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 : Conditional Sale vs. Absolute Sale (1997) Distinguish between a conditional sale, on the one hand, andan absolute sale, on the other hand. SUGGESTED ANSWER: A CONDITIONAL SALE is one where the vendor isgranted the right to unilaterally rescind the contract predicatedon the fulfillment or non-fulfillment, as the case may be, of the prescribed condition. An ABSOLUTE SALE is one where the title to the property is not reserved to the vendor orif the vendor is not granted the right to rescind the contractbased on the fulfillment or nonfulfillment, as the case may be,of the prescribed condition. Contract of Sale vs. Agency to Sell (1999) A granted B the exclusive right to sell his brand of Maong pants in Isabela, the price for his merchandise payable within60 days from delivery, and promising B a commission of 20%on all sales. After the delivery of the merchandise to B butbefore he coul d sell any of them, Bs store in Isabela was completely burned without his fault, together with all of A'spants. Must B pay A for his lost pants? Why? (5%) SUGGESTED ANSWER: The contract between A and B is a sale not an agency to sellbecause the price is payable by B upon 60 days from delivery even if B is unable to resell it. If B were an agent, he is notbound to pay the price if he is unable to resell it. As a buyer, ownership passed to B upon delivery and, under Art. 1504 of the Civil Code, the thing perishes for the owner.Hence, B must still pay the price. Contract of Sale; Marital Community Property; Formalities(2006) Spouses Biong and Linda wanted to sell their house. They found a prospective buyer, Ray. Linda negotiated with Ray forthe sale of the property. They agreed on a fair price of P2Million. Ray sent Linda a letter confirming his intention tobuy the property. Later, another couple, Bernie and Elena,offered a similar house at a lower price of P 1.5 Million. ButRay insisted on buying the house of Biong and Linda forsentimental reasons. Ray prepared a deed of sale to be signedby the couple and a manager's check for P2 Million. Afterreceiving the P2 Million, Biong signed the deed of sale.However, Linda was not able to sign it because she wasabroad. On her return, she refused to sign the documentsaying she changed her mind. Linda filed suit for nullificationof the deed of sale and for moral and exemplary damagesagainst Ray. Will the suit prosper? Explain. (2.5%) ALTERNATIVE ANSWER No, the suit will not prosper. The contract of sale was In a CONT RACT OF SALE, ownership is transferred toperfected when Linda and

Ray agreed on the object of thesale and the price [Art. 1475, New Civil Code]. The consentof Linda has already been given, as shown by her agreementto the price of the sale. There is therefore consent on her partas the consent need not be given in any specific form. Hence,her consent may be given by implication, especially since she was aware of, and participated in the sale of the property (Pelayo v. CA, G.R. No. 141323, June 8, 2005). Her action formoral and exemplary damages will also not prosper becausethe case does not fall under any of those mentioned in Art.2219 and 2232 of the Civil Code. ALTERNATIVE ANSWER: The suit will prosper. Sale of community property requires written consent of both spouses. The failure or refusal of Linda to affix her signature on the deed of sale, coupled withher express declaration of opposing the sale negates any validconsent on her part. The consent of Biong by himself isinsufficient to effect a valid sale of community property (Art.96, Family Code; Abalos v. Macatangay, G.R. No. 155043,September 30, 2004). Does Ray have any cause of action against Biong andLinda? Can he also recover damages from the spouses?Explain. (2.5%) Considering that the contract has already been perfected andtaken out of the operation of the statute of frauds, Ray cancompel Linda and Biong to observe the form required by law in order for the property to be registered in the name of Ray which can be filed together with the action for the recovery of house [Art. 1357 New Civil Code]. In the alternative, hecan recover the amount of Two million pesos (P2,000,000.00)that he paid. Otherwise, it would result in solutio indebiti orunjust enrichment.Ray can recover moral damages on the ground that the actionfiled by Linda is clearly an unfounded civil suit which fallsunder malicious prosecution {Ponce v. Legaspi, G.R. No.79184, May 6,1992). Contract to Sell (2001) Arturo gave Richard a receipt which states: Receipt Received from Richard as down payment for my 1995 Toyota Corolla with plate No. XYZ-1 23..............P50.000.00Balance payable: 12/30/01........ P50 0 00.00September 15, 2001.(Sgd.) Arturo Does this receipt evidence acontract to sell? Why? (5%) SUGGESTED ANSWER: It is a contract of sale because the seller did not reserveownership until he was fully paid. Contract to Sell vs. Contract of Sale (1997) State the basic difference (only in their legal effects) Betweena contract to sell, on the one hand, and a contract of sale, onthe

