Three of the following contracts are void. Which is the exception?
a. Those whose cause, object or purpose is contrary to law, morals, good customs, public order or public
policy.
b. Those which re absolutely stimulated or fictitious.
c. Those where both parties are incapable of giving consent to a contract.
d. Those which cause or object did not exist at the time of the transaction.

32. X, a former government employee, suffered from severe paranoia and was confined in the mental hospital in
2006. After his release he was placed under the guardianship of his wife to enable his to get his retirement
pay. In 2009, he became a mining prospector and sold some mining claims. In 2012, he sues to annul the
sale claiming that he was not mentally capacitated at the time of sale. The sale in question was
a. Illegal c. Void
b. Valid d. Voidable

33. Which of the following is presumed not to be legal subrogation?

a. When a creditor pays another creditor who is preferred
b. When a third person, not interested in obligation, pays with the approval of the debtor
c. When a third person interested in the obligation, pays even without the approval of the debtor
d. None of them

34. Essential requisites of a contract:

a. Consent c. Subject
b. Cause d. All of them

35. Which of the following instruments is not subject to reformation?

a. Simple donations inter vivos wherein no condition is imposed
b. Wills
c. When the real agreement is void
d. All of the above

36. Valid until annulled unless there has been a ratification

a. Rescissible contract c. Voidable contract
b. Inexistence contract d. None of the above

37. In three of the following defective contracts, ratification ceases the defects. Which is the exception?
a. Sale of piece of land thru an agent the authority is oral
b. Sale of immovable property or interest orally entered into
c. Contracts entered into by a person who has been given no authority.
d. Both parties are incapable of giving consent.
RECALL – RFBT [12]
38. S makes an offer to B on January 1, 2007. B makes known his acceptance in a letter sent on January 2, and
received by S on January 10. Meantime, on January 5, S become insane.
a. The contract is voidable because on party is insane
b. The contract is not binding because there is no meeting of minds.
c. There is already a meeting of minds, the contract is perfected.
d. None of the above

39. In the preceding number S is perfectly sane but only an un- emancipated minor of the time the acceptance
is communicated to him.
a. There is no meeting of minds between the parties, unless ratified by the guardian of S.
b. The contract is not binding because the party is incapacitated
c. The contract is binding between the parties
d. None of the above

40. Which of the following contracts is voidable?

a. Those where one of the parties is incapacitated.
b. Those whose object is outside the commerce of men.
c. Those which are absolutely fictitious.
d. Those which contemplate an impossible service

41. The stipulation in a contract to the effect that the debtor should remain as a servant in the house and in the
service of her creditor so long as she had not paid her debt is void because it is:
a. Contrary to good custom
b. Contrary to public policy
c. Contrary to law and morality
d. None of the above.

42. X, after the death of his father, sold his inheritance though its amount has not yet been determined to B, for
a consideration of P50, 000.
a. The contract is valid only if the inheritance valued at least equal or more than p50, 000
b. The contract is rescissible.
c. The contract is valid even though nothing remains of the inheritance to be turned over to B.
d. Contract is void, future inheritance cannot be the object of sale.

43. X, alleged that Y promised to give X one hectare of land. This is in consideration Y’s meritorious services to
Y. Y pleads in defense that since the promise was not in writing, it is unenforceable under the Statute of
Frauds. Decide.
a. The promise is unenforceable because it is not in writing
b. The Statute of Frauds is applied because A has rendered services
c. The Statute of Frauds can apply to partially executed contract.
d. The Statute of Frauds is inapplicable here, because the promise to give the land is not a sale of really
property.

44. Statement No. 1: In voidable contracts, there is no need to ratify same before they can be considered valid.
In unenforceable contracts, however ratification is mandatory before they can be considered enforceable.
Statement No. 2: There is undue influence if insidious words or machinations were employed by a party on
the other just to obtain the latter’s consent, without which the latter would not have entered into contract.
a. Both are true c. No. 1 is true; No. 2 is false
b. Both re false d. No. 1 is false; No. 2 is true

45. Three of the following are void contracts. Which is the exception?
a. Contracts where the cause is immoral
b. Contracts to prevent a known supporter of a political rival from voting for his candidate for a valuable
consideration
RECALL – RFBT [13]
c. Contracts with valid consideration but with unlawful motives
d. Absolutely simulated contracts

46. Statute of Frauds is applicable to

a. Contract not to be performed within a year from the making thereof
b. Partially executed contracts
c. Oral contract of loan when the amount involved is less than P500
d. All of the above.

