Article 1458-1637 Law on Sales

Article 1458: By the contract of sale one of the contracting parties obligates himself to transfer the
ownership of and to deliver a determinate thing, and the other to pay therefore a price certain in
money or its equivalent.

It is contract - The Civil Code defines a contract as “a meeting of minds between two persons whereby
one binds himself, with respect to the other, to give something or to render some service.”

What are the different characteristics of the contract of sale? PNB-COC-T

1. Principal- can stand alone

2. Nominate- particularly designated
3. Bilateral- two parties involved with
4. Commutative
5. Onerous
6. Consensual- perfected by mere consent
7. Title is not a mode of transferring ownership

Kinds of contract of sales

1. Absolute Sale- no period or condition attached; transfer of ownership is vested upon delivery
2. Conditional Sale - subject to certain condition; delivery does not transfer ownership until the
condition is fulfilled

Elements of the Contract of Sale:

1. Essential Elements – are those without which, there can be no contract. (The absence of one
makes the contract invalid or void)
a. Consent
b. Object
c. Consideration
2. Natural elements – are those which are derived from the nature of the contract ( Implied)
a. Warranty against eviction
b. Warranty against hidden defects
c. Warranty against non-apparent and unregistered servitude or encumbrances
d. Warranty for merchantability
3. Accidental elements – are those which exist only when the parties expressly provide ( Based on
the stipulation of the parties.
a. Place and time of delivery and payment
b. Terms of conditions of payment
Remember:

1. Essential Elements affect the validity of the contract while Natural and Accidental elements
does not render the contract of sale invalid in the absence thereto
2. Both Natural and Accidental Elements can be waived

ESSENTIAL ELEMENTS OF SALE

CONSENT – This refers to the consent on the part of the seller to transfer ownership and deliver and on the
part of the buyer to pay.
Note: The parties must have legal capacity to give consent and to obligate themselves.

Who may be parties to a contract of sale? – all parties who are capacitated may enter into a contract
of sale.

EXCEPT:
1. Absolute in capacity: minors, demented persons, embeciles, deaf and dumb who don’t know how
to write, prodigals, and civil interdictees
2. Relative incapacity- the incapacity is relative when a person cannot buy a certain property
because of special prohibition.
o Minors – where necessaries are sold and delivered to a minor or other person without capacity to act,
he must pay a reasonable price therefor. Necessaries are those indispensable for sustenance, dwelling,
clothing and medical attendance.
o Sale between spouses is void; applies also to common law spouses. Exceptions:
▪ When a separation of property was agreed in the marriage settlement; or
▪ When there has been a judicial separation of property.

• Relative incapacity to buy – the following persons cannot acquire by purchase, even at a public or
judicial auction sales or in legal redemption, compromises and renunciations, either in person or
through mediation of another:
o The guardian, the property of the person or person who may be under his guardianship; ( voidable)
o Agents, the property whose administration or sale may have been entrusted to them unless consent of
the principal has been given; ( Voidable)
o Executors and administrators, the property of the estate under their administration; ( Voidable)
o Public officers and employees the property of the State or any subdivision thereof or of any GOCC or
institution, the administration of which has been entrusted to them. ( Void)
o Justices, judges and prosecuting attorneys, clerks of superior or inferior courts and other officers and
employees connected with the administration of justice, the property and rights in litigation or levied
upon an execution before the court within whose jurisdiction or territory they exercise their respective
functions. (Void)
O Aliens are disqualified to purchase or acquire real property unless by hereditary succession. ( Void)
OBJECT of Sale or Subject Matter- refers to the determinate thing.

Rules on the object of a contract of sale

What can be an object of sale?

1. Rights – transmissible and personal EXCEPT:

 Future inheritance or services

E.g. of transmissible rights: right to usufruct, right of conventional redemption.

E.g. of untransmissible right: voting right, parental right

2. Things – actual or possible, licit, and determinate or at least determinable such as

a. Existing Goods ( real or personal property, tangible or intangible things)
b. Future Goods ( Conditional Sale, that the goods will exist in the future)

E.g. of illicit things per se (in nature) decayed food unfit for consumption
E.g. of illicit things per accidens (according to law) prohibited drugs

Note: Services cannot be a contract of sale.

o Requisites:
▪ The thing must be within the commerce of men and not impossible.
e.g public ownership, air, sunshine
▪ The thing must not be contrary to laws, morals, good customs, public order and public policy
otherwise the contract of sale is void.
▪ The thing must be determinate – a thing is determinate if it is particularly designated or
physically segregated from all others of the same class.It is identified by its individuality.

