Actions For Breach Of Contract of Sale of Goods, Extinguishment of Sale, Assignment of Credits

and Other Incorporeal Rights, and General Provisions

1. It includes all chattels personal but not things in action or money of legal tender in the
Philippines. The term includes growing fruits or crops. Goods

2. I. Where the ownership of the goods has passed to the buyer, and he wrongfully neglects or
refuses to pay for the goods, the seller may maintain an action against him for the price of the
goods.

II. Where the price is payable on a certain day, and the buyer wrongfully neglects or
refuses to pay such price, the seller may maintain an action for the price although the
ownership in the goods has not passed. Both are true

3. I. Where the buyer wrongfully neglects or refuses to accept and pay for the goods, the seller
may maintain an action against him for damages for non-acceptance.

II. While labor or expense of material amount is necessary on the part of the seller to
enable him to fulfill his obligations under the contract, the buyer shall be liable to the
seller for labor performed or expenses made before receiving notice of the buyer’s
repudiation or countermand. Both are true

4. The seller may totally rescind the contract of sale of goods in the following cases, except:
None of the above

5. The following are the remedies of the buyer in case of breach of warranty by the seller of
goods, except: None of the above

6. It takes place when the vendor reserves the right to repurchase the thing sold with the
obligation of returning to the vendee the price of the sale, the expenses of the contract, and the
necessary and useful expenses made on the thing sold. Conventional redemption

7. A,B and C are co-owners in equal shares of one hectare rural land, the adjoining owners to
which are D and E, the latter owning the smaller area. A donated his share of the land owned
in common to X who is a rural landowner. Upon the proper notice of the sale, B, C, D and E
sought to exercise the right of legal redemption over the shares sold. Who shall have the right
to do so? None of them has the right to redeem because the land alienated was not by onerous
title
8. The contract shall be presumed to be an equitable mortgage, in any of the following cases,
except: When the price of sale with right to repurchase is usually inadequate

9. A, B, and C are co-owners of an undivided parcel of land. A sold his 1/3 share to B. Which is
correct? C cannot exercise the right of redemption since the sale was made to a co-owner

10. The contract shall be presumed to be an equitable mortgage, in any of the following cases,
except: When the vendee binds himself to pay the taxes on the thing sold

11. I. In case of doubt, a contract purporting to be a sale with right to repurchase shall be
construed as an equitable mortgage.

II. In case of doubt, courts are generally inclined to construe a transaction purporting it
to be a sale as an equitable mortgage, which involves a lesser transmission of rights and
interest over the property in controversy. Both are true

12. A sold to X his1/2 share of the parcel of land he co-owns with B. C owns the parcel of land
adjoining that A and B. Both B and C want to redeem the share of A which the latter sold to X.
B’s right as co-owner excludes that of C, the latter being only an adjoining owner

13. One that-although lacking in some formality, forms and words, or other requisites
demanded by a statue- nevertheless, reveals the intention of the parties to charge a real
property as security for a debt and contains nothing impossible or contrary to law. Equitable
mortgage

14. I. In conventional redemption, if there is no period of redemption agreed upon, it shall last
10 years from the date of the contract.

II. In conventional redemption, should there be an agreement, the period cannot exceed 4
years. Both are false

15. I. The creditors of the vendor cannot make use of the right of redemption against the
vendee, until after they have exhausted the property of the vendor.

II. the vendor may bring his action against every possessor whose right is derived from the
vendee, even if in the second contract no mention should have been made of the right to
repurchase. Both are True.
16. I. If several persons, jointly and in the same contract, should sell an undivided immovable
with a right of repurchase, none of them may exercise this right for more than his respective
share.

II. If several persons, jointly and in the same contract, should sell an undivided immovable with
a right of repurchase, the vendee may demand from all the vendors or co-heirs that they come
to an agreement upon the purchase of the whole thing sold; and should they fail to do so, the
vendee cannot be compelled to consent to a partial redemption. Both are True

17. I. Each one of the co-owners of an undivided immovable who may have sold his share
separately, may independently exercise the right of repurchases as regards his own share, and
the vendee cannot compel him to redeem the whole property.

II. If the vendee should leave several heirs, the action for redemption cannot be brought against
each of them except for his own share, whether the thing be undivided, or it has been
partitioned among them. Both are True.

18. The vendor cannot avail himself of the right of repurchase without returning to the vendee
the following, except: Interest

19. Is the right to be subrogated, upon the same terms and conditions stipulated in the contract,
in the place of one who acquires a thing by purchase or dation in payment, or by any other
transaction whereby ownership is transmitted by onerous title? Legal redemption

20. I. Legal redemption is intended to maximize co-ownership.

II. The rule on redemption is liberally construed in favor of the original owner of the property
and the policy of the law is to aid rather than defeat him in the exercise of his right of
redemption. Only II is true

21. I. The owners of adjoining lands shall also have the right of redemption when a piece of
urban land, the area of which does not exceed one hectare, is alienated, unless the grantee does
not own any urban land.

II. Whenever a piece of rural land which is so small and so situated that a major portion
thereof cannot be used for any practical purpose within a reasonable time, having been bought
merely for speculation, is about to be re-sold, the owner of any adjoining land has a right of
pre-emption at a reasonable price. Both are False
22. I. In legal redemption, the right of redemption of co-owners excludes that of adjoining
owners.

II. The purpose of legal redemption is to reduce the number of participants until the
community is terminated, being a hindrance to the development and better administration of
the property. Both are True

23. Is an agreement by virtue of which the owner of a credit, known as the assignor, by a legal
cause, such as sale, dacion en pago, exchange or donation, and without the consent of the
debtor, transfers his credit and accessory rights to another, known as the assignee, who
acquires the power to enforce it to the same extent as the assignor could enforce it against the
debtor? Assignment of credit

24. I. The contract of sale is perfected at the moment there is a meeting of minds upon the
price.

II. Assignment of credits and other incorporeal rights are perfected also the moment there is a
meeting of minds. Both are True

25. I. An assignment of a credit, right or action shall produce no effect as against third person,
unless it appears in a public instrument or the instrument is recorded in the Registry of
Property in case the assignment involves real property.

II. A gratuitous assignment is in essence a donation; however, it need not comply with the
formalities of a donation. Only I is true

26. I. The debtor who, before having knowledge of the assignment, pays his creditor shall be
released from the obligation.

II. The assignment of a credit excludes all the accessory rights, such as a guaranty, mortgage,
pledge or preference. Only I is true

27. I. Only notice to the debtor of the assignment of credit is required. His consent is not
required.

II. The vendor in good faith shall be responsible for the existence and legality of the credit at
the time of the sale, unless it should have been sold as doubtful; but not from the solvency of
the debtor. Both are True
28. One of the following is not a warranty of the assignor of credit. The solvency of the debtor
regardless of stipulation

29. I. In case the assignor in good faith should have made himself responsible for the solvency
of the debtor, and the contracting parties should not have agreed upon the duration of the
liability, it shall last for one year only, from the time of the assignment if the period has not
expired.

II. One who sells an inheritance without enumerating the things of which it is composed, shall
only be answerable for his character as an heir. Only II is true

30. When a credit or other incorporeal right in litigation is sold, the debtor shall have the right
to extinguish it by reimbursing the assignee for the following, except: Damages

31. I. In a contract of sale, the object is property.

II. In assignment of credit, the object is credit, incorporeal rights or rights of action. Both are
True

32. I. In a contract of sale, it need not appear in a public instrument to affect third person.

II. In assignment of credit, it must appear in a public instrument to produce effect as against
third person. In case the assignment involves real property, the instrument is recorded in the
Registry of Property. Both are True

33. It includes any bill of lading, dock warrant, “quedan”, or warehouse receipt or order for the
delivery of goods, or any other document used in the ordinary course of business in the sale or
transfer of goods, as proof of possession or control of the goods, or authorizing or purporting to
authorize the possessor of the document to transfer or receive, either by endorsement or by
delivery, goods represented by such document. Document of title of goods

34. It includes all chattels personal but not things in action or money of legal tender in the
Philippines. Goods

35. It means goods identified and agreed upon at the time a contract of sale is made. Specific
goods

36. A person who either has ceased to pay his debts in the ordinary course of business or
cannot pay his debts as they become due. Insolvent
37. When goods are in such a state that the buyer would, under the contract, be bound to take
delivery of them. Deliverable state

