Sales

Angela placed an order with Ronald for one hundred pieces of T-shirt which were then not available but
manufactured by Ronald and consigned to its sales outlets regularly. The contract between Angela and
Ronald is-

A. Contract for a piece of work

B. Contract of Lease of service

C. Contract of sale

D. Renumeratory Contract

Answer

(A) The Answer is Letter C- Contract of Sale

(L) According to Article 1467 of the Civil Code, “a contract for the delivery at a certain price of an article
which the vendor in the ordinary course of his business manufactures or procures for the general
market, whether the same is on hand at the time or not, is a contract of sale, but if the goods are to be
manufactured specially for the customer and upon his special order, and not for the general market, it is
a contract for a piece of work.”

(A) In the situation above, Angela who ordered a one hundred pieces of T-shirt to Ronald, entered into a
contract of sale. This is because Ronald ordinarily manufactures or procures T-shirt for the general
market even though the object has not been given. It is not a contract for a piece of work because the
object to be manufactured is not specially for Angela and not a upon her special order.

(C) Therefore, the order made by Angela to Ronald would be one with the contract of sale as the object
is in the ordinary course of business of Ronald.

Credit

Ronald pledged his Toyota car to Corrine for a loan of ₱ 1M. Ronald was unable to pay the loan and
therefore Corrine sold the car in a public auction, but it was sold only for ₱ .5M. Can Corrine recover the
deficiency from Ronald?

A. No, she cannot recover the deficiency in the absence of contrary stipulation

B. No, she cannot even if there’s an agreement that she can.

C. Yes, she can even in the absence of stipulation allowing him.

D. Yes, he can provided that it was agreed upon by the parties.

The answer is Letter B-. No, he cannot even if there’s an agreement that she can.
According to article 2115 of the Civil Code, “the sale of the thing pledged shall extinguish the principal
obligation, whether or not the proceeds of the sale are equal to the amount of the principal obligation,
interest and expenses in a proper case. If the price of the sale is more than said amount, the debtor shall
not be entitled to the excess, unless it is otherwise agreed. If the price of the sale is less, neither shall
the creditor be entitled to recover the deficiency, notwithstanding any stipulation to the contrary.”

In the facts presented, Ronald pledged his Toyota car to Corrine for a ₱ 1 million loan. Ronald defaulted
in his payment of this loan which resulted for Corrine to foreclose his pledged which was sold at ₱
500,000. In this kind of event where there’s a deficiency in the price, the creditor cannot recover the
deficient. As a result, Corrine will be not able to collect the remaining ₱ 500,000 to Ronald.

Therefore, Corrine is not entitled to recover the deficiency even if there is a stipulation.

Cooperatives

What is the quorum necessary for the validity of meeting of Board of Directors of cooperative bank?

A. At least majority of the members of the Board unless the bylaws provide otherwise

B. One-half plus one of all the members of the board of directors

C. At least ¾ of the members of the Board unless the bylaws provide otherwise

D. At least 2/3 of the members of the Board unless the bylaws provide otherwise

(A) The answer is letter B- One-half plus one of all the members of the board of directors

(L) According to Article 99 of the Cooperative Code, the quorum requirement of Cooperative Bank for
general assembly meetings, whether special or regular, shall be one half plus one of the numbers of
voting shares of all the members in good standing. In the meetings of the board of directors, whether
special or regular, the quorum requirement shall be one-half plus one of all the members of the board of
directors. Each director shall only have one vote.

(A) A Cooperative Bank provides financial, banking and credit services to cooperative organizations and
to its member. It is one of the types of cooperative. One of its difference from an ordinary cooperative is
that its quorum requirement for the meeting of Board of Directors is one half plus one of all the
members of the board. The same requirement goes to its meeting for the General Assembly. This differs
to the requirement of an ordinary cooperative when it comes to quorum for its meetings of Board of
Director which is at least majority of the members of the Board.

(C) Therefore, the quorum necessary for the validity of meeting of Board of Directors of cooperative
bank is one-half plus one of the members of the Board unless the bylaws provide otherwise.
Ronald pledged his wristwatch to Corrine for a ₱100,000 loan. Due to Ronald’s failure to pay his debt,
Corrine auctioned the watch and was sold to Domz for ₱150,000. Can Ronald recover the excess?

A. Ronald cannot recover the excess even if there is a stipulation.

B. Ronald can recover the excess if so agreed upon by the parties.

C. Ronald can recover even if not stipulated.

D. A stipulation allowing to recover the excess to go to the pledgor is void.

(A) The answer is letter B- Ronald can recover the excess if so agreed upon by the parties.

(L) According to article 2115 of the Civil Code, the sale of the thing pledged shall extinguish the principal
obligation, whether or not the proceeds of the sale are equal to the amount of the principal obligation,
interest and expenses in a proper case. If the price of the sale is more than said amount, the debtor shall
not be entitled to the excess, unless it is otherwise agreed. If the price of the sale is less, neither shall
the creditor be entitled to recover the deficiency, notwithstanding any stipulation to the contrary.

(A) In the facts presented, Ronald pledged his wristwatch for a ₱100,000 loan to Corrine. Ronald
defaulted in his payment of his loan which resulted for Corrine to foreclose his wristwatch which was
sold at a price of ₱150,000. In this kind of situation, the debtor is not entitled to the excess of the price
received in the auctioned and the excess will go belong to the creditor. But if there is an agreement to
the contrary then the excess will go belong to the debtor. As a result, Ronald will be allowed to get the
excess only if there is an agreement to that effect.

(C) Thus, Ronald can recover the excess if so agreed upon by the parties.

Negotiable Instrument

Which of the following is not negotiable instrument?

A. I bind myself to pay Shelvi or bearer ₱1M. (sgd) Ronald.

B. I acknowledge being indebted to Danah for ₱1M. (sgd) Ronald.

C. I oblige to pay Gwyneth or order ₱1M. (sgd) Ronald.

D. I agree to pay Angela or bearer ₱1M on demand. (sgd) Ronald.

(A) The answer is letter B- I acknowledge being indebted to Danah for ₱1M. (sgd) Ronald.

(L) According to Sec. 1 of the Negotiable Instrument Law, - An instrument to be negotiable must
conform to the following requirements: (a) It must be in writing and signed by the maker or drawer;
(b) Must contain an unconditional promise or order to pay a sum certain in money; (c) Must be
payable on demand, or at a fixed or determinable future time; (d) Must be payable to order or to
bearer; and (e) Where the instrument is addressed to a drawee, he must be named or otherwise
indicated therein with reasonable certainty.

(A) In the given facts, the acknowledgement of Ronald of his debt to Shelvi does not constitute a
promise to pay. A mere acknowledgement of a debt without a promise is not enough. The negotiable
instrument must contain a promise or signification that there is an intention to pay. The promise should
also be absolute. Such instruments in letter B- “I acknowledge being indebted to Danah for ₱1M.” does
not constitute a promise which render the instrument non-negotiable.

(L) Therefore, the answer is letter B as this is the only one which is not a negotiable instrument, while all
the other choices are a negotiable instrument.