E.g. all sacks of rice in a particular bodega, land in Rizal Corner in Del Pilar Street (the person has owns
only one parcel of land)

Other rules on object:

o The seller must have the right to transfer the ownership of the thing at the time that it is
delivered; it is not necessary that the seller be the owner of the thing at the time of sale.

o Things having potential existence may be the object of a contract of sale; However, the thing
must come into existence, otherwise the sale will not be effective for not having a subject matter.

Note: The things must still be specific and identified and also owned by the vendor at the time.

▪ Emptio rei speratae - sale of future thing; must come into existence otherwise the sale
will not be effective.

Remember:
 Sale of future goods is a form of present sale, is valid only as executory
contract to be fulfilled by the acquisition and delivery of the goods specified
  If manufacture only for a specific customer and not readily salable in ordinary
course of business, it is a contract of piece of work applying the
Massachusetts rule

▪ Emptio spei – sale of hope itself; produces effects even if the thing hoped does not come
into existence.
• Exception: Sale of vain hope is void.

CAUSE OR CONSIDERATION – Refers to the price certain in money or its equivalent

Rules on Price
o Concept – The price is the sum that will be paid for the property that is sold.

1. Real- not (absolute) simulated, otherwise the contract is void, unless it can be shown that it is
some other form of a contract such as donation.
2. Price must be certain, otherwise the sale is void because of lack of meeting of the minds of the
contracting parties otherwise it some other form of contract.

o The price is considered certain if:

 It is a fixed amount
 It is certain with reference to another thing certain
E.g. fixed by reference to a definite day, particular exchange or market
applicable to fungible goods subject to market fluctuations
 If the determination is left to the judgment of a specified person or persons,
subject to the following rules:

• Should such person or persons be unable or unwilling to fix it, the contract shall be
inefficacious, unless the parties subsequently agree upon the price.
• If the third person or persons acted in bad faith or by mistake, the courts may fix the price.
• Where such third person or persons are prevented from fixing the price or terms by fault of
the seller or the buyer, the party not in fault may have such remedies against the party in fault as are
allowed the seller or the buyer, as the case may be ( specific performance or rescission plus damages) .
In case the party not in fault ask for specific performance the court shall fix the prize.

o Fixing of the price cannot be at the sole discretion of one party. However, if the price fixed by one of
the parties is accepted by the other, the sale is perfected.

o Effect if Price cannot be fixed: Where the price cannot be determined in accordance with the above
stated rules, the contract is inefficacious or without effect.

o Gross inadequacy of price: Does not affect the validity of a contract of sale. However such gross
inadequacy may indicate either:
▪ A defect in the consent; or
▪ The parties really intended a donation or some other act or contract.
Exceptions:
1. Where low price indicates a vice of consent, sale may be annulled or the contract is presumed to
be an equitable mortgage
2. Where the price is sol low as to be shocking to the conscience, sale may be set aside
3. Where the price is simulated, the sale is void
4. Where the parties did not intend to be bound at all, the sale is void
5. Where there is lesion, the contract may be rescinded

Stages/Formation of a Contract of Sale

1. Preparation/Conception/ Generation/Negotiation
Prospective contracting parties indicate interest to enter into the contract of sale
Offer
Counter-Offer
Policitation- Mere Offer, Unaccepted promise to buy or sell. It produces no effect.
2. Perfection/Birth
A contract of sale is perfected at the moment there is a meeting of the minds upon:
 The thing which is the subject of the sale; and
 The price.
Acceptance of the payment by the seller indicates his consent.

3. Consummation/Consumption/Execution/Death

• Form of a contract of sale

General Rule: A contract of sale may be entered into any form provided all essential elements are
present

▪ In writing, or by word of mouth or partly in writing and partly by word of mouth or

may be inferred from the conduct of the parties.