Obligations of the Vendor and Vendee and Document of Title

1. The following are the obligations of the vendor except: To transfer ownership of the
thing sold at the time of meeting of the minds
2. The following are the obligations of the vendor except: To pay for the expenses for the
execution and registration of the contract of sale only if stipulated.
3. S sold to A in a deed of sale his parcel of land. Afterwards, S sold the same land to B in
another deed of sale wh o was aware of the sale to A. B, thereafter, took possession
thereof and registered the sale in his name. The parcel of land shall belong to: A,
because he has the oldest title
4. I. If the vendee is placed in actual possession of the property, but by agreement of the
parties ownership of the same is retained by the vendor until the vendee has fully paid
the price, the mere transfer of the possession of the property subject of the sale is not the
“delivery” contemplated in the Law on Sales.
II. Presumptive delivery via execution of a public instrument is negated by the reality
that the vendee actually failed to obtain material possession of the land subject of the
sale. Both are true
5. I. Ownership does not pass by mere stipulation but only by delivery.
II. The purpose of delivery is not only for the enjoyment of the thing but also a mode of
acquiring dominion and determines the transmission of ownership, the birth of the real
right. Both are true.
6. S sold his only car with plate number XYZ123 to B. There was no fixed date for the
performance of their respective obligations. The obligation of S as vendor is: To wait for
the buyer to pay the price before he delivers.
7. It is an act by which one party parts with the title to and the possession of the property,
and the other acquires the right to and the possession of the same. Delivery
8. S sold a parcel of land to B. Subsequently, S sold the same land to C who immediately
took possession of the land. In this case, the proper remedy of B is: Institute an action for
damages against S for breach of contract.
9. It occurs when it is placed under the control and possession of the vendee. Actual
delivery
10. The following are the exceptions to the general rule that ownership of the thing sold is
acquired only upon its delivery to the buyer, except: Sale or return
11. I. Payment of the purchase price is essential to the transfer of ownership as long as the
property sold has been delivered.

II. The ownership of the thing sold is acquired by the vendee from the moment it is
delivered to him. Only II is true

12. A seller sold to a buyer a specific parcel of land at a price of P 1,000,000. The contract
provides that the buyer will pay the seller cash 400,000 and deliver the buyer’s car
worth 600,000. The contract is: Sale
13. It is a delivery by operation of law. Legal delivery
14. Quasi-delivery is the delivery of rights, credits, or incorporeal property which is made
by: Issuance of delivery receipt
15. When the sale is made through a public instrument. Legal formalities
16. A delivers B his parcel of land worth P1,000,000 in exchange for the car of B worth
P500,000 and cash in the amount of 500,000. The contract is: Sale
17. The parties use a symbol to represent the thing delivered. Symbolical tradition.
18. The delivery is by mere consent or agreement of the contracting parties, where the
seller points out to buyer the object of sale without the need of actually delivering it.
Traditio longa manu
19. This occurs when the would be buyer had already the possession of the object even
before the contract of sale by virtue of another title which is not ownership (like a lessee
in a Contract of Lease), and pursuant to a contract of sale, he would now hold
possession in the concept of an owner (like a buyer of a house where he was a former
lessee of the same house). Traditio brevi manu
20. On January 2,2018 S sold to B his only car with the payment to be made on January
10,2018. However, on January 6,2018, S sold the same car to C who immediately took
possession thereof. Decide: B may claim damages from S for breach of contract of sale.
21. This is opposite of constitution possessorium. Traditio brevi manu
22. The delivery consists in the owners’ continuous possession of the property he had
already sold to another person but his present possession is no longer that of an owner
but under another capacity, like that of a lessee. Traditio constitutum possessorium
23. S sold his land to B who began to possess it. Later C, a stranger sold the same land to D,
who registered the sale and thus, obtained the title in his name. B is the owner because
the owner is his seller
24. This is opposite of traditio brevi manu. Traditio constitutum possessorium
25. I. A person who does not have actual possession of the thing sold cannot transfer
constructive possession by the execution and delivery of a public instrument.
II. As a general rule, the execution of a public instrument amounts to a constructive
delivery of the thing subject of a contract of sale. Both are true
26. Legal or constructive delivery may be had through any of the following ways, except:
Traditio possessorium if the buyer already had possession of the object even before the
sale.
27. The following modes of delivery of incorporeal property, except: Execution of official
receipt
28. I. In a sale or return, the ownership passes to the buyer on meeting of the minds.
II. In a sale or return, the ownership passes to the buyer on meeting of the minds. Only
II is true
29. When goods are delivered to the buyer on approval or on trial or on satisfaction, or
other similar terms, the ownership therein passes to the buyer:
I. When he signifies his approval or acceptance to the seller.
II. When he does any other act adopting the transaction.
III. If he retains the goods without giving notice of rejection, then if a time has been
fixed for the return of the goods, on the expiration of such time, and, if no time
has been fixed, on the expiration of a reasonable time. I,II,II are true
30. Also called “Sale on acceptance”. Sale on approval
31. There is no transfer of ownership notwithstanding delivery of the goods. Sale on trial
32. I. In sale on trial, the risk of loss rests upon the buyer.
II. In sale or return, the risks of loss remains with the seller. Both are false
33. I. In a sale on trial, it depends entirely on the will of the buyer.
II. In sale or return, it depends on the quality of the goods. Both are false.
34. I. In all forms of delivery, it is necessary that the act of delivery, whether constructive or
actual, should be coupled with the intention of delivering the thing.
II. In order that this symbolic delivery may produce the effect of tradition, it is necessary
that the vendor shall have had control over the thing sold that, at the moment of the
sale, its material delivery could have been made. Both are true
35. A sold his land to B. Later, A sold the same land to C. B in turn, sold the same land to D,
who took possession of the land in good faith. C, a purchaser in good faith, registered
the sale in his favor. Decide. C is the owner of the land having registered the sale in
good faith
36. The following are examples of document title to goods, except: Negotiable instrument
37. A negotiable document of title may be negotiated by delivery:
I. Were by the terms of the document the carrier, warehouseman or other bailee
issuing the same undertakes to deliver the goods to the bearer.
II. Where by the terms of the document the carrier, warehouse or other bailee
issuing the same undertakes to deliver the goods to the order of a specified
person, and such person or a subsequent endorsee of the document has indorsed
it in blank or to the bearer. Both are true
38. Who can be a negotiable document of title? All of the above
39. The following are the warranties on negotiation of a document of title, except: That he
has a right to transfer the possession but not title to the goods.
40. I. A stipulation designating the place and manner of delivery is controlling on the
contracting parties.

II. The thing sold can only be understood as delivered to the buyer when it is placed in
the buyer’s control and possession at the agreed place of delivery. Both are true

41. The following are the place of delivery, except: If there is no agreement and usage of
trade, it is the buyer’s place of business if he has one, and if not, his residence.
42. Who pays for the expenses of putting the goods into deliverable state? Seller
43. I. Where the seller delivers to the buyer a quantity of goods less than he contracted to
sell, the buyer may reject them, but if the buyer accepts or retains the goods so
delivered, knowing that the seller is not going to perform the contract in full, he must
pay for them at the fair value.
 II. If the buyer has used or disposed of the goods delivered before he knows that the
seller is not going to perform his contract in full, the byer shall not be liable for
more than the fair value to him of the goods so received. Only II is true
44. A sold to B in writing a parcel of land for P5,000,000. B now wants A to place the
contract in a public instrument so that B could register the sale with the Registry of
Deeds and secure the Transfer Certificate of Title in his name. Decide: A has the
obligation to execute the public instrument because the contract of sale is enforceable.
45. I. Where the seller delivers to the buyer a quantity of goods larger that he contracted to
sell, the buyer may accept the goods included in the contract and reject the rest.

II. Where the seller delivers to the buyer a quantity of goods larger than he contracted
to sell and if the buyer accepts the whole of the goods so delivered, he must pay for them
at the book value. Only I is true

46. I. Where the seller delivers to the buyer the goods he contracted to sell mixed with
goods of a different description not included in the contract, the buyer may accept the goods
which are in accordance with the contract and reject the rest.

II. In the preceding paragraph, if the subject matter is indivisible, the buyer may reject
the whole of the goods. Both are true.

47. I. Delivery to the carrier is not delivery to the buyer, even if the seller is required to send
the goods to the buyer.

II. The vendor shall not be bound to deliver the thing sold, if the vendee has not paid
him the price, or if no period for the payment has been fixed in the contract. Only II is true

48. The seller of goods is deemed to be an unpaid seller:

I. When the part or whole of the rice has not been paid or tendered.

II. When a bill of exchange has been received as conditional payment, and the condition
on which it was received has been broken by reason of the dishonor of the instrument.
Only II is true

49. The rights of an unpaid seller of goods are the following, except: A right to annul the sale.
50. Under the following circumstances, the unpaid seller has possessory lien, except: Where the
buyer becomes solvent

51. The unpaid seller of goods loses his lien under the following, except: None of the above

52. I. Goods are considered “in transit” from the time when they are delivered to a carrier for
the purpose of transmission to the buyer, until the buyer takes delivery of them from such
carrier.

II. Goods are considered “in transit” if the goods are rejected by the buyer, and the
carrier continues in possession of them, even if the seller has refused to receive them
back. Both are true

53. Goods are no longer “in transit” under the following, except: If, after the arrival of the goods
at the appointed destination, the carrier acknowledges to the seller that he holds the goods on
his behalf and continues in possession of them as bailee for the seller

54. An unpaid seller having a right of lien or having stopped the goods in transitu may resell
the goods in one of the following cases, except: Goods are not of perishable nature

55. An unpaid seller having a right of lien or having stopped the goods in transitu, may rescind
the transfer of title and resume the ownership in goods where: The buyer has been in default in
the payment of the price for an unreasonable time.