other. SUGGESTED ANSWER: the buyer upon delivery of the object to him while in aCONTRACT TO SELL, ownership is retained by the selleruntil the purchase price is fully paid. In a contract to sell,delivery of the object does not confer ownership upon thebuyer. In a contract of sale, there is only one contractexecuted between the seller and the buyer, while in a contractto sell, there are two contracts, first the contract to sell (whichis a conditional or preparatory sale) and a second, the finaldeed of sale or the principal contract which is executed afterfull payment of the purchase price. Contract to Sell; Acceptance; Right of First Refusal (1991) A is the lessee of an apartment owned by Y. A allowed hismarried but employed daughter B, whose husband works inKuwait, to occupy it. The relationship between Y and Asoured. Since he has no reason at all to eject A, Y, inconnivance with the City Engineer, secured from the latter anorder for the demolition of the building. A immediately filedan action in the Regional Trial Court to annul the order andto enjoin its enforcement. Y and A were able to forge acompromise agreement under which A agreed to a twenty percent (20%) increase in the monthly rentals. They furtheragreed that the lease will expire two (2) years later and that inthe event that Y would sell the property, either A or hisdaughter B shall have the right of first refusal. TheCompromise Agreement was approved by the court. Six (6)months before the expiration of the lease, A died. Y sold theproperty to the Visorro Realty Corp. without notifying B. B then filed an action to rescind the sale in favor of thecorporation and to compel Y to sell the property to her sinceunder the Compromise Agreement, she was given the rightof first refusal which, she maintains is a stipulation pour atruiunder Article 1311 of the Civil Code. Is she correct? SUGGESTED ANSWER: B is not correct. Her action cannot prosper. Article 1311requires that the third person intended to be benefited mustcommunicate his acceptance to the obligor before therevocation. There is no showing that B manifested heracceptance to Y at any time before the death of A and beforethe sale. Hence, B cannot enforce any right under the allegedstipulation pour atrui. Double Sales (2001) On June 15, 1995, Jesus sold a parcel of registered land toaime. On June 30, 1995, he sold the same land to Jose. Whohas a better right if: a) the first sale is registered ahead of thesecond sale, with knowledge of the latter. Why? (3%) b) the second sale isregistered ahead of the first sale, with knowledge of the latter? Why? (5%) SUGGESTED ANSWER:

(a) The first buyer has the better right if his sale was first tobe registered, even though the first buyer knew of the secondsale. The fact that he knew of the second sale at the time of his registration does not make him as acting in bad faithbecause the sale to him was ahead in time, hence, has apriority in right. What creates bad faith in the case of doublesale of land is knowledge of a previous sale. b) The first buyer is still to be preferred, where the second(2) years, or until 3 June 1973. It is further stated thereinsale is registered ahead of the first sale but with knowledge of the latter. This is because the second buyer, who at the timehe registered his sale knew that the property had already beensold to someone else, acted in bad faith. (Article 1544, C.C.) Double Sales (2004) V, owner of a parcel of land, sold it to PP. But the deed of sale was not registered. One year later, JV sold the parcelagain to RR, who succeeded to register the deed and toobtain a transfer certificate of title over the property in hisown name. Who has a better right over the parcel of land,RR or PP? Why? Explain the legal basis for your answer.(5%) SUGGESTED ANSWER: It depends on whether or not RR is an innocent purchaserfor value. Under the Torrens System, a deed or instrumentoperated only as a contract between the parties and asevidence of authority to the Register of Deeds to make theregistration. It is the registration of the deed or theinstrument that is the operative act that conveys or affectsthe land. (Sec. 51, P.D. No. 1529).In cases of double sale of titled land, it is a wellsettled rulethat the buyer who first registers the sale in good faithacquires a better right to the land. (Art. 1544, Civil Code).Persons dealing with property covered by Torrens title arenot required to go beyond what appears on its face. (Orquiola v. CA 386, SCRA 301, [2002]; Domingo v. Races 401SCRA 197, [2003]). Thus, absent any showing that RR knew about, or ought to have known the prior sale of the land toPP or that he acted in bad faith, and being first to register thesale, RR acquired a good and a clean title to the property asagainst PP. Equitable Mortgage(1991) On 20 December 1970, Juliet, a widow, borrowed fromRomeo P4,000.00 and, as security therefore, she executed adeed of mortgage over one of her two (2) registered lots which has a market value of P15,000.00. The document andthe certificate of title of the property were delivered toRomeo.On 2 June 1971, Juliet obtained an additional sum of P3,000from Romeo. On this date, however, Romeo caused thepreparation of a deed of absolute sale of the above property,to which Juliet affixed her signature without first reading thedocument. The consideration indicated is P7,000.00. Shethought that this document was similar to the first