EXCEPTIONS:
The following must be in writing to be enforceable: (Executory, contract of sale subject to statute of
frauds)
1. Sale of personal property at a price not less than P500 or P500 or more
2. Sale of real property or an interest therein ( If the sale is made thru an agent the agent’s
authority to sell must be in writing otherwise it is void)
3. Sale of property which will be performed after 12 months or a year from the date of agreement

• Rules in case of sale by auction

o When sale by auction is perfected? – when the auctioneer announces its perfection by the fall
of the hammer, or in any other manner.

o Rights of parties before perfection:

▪ Any bidder may retract his bid – because the bid is merely an offer and an offer may be withdrawn at
anytime before acceptance.
▪ The auctioneer may withdraw the goods from sale unless the auction has been announced to be
without reserve.
o Rights of Parties after perfection
▪ The winning bidder cannot retroact his bid nor can the auctioneer withdraw the goods since there is
already a perfected contract.

o Right of the seller to bid – The seller may bid at the auction provided the following requisites are
present:
▪ The right to bid must have been reserved expressly by or on behalf of the seller;
▪ His right to bid must not be prohibited by law or stipulation;
▪ Notice must be given that the sale is subject to a right to bid by or on behalf of the seller.

• Rules on promise to buy/sell

o Bilateral promise – one party promises to buy and the other party promises to sell a determinate thing
at an agreed price.
▪ This is as good as a perfected sale; For enforceability, the rules in Statute of Frauds must be observed.

o Unilateral Promise – here the promise to buy or to sell a determinate thing at a certain price is made
by only one of the parties. The promise may be accepted or not and shall have the
following effects:
▪ If not accepted by the promise – no legal effect
▪ If accepted by the promise:
• If supported by a consideration distinct from the price, the promise is binding upon the promisor.
• If it is not supported by any consideration distinct from the price, the promise is not binding upon the
promisor. Accordingly, the promisor can withdraw his promise by informing the promise of such
withdrawal even before the lapse of any option period given to the promise.

• Earnest money and Option Money

o Earnest Money – the money given as part of the purchase price and as proof of the perfection
of the contract; paid by the buyer to show his legitimate interest and earnest desire to purchase
the thing.

o Option Money – is the consideration paid for the purpose of holding one to his promise to buy
or sell a determinate thing for a certain period of time, which consideration is separate and
distinct from the purchase price.

Option Money Earnest Money

Money given as distinct consideration for an
option contract
Applies to a sale not yet perfected
Prospective buyer not required to buy
If the buyer does not decide to buy, it cannot be
recovered
Ownership is reserved to the seller and is not to
pass until full payment
Forms part of the purchased Price
Given only when there is already sale
When given, the buyer is bound to pay the balance
If sale did not materialize, it must be returned
Title passes to the buyer upon delivery of the
thing sold

Option Contract Contract of Sale

Consideration may be anything of value Consideration must be price certain in money or
 its equivalent
Unilateral Bilateral
“ The option to purchase” constitutes such subject Subject matter of the contract of sale
matter

Sale by sample, description, sale or return, sale on approval

o Sale by sample – the parties contract solely with reference to the sample. The seller warrants that the
bulk of the goods delivered correspond with the sample shown to the buyer.

o Sale by description – The parties contract solely with reference to the description. The seller warrants
that the bulk of the goods delivered correspond with the description of the goods presented to the
buyer.

o Sale by sample and description – The seller warrants that the bulk of the goods delivered correspond
with both the sample and description, and not with only one. The buyer shall have reasonable
opportunity of comparing the bulk with the description of the sample.

o Sale or return – The ownership of the goods is transferred to the buyer on delivery, but the buyer has
the option to revest their ownership on the seller by returning them within the time fixed in the
contract, or if not time has been fixed, within a reasonable time.

o Sale on approval or on trial or on satisfaction – ownership of the goods remains with the seller despite
delivery but shall be transferred to the buyer in the following cases:
▪ When he signifies his approval or acceptance of the goods;
▪ When he does an act adopting the transaction e.g. makes use or consumes the thing;
▪ If he does not signify his approval or acceptance of the goods but retains the goods without giving
notice of rejection within the time fixed in the contract, or within a reasonable time, and such time has
expired.