56. The vendor is not bound to deliver the thing sold because the vendee has lost right to make
use of the term in the following instances, except: When the vendee does not furnish the
guaranties

57. I. In the sale of real estate, made for a lump sum, there shall be no increase or decrease of
the price although there be a greater or lesser area or number than that stated in the contract.
However, the discrepancy must not be substantial.

II. In a nit price contract, the statement of area of immovable is conclusive and the price
may not be reduced or increased depending on the area actually delivered. Only I is
true
58. A bought a pair of shoes from a store. The shoes did not belong to the store but a customer
who had left the same for repair. Did A acquire good title to the shoes? Yes, because it was
bought from a store in good faith and for value.

59. In a sale of immovable by the unit, that is, at a stated rate per unit area:

I. If the vendor delivers less than the area agreed upon, the vendee may oblige the
vendor to deliver all that may be stated in the contract or demand for the proportionate
reduction of the purchase price if delivery is not possible.

II. if the vendor delivers more than the area stated in the contract, the vendee has the
option to accept only the amount agreed upon or to accept the whole area, provided he
pays for the additional area at the contract rate. Both are true

60. I. Where both the area and the boundaries of the immovable are declared, the area covered
within the boundaries of the immovable prevails over the stated area. In cases of conflict
between areas and boundaries, it is the latter which should prevail.

II. What really defines a piece of ground is not the area, calculated with more or less
certainty, mentioned in its description, but the boundaries therein laid down, ad
enclosing the land and indicating its limits. Both are true

61. The requisites of double sale are the following, except: They must be bought from different
seller

62. The principle of double sale is not applicable in the following, except: Where one of the
contract of sale is genuine and the other is also genuine

63. The following are the rules of preference in case of double sale in case of immovable
property, except: Person with the oldest transfer certificate of title in good faith

64. I. If a vendee in a double sale registers the sale after he has acquired knowledge that there
was a previous sale of the same property to a third party or that another person claims said
property in a previous sale, the registration will constitute a registration in bad faith and will
not confer upon him any right.

II. In a case of double sale, what finds relevance and materiality is not whether or not
the second buyer is in good faith but whether or not said second buyer registers such
 second sale in good faith, that is, without knowledge of any defect in the title of the
property sold. Both are true

65. I. A second buyer of the property who may have had knowledge of such defect in the
seller’s title, or at least was charged with the obligation to discover such defect, can be a
registrant in good faith.

II. When the thing sold twice is an immovable, the one who acquires it and first
records it in the Registry of Property, both made in good faith, shall be deemed the
owner. Only II s true

66. Is one who buys property of another without notice that some other person has a right to,
or interest in, such property and pays a full and fair price for the same at the time of such
purchase, or before he has notice of the claim or interest of some other person in the property?
Purchaser in good faith

67. It is any affirmation of fact or any promise by the seller relating to the thing if the natural
tendency of such affirmation or promise is to induce the buyer to purchase the same, and if the
buyer purchases the thing relying thereon? Express warranty

68. I. The usual exaggerations in trade, when the other party had an opportunity to know the
facts, are in themselves fraudulent.

II. A mere expression of opinion does not import a warranty, unless the seller is an
expert and his opinion was relied upon by the buyer. Only II is true

69. Is a statement or representation made by the seller of goods, contemporaneously and as part
of the contract of sale, having reference to the character, quality or title of the goods, and by
which he promises or undertakes to insure that certain facts are or shall be as he then
represents them? Warranty

70. Is that which the law derives by application or inference from the nature of the transaction
or the relative situation or circumstances of the parties, irrespective of any intention of the
seller to create it? Implied warranty

71. The prescriptive period for instituting actions based on a breach of express warranty is that
specified in the contract, and in the absence of such period, the general rule on rescission of
contract, which is: 4 years
72. A sold her specific car to B for P200,000 payable in 5 equal installments. A delivered the
car to B but a mortgage was constituted on the car to answer for the unpaid installments. B
paid the first 2 installments but failed to pay the last 3 installments. A foreclosed the mortgaged
property and sold it at public auction for P100,000. Which is correct? A cannot recover the
deficiency even if there is stipulation to the contrary.

73. As for actions based on breach of implied warranty, the prescriptive period is, warranty
against hidden defects and warranty against eviction: 6 months from the date of delivery

74. It shall takes place whenever by a final judgement based on a right prior to the sale or an
act imputable to the vendor, the vendee is deprived of the whole or of a part of the thing
purchased? Eviction

75. In order that a vendor’s liability for eviction may be enforced, the following requisites must
concur, except: The purchaser has been deprived of only the whole of the thing sold

76. I. If the property is sold for non-payment of taxes due and not made known to the vendee
before the sale, the vendor is not liable for eviction.

II. Any stipulation exempting the vendor from the obligation to answer for eviction shall be
void, even if he acted in good faith. Both are false

77. The waiver is made by the vendee without the knowledge of the risk of eviction. The vendor
shall only pay the value which the thing sold had at the time of eviction. Waiver consciente

78. The waiver is made by the vendee with the knowledge of the risk of eviction and assumed
its consequences. The vendor shall not be liable. Waiver intencionada

79. In case eviction occurs, the vendee shall have no right to demand of the vendor one of the
following: The expenses of the contract, if the vendor has paid them

80. One of the following is not a requisite for breach of warranty against hidden defect: The
defect must exist at the time of delivery of the contract of sale.

81. I. As a general rule, there is no implied warranty in the sale of secondhand articles.

II. Where the goods are bought by description from a seller who deals in the goods of
that description, there is an implied warranty that the goods are of merchantable
quality. Both are true
82. I. In case of hidden defects, the vendee may elect between withdrawing from the contract
and demanding a proportionate reduction of the price, with damages in either case.

II. The vendor is responsible to the vendee for any hidden faults or defects in the thing sold,
even though he was not aware thereof. Both are true

83. If the thing sold should be lost in consequence of the hidden faults, and the vendor was not
aware of them, the following are the effect of loss, except: None of the above

84. If the thing sold should be lost in consequence of the hidden faults, and the vendor was
aware of them, one of the following is not an the effect of loss. He shall not pay damages

85. I. If two or more animals are sold together, whether for a lump sum or for a separate price
of each of them, the redhibitory defect of one shall only give rise to its redhibition, and not that
of the others.

II. There is no warranty against hidden defects of animals sold at fairs or at public
auctions, or of live stock as condemned. Both are true

86. I. The sale of animals suffering from contagious diseases shall be void.

II. A contract of sale of animals shall also be void if the use or service for which they are
acquired has been stated in the contract, and they are found to be unfit therefor. Both
are true

87. I. The redhibitory action, based on the faults or defects of animals, must be brought within
six months from the date of their delivery to the vendee.

II. If the animal should die within five days after its purchase, the vendor shall be liable
if the disease which cause the death existed at the time of the contract. Both are false.

88. I. The vendee is bound to accept delivery and to pay the price of the thing sold at the time
and place stipulated in the contract.

II. The very essence of a contract of sale is the transfer of ownership in exchange for a
price paid or promised. Both are true.

89. I. The buyer of goods is not bound to accept delivery thereof by installments.
 II. The buyer has a reasonable opportunity to examine the goods upon delivery to
ascertain whether they are in conformity with the contract before accepting the same. Both are
true

90. It is when the buyer does any act in relation to the goods which is inconsistent with the
ownership of the seller. Implied acceptance

91. When the buyer intimated to the seller that he has accepted the goods. Express acceptance

92. When, after the lapse of a reasonable time, he retains the goods without intimating to the
seller that he has rejected them. Implied acceptance

93. I. Acceptance of the goods by the buyer shall discharge the seller from liability in damages
for breach of any warranty in the contract of sale.

II. Where goods are delivered to the buyer, and he refuses to accept them, having the right to
do so, he is bound to return them to the seller. Both are false

94. Except for one, the following are the effect of buyer’s justifiable refusal to accept delivery.
There will be legal pledge or pledge by operation of law

95. I. When the buyer’s refusal to accept the goods s without just cause, the title thereto passes
to him.

II. Where goods are delivered to the buyer, and he refuses to accept them having the
right to do so, he is not bound to return them to the seller. Both are true

96. Vendee owes interest between the delivery and payment in the following three cases,
except: Should the thing has hidden defect

97. I. Should the vendee be disturbed in the possession or ownership of the thing acquired, he
may suspend the payment of the price.

