LAW ON SALES - Preliminary Examination

COR JESU COLLEGE
LAW ON SALES
ATTY. WILLIAM GACETA CARPENTERO
Preliminary Examination
INSTRUCTIONS:
1. This Questionnaire contains FOUR (4) pages including this page. Check the number
of pages and their proper sequencing.
2. Read each question carefully and note the points allocated for each question. In your
answers, follow the sequence and the numbering system used in the Questionnaire.
Answer each numbered question on a separate page; an answer to a sub-question under
the same number set may be written continuously on the same page and succeeding
pages until completed.
3. Your answers should demonstrate your ability to analyze the facts, apply the
pertinent laws and jurisprudence, and arrive at sound and logical conclusions. Always
support your answers with the pertinent laws, rules, and/or jurisprudence. A mere
"yes" or "no" answer without any corresponding explanation or discussion may not be
given full credit.
5. Marking of this questionnaire with your name or other identifying signs or symbols
extraneous to the subject matter of the questions may be considered as cheating, and
may disqualify you for the whole examination.
6. Make sure that both your primary and secondary cameras are turned on for the
whole duration of the examination, otherwise, your examination will be forfeited and
you will be given a merit of zero.
I.
Distinguish between a conditional sale, on the one hand, and an absolute sale, on the
other hand. (5 points)
II.
Trae Young granted Ja Morant the exclusive right to sell his brand of basketball shoes in
Makati, the price for his merchandise is payable within 60 days from delivery. Trae
also promised Ja Morant a commission of 20% on all sales. After the delivery of the
merchandise to Ja Morant but before he could sell any of them, Ja Morant’s store in
Makati City was completely burned without his fault, together with all of Trae Young’s
shoes. Must Ja Morant pay Trae Young for his lost shoes? Why? (10 points)
III.
Page 1 of 4
Spouses Daniel and Kathryn got married on May 26, 1989. After 7 years, or on
December 17, 1996, they wanted to sell their house located in Quezon City. They found
a prospective buyer named Julia. Kathryn negotiated with Julia for the sale of the
property. They agreed on a fair price of P2 Million. Julia sent Kathryn a letter
confirming her intention to buy the house. Later, another couple, Bea and Gerald,
offered a similar house at a lower price of P 1.5 Million. But Julia insisted on buying the
house of Daniel and Kathryn for sentimental reasons. Julia prepared a deed of sale to be
signed by the couple and a manager’s check for P2 Million. After receiving the P2
Million, Daniel signed the deed of sale. However, Kathryn was not able to sign it
because she was abroad. On her return, she refused to sign the document saying she
changed her mind. Kathryn filed suit for nullification of the deed of sale and for moral
and exemplary damages against Julia.
A. Will the suit filed by Kathryn against Julia prosper? Explain. (10 points)
B. If Daniel and Kathryn celebrated their marriage on May 26, 1987, would your
answer be the same? (10 points)
IV.
Distinguish between a contract to sell, on one hand, and a contract of sale, on the other.
(5 points)
V.
Kenshin is the lessee of an apartment owned by Kaoru. Kenshin allowed his married
but employed daughter Misao, whose husband works in Japan, to occupy it. The
relationship between Kaoru and Kenshin soured. Since the lessor has no reason at all to
eject Kenshin, Kaoru, in connivance with the City Engineer, secured from the latter an
order for the demolition of the building. Kenshin immediately filed an action in the
Regional Trial Court to annul the order and to enjoin its enforcement. Kaoru and
Kenshin were able to forge a compromise agreement under which Kenshin agreed to a
twenty percent (20%) increase in the monthly rentals. They further agreed that the lease
will expire two (2) years later and that in the event that Kaoru would sell the property,
either Kenshin or his daughter Misao shall have the right of first refusal. The
Compromise Agreement was approved by the court. Six (6) months before the
expiration of the lease, Kenshin died. Kaoru sold the property to the Shogunate Realty
Corp. without notifying Misao. Misao then filed an action to rescind the sale in favor of
the corporation and to compel Kaoru to sell the property to her since under the
Compromise Agreement, she was given the right of first refusal which, she maintains is
a stipulation pour atrui under Article 1311 of the Civil Code. Is she correct? (10 points)
VI.
Page 2 of 4
What are the so-called “Maceda” and “Recto” laws in connection with sales on
installments? Give the most important features of each law. (5 points)
VII.
Luka applied with BPI to purchase a house and lot in Davao City, one of its acquired
assets. The amount offered was P1,000,000.00 payabale, as follows: P200,000.00 down
payment, the balance of P800,000.00 payable within 90 days from June 1, 1985. BPI
accepted the offer, whereupon Luka drew a check for P200,000.00 in favor of BPI which
the latter thereafter deposited in its account. On September 5, 1985, Luka wrote BPI
requesting extension until October 10, 1985, within which to pay the balance, to which
BPI agreed. On October 5, 1985, due to the expected delay in the remittance of the
needed amount by his financier from the United States, Luka wrote BPI requesting a
last extension until October 30, 1985, within which to pay the balance. BPI denied
Luka’s request because another had offered to buy the same property for P1,500,000.00.
BPI cancelled its agreement with Luka and offered to return to him the amount of
P200,000.00 that Luka had paid to it. On October 20, 1985, upon receipt of the amount of
P800,000.00 from his US financier, Luka offered to pay the amount by tendering a
cashier’s check therefor but which BPI refused to accept. Luka then filed a complaint
against BPI in the RTC for specific performance and deposited in court the amount of
P800,000.00. Is BPI legally correct in canceling its contract with Luka? (10 points)
VIII.
Liam offers to buy Willie’s property under the following terms and conditions: P1
million purchase price, 10% option money, the balance payable in cash upon the
clearance of the property of all illegal occupants. The option money was promptly paid
and Willie clears the property of illegal occupants in no time at all. However, when
Liam tendered payment of the balance and asked Willie for the deed for absolute sale,
the latter suddenly had a change of heart, claiming that the deal is disadvantageous to
him as he has found out that the property can fetch three time the agreed purchase
price. Liam seeks specific performance, but Willie contends that he has merely given
Liam an option to buy and nothing more and offers to return the option money which
Liam refuses to accept.
A. Will Liam’s action for specific performance prosper? Explain. (5 points)