Contract of Sale Contract to sell

Ownership is transferred upon delivery Transferred upon full payment and execution of
deed of absolute sale
One contract Two contract
Non-payment of the price is a resolutory condition Full payment of the price is a positive suspensive
• When buyer fails to pay the price, the condition
seller will take back the thing sold. Note: Contract to sell is not a conditional sale
Contract for a piece of work
Manufacture in ordinary course of business Special order
For General Market Not For General market
Stature of Fraud Applies Statute of Fraud does not apply
Massachusetts rule:- if specially done at the order of the customer ( Applicable in Phil. Jurisdiction)
New York Rule –If the thing is already existing at the time of sale, it is a contract of sale
English Rule – If the material is more valuable than Labor, contract of sale

Contract of barter
Thing is given in exchange of a price certain in
money or its equivalent
If consideration is partly in money and partly in
another thing
1. Intention of the parties
2. Value of the thing ( consideration) is equal
or less than the amount in money
No pre-existing credit
Obligations are created
Greater freedom in the determination of the price
Thing is given in exchange of another thing
If consideration is partly in money and partly in
another thing
1. Intention of the parties
2. Value of the thing ( consideration) is
valuable more than the money
Dacion En Pago
Contract where property is alienated to
extinguished pre-existing credit/debt
Obligation are extinguished
Limited freedom in the determination of the price

1. It is a contract whereby one of the contracting parties, known as the seller or vendor, obligates
himself to transfer the ownership of and to deliver a determinate thing, and the other party, known as
the buyer or vendee, obligates himself to pay therefore a price certain in money or its equivalent.
a. Contract of Sales
b. Contract of Agency
c. Contract of Partnership
d. Contract of Pledge

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

3. The following are the natural elements of the contract of sale, except
a. Warranty against eviction
b. Warranty against hidden defects
c. Warranty against non-apparent and unregistered servitude or encumbrance
d. Warranty for merchantability
e. Warranty against sale's talk

4. The following are only considered accidental elements in the contract of sale, except
a. Place of delivery and payment
b. Time of delivery and payment
c. Terms or conditions of payment
d. Price certain in money or its equivalent

5. Which of the following is necessary for the perfection and validity of contract of sale?
a. Essential elements
b. Natural elements
c. Accidental elements
d. All of the above

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

a. Principal — It can exist by itself without being dependent upon another contract.
b. Bilateral — Both the contracting parties have obligations to perform.
c. Reciprocal — The cause of the other party is the object of the other party and vice versa.
d. Onerous — Valuable considerations are given by both parties to acquire rights.
e. Commutative — The parties exchange almost equivalent values.
f. Nominate — It has special name given to it by law.
g. Real — It is perfected by delivery of the subject matter.

7. The following are distinctions between sale and dacion en pago, except
a. In sale, there is no pre-existing credit, while in dacion en pago, there is pre-existing credit.
b. A sale creates obligations while dacion en pago extinguishes obligations.
c. In sale, there is greater freedom in fixing the price, while in dacion en pago, there is less freedom in
fixing the price because of the amount of the pre-existing credit which the parties seek to extinguish.
d. In sale, the cause or consideration is the price from the seller's point of view, and the delivery of the
object from the buyer's view point, in dacion en pago, the cause or consideration is the extinguishment
of the obligation, from the debtor's point of view and the delivery of the object given in place of the
credit, from the creditor's point of view.
e. A contract of sale is an onerous transfer while dation en pago is considered a gratuitous transfer.

8. What is the similarity between contract of sale and dacion en pago?

a. The law that governs them
b. The cause of obligation
c. The object of obligation
d. All of the above.

9. The following are the distinctions between sale and payment by cession, except
a. In sale, there is no pre-existing credit while in payment by cession, there are pre-existing credits.
b. A sale creates obligations while payment by cession extinguishes obligations.
c. In sale, the cause or consideration is the price from the seller's point of view, and the delivery of the
object, from the buyer's point of view while in payment by cession, the cause or consideration is the
extinguishment of the obligation from the debtor's point of view and the assignment of the things to be
sold from the creditor's point of view.
d. In sale, there is greater freedom in fixing the price while in payment by cession there is less freedom
in fixing the price because of the fixed amount of the pre-existing credits which the parties seek to
extinguish.
e. In sale, the buyer becomes the owner of the property sold to them while in payment by cession, the
creditors do not become the owners of the property assigned to them but are merely given the right to
sell such property and apply the proceeds to their claims.
f. Contract of sale is governed by FRIA of 2010 while cession is governed by Law on Sales.