II. Should the vendor have reasonable grounds to fear the loss of immovable property
sold and its price, he may immediately sue for the rescission of the sale. Both are true
Actions For Breach Of Contract of Sale of Goods, Extinguishment of Sale, Assignment of Credits
and Other Incorporeal Rights, and General Provisions

1. It includes all chattels personal but not things in action or money of legal tender in the
Philippines. The term includes growing fruits or crops. Goods

2. I. Where the ownership of the goods has passed to the buyer, and he wrongfully neglects or
refuses to pay for the goods, the seller may maintain an action against him for the price of the
goods.

II. Where the price is payable on a certain day, and the buyer wrongfully neglects or
refuses to pay such price, the seller may maintain an action for the price although the
ownership in the goods has not passed. Both are true

3. I. Where the buyer wrongfully neglects or refuses to accept and pay for the goods, the seller
may maintain an action against him for damages for non-acceptance.

II. While labor or expense of material amount is necessary on the part of the seller to
enable him to fulfill his obligations under the contract, the buyer shall be liable to the
seller for labor performed or expenses made before receiving notice of the buyer’s
repudiation or countermand. Both are true

MIDTERM QUIZ 1 AND 2

1. One that-although lacking in some formality, forms and words, or other requisites
demanded by a statue- nevertheless, reveals the intention of the parties to charge a real
property as security for a debt and contains nothing impossible or contrary to law.
Equitable mortgage
2. A, B and C are co-owners in equal shares of one hectare rural land, the adjoining
owners to which are D and E, the latter owning the smaller area. A donated his share of
the land owned in common to X who is a rural landowner. Upon the proper notice of
the sale, B, C, D and E sought to exercise the right of legal redemption over the shares
 sold. Who shall have the right to do so? None of them has the right to redeem because
the land alienated was not by onerous title
3. I. In conventional redemption, if there is no period of redemption agreed upon, it shall
last 10 years from the date of the contract.
II. In conventional redemption, should there be an agreement, the period cannot exceed
4 years. Both are false
4. I. The creditors of the vendor cannot make use of the right of redemption against the
vendee, until after they have exhausted the property of the vendor.

II. the vendor may bring his action against every possessor whose right is derived from
the vendee, even if in the second contract no mention should have been made of the right to
repurchase. Both are True.

5. The contract shall be presumed to be an equitable mortgage, in any of the following

cases, except: When the price of sale with right to repurchase is usually inadequate
6. An owner of a rural land shas the right of legal redemption of an adjoining rural land
sold if the following requisites are present, except when the: grantee owns an urban
land
7. Brothers Antonio, Benito, Carmelo and Donato are co-owners of an agricultural lot
which they inherited from their parents. Antonio sold his undivided share in the
property to Teodulfo. Either Benito, Carmelo and Donato may purchase Antonio’s share
in the property from Teodulfo by virtue of their right of: Legal Redemption
8. I. The owners of adjoining lands shall also have the right of redemption when a piece of
urban land, the area of which does not exceed one hectare, is alienated, unless the
grantee does not own any urban land.
II. Whenever a piece of rural land which is so small and so situated that a major portion
thereof cannot be used for any practical purpose within a reasonable time, having been
bought merely for speculation, is about to be re-sold, the owner of any adjoining land
has a right of pre-emption at a reasonable price. Both are False
9. I. Each one of the co-owners of an undivided immovable who may have sold his share
separately, may independently exercise the right of repurchases as regards his own
share, and the vendee cannot compel him to redeem the whole property.
II. If the vendee should leave several heirs, the action for redemption cannot be brought
against each of them except for his own share, whether the thing be undivided, or it has
been partitioned among them. Both are True.

10. I. If several persons, jointly and in the same contract, should sell an undivided
immovable with a right of repurchase, none of them may exercise this right for more
than his respective share.
II. If several persons, jointly and in the same contract, should sell an undivided
immovable with a right of repurchase, the vendee may demand from all the vendors or
co-heirs that they come to an agreement upon the purchase of the whole thing sold;
and should they fail to do so, the vendee cannot be compelled to consent to a partial
redemption. Both are True
11. A, B, and C are co-owners of an undivided parcel of land. A sold his 1/3 share to B.
Which is correct? C cannot exercise the right of redemption since the sale was made to
a co-owner
12. The contract shall be presumed to be an equitable mortgage, in any of the following
cases, except: When the vendee binds himself to pay the taxes on the thing sold
13. A sold to X his1/2 share of the parcel of land he co-owns with B. C owns the parcel of
land adjoining that A and B. Both B and C want to redeem the share of A which the
latter sold to X. B’s right as co-owner excludes that of C, the latter being only an
adjoining owner
14. The vendor cannot avail himself of the right of repurchase without returning to the
vendee the following, except: Interest
15. I. Legal redemption is intended to maximize co-ownership.
II. The rule on redemption is liberally construed in favor of the original owner of the
property and the policy of the law is to aid rather than defeat him in the exercise of his
right of redemption. Only II is true
16. 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 share also to X. Each
sale was with a right to repurchase. Each co-owner may exercise his right of
redemption only with respect to his share
17. I. In case of doubt, a contract purporting to be a sale with right to repurchase shall be
construed as an equitable mortgage.
 II. In case of doubt, courts are generally inclined to construe a transaction purporting it
to be a sale as an equitable mortgage, which involves a lesser transmission of rights and
interest over the property in controversy. Both are true
18. It takes place when the vendor reserves the right to repurchase the thing sold with the
obligation of returning to the vendee the price of the sale, the expenses of the contract,
and the necessary and useful expenses made on the thing sold. Conventional
redemption
19. . I. In legal redemption, the right of redemption of co-owners excludes that of adjoining
owners.
II. The purpose of legal redemption is to reduce the number of participants until the
community is terminated, being a hindrance to the development and better
administration of the property. Both are True
20. An owner of a rural land shas the right of legal redemption of an adjoining rural land
sold if the following requisites are present, except when the: grantee owns an urban
land
21. Is the right to be subrogated, upon the same terms and conditions stipulated in the
contract, in the place of one who acquires a thing by purchase or dation in payment, or
by any other transaction whereby ownership is transmitted by onerous title? Legal
redemption
22. This refers to the rights 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. Right of pre-emption
23. On June 1, S sold to B in a private instrument a certain computer. Two days later, S
orally sold the same computer to C who immediately took possession of the computer.
Neither party was aware of the sale made to the other. The computer belongs to C
24. Is one who buys property of another without notice that some other person has a right
to, or interest in, such property and pays a full and fair price for the same at the time of
such purchase, or before he has notice of the claim or interest of some other person in
the property. Purchaser in good faith
25. S sold a registered piece of land to B on May 1 in a public instrument. On May 3, S sold
in a private instrument the same piece of land to C, who took physical possession of the
land. Neither buyer was aware of the sale made to the other. The land belongs to b
26. S sold to B a lot through a deed of absolute sale duly acknowledged before a notary
public. Three days later, S sold the sale lot to X, also through a deed of absolute sale duly
acknowledge before a notary public. X had the sale registered with the Register of
Deeds. Neither B nor X was aware of the sale made by S to the other and neither took
physical possession of the lot. Who is the present owner of the lot? X, because he
registered the sale in good faith
27. I. If a vendee in a double sale registered the sale after he has acquired knowledge that
there was a previous sale of the same property to a third party of that another person
claims said property in a previous sale, the registration will constitute a registration in
bad faith and will not confer upon him any right. Both are true
II. In a case of double sale, what finds relevance and materiality is not whether or not
the second buyer r3egisters such second sale in good faith, that is, without knowledge of
any defect in the title of the property sold.
28. The principle of double sale is not applicable in the following, except: Where one of the
contract of sale is genuine and the other is also genuine
29. The requisites of double sale are the following, except: They must be bought from
different seller
30. Under the “Realty Installment Buyer Act”, the buyer of real estate on installment
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:
residential lots
31. B bought from Century Properties, Inc. a 1,000 square meter lot located beside the
Manila International Airport on which he intended to construct a warehouse
condominium. The terms of the sale provided for the payment of the contract price of
P300,000.00 in 60 equal monthly installments of P5,000.00 each. After having paid 36
installments, B defaulted in the payment of the succeeding installments. As a
consequence, Century cancelled the sale. B now wants to claim the return of the cash
surrender value of the payment he had made pursuant to the “Realty Installment Buyer
Act”, otherwise known as the Maceda Law. B is entitled to a cash surrender value of
50% of P180,000.00, or P90,000.00 under the Maceda Law
32. Under the Maceda Law, in determining the number of installments paid by the buyer,
the following payments are included, except: None of the choices
33. S sold a specific laptop computer to B for P120,000.00 with B giving a down payment
of P10,000.00 and promising to pay the balance in 11 equal monthly installments. B
likewise executed a chattel mortgage on the computer and a real estate mortgage on his
lot to secure the payment of the balance of the purchase price. After paying the first two
installments. S may avail himself of any of the following remedies except to: Foreclose
the chattel mortgage and recover ANY deficiency during the foreclosure sale if there is
an agreement to that effect
34. The Recto Law applies to which of the following examples of sale? Sale of piano on
installments where the buyer constituted a chattel mortgage on the piano
35. An unpaid seller having a right of lien or having stopped the goods in transit may resell
the goods in one of the following cases: Goods are not of perishable nature
36. An unpaid seller’s right to resell the goods is available in the following cases, except:
when the seller lost his lien on the goods
37. Goods are no longer “in transit” under the following, except: : If, after the arrival of the
goods at the appointed destination, the carrier acknowledges to the seller that he holds
the goods on his behalf and continues in possession of them as bailee for the seller
38. I. Goods considered “in transit” from the time when they are delivered to a carrier for
the purpose of transmission to the buyer takes delivery of them from such carrier.
II. Goods are considered “in transit” if the goods are rejected by the buyer, and the
carrier continues in possession of them, even if the seller has refused to receive them
back. Both are true
39. The unpaid seller of goods loses his lien under the following except: None of the choices
40. S sold a computer to B for P120,000.00 under the following terms: P20,000.00 down:
balance payable in 10 equal monthly installments with an acceleration clause. To
secure payment of the balance, B executed a chattel mortgage on the computer and a
real estate on his lot. After paying the first two installments, B defaulted in the payment
of the third, fourth and fifth installments. S wants to recover in full the balance of
P80,000.00 even in case of deficiency so he consults you which of the following courses
of action to take to achieve that purpose: either I or III
I. Exact fulfillment of the balance by suing B and have the computer sold for the
execution of the judgement against B.
II. Foreclose chattel mortgage on the computer.
 III. Foreclose the real estate mortgage on the lot.
41. The seller of goods is deemed to be an unpaid seller: Only II is true
I. When the part or whole of the price has not been paid or tendered.
II. When a bill exchange has been received as conditional payment, and the
condition on which it was received has been broken by reason of the dishonor of
the instrument.
42. Under the following circumstances, the unpaid seller has possessory lien, except: Where
the buyer becomes solvent
43. An unpaid seller having the right of lien or having stopped the goods in transit, may
rescind the transfer of title and resume the ownership in the goods where: The buyer
has been in default in the payment of the price for an unreasonable time.
44. An unpaid seller loses his lien on the goods in the following cases, except: when he
obtained judgment for the price of the goods
45. It shall take place whenever by a final judgement based on a right prior to the sale or an
act imputable to the vendor, the vendee is deprived of the whole or of a part of the thing
purchased. Eviction
46. One of the following is not a requisite for beach of warranty against hidden defect: The
defect must exist at the time of delivery of the contract of sale.
47. If the thing sold should be lost in consequence of the hidden faults, and the vendor was
aware of them, one of the following is not an effect of loss. He shall not pay damages
48. I. As a general rule there is no implied warranty in the sale of secondhand articles.
III. Where the goods are bought by description from a seller who deals in the goods
of that description, there is an implied warranty that the goods are merchantable
quality. Both are true
49. Is that which the law derives by application or interference from the nature of the
transaction or the relative situation or circumstances of the parties, irrespective of any
intention of the seller to create it. Implied warranty
50. I. The redhibitory action, based in the faults or defects of animals, must be brought
within six months from the date of their delivery to the vendee.
II. If the animal should die within five days after its purchase, the vendor shall be liable
if the disease which caused the death existed at the time of the contract. Both are false.
 51. It is any affirmation of fact or any promise by the seller relating to the thing if the
natural tendency of such affirmation or promise is to induce the buyer to purchase the
same, and if the buyer purchases the thing relying thereon. Express warranty

