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Sales Reviewer daw hahahah okey ra, Assignments of Advanced Accounting

University of Cebu (UC)Advanced Accounting

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! ! !!!! © Michelle Duguil,

DE LEON SALES REVIEWER

1

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 therefor a price certain in money or its equivalent

CONCEPT OF CONTRACT OF SALE

• Agreement whereby one of the parties (called the seller or vendor) obligates

himself to deliver something to the other (called the buyer or purchaser or

vendee) who, on his part, binds himself to pay therefore a sum of money or its

equivalent

6 CHARACTERTISTIC OF CONTACT OF SALE

CONSENSUAL

Perfected the moment there is a meeting

of minds upon the thing which is the

object of the contract and upon the price

(Art. 1475)

BILATERAL

Both the contracting parties are bound to

fulfill correlative obligations towards

each other

ONEROUS

The thing sold is conveyed in

consideration of the price and vice versa

COMMUTATIVE

The thing sold is considered the

equivalent of the price paid and vice

versa

However, the contract may be aleatory

as in the case of the sale of a hope

NOMINATE

Special name or designation in the Civil

Code namely, “sale”

PRINCIPAL

It does not depend for its existence and

validity upon another contract

ESSENTIAL REQUISITES OF A CONTRACT OF SALE

1. CONSENT OR MEETING OF THE MINDS

• General Contract: Consent is the meeting of the offer and the acceptance

upon the thing and the cause which are to constitute the contract (Art.

1319)

• Contract of Sale: Consent on the part of the seller or vendor to transfer

ownership of, and deliver, a determinate thing, and the consent on the part

of the buyer or vendee to pay the price certain (Art. 1475)

• The contract to sell is a bilateral contract

• A person is not incompetent to contract merely because of advanced years

or by reason of physical infirmities

o E: When such age or infirmities have impaired the mental faculties so

as to prevent a person from intelligibly protecting his property rights,

then such person is undeniably incapacitated

• There may however be a sale against the will of the owner in case of

expropriation, ordinary execution sale, judicial foreclosure sale and extra-

judicial foreclosure sale

2. OBJECT OR SUBJECT MATTER

• Refers to the determinate thing which is the object of the contract

• May be personal or real property

• Subject matter may be present or future

• Subject matter must be licit and must be within the commerce of men

• An impossible thing cannot be the object of a contract = void

• The civil code allows:

o Sale of credit

o Sale of the whole of certain rights, rents or products

o Sale if inheritance already acquired (but not future inheritance)

o Sale of possession

• It prohibits:

o Sale of easements independent of the estate to which they belong

o Sale of contagious animals

3. CAUSE OR CONSIDERATION

• This refers to the “price certain in money or its equivalent”

• In onerous contract = the cause is the prestation or promise of a thing or

service by the other (Art. 1350)

• Contract of Sale = the cause as far as the vendor is concerned is the

acquisition of the price certain in money or its equivalent, and the cause as

far as the vendee is concerned, is the acquisition of the thing which is the

object of the contract

• Price: The cost at which something is obtained, or something which one

ordinarily accepts voluntarily in exchange for something else, or the

consideration given for the purchase of a thing

• Price must be certain, real and pecuniary

• Tantum valet res quantum vendi potest – a thing is worth only what

someone else will pay for it

• Gross inadequacy of the price does not affect a contract of sale

• “It’s equivalent” – payment need not be in money, so that there can be a

sale where the thing given as token of payment has been “assessed and

evaluated and its price equivalent in terms of money has been determine”

• Conveyances by virtue of forged signature are void ab initio and inexistent

for absence of consent and cause or consideration

• Presumption is that a contract has sufficient consideration

Note:

• Absence of any of the 3 essential elements negates the existence of a

perfected contract of sale

CHAPTER 1

NATURE AND FORM OF CONTRACT

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!!!!!! © Michelle Duguil,

1 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 therefor a price certain in money or its equivalent CONCEPT OF CONTRACT OF SALE

Agreement whereby one of the parties (called the seller or vendor) obligates himself to deliver something to the other (called the buyer or purchaser or vendee) who, on his part, binds himself to pay therefore a sum of money or its equivalent 6 CHARACTERTISTIC OF CONTACT OF SALE CONSENSUAL Perfected the moment there is a meeting of minds upon the thing which is the object of the contract and upon the price (Art. 1475) BILATERAL Both the contracting parties are bound to fulfill correlative obligations towards each other ONEROUS The thing sold is conveyed in consideration of the price and vice versa COMMUTATIVE The thing sold is considered the equivalent of the price paid and vice versa However, the contract may be aleatory as in the case of the sale of a hope NOMINATE Special name or designation in the Civil Code namely, “sale” PRINCIPAL It does not depend for its existence and validity upon another contract **ESSENTIAL REQUISITES OF A CONTRACT OF SALE