10. What is the name of the contract if it is for the delivery at a certain price of an article which the
vendor in the ordinary course of business, manufactures or procures for the general market, whether
the same is on hand or not?
a. Contract for a piece of work
b. Contract of pledge
c. Contract of sale
d. Contract of deposit

11. What is the name of the contract if the goods are to be manufactured especially for the customer
upon his special order and not for the general market?
a. Contract for a piece of work
b. Contract of pledge
c. Contract of sale
d. Contract of deposit

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

13. In sale, the cause or consideration is in money while in barter, the cause or consideration is another
thing. However, where the consideration is partly in money and partly in another thing, the following
are the rules to be observed, except
a. The contract shall be one of sale or barter depending upon the manifest intention of the parties.
b. If the intention of the parties does not clearly appear, the contract is one of barter if the value of the
other thing given as part of the consideration exceeds the monetary consideration.
c. If the intention of the parties does not clearly appear, the contract is one of sale if the monetary
consideration is more than the value of the other thing given as part of the consideration.
d. If the intention of the parties does not clearly appear, the contract is one of barter if the monetary
consideration is equal to the value of the other thing given as part of the consideration.

14. A and B entered into a contract whereby A will deliver his laptop to B while the latter will deliver
P10,000 and a cellphone with a value of P10,000 to A. What is the name of the contract if the intention
of the parties does not clearly appear?
a. Contract of Barter
b. Contract of Agency
c. Contract of Sale
d. Contract of Pledge

15. The following are the distinctions between contract of sale and contract to sell, except
a. In contract of sale, ownership passes to the buyer upon delivery while in contract to sell, the title to
the goods does not pass to the buyer until some future time and oftentimes upon payment of the price.
b. In contract of sale, the risk of loss or damage to the goods upon delivery is on the buyer, under the
rule "res perit domino", or the thing perished with the owner; while in contract to sell, the risk is borne
by the seller based on the same principle that the thing perishes with the owner.
c. In contract of sale, the non-payment of the price is a resolutory condition while in contract to sell, the
payment in full of the price is a suspensive condition.
d. The rule on double sale applies to contract to sell while contracts of sale are not covered by rule on
double sale.

16. The following are the distinctions between contract of sale and agency to sell, except
a. In sale, ownership passes to the buyer, while in agency to sell, ownership is retained by the principal.
b. In sale, the buyer pays the seller, while in agency to sell, the buyer pays the agent and the latter
transmits the money to the principal.
c. In sale, the goods are delivered by the seller to the buyer while in agency to sell, it is the agent who
delivers the goods to the final consumer.
d. Contract of sale is governed by law on sale while agency to sell is governed by law on agency.
e. Contract of sale is never covered by statute of fraud while agency to sell is always covered by statute
of fraud.

17. The following are the requisites of the object of a contract of sale, except
a. It must be within the commerce of men.
b. It must be not contrary to law, morals, good customs, public order or public policy.
c. It must be determinate.
d. It must be owned by the vendor at the time of perfection of contract of sale.

18. The object of a contract of sale must be determinate or specific otherwise there is no sale. When is
the thing considered determinate?
a. When it is particularly designated or physically segregated from all others of the same class at the
time the contract is entered into without the necessity of a new or further agreement between the
parties.
b. When it is particularly designated or physically segregated from all others of the same class at the
time the contract is entered into with the necessity of a new or further agreement between the parties.
c. When it is particularly designated or physically segregated from all others of the same class at the
time the goods are to be delivered into without the necessity of a new or further agreement between
the parties.
d. When it is particularly designated or physically segregated from all others of the same class at the
time the contract is entered into with the necessity of a new or further agreement between the parties.

19. On January 1.2012, S sold to B a specific car owned by X for P50,000. S promised to deliver the car to
B on January 11,2012. S bought the car from X on January 10,2012 and delivered it to B on January
11,2012. Is the contract of sale between S and B valid?
a. No because there is no delivery of the car on January 1,2012 which is an essential requisite of a
contract of sale.
b. No because the seller or vendor shall be the owner of the thing sold at the time of perfection of
contract.
c. Yes even if X is not the owner of the thing sold on January 11,2012 because future thing can be the
object of a contract of sale.
d. Yes because the vendor need not possess the title to the thing sold at the perfection of the contract
but he must have the right to transfer the ownership of the thing at the time that the thing is to be
delivered.