MACEDA LAW / R.A. 6552

1. In all transactions or contracts involving the sale or financing of real estate on installment payments,
including residential condominium apartments but excluding industrial lots, commercial buildings and
sales to tenants, where the buyer as paid at least two years of installments, the buyer is entitled to the
following rights in case he defaults in the payment of succeeding installments:

I. To pay, without additional interest, the unpaid installments due within the total grace period earned
by him which is hereby fixed at the rate of one month grace period for every one year of installment
payments made: Provided, That this right shall be exercised by the buyer only once in every five years of
the life of the contract and its extensions, if any.

II. If the contract is cancelled, the seller shall refund to the buyer the cash surrender value of the
payments on the property equivalent to fifty percent of the total payments made, and , after five years of
installments, an additional five percent every year but not to exceed ninety percent of the total payments
made: Provided, That the actual cancellation of the contract shall take place after thirty days from
receipt by the buyer of the notice of cancellation or the demand for rescission of the contract by a
notarial act and upon full payment of the cash surrender value to the buyer. Both are true

2. I. Realty Installment Buyer Act applies to all transactions or contracts involving the sale or financing
of real estate on installment payments, including residential condominium buildings and sales to
tenants.

II. Down payments, deposits or options on the contract shall be included in the computation of the total
number of installment payments made. Both are true

3. I. In case where less than two years of installments were paid, the seller shall give the buyer a grace
period of not less than sixty days from the date the installment became due.

II. If the buyer fails to pay the installments due at the expiration of the grace period, the seller may
cancel the contract after thirty days from receipt by the buyer of the notice of cancellation or the
demand for rescission of the contract by a notarial act. Both are true
4. I. Under the Reality Installment Buyer Act, the buyer shall have the right to sell his rights or assign the
same to another person or to reinstate the contract by updating the account during the grace period and
before actual cancellation of the contract. The deed of sale or assignment shall be done by notarial act.

II. The buyer shall have the right to pay in advance any installment or the full unpaid balance of the
purchase price annotated in the certificate of title covering the property. Both are true

The Subdivision and Condominium Buyer’s Protective Decree/P.D.957

1. It means a natural or a juridical. Person

2. It includes every disposition, or attempt to dispose, for a valuable consideration, of a

subdivision lot, including the building and other improvements thereof, if any, in a subdivision
project or a condominium unit in a condominium project. Sale or Sell

3. It includes any contract to buy, purchase, or otherwise acquire for valuable consideration a
subdivision lot, including the building and other improvements, if any, in a subdivision project
or a condominium unit in a condominium project. Buy and purchase

4. It means a tract or a parcel of land which is partitioned primarily for residential purposes
into individual lots with or without improvements thereon, and offered to the public for sale, in
cash or in installment terms. Subdivision project

5. It means any of the lots, whether residential, commercial, industrial or recreational, in a

subdivision project. Subdivision lot

6. It means a subdivision plan of a registered land wherein a street, passageway or open space
is delineated on the plan. Complex subdivision plan

7. It means the entire parcel of real property divided or to be divided primarily for residential
purposes into condominium units, including all structures thereon. Condominium project

8. It means a part of the condominium project intended for any type of independent use or
ownership, including one or more rooms or spaces located in one or more floors in a building
or buildings and such accessories as may be appended thereto. Condominium unit

9. It refers to the registered owner of the land subject of a subdivision or a condominium

project. Owner
10. It means the person who develops or improves the subdivision project or condominium
project for and in behalf of the owner thereof. Developer

11. It means any person directly engaged as principal in the business of buying, selling or
exchanging real estate whether on a full-time or part-time basis. Dealer.

12. It means any person who, for commission or other compensation, undertakes to sell or
negotiate the sale of a real estate belonging to another. Broker

13. It refers to the person regularly employed by a broker to perform, for and in his behalf, any
or all functions of a real estate broker. Salesman

14. I. The registered owner of a parcel of land who wishes to convert the same into a
subdivision project shall submit his subdivision plan to the Authority which shall act upon and
approve the same, upon a finding that the plan complies with the Subdivision Standards’ and
Regulations.

II. In the case of a plan for a condominium project, the Authority shall act upon and approve
the plan with respect to the building or buildings included in the condominium project in
accordance with the National Building Code. Both are True

15. I. Such owner or dealer to whom has been issued a registration certificate shall not be
authorized to sell any subdivision lot or condominium unit in the registered project unless he
shall have first obtained a license to sell the project within two weeks from the registration of
such project.

II. The Authority shall issue to such owner or dealer of a registered project a license to sell the
project if, after an examination of the registration statement filed by said owner or dealer and
all the pertinent documents attached thereto, he is convinced that the owner or dealer is of
good repute, that his business is financially stable, and that the proposed sale of the subdivision
lots or condominium units to the public would not be fraudulent. Both are true

16. I. No license to sell subdivision lots or condominium units shall be issued by the Authority
unless the owner or dealer shall have filed an adequate performance bond to guarantee the
construction and maintenance of the roads, gutters, drainage, sewerage, water system, lighting
systems, and full development of the subdivision project or the condominium project and the
compliance by the owner or dealer with the applicable laws and rules and regulations.
II. The performance bond shall be executed in favor of the Republic of the Philippines and shall
authorize the Authority to use the proceeds thereof for the purposes of its undertaking. Both
are True

17. A license to sell and performance bond shall not be required in any of the following
transactions: All of the above

18. I. Upon verified complaint by a buyer of a subdivision lot, the Authority may not
immediately suspend the owner’s or dealer’s license to sell pending investigation and hearing.