CONSENT OR MEETING OF THE MINDS**
- General Contract: Consent is the meeting of the offer and the acceptance upon the thing and the cause which are to constitute the contract (Art.
- Contract of Sale: Consent on the part of the seller or vendor to transfer ownership of, and deliver, a determinate thing, and the consent on the part of the buyer or vendee to pay the price certain (Art. 1475)
- The contract to sell is a bilateral contract
- A person is not incompetent to contract merely because of advanced years or by reason of physical infirmities o E: When such age or infirmities have impaired the mental faculties so as to prevent a person from intelligibly protecting his property rights, then such person is undeniably incapacitated

There may however be a sale against the will of the owner in case of expropriation, ordinary execution sale, judicial foreclosure sale and extra- judicial foreclosure sale 2. OBJECT OR SUBJECT MATTER
Refers to the determinate thing which is the object of the contract
May be personal or real property
Subject matter may be present or future
Subject matter must be licit and must be within the commerce of men
An impossible thing cannot be the object of a contract = void
The civil code allows: o Sale of credit o Sale of the whole of certain rights, rents or products o Sale if inheritance already acquired (but not future inheritance) o Sale of possession
It prohibits: o Sale of easements independent of the estate to which they belong o Sale of contagious animals 3. CAUSE OR CONSIDERATION
This refers to the “price certain in money or its equivalent”
In onerous contract = the cause is the prestation or promise of a thing or service by the other (Art. 1350)
Contract of Sale = the cause as far as the vendor is concerned is the acquisition of the price certain in money or its equivalent, and the cause as far as the vendee is concerned, is the acquisition of the thing which is the object of the contract
Price: The cost at which something is obtained, or something which one ordinarily accepts voluntarily in exchange for something else, or the consideration given for the purchase of a thing
Price must be certain, real and pecuniary
Tantum valet res quantum vendi potest – a thing is worth only what someone else will pay for it
Gross inadequacy of the price does not affect a contract of sale
“It’s equivalent” – payment need not be in money, so that there can be a sale where the thing given as token of payment has been “assessed and evaluated and its price equivalent in terms of money has been determine”
Conveyances by virtue of forged signature are void ab initio and inexistent for absence of consent and cause or consideration
Presumption is that a contract has sufficient consideration Note:
Absence of any of the 3 essential elements negates the existence of a perfected contract of sale

CHAPTER 1

NATURE AND FORM OF CONTRACT

!!!!!! © Michelle Duguil,

2

Burden of proof is upon the person who alleges existence of sale NATURAL AND ACCIDENTAL ELEMENTS NATURAL ACCIDENTAL Deemed to exist in certain contracts, in the absence of any contrary stipulation Those which may be present or absent depending on the stipulations of the parties Warranty against eviction (1548) Hidden defects (1561) Conditions, Interest, Penalty Time or place of payment, etc. **STAGES OF CONTRACT OF SALE

NEGOTIATION**

Covering the period from the time the prospective contracting parties indicate interest in the contact to the time the contract is perfected 2. PERFECTION
Takes place upon the concurrence of the essential elements of the sale which are the meeting of the minds of the parties as to the object of the contract and upon the price; and 3. CONSUMMATION
Begins when the parties perform their respective undertakings under the contract of sale, culminating in the extinguishment thereof **ABSENCE OF PRICE/NON-PAYMENT OF PRICE

