PART I: MULTIPLE CHOICES

1. D.
2. D.
3. A.
4. A.
5. B.
6. B.
7. C.
8. D.
9. B.
10. C.
11. B.
12. B.
13. D.
14. A.
15. B.

Part II: ESSAY:

1. Yes, it is not mandatory for the seller to own the item at the time of sale. But only at
the time of delivery.

2. It would depend on whether or not the buyer agrees with the price set by the seller,
whether there is an agreement of the minds meeting, and the deal is valid for that.

3. "Earnest money" and "option money" are not the same but distinguished thus: (a)
earnest money is part of the purchase price, while option money is the money given as
a distinct consideration for an option contract; (b) earnest money is given only where
there is already a sale, while option money applies to a sale not yet perfected; and, (c)
when earnest money is given, the buyer is bound to pay the balance, while when the
would-be buyer gives option money, he is not required to buy, but may even forfeit it
depending on the terms of the option.

4. 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.

5. 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.