she signed. When she reached home, her son X, after reading theduplicate copy of the deed, informed her that what she signed was not a mortgage but a deed of absolute sale. On thefollowing day, 3 June 1971, Juliet, accompanied by X, wentback to Romeo and demanded the reformation it, Romeoprepared and signed a document wherein, as vendee in thedeed of sale above mentioned, he obligated and boundhimself to resell the land to Juliet or her heirs and successorsfor the same consideration as reflected in the deed of sale(P7,000) within a period of twothat should the Vendor (Juliet) fail to exercise her right toredeem within the said period, the conveyance shall bedeemed absolute and irrevocable. Romeo did not takepossession of the property. He did not pay the taxes thereon.uliet died in January I973 without having repurchased theproperty. Her only surviving heir, her son X, failed torepurchase the property on or before 3 June 1973. In 1975,Romeo sold the property to Y for P50,000.00. Upon learning of the sale, X filed an action for the nullification of the saleand for the recovery of the property on the ground that theso-called deed of absolute sale executed by his mother wasmerely an equitable mortgage, taking into account theinadequacy of the price and the failure of Romeo to takepossession of the property and to pay the taxes thereon.Romeo and Y maintain that there was a valid absolute saleand that the document signed by the former on 3 June 1973 was merely a promise to sell. a) If you were the Judge, wouldyou uphold the theory of X? b) If you decide in favor of Romeo and Y, would youuphold the validity of the promise to sell? SUGGESTED ANSWER: A. I will not uphold the theory of X for the nullification of the sale and for the recovery of the property on the groundthat the so-called sale was only an equitable mortgage. Anequitable mortgage may arise only if, in truth, the sale was one with the right of repurchase. The facts of the case state thatthe right to repurchase was granted after the absolute deed of sale was executed. Following the rule in Cruzo vs. Carriaga(174 SCRA 330), a deed of repurchase executed independently of the deed of sale where the two stipulations are found intwo instruments instead of one document, the right of repurchase would amount only to one option granted by thebuyer to the seller. Since the contract cannot be upheld as acontract of sale with the right to repurchase, Art. 1602 of theCivil Code on equitable mortgage will not apply. The rulecould have been different if both deeds were executed on thesame occasion or date, in which case, under the ruling inspouses Claravall v. CA (190 SCRA 439),the contract may stillbe sustained as an equitable mortgage, given thecircumstances expressed in Art. 1602. The reserved right torepurchase is then deemed an original intention.B. If I were to decide in favor of Romeo and Y, I would notuphold the validity of the promise to sell, so as to enforce itby an action for specific performance. The promise to sell would only amount to a mere offer and, therefore,

it is notenforceable unless it was sought to be exercised before a withdrawal or denial thereof.Even assuming the facts given at the end of the case, there would have been no separate consideration for such promiseto sell. The contract would at most amount to an option which again may not be the basis for an action for specificperformance. Equitable Mortgage vs. Sale (2005) On July 14, 2004, Pedro executed in favor of Juan a Deed of Absolute Sale over a parcel of land covered by TCT No. 6245. It appears in the Deed of Sale that Pedro received X sold a parcel of land to Y on 01 January 2002, paymentfrom Juan P120,000.00 as purchase price. However, Pedroretained the owner's duplicate of said title. Thereafter, Juan,as lessor, and Pedro, as lessee, executed a contract of leaseover the property for a period of one (1) year with a monthly rental of Pl,000.00. Pedro, as lessee, was also obligated to pay the realty taxes on the property during the period of lease.Subsequently, Pedro filed a complaint against Juan for thereformation of the Deed of Absolute Sale, alleging that thetransaction covered by the deed was an equitable mortgage.In his verified answer to the complaint, Juan alleged that theproperty was sold to him under the Deed of Absolute Sale,and interposed counterclaims to recover possession of theproperty and to compel Pedro to turn over to him theowner's duplicate of title. Resolve the case with reasons. (6%) SUGGESTED ANSWER: The complaint of Pedro against Juan should be instances when a contract regardless of its nomenclature may be presumed to be an equitablemortgage are Article 1602 of the Civil Code:"Art. 1602. The presumed to be an equitablemortgage, in any of cases:1 dismissed. The