20. On January 1,2012, D borrowed from C P100,000 and as a security D mortgaged his land to C. On
January 2,2012, D sold the same land to X for P50,000 to be delivered on January 5,2012. D failed to pay
the loan. Is the contract of sale between D and X valid?
a. No because D is no longer the owner of the land on January 2,2012.
b. No because D is no longer the owner of the land on January 5,2012.
c. Yes because D is still the owner of the land although it was mortgaged to C.
d. Yes provided D will pay the amount due to C.

21. Future things or things having a potential existence may be the object of a contract of sale. However,
the thing must come into existence; otherwise, the sale will not be effective for not having a subject
matter. The following future things can be the object of a contract of sale, except
a. Wine that a determinate vineyard is expected to produce
b. Milk that a specific female cow may yield during the coming year
c. Next catch of a specific fisherman's net
d. Future inheritance of an heir

22. The following are the distinctions between emptio rei speratae and emptio spei, except
a. Emptio rei speratae is a sale of hope or expectancy while emptio spei is the sale of future thing.
b. Sale of future harvest is emptio rei speratae while sale of lottery ticket No. 1 13 is emptio spei.
c. In emptio rei speratae the thing expected will definitely come into existence, but its quality or
quantity unknown; while in emptio spei it is not certain that the thing will exist much less its quantity or
quality.
d. Emptio rei speratae is subject to the condition that the thing should exist, so that if it does not, there
will be no contract of sale by reason of the absence of an essential element — subject matter while in
emptio spei produces effects even though the thing does not come into existence because the subject
matter is the hope itself.

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

24. In emptio rei speratae or sale of future things or things having potential existence, what is the effect
to the contract of sale if the said subject matter does not come into existence?
a. The contract becomes ineffective or void for want of subject matter.
b. The seller will never be liable for damages.
c. The contract becomes unenforceable
d. The contract remains to be perfectly valid.

25. S sold a lottery ticket No. 143 to B on January 2,2012. The draw was already made on January 1,2012
and ticket No. 143 did not win. B purchased the ticket with intent to win the jackpot price. Is the
contract of sale between S and B valid?
a. Yes because it involves emptio spei or sale of mere hope.
b. No because the sale of vain hope or expectancy is void.
c. No even if the ticket is considered collector's item.
d. Yes because the essential elements of contract of sale are present.

26. The following goods may become the subject of a contract of sale, except
a. Existing goods owned or possessed by the seller.
b. Goods to be manufactured, raised or acquired by the seller after the perfection of the contract of sale
or "future goods".
c. Goods whose acquisition by the seller depends upon the contingency which may or may not happen.
d. Vain hope /expectancy or future inheritance.
e. Things subject to resolutory condition or resolutory period.

27. S is the sole owner of a condominium unit. S sells h undivided interest therein to B. Is the contract of
sale valid?
a. No because the object of a contract of sale must be determinate.
b. No because the object of a contract of sale must be whole interest.
c. Yes the sole owner of a thing may sell an undivided interest therein and such sale shall produce the
effect of making the seller and the buyer co-owners of the thing sold.
d. Yes provided that the condominium unit shall be physically divided.

28. There may be a sale of an undivided share of a specific mass of fungible goods though the seller
purports to sell and the buyer purports to buy a definite number, weight or measure of the goods in the
mass, and though the number, weight or measure of the goods in the mass is undetermined. Which of
the following rules is correct?
I. If the quantity, number, weight or measure, of the mass is more than the quantity sold, the parties
shall become co-owners of the mass.
II. If the quantity of the mass is less than the quantity sold, the buyer becomes the owner of the whole
mass, with the seller being bound to make good the deficiency from goods of the same kind and quality,
unless a contrary intent appears.
a. I only
b. II only
c. Neither I nor II
d. Both I and II

29. S sells to B 200 sacks of rice from a mass stored in the warehouse of S. The mass, however, actually
consist of 300 sacks of rice. Which of the following statements is correct?
a. The sale is null and void because the object is not determinate.
b. The sale is valid provided B will pay for the excess 100 sacks of corn.
c. The sale is valid, thus, S and B will become co-owners of the whole mass to the extent of 2/3 for B and
1/3 for S.
d. The sale is null and void because there is no consent.