B. May Willie justify his refusal to proceed with the sale by the fact that the deal is
financially disadvantageous to him? Explain. (5 points)
IX.
Kerwin sold his car to John who issued a postdated check in full payment therefor.
Before the maturity of the check, John sold the car to Rocky who later sold it to Orly.
When presented for payment, the check issued by John was dishonored by the drawee
bank for the reason that he, John, had already closed his account even before he issued
his check.
Page 3 of 4
Kerwin sued to recover the car from Orly alleging that he (Kerwin) had been unlawfully
deprived of it by reason of John’s deception. Will the suit prosper? (10 points)
X.
Joel is the owner of a building which has been leased by Ellie for the past 20 years. Joel
has repeatedly assured Ellie that if he should decide to sell the building, he will give
Ellie the right of first refusal. On June 30, 1994, Joel informed Ellie that he was willing to
sell the building for P5 Million. The following day, Ellie sent a letter to Joel offering to
buy the building at P4.5 Million. Joel did not reply. One week later, Ellie received a
letter from Tommy informing him that the building has been sold to him by Joel for P5
Million, and that he will not renew Ellie’s lease when it expires. Ellie filed an action
against Joel and Tommy for cancellation of the sale, and to compel Joel to execute a
deed of absolute sale in his favor, based on his right of first refusal.
a) Will the action prosper? Explain. (7.5 points)
b) If Joel had given Ellie an option to purchase the building instead of a right of first
refusal, will your answer be the same? Explain. (7.5 points)
Page 4 of 4

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COR JESU COLLEGE

A. Will Liam’s action for specific performance prosper? Explain. (5 points)

a) Will the action prosper? Explain. (7.5 points)

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