enumerated in contract shall be the following

When the price of a sale with right to repurchase isunusually inadequate:2 When the vendor remains in possession as lessee orotherwise;3 When upon or after the expiration of the right torepurchase another instrument extending the period of redemptionor granting a new period is executed;4 When the purchaser retains for himself a part of thepurchase price;5 When the vendor binds himself to pay the taxes on thething sold;6

In any other case where it may be fairly inferred that thereal intention of the parties is that the transaction shall secure thepayment of a debt or the performance of any other obligation."In any of the foregoing cases, any money, fruits, or otherbenefit to be received by the vendee as rent or otherwiseshall be considered as interest which shall be subject to theusury laws." Article 1604 states that "the provisions of article 1602 shallalso apply to a contract purporting to be an absolute sale."For Articles 1602 and 1604 to apply, two requisites mustconcur: 1) the parties entered into a contract denominated asa contract of sale; and 2) their intention was to secure anexisting debt by way of mortgage. (Heirs of Balite v. Lim,G.R. No. 152168, December 10, 2004) In the given case, although Pedro retained possession of theproperty as lessee after the execution of the Deed of Sale,there is no showing that the intention of the parties was tosecure an existing debt by way of mortgage. Hence, thecomplaint of Pedro should be dismissed. Immovable Property; Rescission of Contract (2003) and delivery to be made on 01 February 2002. It wasstipulated that if payment were not to be made by Y on 01February 2002, the sale between the parties wouldautomatically be rescinded. Y failed to pay on 01 February 2002, but offered to pay three days later, which payment X refused to accept, claiming that their contract of sale had already been rescinded. Is Xs contention correct? Why? 5% SUGGESTED ANSWER: No, X is not correct. In the sale of immovable property, eventhough it may have been stipulated, as in this case, that uponfailure to pay the price at the time agreed upon the rescissionof the contract shall of right take place, the vendee may pay,even after the expiration of the period, as long as no demandfor rescission of the contract has been made upon him eitherjudicially or by a notarial act (Article 1592, New Civil code).Since no demand for rescission was made on Y, eitherjudicially or by a notarial act, X cannot refuse to accept thepayment offered by Y three (3) days after the expiration of the period. ANOTHER SUGGESTED ANSWER: This is a contract to sell and not a contract of absolute sale,since as there has been no delivery of the land. Article 1592 of the New Civil code is not applicable. Instead, Article 1595 of the New Civil Code applies. The seller has two alternativeremedies: (1) specific performance, or (2) rescission orresolution under Article 1191 of the New Civil code. In bothremedies, damages are due because of default. ALTERNATIVE ANSWER:

Yes, the contract was automatically rescinded upon Ys failure to pay on 01 February 2002. By the express terms of thecontract, there is no need for X to make a demand in orderfor rescission to take place. (Article 1191, New Civil Code, Suria v. IAC 151 SCRA 661 [1987]; U.P. v. de los Angeles 35 SCRA 102 [1970]). Maceda Law (2000) Priscilla purchased a condominium unit in Makati City fromthe Citiland Corporation for a price of P10 Million, payableP3 Million down and the balance with interest thereon at 14%per annum payable in sixty (60) equal monthly installments of P198,333.33. They executed a Deed of Conditional Sale in which it is stipulated that should the vendee fail to pay three(3) successive installments, the sale shall be deemedautomatically rescinded without the necessity of judicial actionand all payments made by the vendee shall be forfeited infavor of the vendor by way of rental for the use andoccupancy of the unit and as liquidated damages. For 46months, Priscilla paid the monthly installments religiously, buton the 47th and 48th months, she failed to pay. On the 49thmonth, she tried to pay the installments due but the vendorrefused to receive the payments tendered by her. Thefollowing month, the vendor sent her a notice that it wasrescinding the Deed of Conditional Sale pursuant to thestipulation for automatic rescission, and demanded that she vacate the premises. She replied that the contract cannot berescinded without judicial demand or notarial act pursuant to Article 1592 of the Civil Code. a) Is Article 1592 applicable? (3%) b) Can the vendor rescind the contract? (2%) SUGGESTED ANSWER: a) Article 1592 of the Civil Code does not apply to aconditional sale. In Valarao v. CA, 304 SCRA 155 , theSupreme Court held that Article 1592 applies only to acontract of sale and not to a Deed of Conditional Sale wherethe seller has reserved title to the property until full paymentof the purchase price. The law applicable is the Maceda Law. SUGGESTED ANSWER: b) No, the vendor cannot rescind the contract under thecircumstances. Under the Maceda Law, which is the law applicable, the seller on installment may not rescind thecontract till after the lapse of the mandatory grace period of 30 days for every one year of installment payments, and only after 30 days from notice of cancellation or demand forrescission by a notarial act. In this case, the refusal of theseller to accept payment from the buyer on the 49th month was not justified because the buyer was entitled to 60 daysgrace period and the payment was tendered within thatperiod. Moreover, the notice of rescission served by the selleron the buyer was not effective because the notice was not by a notarial act. Besides,