30. S sells to B 300 sacks of yellow corn from a mass stored in the warehouse of S. The mass, however,
actually consists of 280 sacks of yellow corn. Which of the following statements is correct?
a. The sale is null and void because there is no consent.
b. The sale is null and void because there is no determinate object.
c. B becomes the owner of all the 280 sacks and S is bound to deliver additional 20 sacks in the absence
of contrary agreement.
d. B becomes the owner of all the 280 sacks and S is not bound to deliver the additional 20 sacks.

31. It is the sum stipulated as the equivalent of the thing sold, and also every incident taken into
consideration for the fixing of the same, put to the debit of the vendee, and agreed to by him. It is the
cause of contract of sale on the part of the seller.
a. Loan
b. Price
c. Debt
d. Money

32. The following are the requisites of the price in a contract of sale, except
a. It must be certain.
b. It must be real.
c. It must have possible equivalent in money.
d. It must be fictitious.

33. The price of the thing sold must be certain, otherwise, the sale is void by reason of the absence of
meeting of minds between the parties. The following are the instances when the price is certain, except
a. If the parties have agreed upon a definite amount for the sale.
b. If it be certain with reference to another thing certain.
c. If the determination of the price is left to the judgment of a specified person or persons.
d. If the price is fixed by the court.
e. If the price fixed is that which the thing sold would have on a definite day, or in a particular exchange
or market, or when an amount is fixed above or below the price on such day, or in such exchange or
market, provided said amount is certain.
f. If the price is fixed by one of the contracting parties but not accepted by the other contracting party.

34. The following contracts of sale have prices which are certain and therefore valid, except
a. S sold to B a specific watch for P2,500 which both parties agreed upon.
b. S sold to B a certain ring of which the price is the salary of the faculty member of La Salle School.
c. S sold to B a specific car the price of which is subject to determination of X, third person.
d. S sold to B 500 shares of ordinary stocks of BPI at the price equivalent to the closing price of the ALI's
ordinary shares on April 30,2020 at the Philippine Stock Exchange.

35. When may the court fix the price of the contract of sale if the determination of the price is left to the
judgement of a third person?
a. If the third person is unable or unwilling to fix the price.
b. If the third person acted in bad faith or by mistake.
c. If the third person or persons are prevented from fixing the price or terms by the fault of the buyer or
seller.

36. What is the effect to the contract of sale if the determination of the price is left to the judgment of a
third pet-son and such person is unable or unwilling to fix the price?
a. The contract of sale is voidable.
b. The contract of sale is valid and binding.
c. The contract of sale is inefficacious unless the parties subsequently agree upon the price.
d. The contract of sale is rescissible.

37. What is the effect to the contract of sale if the determination of the price is left to the judgment of a
third person, where such third person or persons are prevented from fixing the price or terms by fault of
the seller or the buyer?
a. The contract is voidable.
b. The contract is unenforceable.
c. The party not in fault may have such remedies against the party in fault as are allowed the seller or
the buyer, as the case may be such as filing an action for damages.
d. The contract is rescissible,
38. S sold to B a specific good. The price of the good cannot be determined. The good has been
delivered to and appropriated by B. What is the obligation of B?
a. B has no obligation because the contract of sale is null and void having no price.
b. B has no obligation because the contract of sale is inefficacious because the price of the good cannot
be determined.
c. B has the obligation to rescind the contract.
d. B has the obligation to pay a reasonable price which depends on the circumstances of each particular
case.

39. What is the effect of gross inadequacy of price in a contract of sale?

a. It renders the contract of sale null and void.
b. In renders the contract of sale unenforceable.
c. It does not affect a contract of sale, except as it may indicate a defect in the consent which makes the
contract voidable
or except as it may indicate that the intention of the parties is another contract such as donation or loan
with equitable mortgage.
d. It does not affect a contract of sale even if the parties really intended a donation or some other act or
contract.

40. What is the effect of simulated price in a contract of sale?

a. It renders the contract of sale null and void.
b. It renders the contract of sale voidable.
c. It renders the contract of sale rescissible.
d. It renders the contract of sale unenforceable.
e. It renders the contract of sale as a valid donation even if the formal or solemn requirements of
donation or other agreement for validity of contract are not complied with.