SALE INEXISTENT AND VOID**

A contract of sale is void and produces no effect where the same is without cause or consideration in that the purchase price, which appears thereon as paid, has, in fact, never been paid by the buyer to the seller
X mere estimates 2. SALE SUBJECT TO RESCISSION OR SPECIFIC PERFORMANCE
Non-payment of the purchase price = resolutory condition! judicial rescission or specific performance (1191)
Failure to pay within a fixed period, in the absence of any express agreement that payment on time is essential, does not dissolve the contract of sale! results at most in DEFAULT which the vendor may exercise his legal remedies
A stipulation in a contract providing for automatic rescission upon non- payment within the stipulated period = valid
A notarized document is evidence of high character for proving payment of purchase price by the vendee TRANSFER OF TITLE TO PROPERTY FOR A PRICE, ESSENCE OF SALE Contract of sale has correlative duty:
Of the seller to deliver the property
Obligation of the buyer to pay the agreed price 1. OBLIGATION TO DELIVER AND PAY
The transfer of title to property or agreement to transfer title for a price actually paid, NOT mere physical transfer of the property = essence of sale
GR : Being consensual, it is perfected by mere consent o E : Impossible service – delivery of ownership is no longer possible
Payment of purchase price is NOT essential to the transfer of ownership as long as the property sold has been delivered 2. WHERE TRANSFER OF OWNERSHIP NOT INTENDED BY THE PARTIES
A contract for the sale or purchase of goods/commodity to be delivered at a future time, entered into without the intention of having any goods/commodity pass from one party to another, but with the understanding that at the appointed time, the purchaser is merely to receive or pay the difference between the contract and the market prices = illegal
“Futures” – Parties merely gamble on the rise or fall of prices = null and void! the loser may recover what he paid (2018) KINDS OF CONTRACT OF SALE Presence or absence of Condition Absolute (^) • Not subject to any condition
Title to the property passes to the purchaser upon delivery of the thing sold
Ownership of the property sold passes upon actual or constructive delivery thereof Conditional • Sale contemplates a contingency
Where the contract us subject to certain conditions
Usually in the case of the vendee, the full payment of the agreed purchase price
In the case of the

!!!!!! © Michelle Duguil,

4

Public land act – sale of homestead patent within 5 years prohibitory period RIGHT OF VENDOR TO TRANSFER OWNERSHIP

Seller must be owner or authorized by owner of thing sold

Nemo dat quod non habet – one cannot transmit or dispose of that which does not belong to him
Paraphernal property of deceased wife
Only share of co-owner can be validly acquired by the vendee even if he acted in GF
Fictitious sale as there was no consideration

Right must exist at the time of delivery

X require that vendor must have right to transfer ownership at the time of the perfection of the contract
Sufficient that seller has the right to transfer ownership at the time it is delivered
Ex. Sale of future good

Where the property sold registered in the name of seller who employed fraud in securing title

GR: Forged deed = void
E: Where the certificate of title has been transferred to the name of the true owner to the forger and sold to innocent purchaser for value

Where property sold in violation of a right of first refusal

GR: Valid BUT rescissible
E: If there is no BF = X rescissble! remedy: action for damages against vendor

Where real property, subject of unrecorded sale, subsequently mortgaged by seller which mortgage was registered

Buyer’s unregistered right OVER mortgagee’s registered right 1460. SUBJECT MATTER MUST BE DETERMINATE WHEN THING DETERMINATE
Particularly designated or physically segregated from all others of the same kind
A thing is determinate if its identified by its individuality SUFFICIENT IF SUBJECT MATTER CAPABLE OF BEING MADE DETERMINATE
X necessary that the thing sold must be in sight at the time contract is entered into
Sufficient that thing is determinable or capable of being made determinate without the necessity of a new or further agreement between the parties to ascertain its identity, quantity or quality 1461. REQUIREMENT THAT THING MUST EXIST
General Contract of law: object of contract must exist at the time of the transaction
Contract of sale: The object of contract need not be existing at the time the contract is entered into SALE OF THING HAVING POTENTIAL EXISTENCE
A future thing may work in 2 different ways:

Its coming into existence is a condition for the effectivity of the contract
The contract is effective and the buyer has to pay the purchase price w/n the thing comes into existence

Sale is subject to the condition that thing will come into existence SALE OF THING EXPECTED (EMPTIO REI SPERETAE)
Sale of a thing not yet in existence subject to the condition that the thing will exist
If X come into existence = contract X effective = buyer X obliged to pay
Ex. Wine a vine is expected to produce, grain a field may grow in a given time SALE OF MERE HOPE OR EXPECTANCY (EMPTIO REI SPEI)
Sale of HOPE ITSELF that the thing will come into existence where it is agreed that the buyer will pay the price even if the thing does not eventually exist
Ex. Sale of the catch of fishermen, fish or no fish
Condition that thing contemplated or expected will come into existence
Sale of vain hope or expectancy = void
Sale of mere hope or expectancy = valid = even if the thing hoped or expected does not come into existence o E: VAIN HOPE OR EXPECTENCY= VOID SALE OF THING EXPECTED SALE OF HOPE Subject to the condition that thing will come into existence X certain that the thing itself will exist Sale of future thing Sale of hope or expectancy IF X exist = X contract of sale because of absence of essential requisite ✓ Exist even though the thing does not come into existence because the object of the contract is hope itself E: Vain hope or expectance (ex. Sale of falsified sweepstake ticket which can never win) PRESUMPTION IN CASE OF DOUBT
Presumption in favor of SALE OF THING EXPECTED
More in keeping with the COMMUTATIVE character of the contract 1462. GOODS WHICH MAY BE THE OBJECT OF SALE