II. The Authority may motu proprio suspend the license to sell if, in its opinion, any information
in the registration statement filed by the owner or dealer is or has become misleading,
incorrect, inadequate or incomplete or the sale or offering for a sale of the subdivision or
condominium project may work or tend to work a fraud upon prospective buyers. Only II is
true

19. I. No real estate dealer, broker or salesman shall engage in the business of selling
subdivision lots or condominium units unless he has registered himself with the Authority.

II. The suspension or revocation of the registration of a dealer or broker shall carry with it all
the suspension or revocation of the registrations of all his salesmen. Both are True

20. I. All contracts to sell, deeds of sale and other similar instruments relative to the sale or
conveyance of the subdivision lots and condominium units, whether or not the purchase price
is paid in full, shall be registered by the seller I the Office of the Register of Deeds of the
province or city where the property is situated.

II. No mortgage on any unit or lot shall be made by the owner or developer without prior
written approval of the Authority. Both are true.

21. I. Advertisements that may be made by the owner or developer through newspaper, radio,
television, leaflets, circulars or any other form about the subdivision or the condominium or its
operations or activities must reflect the real facts and must be presented in such manner that
will not tend to mislead or deceive the public.

II. The owner or developer shall be answerable and liable for the facilities, improvements,
infrastructures or other forms of development represented or promised in brochures,
advertisements and other sales propaganda disseminated by the owner or developer or his
agents and the same shall form part of the sales warranties enforceable against said owner or
developer, jointly and severally. Both are true

22. I. Every owner or developer shall construct an provide the facilities, improvements,
infrastructures and other forms of development, including water supply and lighting facilities,
which are offered and indicated in the approved subdivision or condominium plans,
brochures, prospectus, printed matters, letters or in any form of advertisement, within one year
from the date of the issuance of the license for the subdivision or condominium project or such
other period of time as may be fixed by the Authority.

II. No owner or developer shall change or alter the roads, open spaces, infrastructures, facilities
for public use and/or other form of subdivision development as contained in the approved
subdivision plan and/or represented in its advertisements, without the permission of the
Authority and the written conformity or consent of the duly organized homeowners
association, or in the absence of the latter, by the majority of the lot buyers in the subdivision.
Both are true

23. I. No installment payment made by a buyer in a subdivision or condominium project for the
lot or unit he contracted to buy shall be forfeited in favor of the owner or developer to develop
the subdivision or condominium project according to the approved plans and within the time
limit for complying with the same. Such buyer may, at his option, be reimbursed the total
amount paid including amortization interests but excluding delinquency interests, with interest
thereon at the legal rate.

II. The owner or developer shall deliver the title of the lot or unit to the buyer upon full
payment of the lot or unit. Both are True

24. I. Real estate tax and assessment on a lot or unit shall be paid by the owner or developer
without recourse to the buyer for as long as the title has not passed to the buyer; Provided,
however, that if the buyer has actually taken possession of and occupied the lot or unit, he shall
be liable to the owner or developer for such tax and assessment effective the year following
such taking of possession and occupancy.

II. No owner or developer shall levy upon any lot or buyer a fee for an alleged community
benefit. Fees to finance services for common comfort, security and sanitation may be collected
only by a properly organized homeowners association and only with the consent of a majority
of the lot or unit buyers actually residing in the subdivision or condominium project. Both are
True

25. I. No owner or developer shall deny any person free access to any government office or
public establishment located within the subdivision or which may be reached only by passing
through the subdivision.

II. The owner or developer of a subdivision without access to any existing public road or street
must secure a right of way to a public road or street and such right of way must be developed
and maintained according to the requirement of the government and authorities concerned.
Both are True

26. I. The owner or developer of a subdivision project or condominium project shall initiate the
organization of a homeowners’ association among the buyers and residents of the projects for
the purpose of promoting and protecting their mutual interest and assist in their community
development.

II. The owner or developer may divide the development and sale of the subdivision into phases,
each phase to cover not less than five hectares. Only I is true

27. I. The NHA may take over or cause the development and completion of the subdivision or
condominium project at the expense of the owner or developer, jointly and severally, in cases
where the owner or developer has refused or failed to develop or complete the development of
the project.

II. The NHA may, after such take-over, demand, collect and receive from the buyers the
installment payments due on the lots, which shall be utilized for the development of the
subdivision. Both are True

Pledge, Chattel Mortgage, and Real Estate Mortgage

1. The following requisites are essential to the contracts of pledge and mortgage, except: The
pledgor or mortgagor can appropriate the object of pledge or mortgage upon default.

2. A borrowed 50,000 from B with A’s cellphone given to B by way of pledge. It was stipulated
that in case of non-payment on due date, the cellphone would belong to B. This forfeiture is:
Pactum commissorium
3. I. Pledges and mortgages are accessory contracts.

II. A principal obligation may still be valid even if the pledge or mortgage is void. Both are true

4. A borrowed P100,000 from B, and as security, he pledged his ring, cellphone and laptop. On
due date, A paid P70,000. As a result: A cannot demand the return of any of the things pledged

5. Is an accessory, real and unilateral contract by virtue of which the debtor or a third person
delivers to the creditor or to a third person movable property as security for the performance of
the principal obligation? Pledge

6. Is a contract embodied in a public instrument recorded in the Registry of Property, by which

the owner of an immovable directly and immediately subjects it, whoever the possessor may be,
to the fulfillment of the obligation for whose security it was constituted? Real Mortgage

7. It is a contract in which the debtor guarantees to the creditor the fulfillment of a principal
obligation, subjecting for the faithful compliance therewith a real property in case of non-
fulfillment of said obligation at the time stipulated. Real mortgage

8. A mortgage his residential land to B secure the loan of P400,000 obligations to B. They
agreed that A should not sell the land while the obligations to B. They agreed that A should not
sell the land while the obligation exists. Before the maturity of the mortgage, C offered to buy
the land from A. Which is correct? A can sell the land to C despite the agreement not to sell.

9. I. A mortgage is regarded as nothing more than a mere lien, encumbrance, or security for a
debt, and passes no title or estate to the mortgagee and gives him no right or claim to the
possession of the property.

II. The mortgagee only owns the mortgage credit, not the property itself. Both are True

10. I. Settled is the rule that a contract of mortgage must be constituted only by the absolute
owner on the property mortgaged. A mortgaged. A mortgage constituted by an impostor is
voidable.

II. Where a mortgage is not valid, as where it is executed by one who is not the owner of the
property, or the consideration of the contract is simulated or false, the principal obligation
which it guarantees is thereby rendered null and void. Both are false
11. Where, despite the fact that the mortgagor is not the owner of the mortgaged property, his
title being fraudulent, the mortgage contract and any foreclosure sale arising therefrom are
given effect by reason of public policy. Doctrine of mortgagee in good faith

12. This is based on the rule that all persons dealing with property covered by a Torrens
Certificate of Title, as buyers or mortgagees, are not required to go beyond what appears on the
face of the title. Doctrine of mortgagee in good faith

13. There are at least two contractual modes under the Civil Code by which personal property
can be used to secure a principal obligation:

I. The first is through a contract of pledge.

II. The second is through a real mortgage. Only I is true

14. I. The law recognizes instances when persons not directly parties to a loan agreement may
give as security their own properties for the principal transaction.

II. When the property of a third person which has been expressly mortgaged to guarantee an
obligation to which the said person is a stranger, said property is directly and solidarily liable
for the fulfillment thereof. Only I is true

15. I. In a contract of mortgage, the debtor retains beneficial interest over the property
notwithstanding the encumbrance, since the mortgage only serves to secure the fulfillment of
the principal obligation.

II. Even if the debtor defaults, this fact does not operate to vest in the creditor the ownership of
the real property, subject of mortgage. The creditor must still resort to foreclosure proceedings.
Both are True

16. I. The subsequent declaration of a title as null and void is not a ground for nullifying the
mortgage right of a mortgagee in good faith.

II. Where innocent third persons relying on the correctness of the certificate thus issued,
acquire rights over the property, the court cannot disregard such rights. Both are True

17. I. A mortgagee who files a suit for collection abandons the remedy of foreclosure of the
chattel mortgage constituted over the personal property as security for the debt or value of the
promissory note which he seeks to recover in the said collection suit.
II. In the accessory contract of real estate mortgage, the consideration of the debtor in
furnishing the mortgage is the existence of a valid, voidable, or unenforceable debt. Both are
True

18. I. When the principal obligation becomes due and the debtor fails to perform his obligation,
the creditor may foreclose on the pledge or mortgage for the purpose of alienating the property
to satisfy his credit.

II. The creditor cannot appropriate the things given by way of pledge or mortgage, or dispose of
them. Any stipulation to the contrary is unenforceable. Only I is true.