47. Which of the following is correct?

a. An action to enforce judicially a natural obligation prescribes in 4 years
b. An action to declare a contract void is not subject to prescription
c. An action for annulment of contract is imprescriptible
d. An action for rescission of contract prescribes in five (5) years counted from the execution of the
contract.

48. B fraudulently induces S to sell to him (B) a masterpiece painting for P10, 000. Subsequently, B sold it to X
for P12, 000, a good faith purchaser. S is entitled to
a. Rescind the contract with B plus damages
b. Recover the painting from X but no damages
c. Recover damages from B
d. Rescind the contract between B and X

49. Which of the following contracts is not rescissible?

a. Those which are entered into by guardians whenever the wards whom they represent suffer a lesion of
more than ¼ of the value of the object of the contract.
b. Those where one of the parties is incapable of giving consent to a contract.
c. Those executed in representation of an absentee, if the latter suffer a lesion of more than ¼ of the
value of the object of the contract.
d. Those undertaken in fraud of creditors when the latter cannot in any other manner collect the claims
due them.
e. Those which refer to things under litigation if they have been entered into by the defendant without the
knowledge and approval of the litigants or of competent judicial authority.

50. When there is concurrence of offer and acceptance, there is

a. Payment c. Revocation
b. Consent d. none of the above

LAW ON SALES
i
As a rule, this contract of sale involving a piece of land is void,
A. Between a minor and a capacitated person.
B. Between two insane persons who did not act during lucid interval
C. Between first degree cousins
D. Between husband and wife
ii
X, 17 years old, sold to Z, of legal age, her necklace worth P20,000 for P15,000. Later, Z sold the necklace to Y for
P20,000. Which of the following statements is correct?
A. X has got a voidable title because at the time of sale, she is a minor
B. X can ask for rescission of the sale to Y because she suffered a lesion of more than ¼ of the value of the
property.
C. If Y is in bad faith, Y becomes the owner of the necklace upon delivery to him but his title is voidable.
D. X can ask for the annulment of the sale to Y because at the time of sale she is a minor.
iii
A contract of sale is not a(an)
A. Onerous contract
RECALL – RFBT [14]
B. Accessory contract
C. Commutative contract
D. Bilateral contract
iv
The sale of an expected thing
A. Dacion en pago
B. Payment by cession
C. Emptiospei
D. Emptio rei-speratae
v
The sale of the hope itself
A. Dacion en pago
B. Payment by cession
C. Emptio spei
D. Emptio rei-speratae
vi
One of the following is not correct
A. Things subject to a resolutory condition may be the object of the contract of sale.
B. A thing is generic when it is particularly designated or physically segregated from all others of the same
class.
C. Things having a potential existence may be the object of the contract of sale.
D. The sole owner of a thing may sell an undivided interest therein
vii
X needs a size of 10 of model 101 of Leather Shoes regularly available to the public for her boyfriend Z, but the
same is out of stock so she placed an order for one. On the other hand, Z placed an order for size No. 8, colored
violet, (something not ordinarily made by the company) to be given to X. Which is correct?
A. Both are contracts of sale
B. Both are contracts for a piece of work
C. First is a contract of sale second is a contract for a piece of work
D. First is a contract for a piece of work, second is a contract of sale
viii
V offered to sell for P12,000,000 her house and lot to DD who was interested in buying the same. In her letter to
DD, V stated that she is giving DD a period of one month within which to raise the amount and that as soon as DD is
ready, they will sign the deed of sale. Five days before the expiration of the one month period. V went to DD and told
her that she is no longer willing to sell the property unless the price in increased to P15,000,000. Which is correct?
A. DD may compel V to accept the P12,000,000 first offered.
B. V may compel DD to pay P15,000,000
C. V and DD should shoulder the P3,000,000 difference
D. DD cannot compel V to accept the P12,000,000 first offered
ix
The rule observed in the Philippines as to Contract of Piece of Work and Contract of Sale is
A. English rule
B. Massachusetts rule
C. New York rule
D. I will rule
x
Goods are deemed in transit
A. When the buyer accepts delivery of the goods upon arrival at destination
B. When the buyer intercepts and lawfully takes possession of the goods at any point before destination.
C. From the time they are delivered by the seller to a common carrier or other bailee for transmission to the
buyer, up to the time that the buyer or his agent takes delivery of the goods from the carrier or bailee.
D. When the carrier or bailee, upon arrival of the goods at destination acknowledges to the buyer or his agent
that he is holding the goods as bailee for the latter.
xi
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.
RECALL – RFBT [15]