!!!!!! © Michelle Duguil,

5

1. EXISTING GOODS – Goods owned or possessed by the seller 2. FUTURE GOODS – Goods to be manufactured, raised, acquired **SALE OF FUTURE GOODS

VALID AS AN EXECUTORY CONTRACT TO BE FULFILLED**

Valid as an executor contract to be fulfilled by acquiring and delivering the goods specified in the contract, even though the acquisition of good by the seller depends upon a contingency that may or may not happen 2. SALE CONTEMPLATED BY ART 1462
Contract of sale of specific goods
Requires that there be delivery of goods, actual or constructive, to be applicable
Paragraph X apply if contract is one for a piece of work = if goods are to be manufactured especially for the buyer and not readily saleable to other in the manufacturer’s regular course of business **ART. 1463. The sole owner of a thing may sell an undivided interest therein SALE OF UNDIVIDED INTEREST IN A THING

BY SOLE OWNER**

Sole owner of a thing may sell the ENTIRE thing; or only a SPECIFIC PORTION thereof; or an UNDIVIDED INTEREST THEREIN and such interest may be designated as an aliquot part of the whole
Legal effect of sale of undivided interest: o The buyer is made the co-owner of the thing sold o As co-owner, he acquires full ownership of his part and may sell it o Limited to the portion which may be allotted to him in the division of the thing upon the termination of co-ownership o Operates similarly to ownership of fungible goods 2. BY A CO-OWNER
Co-owners can dispose of their share even without the consent of the other co-owners
Effect of alienation is limited to the portion allotted to the vendor in the division of the property upon the termination of the co-ownership **ART. 1464 SALE OF UNDIVIDED SHARE OF A SPECIFIC MASS

MEANING OF FUNGIBLE GOODS**

Goods of which any unit is, from its nature or by mercantile usage, treated as the equivalent of any other unit
Those which cannot be used without being consumed
Ex. Grain, old, wine, gasoline 2. EFFECT OF SALE
Owner may sell only an undivided share thereof, provided that the mass is specific or cable of being made determinate
Buyer becomes co-owner with the seller of the whole mass in proportion in which the definite share bought bears to the mass
Aliquot share of each owner can be determined only by the measurement of the entire mass o If mass of FG contains less than what was sold! buyer comes owner of the whole mass! seller shall supply whatever is lacking from the goods of same kind and quality, subject to any stipulation to the contrary 3. RISK OF LOSS
Whole mass is at the risk of all the parties interested in it since buyer becomes co-owner
In proportion to their various holdings 4. SUBJECT MATTER
Subject matter is an incorporeal right
Ownership passed to the buyer by the intention of the parties 5. APPLICABILITY OF ART 1464 TO NON-FUNGIBLE GOODS
It may also apply to goods not strictly fungible in nature
Ex: Barrels of flour, goods in barrels, bales of cotton, cattle, sheep ART. 1465. Things subject to a resolutory condition may be the object of the contract of sale SALE OF THING SUBJECT TO RESOLUTORY CONDITION
Resolutory condition – an uncertain even upon the happening of which the obligation (or right) subject to it is extinguished. Hence, right acquired by virtue of the obligation is also extinguished
If the resolutory condition attaching to the object of the contract should happen! vendor X transfer the ownership of what he sold since there is no object ART. 1466. In construing a contract containing provisions characteristic of both the contract of sale and of the contract of agency to sell, the essential clauses of the whole instrument shall be considered CONTRACT OF AGENCY
A person binds himself to render some service or to do something in representation or on behalf of another, with the consent or authority of the latter
A contract is what the law defined it to be and not what it is called by the contracting parties CONTRACT OF SALE CONTRACT OF AGENCY Buyer receives the goods a OWNER Agent receives the goods of the principal who RETAINS HIS OWNERSHIP OVER THEM
Owner has the right to fix the price and the terms of the sale

!!!!!! © Michelle Duguil,

7

Such intention may be ascertained by taking into account the contemporaneous and subsequent acts of the parties

• If the intention cannot be ascertained! last sentence of article applies!