19. Appropriation of the mortgaged properties by the mortgagee even if stipulated by the
parties would be null and void for being what is known as: Pactum commissorium

20. I. The prohibition against a pacto commissorio is intended to protect the obligor, pledgor, or
mortgagor against being overreached by his creditor who holds a pledge or mortgage over
property whose value is much more than the debt.

II. The essence pactum commissorium is that ownership of the security will pass to the creditor
by the mere default of the debtor. Such arrangement is contrary to morals and public policy.
Both are true.

21. There are two elements for pactum commissorium to exist:

I. That there should be a pledge or mortgage wherein in a property is pledged or mortgaged by

way of security for the payment of the principal obligation.

II. That there should be a stipulation for an appropriation by the creditor of the thing pledged
or mortgaged in the event of non-payment of the principal obligation within the stipulated
period. Both are true

22. I. A stipulation allowing the mortgagee to take actual or constructive possession of a

mortgaged property upon foreclosure is not valid.

II. A pledge or mortgage is divisible, even though the debt may be divided among the successors
in interest of the debtor or of the creditor. Both are false
23. I. In pledge or mortgage, the debtor’s heir who has paid a part of the debt cannot ask for the
proportionate extinguishment of the pledge or mortgage as long as the debt is not completely
satisfied.

II. In pledge or mortgage, neither can the creditor’s heir who received his share of the debt
return the pledge or cancel the mortgage, to the prejudice of the other heirs who have not been
paid. Both are True

24. I. The pledge or mortgage is divisible if there being several things given in mortgage or
pledge, each one of them guarantees only a determinate portion of the credit.

II. The debtor, in divisible mortgage or pledge, shall have a right to the extinguishment of the
pledge or mortgage as the portion of the debt for which each thing is specially answerable is
satisfied. Both are True

25. I. In essence, indivisibility means that the mortgage obligation cannot be divided among the
different lots, that is, each and every parcel under mortgage answers for the totality of the debt.

II. The indivisibility of a pledge or mortgage is affected by the fact that the debtors are not
solidarily liable. Only I is true

26. I. The contract of pledge or mortgage may secure few kinds of obligations, which excludes
pure or subject to a suspensive or resolutory condition.

II. A promise to constitute a pledge or mortgage gives rise only to a personal action between the
contracting parties, without prejudice to the criminal responsibility incurred by him who
defrauds another, by offering in pledge or mortgage as unencumbered, things which he knew
were subject to some burden, or by misrepresenting himself to be the owner of the same. Only
II is True

27. I. In order to constitute the contract of pledge, the thing pledged must be placed in the
possession of the creditor, or of a third person by common agreement.

II. A pledge contract s an accessory contract, however, it is not discharged if the principal
obligation is extinguished. Only I is True

28. The requisites for the contract of pledge to be valid, except one, are: The pledgor can
appropriate the object of pledge upon default if there is stipulation
29. I. A pledge is a format contract, hence, it is necessary in order to constitute the contract of
pledge, that the thing pledged be laced in the possession of the creditor, or of a third person by
common agreement.

II. All movables which are within commerce may be pledged, provided they are susceptible of
possession. Only II is true

30. I. Incorporeal rights, evidenced by negotiable instruments, bills of lading, shares of stock,
bonds, warehouse receipts and similar documents may not be pledged.

II. A pledge shall not take effect against third persons if a description of the thing pledged and
the date of the pledge do not appear in a private instrument. Both are false

31. I. For the contract of pledge to affect third persons, apart from being in a private
instrument, possession of the thing pledged must, in addition, be delivered to the pledgee.

II. With the consent of the pledgee, the thing pledged may be alienated by the pledgor or
owner, subject to the pledge. Only II is True

32. I. The contract of pledge gives a right to the creditor to retain the thing in his possession or
in that of a third person to whom it has been delivered, until the debt is paid.

II. The creditor shall take care of the thing pledged with the extra ordinary diligence; he has a
right to the reimbursement of the expenses made for its preservation, and is liable for its loss or
deterioration. Only I is true

33. I. The pledgee can deposit the thing pledged with a third person, unless there is a
stipulation authorizing him to do so.

II. The pledgee is not responsible for the acts of his agents or employees with respect to the
thing pledged. Both are false

34. I. In case of pledge of animals, their offspring shall pertain to the pledgee.

II. The creditor cannot use the thing pledged, without the authority of the owner, and if he
should do so, or should misuse the thing in any other way, the owner may ask that it be
judicially or extrajudicially deposited. When the preservation of the thing pledged requires its
use, it must be used by the creditor but only for that purpose. Only II is True
35. I. The debtor cannot ask for the return of the thing pledged against the will of the creditor,
unless and until he has paid the debt and its interest, with expenses in a proper case.

II. In pledge, the prescriptive period within which to demand the return of the thing pledged
should begin to run only after the payment of the loan and a demand for the thing has been
made. Both are True

36. I. If through the negligence or willful act of the pledgee, the thing pledged is in danger of
being lost or impaired, the pledgor may require that it be deposited with a third person.

II. The pledgee is bond to advise the pledgor, without delay, of any danger to the thing pledged.
Both are True

37. I. If there are reasonable grounds to fear the destruction or impairment of the thing
pledged, without the fault of the pledgee, the pledgor may demand the return of the thing,
upon offering another thing n pledge.

II. If, without the fault of the pledgee, there is danger of destruction, impairment, or diminution
in value of the thing pledged, he may cause the same to be sold at a public sale. Both are True

38. I. If the creditor is deceived on the substance or quality of the thing pledged, he may either
claim another thing in its stead, or demand immediate payment of the principal obligation.

II. If the thing pledged is returned by the pledgee to the pledgor or owner, the pledge is
extinguished. Any stipulation to the contrary shall be valid. Only I is true

39. I. If subsequent to the perfection of the pledge, the thing is in the possession of the pledgor
or owner, there is a conclusive presumption that the same has been returned by the pledgee.

II. A verbal statement by the pledgee that he renounces or abandons the pledge is sufficient to
extinguish the pledge. Both are false

40. I. The creditor to whom the credit has not been satisfied in due time, may proceed before a
Judge of the sale of the thing pledged.

II. If at the first auction, the thing is not sold, a second one with the same formalities shall be
held; and if at the second auction, there is no sale either, the creditor may appropriate the thing
pledged. Only II is true
41. I. The creditor, in a contract of real security, like pledge, cannot appropriate without
foreclosure the things given by way of pledge.

II. The law requires foreclosure in order to allow a transfer of title of the goods given by way of
security from its pledgor, and before any such foreclosure, the pledgor, not the pledgee, is the
owner of the goods. Both are True

42. I. At the public auction, the pledgor or owner cannot bid.

II. The pledgee may also bid, and his offer shall be valid if he is the only bidder. Both are False

43. I. The sale of the thing pledged shall extinguish the principal obligation, only if the
proceeds of the sale are equal to the amount of the principal obligation, interest and expenses
in a proper case.

II. All bids at the public auction shall offer to pay the purchase price at once. F any other bid is
accepted, the pledgee is deemed to have received the purchase price, as far as the pledgor or
owner is concerned. Only II is True

44. In a sale of the thing pledge:

I. If the price of the sale is more than said amount, the debtor shall be entitled to the excess,
unless it is otherwise agreed.

II. If the price of the sale is less, neither shall the creditor be entitled to recover the deficiency,
unless otherwise stipulated. Both are false

45. I. Under the Civil Code, it is the pledgee, and not the pledgor, who is given the right to
choose which of the items should be sold if two or more things are pledged.

II. There is nothing in the Civil Code provisions governing the extrajudicial sale of pledged
properties that prohibits the pledgee of several different pledge contracts from auctioning all of
the pledged properties on a single occasion, or from the buyer at the auction sale in purchasing
all the pledged properties with a single purchase price. Both are true

46. I. It is settled that if the proceeds of the sale are insufficient to cover the debt in an
extrajudicial foreclosure of the mortgage, the mortgagee is not entitled to claim the deficiency
from the debtor.
II. When the legislature intends to deny the right of a creditor to sue for any deficiency
resulting from foreclosure of security given to guarantee an obligation, it expressly provides as
in the case of pledges and in real mortgages of a thing sold on installment basis. Both are False

47. I. In a pledge, the sale of the thing pledged extinguishes the entire principal obligation, such
that the pledgor may no longer recover proceeds of the sale in excess of the amount of the
principal obligation. In Chattel Mortgage Law, it expressly entitles the mortgagor to the balance
of the proceeds, upon satisfaction of the principal obligation and costs.

II. In the extrajudicial foreclosure of real mortgages, while silent as to the mortgagee’s right to
recover, does not, prohibit recovery of deficiency. Both are True

48. I. If a credit which has been pledged becomes due before it is redeemed, the pledgee may
collect and receive the amount due. He shall apply the same to the payment of his claim, and
deliver the surplus, should there be any, to the pledgor.

II. Any third person who has any right in or to the thing pledged may satisfy the principal
obligation as soon as the latter becomes due and demandable. Both are True

49. I. If two or more things are pledged, the pledgee may choose which he will cause to be sold,
unless there is a stipulation to the contrary.