xii
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 month later. At the end of three month 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.
xiii
If immovable property should have been sold to different vendees, the ownership shall be transferred to the person
A. Who have first taken possession in good faith
B. Who presents the oldest title in good faith
C. Who in good faith first recorded it in the Registry of Property
D. Who have paid in good faith the purchase price in full
xiv
Using the preceding number, if movable property, it shall belong to the person
A. Who have paid in good the purchase price in full
B. Who in good faith first recorded it in the Registry of Property
C. Who presents the oldest title in good faith
D. Who have first taken possession in good faith
xv
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
xvi
Action to seek a corresponding reduction in price by reason of some vices or defects in the thing purchased
A. Accion quanti minoris
B. Accion reinvidicatoria
C. Accion pauliana
D. Redhibilitory action
xvii
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
xviii
In contract of sale, if the price is absolutely simulated, the sale is
A. Unenforceable
B. Voidable
C. Void
D. Rescissible
xix
In a contract of sale, of personal property, the price of which is payable in installments, the vendor may exercise
any of the following remedies, except
A. Exact fulfillment of the obligation, should the vendee fail to pay any installment
B. Cancel the sale, should the vendee’s failure to pay cover two or more installment
C. Foreclose the chattel mortgage on the thing sold, if one has been constituted should the vendee’s failure to
pay cover two or more installments
D. Rescind the sale should the vendee fail to pay any installment.
xx
The right of the seller to stop goods in transit, upon discovering that the buyer does not have the funds to pay for
the goods
A. Pre-emptive right
B. Appraisal right
C. Voting right
D. Right of stoppage in transit
xxi
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
RECALL – RFBT [16]
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
xxii
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
xxiii
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
xxiv
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
xxv
After the death of C; A, C’s son, sold his inheritance though its amount has not yet been determined to B for a
consideration of P1,000,000. Which is correct?
A. The contract is valid if the value of inheritance is at least equal to P1,000,000
B. The contract is valid even though the inheritance to be turned over to B is less than P1M
C. The contract is void as future inheritance cannot be the object of sale
D. The contract is unenforceable
xxvi
When goods are delivered to the buyer on “sale or return” for period of seven days, ownership of the goods passes
to the buyer
A. Upon perfection of the contract
B. Upon acceptance by the buyer of the offer of the seller
C. Upon expiration of seven days
D. Upon delivery of the goods
xxvii
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
xxviii
Not an element of the sellers right of stoppage in transit
A. The goods must be in transit
B. The buyer must be insolvent
C. The seller must be in possession of the goods
D. The seller must be unpaid
xxix
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.
RECALL – RFBT [17]
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 perit” or generic thing never
perishes
D. Yes, because the principle “res perit domino” or the thing perishes with the owner.
xxx
Which of the following cannot be the object of a contract of sale?
A. Sale of credit
B. Young animal not yet conceived at the time of perfection
C. Land which the seller expects to buy
D. Future inheritance
xxxi
A offered for sale to B 20 cavans of wagwag rice and fixed the price per cavan at P10 over the price offered at Z’s
store in Cainta Market. The price is
A. Not certain because the price at Cainta Market is not stated
B. Certain because it has got reference to another thing which is certain
C. Certain because there is a price ceiling for price of land
D. Not certain so court may fix the price
xxxii
X sold his motor vehicle to V who bought it for P200,000. It turned out however, that X has 2 motor vehicles:
Toyota valued at P230,000 and Lancer valued at P220,000. Which is correct?
A. There is no contract of sale between X and V
B. The parties may ask for interpretation or reformation
C. The parties can ask for annulment of the contract
D. V may choose between the Toyota or Lancer
xxxiii
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
xxxiv
X owns 50 mango trees bearing fruits, ready for harvest. She sold all the fruits of all the trees to V who paid
P100,000. X told V that he can harvest her fruits anytime he likes and pointing at the mango trees. For legal
purposes, X has fulfilled her obligation to deliver the mango fruits to V by
A. Traditio longa manu
B. Traditio brevi manu
C. Traditio constitutum possessorium
D. Execution of a public instrument
xxxv
X sold her specific car to V for P200,000 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
xxxvi
Ownership of the thing sold is
A. Retained by the seller in “sale or return”
B. Transferred to the buyer upon constructive or actual delivery of the thing sold
C. Acquired by the buyer upon perfection of the contract
D. Transferred to the buyer upon acceptance of the price
xxxvii
X sold his horse to Y for P40,000. No payment has yet been made and the sales document does not provide the
date of delivery. Before delivery and payment the horse gave birth to a baby horse, which is correct?
A. Y is entitled to the baby horse which was born after the perfection of the contract
B. X is entitled to the fruit (baby horse) as Y has not paid the price yet
C. X is entitled to the (baby horse) because it was born before his obligation to deliver arises
D. Y should pay additional amount for the baby horse to be entitled to it
RECALL – RFBT [18]

