CASE PROBLEMS

FOR GRADED RECITATION

I.
On February 6, Ken offered to sell his condo unit in Tagaytay at the price of
Php2.3 M to Barbie. On February 7, Barbie made a counter-offer to buy at the
price of Php2 M flat. Ken accepted on February 8. On Valentine’s Day, Ken and
Barbie executed the Deed of Absolute Sale of the condo unit before Atty. Fortun.
On the same day, the key to the unit was handed over to Barbie after she paid
50% of the price in cash. On February 16, the price was finally paid in full.
Questions:
a. When is the contract of sale perfected? And how?

It is perfected orally At the moment there is a meeting of minds that in this

case when ken accepted Barbie’s counter offer on February 8.

b. When did Barbie acquire ownership of the condo unit? And how?

It is when the unit was handed over to Barbie that she has the ownership.

c. What stage of the contract happened on February 16?

The stage of consummation happened on February 16 as both parties

have fully completed and transferred ownership to the buyer and as the
buyer pays for the amount.

d. What, if any, is the effect of the execution of the Deed of Absolute Sale?

The effect is that the property is transferred to the new owner which is
Barbie and the previous owner has no longer any claims to it.

*No, because the contract remains valid. Covered by statute of fraud.

Convinience rather than validity of contract.

e. Assuming Barbie failed to pay the price after delivery of the condo unit, can
the seller cancel the sale or resell the unit to another buyer?

No, the failure to pay in full the purchase price stipulated in the deed of
sale does not “ipso facto” grant the seller the right to rescind the
agreement.

 No because no reservation
Remedy: action to recover the price + damages.
 II.
CARPLAZA, Inc. sold Quico a brand-new car on credit, payable for 60 months.
To secure the loan, Quico executed a promissory note in favor of CARPLAZA,
Inc covering the total obligation. As security for the loan, a chattel mortgage was
executed on the car. On the 7th month, Quico defaulted. Hence, he paid two
monthly installments with penalty on the next month. On the 13 th month, Quico
defaulted again. When he tendered payment for two installments with penalty on
the succeeding month, CARPLAZA, Inc. refused. Instead, CARPLAZA, Inc.
notified Quico of its intention to have the chattel mortgage foreclosed.

Questions:
a. Is CARPLAZA, Inc. legally correct and justified to foreclose the chattel
mortgage?

Yes, because (2) two consecutive failure payments can lead to the
application of foreclosing because Queco defaulted twice that constituted a
breach of the loan agreement and carplaza used its rights to exercise
remedies including foreclosure.

b. What is the remedy of CARPLAZA, Inc. after Quico defaulted in the

payment of monthly installment?

Demanding the exact full payment as the when the vendee fails to pay.

c. After the execution of the chattel mortgage, who between Quico and
CARPLAZA, Inc. is the owner of the car?

Quico is still the owner of the car as the lender cannot be the owner but
holds a lien(it prevents sale of the property until the underlying obligation
until the creditor is satisfied). On the property allowing them to take
possession of it in the event of
A default.

d. Can the parties agree that in the event the loan is unpaid on maturity, the
mortgagee shall automatically appropriate or own the car? Why? Why
not?

No, he doesn’t have the right to appropriate himself to the property.

e. If in case Quico turned insolvent, can he voluntarily convey ownership or

sell the car back to CARPLAZA, Inc. in order to extinguish his obligation?

III.
Cherry offered to sell her a condo unit to Apple for the price of Php1.8 M, payable
in 5 years. Apple asked for a period of 72 hours to consider the offer. As
reservation fee, she paid Cherry the sum of Php3,000. After 24 hours, Cherry
sold the same condo unit to Peach who paid the price on the spot. Peach
instructed Cherry to leave the keys of the condo unit to her secretary as she was
to leave for Hawaii on a honeymoon. When Cherry was about to deliver the
keys, she got a call from Apple telling her that she decided to buy, and that she is
ready to pay the full price. Cherry, realizing her mistake, tried to explain to Apple
the latest situation on the property. Unable to accept the explanation, Apple
insisted to pay the price and demanded Cherry to turn over they keys of the
condo unit to her.

Questions:
a. At the moment (ATM), who is the owner of the condo unit?

Cherry is the owner of the condo. Because there is no delivery happened.

b. Is Cherry obligated to deliver the keys of the condo unit to Apple?

No.

c. Is Cherry liable to Apple? If so, specify the cause for such liability?
Yes. By breaking the option contract (paid option money).

d. Assume the sale to Apple proceeded, how much will she pay as price?
1.8M
e. Assume Cherry was prevailed upon to sell the condo unit (for the second
time) to Apple, and thus handed over to the latter the keys. Who between
Apple and Peach has better right to own the condo unit?
Apple.