the seller may still pay within 30 daysfrom such notarial notice before rescission may be effected. All these requirements for a valid rescission were notcomplied with by the seller. Hence, the rescission is invalid. Maceda Law; Recto Law (1999) What are the so-called "Maceda" and "Recto" laws inconnection with sales on installments? Give the mostimportant features of each law. (5%) SUGGESTED ANSWER: The MACEDA LAW (R.A. 655) is applicable to sales of immovable property on installments. The most importantfeatures are (Rillo v. CA, 247 SCRA 461): (1) After having paid installments for at least two years, thebuyer is entitled to a mandatory grace period of one monthfor every year of installment payments made, to pay theunpaid installments without interest.If the contract is cancelled, the seller shall refund to thebuyer the cash surrender value equivalent to fifty percent(50%) of the total payments made, and after five years of installments, an additional five percent (5%) every year butnot to exceed ninety percent (90%) of the total paymentsmade.(2) In case the installments paid were less than 2 years, theseller shall give the buyer a grace period of not less than 60days. If the buyer fails to pay the installments due at theexpiration of the grace period, the seller may cancel thecontract after 30 days from receipt by the buyer of the noticeof cancellation or demand for rescission by notarial act. The RECTO LAW (Art. 1484} refers to sale of movablespayable in installments and limiting the right of seller, in caseof default by the buyer, to one of three remedies: a) exactfulfillment; b) cancel the sale if two or more installmentshave notbeen paid;c) foreclose the chattel mortgage on the things sold,also in case of default of two or more installments, with nofurther action against the purchaser. Option Contract (2002) Explain the nature of an option contract. (2%) SUGGESTED ANSWER: An OPTION CONTRACT is one granting a privilege to buy or sell within an agreed time and at a determined price. Itmust be supported by a consideration distinct from the price.(Art. 1479 and 1482, NCC) Option Contract; Earnest Money (1993) LT applied with BPI to purchase a house and lot in QuezonCity, one of its acquired assets. The amount offered wasPl,000,000.00

payable, as follows: P200,000.00 down payment,the balance of P800,000.00 payable within 90 days from June1, 1985. BPI accepted the offer, whereupon LT drew a check for P200,000.00 in favor of BPI which the latter thereafterdeposited in its account. On September 5, 1985, LT wroteBPI requesting extension until October 10, 1985 within whichto pay the balance, to which BPI agreed. On October 5, 1985,due to the expected delay in the remittance of the neededamount by his financier from the United States, LT wrote BPIrequesting a last extension until October 30, 1985, within which to pay the balance. BPI denied LTs request becauseanother had offered to buy the same property forP1,500,000.00. BPI cancelled its agreement with LT andoffered to return to him the amount of P200,000.00 that LThad paid to it. On October 20, 1985, upon receipt of theamount of P800,000.00 from his US financier, LT offered topay the amount by tendering a cashier's check therefor but which BPI refused to accept. LT then filed a complaint againstBPI in the RTC for specific performance and deposited incourt the amount of P800,000.00. Is BPI legally correct incanceling its contract with LT? SUGGESTED ANSWER: BPI is not correct in canceling the contract with LT. In Linaopacio v Court of Appeals and BPI Investment (G. R No.102606, July 3. 1993, 211 SCRA 291) the Supreme Court heldthat the earnest money is part of the purchase price and isproof of the perfection of the contract. Secondly, notarial orjudicial rescission under Art. 1592 and 1991 of the Civil Codeis necessary (Taguba v. de Leon, 132 SCRA 722.) ALTERNATIVE ANSWER: BPI is correct in canceling its contract with LT but BPI mustdo so by way of judicial rescission under Article 1191 CivilCode. The law requires a judicial action, and mere notice of rescission is insufficient if it is resisted. The law also providesthat slight breach is not a ground for rescission (Song Fo &Co, vs, Hawaiian Phil Co., 47 Phils. 821), Delay in thefulfillment of the obligation (Art. 1169, Civil Code) is aground to rescind, only if time is of the essence. Otherwise,the court may refuse the rescission if there is a just cause forthe fixing of a period. Perfected Sale; Acceptance of Earnest Money (2002) Bert offers to buy Simeon s property under the following terms and conditions: P1 million purchase price, 10% optionmoney, the balance payable in cash upon the clearance of theproperty of all illegal occupants. The option money ispromptly paid and Simeon clears the property of illegaloccupants in no time at all. However, when Bert tenderspayment of the balance and ask Simeon for the deed for absolute sale, Simeon suddenly has a change of heart,May Adela still exercise her right of redemption? Explain.claiming that the deal is disadvantageous to him as he hasfound out that