xxxviii
A contract of sale is in the stage of conception when
A. There is meeting of the minds
B. Negotiations are in progress
C. The parties come to an agreement
D. The contract is perfect
xxxix
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
xl
X sold his car to Z for P60,000. No date was fixed for the performance of the obligation of the seller and the buyer.
The obligation of X is
A. To deliver the car immediately because the sale is a perfected contract
B. To deliver the car only after Z writes to X demanding the delivery of the car.
C. To deliver the car only after Z pays the P60,000
D. To rescind the contract because there is no time fixed for the delivery
xli
True or False
1. The vendor need not be the owner at the time the sale is perfected. It is sufficient that he is the owner at the
time the thing sold is delivered.
2. The sale of a vain hope or expectancy is voidable.
3. There may be a contract of sale of goods, whose acquisition by the seller depends upon a contingency
which may or may not happen.
4. If the consideration of the contract consists partly in money and partly in another thing, it shall be considered
a barter if the value of the thing given as a part of the consideration exceeds the amount of the money or its
equivalent.
5. If the price is grossly inadequate, the sale is void.
6. Whenever option money is given in a contract of sale, it shall be considered as part of the price and a proof
of the perfection of the contract.
7. Earnest money and option money both apply to perfected sale.
8. In a contract of sale of personal property the price of which is payable in installment, the vendor may cancel
the sale should the vendee fail to pay.
9. Should the vendee’s failure to pay, cover two or more installments, the vendor may foreclose the chattel
mortgage on the thing sold but he shall have no further action against the purchaser to recover any unpaid
balance of the price, except if there is an agreement to the contrary.
10. Sale is a consensual contract, therefore delivery or payment is not essential for perfection.
11. The ownership of the thing sold shall be transferred to the vendee upon perfection of the contract.
12. An unaccepted unilateral promise to buy or to sell a determinate thing for a price certain is binding upon the
promissory.
13. The husband and the wife cannot sell property to each other, as a rule.
14. The sale of a piece of land or interest therein when made thru an agent is void unless the agent’s authority
is in writing even if the sale itself is in s public instrument and has been registered.
15. The expenses for the execution and registration of the sale shall be borne by the vendee, unless there is a
stipulation to the contrary.
16. If the same thing should have been sold to different vendees the ownership shall be transferred to the
person who may have taken possession thereof in good faith.
17. Any stipulation exempting the vendor from the obligation to answer for eviction shall be void.
18. The vendor is responsible to the vendee for any hidden faults or defects in the thing sold only if he was
aware thereof.
19. If the animal sold should die within three (3) days after its purchase, the vendor shall be liable to the vendee.
20. The fixing of the price can never be left to the discretion on one of the contracting parties. However, if the
price fixed by one of the parties is accepted by the other, the sale is perfected.
21. Option money is considered as part of the purchase price while earnest money is not.
22. 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.
23. If two or more animals are sold together, whether for lump sum or for a separate price for each of them, the
redhibitory defect of one shall give rise to the redhibition of the others.
RECALL – RFBT [19]
24. There is no warranty against hidden defects of animals sold at fairs or at public auctions or of livestock sold
as condemned.
25. The ownership in the thing shall not pass to the purchaser until he has fully paid the price.
26. If at the time the contract of sale is perfected, the thing which is the object of the contract has been partially
lost, the contract shall be without effect.
27. Where the seller of goods has a voidable title thereto, but his title has not been avoided at the time of the
sale, the buyer acquires a good title to the goods.
28. If the vendee has renounced the right to warranty in case of eviction, and eviction should take place, the
vendor shall only pay the value which the thing sold had at the time of sale.
29. Unless otherwise agreed, the buyer of goods is not bound to accept delivery thereof by installment.
30. In case of doubt, a contract purporting to be an equitable mortgage shall be construed as a sale with a right
to repurchase.

