Group V

QUESTIONS:

1. Conditional Sale vs. Absolute Sale

Distinguish between a conditional sale, on the one hand, and an absolute sale, on the other

hand.

SUGGESTED ANSWER:

A CONDITIONAL SALE is one where the vendor is granted the right to unilaterally rescind the
contract predicated on the fulfillment or non-fulfillment, as the case may be of the prescribed
condition.  An ABSOLUTE SALE is one where the title to the property is not reserved to the
vendor or if the vendor is not granted the right to rescind the contract based on the fulfillment or
non- fulfillment, as the case may be, of the prescribed condition.

2. Contract of Sale vs. Agency to Sell

A granted B the exclusive right to sell his brand of Maong pants in Isabela, the price for his

merchandise payable within   60   days   from   delivery, and   promising   B   a commission
of 20% on all sales. After the delivery of the merchandise to B but before he could sell any
of them, B’s store in Isabela was completely burned without his fault, together with all of
A’s pants. Must B pay A for his lost pants? Why?
SUGGESTED ANSWER:
The contract between A and B is a sale not an agency to sell because the price is payable by B
upon 60 days from delivery even if B is unable to resell it. If B were an agent, he is not bound to
pay the price if he is unable to resell it.
As a buyer, ownership passed to B upon delivery and, under Art. 1504 of the Civil Code, the
thing perishes for the owner. Hence, B must still pay the price.
3. Contract to Sell vs. Contract of Sale
State the basic difference (only in their legal effects) between a contract to sell, on the one
hand, and a contract of sale, on the other.

SUGGESTED ANSWER:
In a CONTRACT OF SALE, ownership is transferred to the buyer upon delivery of the object to him
while in a CONTRACT TO SELL, ownership is retained by the seller until the purchase price is fully
paid. In a contract to sell, delivery of the object does not confer ownership upon the buyer. In a contract
of sale, there is only one contract executed between the seller and the buyer, while  in  a contract to sell,
there are two contracts, first the contract to sell  (which  is  a  conditional  or  preparatory  sale)  and
a second, the final deed of sale or the principal contract which is executed after full payment of the
purchase price.

4. Contract to Sell; Acceptance; Right of First Refusal

A is the lessee of an apartment owned by Y. A allowed his married but employed daughter
B, whose husband works in Kuwait, to occupy it. The relationship between Y and A soured.
Since he has no reason at all to eject A, Y, in connivance with the City Engineer, secured
from the latter an order for the demolition of the building. A immediately filed an action in
the Regional Trial Court to annul the order and to enjoin its enforcement. Y and A were
able to forge a compromise agreement under which A agreed to a twenty percent (20%)
increase in the monthly rentals. They further agreed that the lease will expire two (2) years
later and that in the event that Y would sell the property, either A or his daughter B shall
have the right of first refusal. The Compromise Agreement was approved by the court. Six
(6) months before the expiration of the lease, A died. Y sold the property to the Visorro
Realty Corp. without notifying B. B then filed an action to rescind the sale in favor of the
corporation and to compel Y to sell the property to her since under the Compromise
Agreement, she was given the right of first refusal which, she maintains is a stipulation
pour atrui under Article 1311 of the Civil Code. Is she correct?

SUGGESTED ANSWER:

B is not correct. Her action cannot prosper. Article 1311 requires that the third person intended
to be benefited must communicate his acceptance to the obligor before the revocation. There is
no showing that B manifested her acceptance to Y at any time before the death of A and before
the sale. Hence, B cannot enforce any right under the alleged stipulation pour atrui.

5. Double Sales

On June 15, 1995, Jesus sold a parcel of registered land to Jaime. On June 30, 1995, he sold

the same land to Jose. Who has a better right if:

a)     the first sale is registered ahead of the second sale, with knowledge of the latter. Why?

b)     the second sale is registered ahead of the first sale, with knowledge of the latter?
Why?

SUGGESTED ANSWER:

(a)     The first buyer has the better right if his sale was first to be registered, even though the
first buyer knew of the second sale. The fact that he knew of the second sale at the time of his
registration does not make him as acting in bad faith because the sale to him was ahead in time,
hence, has a priority in right. What creates bad faith in the case of double sale of land is
knowledge of a previous sale.

b) The first buyer is still to be preferred, where the second sale is registered ahead of the first
sale but with knowledge of the latter. This is because the second buyer, who at the
time he registered his sale knew that the property had already been sold to someone
else, acted in bad faith. (Article 1544, C.C.)