the property can fetch three time the agreedpurchase price. Bert seeks specific performance but Simeoncontends that he has merely given Bert an option to buy andnothing more, and offers to return the option money whichBert refuses to accept. B. Will Berts action for specific performance prosper? Explain. (4%)C. May Simeon justify his refusal to proceed with the sale by the fact that the deal is financially disadvantageous to him?Explain. (4%) SUGGESTED ANSWER: B. Berts action for specific performance will prosper because there was a binding agreement of sale, not just an optioncontract. The sale was perfected upon acceptance by Simeonof 10% of the agreed price. This amount is in really earnest money which, under Art. 1482, shall be considered as part of the price and as proof of the perfection of the contract. (Topacio v. CA, 211 SCRA 291 [1992]; Villongco Realty v.Bormaheco, 65 SCRA 352 [1975]). C. Simeon cannot justify his refusal to proceed with the sale by the fact that the deal is financially disadvantageous to him.Having made a bad bargain is not a legal ground for pulling out a biding contract of sale, in the absence of some actionable wrong by the other party (Vales v. Villa, 35 Phil 769 [1916]) , and no such wrong has beencommitted by Bert . Redemption; Legal; Formalities (2001) Betty and Lydia were co-owners of a parcel of land. Lastanuary 31, 2001, when she paid her real estate tax, Betty discovered that Lydia had sold her share to Emma onNovember 10, 2000. The following day, Betty offered toredeem her share from Emma, but the latter replied thatBetty's right to redeem has already prescribed. Is Emmacorrect or not? Why? (5%) SUGGESTED ANSWER: Emma, the buyer, is not correct. Betty can still enforce herright of legal redemption as a co-owner. Article 1623 of theCivil Code gives a co-owner 30 days from written notice of the sale by the vendor to exercise his right of legalredemption. In the present problem, the 30-day period for theexercise by Betty of her right of redemption had not evenbegun to run because no notice in writing of the sale appearsto have been given to her by Lydia. Redemption; Legal; Formalities (2002) Adela and Beth are co-owners of a parcel of land. Beth soldher undivided share of the property to Xandro, who promptly notified Adela of the sale and furnished the latter a copy of the deed of absolute sale. When Xandro presented the deedfor registration, the register of deeds also notified Adela of the sale, enclosing a copy of the deed with the notice.However, Adela ignored the notices. A year later, Xandrofiled a petition for the partition