II. In pledges created by operation of law, after payment of the debt and expenses, the
remainder of the price of the sale shall not be delivered to the obligor. Only I is True

50. I. Pledges created by operation of law refers to the right of retention.

II. A thing under a pledge by operation of law may be sold only after demand of the amount for
which the thing is retained. The public auction shall take place within two months after such
demand. Only I is true

51. Only the following property may be the object of a contract of mortgage:

I. Immovables.

II. Movables may be the object of a chattel mortgage. I, II, and III are true

52. One which reveals an intent to make the property a security, even if the contract lacks the
proper formalities of a real estate mortgage. Equitable mortgage
53. I. It is indispensable, in order that a mortgage may be validly constituted, that the document
in which it appears be recorded in the Registry of Property. If the instrument is not recorded,
the mortgage is, nevertheless, binging between the parties.

II. The persons in whose favor the law establishes a mortgage have no other right than to
demand the execution and the recording of the document in which the mortgage is formalized.
Both are True

54. I. The mortgage directly and immediately subjects the property upon which it is imposed,
whoever the possessor may be, to the fulfillment of the obligation for whose security it was
constituted.

II. The mortgage credit may be alienated or assigned to a third person, in whole or in part, with
the formalities required by law. Both are True

55. I. A stipulation forbidding the owner from alienating the immovable mortgaged shall be
valid.

II. The foreclosure of a mortgage before mortgagor’s default is void. Only II is true

56. A contract where a personal property is recorded as a security for the performance of an
obligation. Chattel mortgage

57. S sold to B specific car for P200,000 payable in four equal installments. S delivered the car
to B but required B to mortgage it back to S to answer for the unpaid installments. B paid the
first and second installments but he failed to pay the balance. S foreclosed the mortgaged
property and sold it at public auction for P80,000. As a result, S cannot recover the deficiency
any more even if there is stipulation to that effect.

58. I. The chattel mortgage must be registered in two chattel mortgage register when the
mortgagor resides in one province, but the property is located in another province.

II. The registration of the chattel mortgage is an effective and binding notice to other creditors
of its existence and creates a real right or a lien which, being recorded, follows the chattel
wherever it goes. The registration gives the mortgagee symbolical possession. Both are True.

59. It is an oath in a contract of chattel mortgage wherein the parties “severally swear that the
mortgage is made for the purpose of securing the obligation specified in the conditions thereof
and for no other purposes and that the same is a just band valid obligation and one not entered
into for the purpose of fraud.” Affidavit of good faith

EXAMPLE QUIZ IN PLEDGE, CHATTEL MORTGAGE, AND REAL ESTATE

MORTGAGE

1. D pledged his specific sewing machine to C for P8,000. D was unable to pay the obligation
within 60 days after due date. C sold the machine at a public auction for P6,000. C cannot
recover the deficiency of P2,000 even if there is stipulation that he can

2. B pledged his Rolex watch to CP4,000. B failed to pay C the P4,000. On due date, C sold the
Rolex watch at a public auction to the highest bidder at P3,500. C cannot recover the
deficiency of P500 even if there is stipulation.

3. B pledged his watch to D pawnshop for P5,000. On due date, B failed to redeem his watch.
The pawnshop sold the watch at a public auction to the highest bidder at P4,000. The
pawnshop cannot recover the deficiency of P1,000 even if there is a stipulation.

4. A mortgaged his residential land to B as a guarantee for the payment of P400,000 obligation
to B. They agreed that A shall not sell the land while the obligation exists. Before the maturity of
the mortgage, C offered to buy the land from A. Which is correct? A can sell the land to C
despite the agreement not to sell.

5. A borrowed P30,000 from B, and as security, A pledged his ring, pair of earrings and
necklace. On due date, A paid P20,000, as a result, A cannot demand the return of any of the
things pledged

6. A borrowed P100,000 from B with A’s ring given to B by way of pledge. It was stipulated
that in case of non-payment on due date, the ring would belong to B. This forfeiture is Pactum
commissorium

7. A borrowed P100,000 from B, and as a security. A pledge his ring to B. After the obligation
falls due, A goes to B relinquishing ownership of the ring in favor of B. This is: Dacion en Pago

8. In real estate mortgage, the mortgagor can sell the property mortgaged. Even without the
consent of the mortgagee
9. Elements of contracts of pledge and mortgage, except: The thing pledged or mortgaged may
be appropriated if the debtor cannot pay.

10. S sold to B a specific car for P200,000 payable in four equal installments. S delivered the
car to B but required B to mortgage it back to S to answer for the unpaid installments. B paid
the first and second installments but he failed to pay the balance. S foreclosed the mortgaged
property and sold it at public auction for P80,000. As a result, S cannot recover the deficiency
any more even if there is stipulation to that effect

11. The distinction between chattel mortgage and a pledge is that in chattel mortgage: The
excess of the amount due after foreclosure goes to the debtor.

12. One of the following is not a characteristic of pledge and mortgage: Gratuitous

13. The following are requisites of pledge except: To bind a third person, it must be recorded in
the office of the Registry of Deeds

14. Three of the following are essentials requisites of a contract of mortgage. Which is not? The
contract must be in writing

15. In real mortgage, the following rules are valid, except one: A stipulation in the mortgage
contract prohibiting the owner from alienating the immovable mortgaged is valid.

16. Which of the following is common requisite for Pledge, Chattel Mortgage and Antichresis?
It is constituted to secure the fulfillment of a principal obligation

17. Which of the following statements is true and correct? When the obligation is secured by a
pledge or mortgage and it is not paid when due, the pledgee or mortgagee may dispose the
collateral even if there is no agreement to that effect between the parties

18. X was engaged in the business of buying and selling of second hand cars. X advanced for
her marketing specialists (employees) sums of money for the business operation. X required
them to surrender the Transfer Certificate of Title (TCT) of their lands and to execute the
corresponding Contract of Sale in her favor. Subsequently, Y, one of X’s employees, incurred
shortage. X, afterwards, sold the land of Y to Z. Y filed an action for annulment of sale against X
and Z alleging that there was no sale intended but only equitable mortgage for the purpose of
securing the shortage by Y. Decide. The purported contract of sale was actually intended
merely to secure the payment of the shortage incurred by Y in the conduct of the buy and sell
of second hand cars

19. X obtained a loan of P50,000 from Y. X pledged his laptop. The contract signed by the
parties stipulated that if X is unable to redeem the laptop on due date, X will execute a
document in favor of Y providing that the laptop shall automatically be a considered full
payment of the loan. Is the contract valid? The contract is valid because it does not amount to
pactum commissorium as it does not provide for the automatic appropriation by Y of the laptop
in case of default of X

20. X obtained a loan of P50,000 from Y. X pledged his laptop. The contract signed by the
parties stipulated that if X is unable to redeem the laptop on due date, Y may immediately sell
the laptop and appropriate the entire proceeds thereof for herself as full payment of the loan.
Decide. The stipulation authorizing Y to immediately sell the laptop is void as Y cannot
appropriate the things given by way of pledge or dispose of them.

21. In 2017, D borrowed P500,000 from C, collaterized by pledge of shares of stock of a

corporation worth 700,000. In 2018, because of the economic crisis, the value of the shares fell
to 100,000. Can C demand that D surrender additional shares worth 600,000? No. Contract of
pledge cannot be changed unilaterally. Moreover, pledge is only an accessory contract

22. X loaned to Y P40,000 for which the latter pledged 4,000 shares of stock in Z Corporation.
It was agreed that if the pledgor failed to pay the loan with 10% yearly interest within four
years, the pledgee is authorize to foreclose on the shares of stock. As required, Y delivered
possession of the shares to X with the understanding that the shares would be returned to Y
upon payment of the loan. However, the loan was not paid on time. A month after 4 years, may
the shares of stock pledged be deemed owned by X? No, because they have to be foreclosed

23. H and W borrowed money from Y. To guarantee payment, they left the Torrens title of their
land with Y for him to hold until they pay the loan. What contract was executed? None of the
above

24. D obtained a loan of P100,000 from C, and pledged her diamond ring. The contract signed
by the parties stipulated that if D is unable to redeem the ring on due date, he will execute a
document in favor of C providing that the ring shall automatically be considered full payment
of the loan. Is the contract valid? The contract is valid.
25. D obtained a loan of P100,000 from C, and pledged her diamond ring. The contract signed
by the parties stipulated that if D is unable to redeem the ring on due date, C may immediately
sell the ring and appropriate the entire proceeds thereof for himself as full payment of the loan.
Decide. The stipulation authorizing the pledgee to immediately sell the thing pledge is void.

26. I. In a contract of chattel mortgage, it must be a recorded in a public instrument to bind

third persons.

II. In a contract of pledge, it must be in a public instrument containing description of the thing
pledged and the date thereof to bind third persons. Both are True