END
RECALL – RFBT [20]
ANSWER KEY:
OBLIGATIONS
i

1 to 25 CBBDB BACBB CDABC DDBDA DDAAA

26 to 50 AAAAA AAAAC CCCCA CCCCC CCCCC

CONTRACTS
1 to 25 DDDDC DADBD CADDE BDCAA DCDDD
26 to 50 BDDCD CBDDD CABCA CCDCC ABCBB

SALES
D. Choice A is voidable; want of capacity as to age. Choice B is unenforceable; both parties are legally incapacitated to act. Choice C is
perfectly valid. Choice D is void, contract is expressly prohibited by law. Art. 87. Every donation or grant of gratuitous advantage, direct or
indirect, between the spouses during the marriage shall be void, except moderate gifts, which the spouses may give to each other on the
occasion of any family rejoicing. The prohibition shall also apply to persons living together as husband and wife without a valid marriage.

C. Choice A is incorrect because the buyer has the voidable title not the seller. Choice B is incorrect because voidable contracts are
ii

curable by prescription or ratification, if the contract is entered by the minor’s guardian thus making the contract now rescissible the
action for rescission can be raised. Choice D is incorrect because the effect of the voidable contract as to X and Z is valid unless annulled
by a court action which can be assailed by the incapacitated party, X. Choice C, Bad faith does not simply connote bad judgment or
negligence, it imports a dishonest purpose or some moral obliquity and conscious doing of a wrong, a breach of known duty through
some motive or interest or ill will that partakes of the nature of fraud. And by Bad Faith consent is vitiated, making the contract voidable.

iii
B. The characteristics of a contract of sale are Nominate, Principal, Consensual, Bilateral, Reciprocal, Onerous, and Commutative.
iv

D.
v

C.
vi

B.
Choices A and C are correct. The things must be possible, licit and determinable. Art. 1461 - Things having a potential existence may be
the object of the contract of sale. The efficacy of the sale of a mere hope or expectancy is deemed subject to the condition that the thing
will come into existence. The sale of a vain hope or expectancy is void.
Choice B is incorrect. Art. 1460, A thing is determinate when it is particularly designated or physical segregated from all other of the same
class.
Choice D is correct. Art 1463.
vii

C. The essence of a Contract for a piece of work is “Service” where goods are to be manufactured specially for a customer and upon
special order and not for general market; while the essence of a Contract of Sale is “Object” where the goods are manufactured for the
general market and which it is the vendor’s ordinary course of business. The first one is a Sale and the latter is a piece of work.
viii

D. No perfected contract yet, only an offer (on policitacion/negotiation stage). Offer is floated with a period but without acceptance. The
offer will be extinguished when the period has ended and maybe withdrawn by the offeror.
ix