of the property. Upon receiptof summons, Adela immediately tendered the requisiteamount for the redemption. Xandro contends that Adela losther right of redemption after the expiration of 30 days fromher receipt of the notice of the sale given by him.(5%) SUGGESTED ANSWER: Yes, Adela may still exercise her right of redemptionnotwithstanding the lapse of more than 30 days from noticeof the sale given to her because Article 1623 of the New CivilCode requires that the notice in writing of the sale must comefrom the prospective vendor or vendor as the case may be. Inthis case, the notice of the sale was given by the vendee andthe Register of Deeds. The period of 30 days never tolled. Shecan still avail of that right. ALTERNATIVE ANSWER: Adela can no longer exercise her right of redemption. Ascoowner, she had only 30 days from the time she received written notice of the sale which in this case took the form of acopy of the deed of sale being given to her (Conejero v. CA, 16SCRA 775 [1966]) . The law does not prescribe any particularform of written notice, nor any distinctive method fornotifying the redemptioner (Etcuban v. CA, 148 SCRA 507[1987]). So long as the redemptioner was informed in writing,he has no cause to complain (Distrito v. CA, 197 SCRA 606, 609[1991]) In fact, in Distrito, a written notice was heldunnecessary where the co-owner had actual knowledge of thesale, having acted as middleman and being present when the vendor signed the deed of sale. Right of First Refusal; Lessee; Effect (1996) Ubaldo is the owner of a building which has been leased by Remigio for the past 20 years. Ubaldo has repeatedly assuredRemigio that if he should decide to sell the building, he willgive Remigio the right of first refusal. On June 30, 1994,Ubaldo informed Remigio that he was willing to sell thebuilding for P5 Million. The following day, Remigio sent aletter to Ubaldo offering to buy the building at P4.5 Million.Ubaldo did not reply. One week later, Remigio received aletter from Santos informing him that the building has beensold to him by Ubaldo for P5 Million, and that he will notrenew Remigio's lease when it expires. Remigio filed an actionagainst Ubaldo and Santos for cancellation of the sale, and tocompel Ubaldo to execute a deed of absolute sale in his favor,based on his right of first refusal. a) Will the action prosper? Explain. b) If Ubaldo had given Remigio an option topurchase thebuilding instead of a right of first refusal, will youranswer be the same? Explain. SUGGESTED ANSWER:

No, the action to compel Ubaldo to execute the deed of absolute sale will not prosper. According to Ang Yu v. Court of Appeals (238 SCRA 602) the right of first refusal is notbased on contract but is predicated on the provisions of human relations and, therefore, its violation is predicated onquasi-delict. Secondly, the right of first refusal implies that theoffer of the person in whose favor that right was given mustconform with the same terms and conditions as those givento the offeree. In this case, however, Remigio was offering only P4.5 Million instead of P5 Million. ALTERNATIVE ANSWER: No, the action will not prosper. The lessee's right of firstrefusal does not go so far as to give him the power to dictateon the lessor the price at which the latter should sell his property. Upon the facts given, the lessor had sufficiently complied with his commitment to give the lessee a right of first refusal when he offered to sell the property to the lesseefor P5 Million, which was the same price he got in selling it toSantos. He certainly had the right to treat the lessee'scounter-offer of a lesser amount as a rejection of his offer tosell at P5 Million. Thus, he was free to find another buyerupon receipt of such unacceptable counter-offer (Art. 1319.NCC). SUGGESTED ANSWER: Yes, the answer will be the same. The action will not prosperbecause an option must be supported by a considerationseparate and distinct from the purchase price. In this casethere is no separate consideration. Therefore, the option may be withdrawn by Ubaldo at any time. (Art. 1324, NCC) Right of First Refusal; Lessee; Effect (1998) In a 20-year lease contract over a building, the lessee isexpressly granted a right of first refusal should the lessordecide to sell both the land and building. However, the lessorsold the property to a third person who knew about the leaseand in fact agreed to respect it. Consequently, the lesseebrings an action against both the lessor-seller and the buyer(a) to rescind the sale and (b) to compel specific performanceof his right of first refusal in the sense that the lessor shouldbe ordered to execute a deed of absolute sale in favor of thelessee at the same price. The defendants contend that theplaintiff can neither seek rescission of the sale nor compelspecific performance of a "mere" right of first refusal. Decidethe case. [5%] SUGGESTED ANSWER: The action filed by the lessee, for both rescission of theoffending sale and specific performance of the right of firstrefusal which was violated, should prosper. The ruling in Equatorial Realty Development, Inc. vs. Mayfair Theater, Inc.(264