41. When is a contract of sale perfected?

a. Upon delivery of the object of a contract of sale.
b. At the moment there is a meeting of minds upon the determinate thing which is the object of the
contract and upon the price certain money or its equivalent.
c. Upon payment of the purchase price.
d. Upon the transfer of ownership or title.

42. X and Y are good friends. X sold and delivered his car to Y. It was agreed and understood that on next
Sunday X will name and fix the price of the car. Sunday came, X called Y by telephone and stated and
fixed the price at P150,000. Is the contract of sale perfected?
a. No because the purchase price is not yet paid.
b. No because the title is not registered to the buyer.
c. Yes because the car has already been delivered to Y.
d. No because the price of the sale was left to the discretion of one of the parties, that is, the seller, and
it was not consented by the buyer.

43. Which of the following contracts of sale is null and void?

a. Executory oral sale of real property or any interest therein regardless of the price.
b. Executory oral sale of goods, chattels or things in action the price of which is P500 or more.
c. Sale of a piece of land by the agent in the name of principal wherein his authority is not in writing.
d. Sale of a piece of land by a third person in the name of owner but who has not been given any
authority

44. When is a contract of sale by auction perfected?

a. When the highest bidder gives his bid.
b. When the auction things has been delivered to the buyer.
c. When the auctioneer announces its perfection by the fall of the hammer or in any other manner.
d. When the bid price has been paid.

45. The following are the rights of the parties in an auction sale, except
a. Before perfection, any bidder may retract his bid.
b. Before perfection. the auctioneer may generally withdraw the goods from the sale unless the auction
has been announced without reservation by auctioneer.
c. After perfection, the wining bidder can retract his bid.
d. After perfection, the auctioneer cannot withdraw the goods.

46. The seller may bid at the auction provided the following requisites are present, except
a. The right to bid must have been reserved expressly by or on behalf of the seller.
b. The right to bid must not be prohibited by law or stipulation.
c. Notice must be given that the sale is subject to a right to bid by or on behalf of the seller.
d. The bid of the seller must be the lowest.

47. By bidders or puffers refer to persons employed by the seller to bid in his behalf, the purpose of
which is to raise the price, but the said persons are not in themselves bound by their bids. What is the
effect of employment by the seller of by bidders or puffers without notice to the other bidders in a
perfected contract of sale by auction?
a. The sale may be considered voidable.
b. The sale is considered null and void.
c. The sale is unenforceable.
d. The sale is rescissible.

48. Which of the following statements concerning bilateral and unilateral promise to buy and/or sell is
incorrect?
a. Bilateral promise takes place when one party promises to buy and the other party promises to sell a
determinate thing at an agreed price.
b. Bilateral promise is reciprocally demandable since this is as good as a perfected contract of sale.
c. Unilateral promise not accepted by the promissee (policitacion) does not produce any effect.
d. Unilateral promise accepted by the promissee is binding upon the promissor even if it is not
supported by a consideration distinct from the price.

49. It refers to the money given as part of the purchase price and as a proof of perfection of the contract
of sale.
a. Option money
b. Earnest money or Arras
c. Perfect money
d. Component money
50. It refers to the consideration paid for the purpose of holding one to his promise to buy or sell a
determinate thing for a certain period of time, which consideration is separate and distinct from the
purchase price. It is a proof of perfection of contract of option.
a. Option money
b. Earnest money or Arras
c. Perfect money
d. Component money

51. S promised to sell his car to B for P100,000 giving B one week to decide whether to buy or not. B
accepts the promise and gives a consideration of P1,000 for the one week period. If B decides to buy the
car, how much should B pay to S?
a. P100,000 because the P1,000 is an earnest money.
b. P99,000 because the P1,000 is an option money.
c. P100,000 because the P1,000 is an option money.
d. P99,000 because the P1,000 is an earnest money.

52. B purchased the car of S for P100,000 payable within 30 days from the date of sale. As a down-
payment, B gives S P1,000 upon the execution of their agreement. How much should B pay to S on the
30th day?
a. P 100,000 because the P1,000 is an earnest money.
b. P99,000 because the P1,000 is an option money.
c. P100,000 because the P1,000 is an option money.
d. P99,000 because the P1,000 is an earnest money.