B.
English Rule - If the material used in the manufacturer of the article is more valuable, it is a contract of sale, and if the labor or skill is
more valuable than the material used in the manufacture of the article, it is a contract for a piece of work.
Massachusetts Rule - 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.
New York Rule - 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.
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C. Goods are deemed to be in course of transit from the time when they are delivered to a carrier by land or water, or other bailee or
custodier for the purpose of transmission to the buyer, until the buyer, or his agent in that behalf, takes delivery of them from such carrier
or other bailee or custodier.
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D. If the buyer or his agent in that behalf obtains delivery of the goods before their arrival at the appointed destination, the transit is at an
end.
If, after the arrival of the goods at the appointed destination, the carrier or other bailee or custodier acknowledges to the buyer, or his
agent, that he holds the goods on his behalf and continues in the possession of them as bailee or custodier for the buyer, or his agent,
the transit is at an end, and it is immaterial that a further destination for the goods may have been indicated by the buyer.
If the goods are rejected by the buyer, and the carrier or other bailee or custodier continues in possession of them, the transit is not
deemed to be at an end, even if the seller has refused to receive them back.
Where the carrier or other bailee or custodier wrongfully refuses to deliver the goods to the buyer, or his agent in that behalf, the transit is
deemed to be at an end.

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C. The statute of frauds concerns the enforceability of a contract, not its validity. Once the parties to a valid oral contract have executed
and performed it, even if the contract was unenforceable, a party cannot use the Statute of Frauds to rescind the contract. X can collect
from V even in the absence of any written agreement to support the claim. A contract was perfected from the moment X effected the
delivery of the Land. Under Article 1305 of the Civil Code of the Philippines, a contract is a meeting of minds between two persons
whereby one binds himself, with respect to the other, to give something or to render some service. Contracts shall be obligatory, in
whatever form they may have been entered into, provided all the essential requisites for their validity are present.
 C. General Rule: First In time, Priority in Right. According to Art. 1544. If the same thing should have been sold to different vendees,
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the ownership shall be transferred to the person who may have first taken possession thereof in good faith, if it should be movable
property.
Should it be immovable property, the ownership shall belong to the person acquiring it who in good faith first recorded it in the Registry of
Property. Should there be no inscription, the ownership shall pertain to the person who in good faith was first in the possession; and, in
the absence thereof, to the person who presents the oldest title, provided there is good faith.
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D.
xv

D.
xvi

A.
xvii

B.
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C. Art 1346. An absolutely simulated or fictitious contract is void. Void contracts are contracts where one or some of the essential
elements of a valid contract is/are lacking in fact and in law. See defective contracts.
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D. Art. 1484, Remedies of an Unpaid Seller.

1. Exact fulfillment should the buyer failed to pay.
2. Cancel the sale if the buyer fails to pay 2 or more installments
3. Foreclose mortgage if the buyer fails to pay 2 or more installments
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D. Special Remedies of Unpaid Seller.

1. Possessory Lien – Seller not bound to deliver if buyer has not paid him the price. It is exercisable only in following circumstances:
a. goods sold without stipulation as to credit
b. goods sold on credit but term of credit has expired
c. buyer becomes insolvent Note: When part of goods delivered, may still exercise right on goods undelivered
2. Stoppage in Transitu
Requisites:
a. Insolvent buyer
b. Seller must Surrender the negotiable document of title, if any
c. Seller must bear the Expenses of delivery of the goods after the exercise of the right.
d. Seller must either actually take possession of the goods sold or give Notice of his claim to the carrier or other person in possession
e. Goods must be in Transit
f. Unpaid seller
3. Special Right to Resell the Goods Exercised when:
a. Goods are perishable,
b. Stipulated the right of resale in case of default, or
c. Buyer in default for unreasonable time
4. Special Right to Rescind Requisites:
a. Expressly stipulated OR buyer is in default for unreasonable time
b. Notice needed to be given by seller to buyer
Note: Ownership of goods already with buyer but seller may still rescind; ownership is destroyed even without court intervention but in
ordinary sale, need to go to court.
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A. Rule on double sale.

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D.
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C. Art. 1469. In order that the price may be considered certain, it shall be sufficient that it be so with reference to another thing certain, or
that the determination thereof be left to the judgment of a special person or persons. Should such person or persons be unable or
unwilling to fix it, the contract shall be inefficacious, unless the parties subsequently agree upon the price. If the third person or persons
acted in bad faith or by mistake, the courts may fix the price. Where such third person or persons are prevented from fixing the price or
terms by fault of the seller or the buyer, the party not in fault may have such remedies against the party in fault as are allowed the seller
or the buyer, as the case may be. (1447a)
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A. Implied warranties in sale.