SCRA 483), a case with similar facts, sustains both rightsof action because the buyer in the subsequent sale knew theexistence of right of first refusal, hence in bad faith. ANOTHER ANSWER: The action to rescind the sale and to compel the right to firstrefusal will not prosper. (Ang Yu Asuncion vs. CA, 238 SCRA 602). The Court ruled in a unanimous en banc decision thatthe right of first refusal is not founded upon contract but on aquasidelictual relationship covered by the principles of human relations and unjust enrichment (Art. 19, et seq. CivilCode). Hence the only action that will prosper according tothe Supreme Court is an "action for damages in a properforum for the purpose." Right of Repurchase (1993) On January 2, 1980, A and B entered into a contract whereby A sold to B a parcel of land for and in consideration of P10.000.00. A reserving to himself the right to repurchase thesame. Because they were friends, no period was agreed uponfor the repurchase of the property. 1) Until when must Aexercise his right of repurchase? 2) If A fails to redeem theproperty within the allowable period, what would you adviseB to do for his better protection? SUGGESTED ANSWER: 1) A can exercise his right of repurchase within four (4) yearsfrom the date of the contract (Art. 1606, Civil Code). SUGGESTED ANSWER: 2} I would advise B to file an action for consolidation of titleand obtain a judicial order of consolidation which must berecorded in the Registry of Property (Art. 1607. Civil Code). Transfer of Ownership; Non-Payment of the Price (1991) Pablo sold his car to Alfonso who issued a postdated check in full payment therefor. Before the maturity of the check, Alfonso sold the car to Gregorio who later sold it to Gabriel. When presented for payment, the check issued by Alfonso was dishonored by the drawee bank for the reason that he, Alfonso, had already closed his account even before he issuedhis check. Pablo sued to recover the car from Gabriel alleging that he (Pablo) had been unlawfully deprived of it by reasonof Alfonso's deception. Will the suit prosper? SUGGESTED ANSWER: No. The suit will not prosper because Pablo was notunlawfully deprived of the car although he was unlawfully deprived of the price. The perfection of the sale and thedelivery of the car was enough to allow Alfonso to have aright of ownership over the car, which can be lawfully transferred to Gregorio. Art. 559 applies

only to a person who is in possession in good faith of the property, and not tothe owner thereof. Alfonso, in the problem, was the owner,and, hence, Gabriel acquired the title to the car.Non-payment of the price in a contract of sale does notrender ineffective the obligation to deliver. The obligation todeliver a thing is different from the obligation to pay itsprice. EDCA Publishing Co. v. Santos (1990) Transfer of Ownership; Risk of Loss (1990) D sold a second-hand car to E for P150,000.00 Theagreement between D and E was that half of the purchaseprice, or P75,000.00, shall be paid upon delivery of the car toE and the balance of P75,000.00 shall be paid in five equalmonthly installments of P15,000.00 each. The car wasdelivered to E, and E paid the amount of P75.000.00 to D.Less than one month thereafter, the car was stolen from E'sgarage with no fault on E's part and was ) V W X

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 7_`sSThd-DM gd~NOg0 E###$$$% %d-DM gd~%%' ) ))***0-~i.j..j7k7}7O>P>s>>BBBCC'C+CdDM gd~***h.i.j..i7j7k7| 799A;B;N>O>P>r>BBBBCCIIIIwKxKyKKMMMNOOOOPPPQVVV#V~W WWW@[A[B[_[[[[[aaaaaaaabbbb g 'h~B*CJOJPJQJ^JaJph3h~h~5B*CJOJPJQJ\^JaJphh~h~B*CJOJPJQJ^JaJphI+CCC<D>D}DDEE`EbEEEnHHIII=KxKyK KMMNOOOd-DM gd~OPPPPQVV$VnVVWWWA[B[_[[[[\\w\\_ `aad-DM gd~aaaaabbbggg5hhniiiij kkl/lmJoopp+p d-DM gd~ggggiiiiklppp*p8u9u;u`uvvvvxxxx{{|{} {{P}Q}R}e}GHIvOPQbno\]^o [ \ ] l d~?@ 3h~h~5B*CJOJP JQJ\^JaJphh~h~B*CJOJPJQJ^JaJph'h~B*CJOJPJQJ^JaJphI+pjpqrst u9u;uauvvvxxx|{}{{Q}R}f}E~i~~ Zd-DM gd~HIwPQc]^p l\]mdd-DM gd~@AS efxgd~d-DM gd~@AR defw h~h~CJOJQJ^JaJU'h~B*CJOJPJQJ^JaJph3h~h~5B*CJOJPJQJ \^JaJph-h~h~B*CJOJPJQJ^JaJphnever recovered. Is Elegally bound to pay the said unpaid balance of P75.000.00?Explain your answer. SUGGESTED ANSWER: Yes, E is legally bound to pay the balance of P75,000.00. Theownership of the car sold was acquired by E from themoment it was delivered to him. Having acquired ownership,E bears the risk of the loss of the thing under the doctrine of res perit domino. [Articles 1496. 1497, Civil Code). 21h:pS/ =! " # $ %

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