1. As to Seller’s title - An implied warranty on the part of the seller that he has a right to sell the thing at the time when the ownership is to
pass, and that the buyer shall from that time have and enjoy the legal and peaceful possession of the thing
2. Against Hidden Defects or Unknown Encumbrance - An implied warranty that the thing shall be free from any hidden faults or defects,
or any charge or encumbrance not declared or known to the buyer
3. As to fitness or merchantability - Where the buyer, expressly or by implication, makes known to the seller the particular purpose for
which the goods are acquired, and it appears that the buyer relies on the seller's skill or judgment (whether he be the grower or
manufacturer or not), there is an implied warranty that the goods shall be reasonably fit for such purpose;
Where the goods are brought by description from a seller who deals in goods of that description (whether he be the grower or
manufacturer or not), there is an implied warranty that the goods shall be of merchantable quality.
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B. This is a perfected sale. The ‘book value’ of the thing to be sold is not an important requisite, as long as the essential requisites of the
contract are met, the sale is valid and enforceable.
xxvi

D. In a sale or return, the ownership of the goods passes to the buyer on delivery and subsequent return of the goods reverts ownership
to the seller. The risk of loss also rests upon the buyer.
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A. Implied Warranty, Warranty as to merchantability. Seller is liable to the buyer.

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C. See above discussion.

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D. It is a perfected sale. The owner at the time when the fortuitous event happened is the buyer. As a general rule, if the thing is lost by
fortuitous events, the risk is borne by the owner of the thing at the time of the loss (res perit domino). The loss of the thing does not
extinguish the obligation of the buyer to pay the balance still due to the seller.
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D. All things as long as licit, possible and determinable. All services which are not contrary to law, morals, good customs, public order or
public policy may likewise be the object of a contract. Well-entrenched is the rule that all things, even future ones, which are not outside
the commerce of man may be the object of a contract. The exception is that no contract may be entered into with respect to future
inheritance
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B. General Rule: No sale if price not certain. Cases when price is considered certain: The parties have agreed upon a definite amount, it
be certain with reference to another thing, and the determination is left to the judgment of a specified person or persons.
xxxii

A. One of the essential requisites of a contract of sale is a determinable subject matter. A determinate thing is identified by its
individuality, and if it cannot be known what may have been sold, the contract is rendered null and void.
xxxiii

B. There is no perfected contract yet. The sale is still in the process negotiation, there was merely a counter-offer. Unless there is an
acceptance on the other party in relation to the counter-offer then the contract is already perfected and binding amongst the parties.

xxxiv
A.
xxxv

D. Right of vendor to recover unpaid balance of purchase price:

1. If chosen remedy is Specific Performance – not limited to the proceeds of the sale, on execution, of the mortgaged goods.
Vendor may still recover from the purchaser the unpaid balance of the price.
2. If chosen remedy is Rescission/Cancellation – Vendor will cancel the sale, vendee can demand return of payment unless
there’s stipulation to the contrary.
3. If chosen remedy is Foreclosure – vendor have no further action to the vendee for the recovery of unpaid balance of the price
and any agreement to the contrary is void.
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B. Ownership is transferred upon delivery. In a sale or return, the ownership is transferred to the buyer upon delivery and if the goods
are returned the ownership will revert to the seller.
xxxvii

A. The creditor (buyer) has a right to the fruits of the thing from the time the obligation to deliver it arises.
xxxviii

B. Choices A, C, and D, refers to perfection stage. Stages in a contract of Sale:

1. Conception/Policitacion/ Negotiation – offer is floated, acceptance is floated but no meeting of minds. Only negotiations.
2. Perfection – concurrence of all requisites; meeting of the minds
3. Consummation – parties perform their individual undertaking
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A.
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C. Contract of sale, by its nature a bilateral contract wherein it is formed by an exchange of promise between the parties. The obligation
of the Vendor arises when the other party (vendee) delivers his/her part of the contract or vice versa.
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