(Value of thing given as part of consideration > money or its equivalent = barter) o E: But if the intention is that contract shall be one of sale, then such intention must be followed even though the value of the thing given as part of the consideration > amount of money given

Only difference between the two: element in sale which is “price certain in money or its equivalent”
Example: Sugar (20k) and WB (20k) – page 57 o 100 Whiskey bottle as payment for sugar = barter o 25 Whiskey bottles + 15k cash = barter " On date of delivery, only had 25 WB " Amount of 15k was paid in consideration for the 75 bottles o No whiskey bottles at the time of delivery + 20k instead = Barter " Payment is in consideration of the value of the whiskey and not of the sugar " Manifest intention = barter o B had 100 WB on date of delivery BUT paid 20k = sale " Intention of parties to convert it to sale o If WB OR Cash! paid in cash = sale o Deliver 50 WB and pay 10k // OR 75WB or pay 5k // OR 25 WB or 15k! transaction shall be considered barter or sale depending on manifest intention of the parties " If such intention does not clearly appear - Barter – if cash is 5k - Sale – if cash is 15k or 10k LEASE OF THINGS
One of the parties binds himself to give to another the enjoyment or use of a thing for a price certain and for a period which may be definite or indefinite
Landlord transfers merely temporary possession and enjoyment of the thing leased
In sale: seller transfers ownership of the thing sold DATION IN PAYMENT
Dacion en pago is the alienation of property by the debtor to the creditor in satisfaction of a debt in money
Governed by law on sales DACION EN PAGO SALE Existence of debt ✓ Debt to creditor X pre-existing credit or debt Obligation Obligations are extinguished Obligations are created Cause Cause is extinguishment of Cause is the price paid – the debt – viewpoint of debtor Object acquired in lieu of debt – viewpoint of creditor viewpoint of seller Thing sold – viewpoint of buyer Freedom in fixing price X freedom in fixing price since value of property may not exactly correspond to amount of debt More freedom in fixing the price Payment Payment is effectively received by the debtor before the contract is perfected
If amount of thing is less than debt, debtor must supply deficiency UNLESS parties have considered the conveyance as full payment Buyer still has to pay the price ART. 1469. In order that the price may be considered certain it shall be sufficient that it be so with reference to another thing certain, or that the determination thereof be left to the judgment of a specified person or persons. 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 persons 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. PRICE CERTAIN IN MONEY OR ITS EQUIVALENT
The buyer pays a price certain in money or its equivalent
HOWEVER, even if the buyer does not pay a price certain in money or its equivalent,! there may be a valid contract of sale IF there was some other consideration for the sale **WHERE PRICE CONSIDERED CERTAIN

NO SALE IF PRICE IS NOT CERTAIN OR ASCERTAINABLE**

There can be no sale without a price
Price must be certain or capable of being ascertained
Money = currency
Equivalent = promissory notes, checks, mercantile instruments generally accepted as representing money
The fact that the exact amount to be paid for the thing sold is not precisely fixed = X bar to an action to recover purchase price

!!!!!! © Michelle Duguil,

8 o PROVIDED that contract, by its terms furnishes a basis or measure for ascertaining the amount agreed upon

2. CASES WHEN PRICE IS CONSIDERED CERTAIN 1. The parties have fixed or agreed upon a definite amount 2. It be certain with reference to another thing certain 3. The determination of the price is left to the judgment of a specified person or persons 4. Fixed by court ** Last 3 cases applicable only when no specific amount stipulated by the parties 3. PRICE CERTAIN WITH REFERENCE TO ANOTHER THING CERTAIN - Example: If the purchase price is “the total amount of the debt of the seller or buyer”! amount of debt as of the sate of the sale can be determined - If the purchase price is the “appraised value” of a specific thing, when such appraised value was previously known to the contracting parties EFFECT WHERE PRICE FIXED BY THIRD PERSON DESIGNATED

GR: A price fixed by a third person designated by the parties is BINDING upon them
E:

Third person acts in Bad Faith or by Mistake

As when 3rd^ person fixed the price having in mind not the object which is the object of sale, but another analogous or similar thing! in which case, the court may fix the price
Mere error in judgement = X serve as basis for impugning the price fixed

When the 3 rd^ person disregard specific instruction or

procedure marked out by the parties or the date given him!

thereby fixing an arbitrary price EFFECT WHERE PRICE NOT FIXED BY THIRD PERSON DESIGNATED

If 3rd^ person designated REFUSES or CANNOT FIX IT (without fault of seller or buyer)! Contract = ineffective as if no price has been agreed upon o E: If parties subsequently agree on the price
If 3rd^ person is PREVENTED from fixing the price by the FAULT OF SELLER/BUYER! party in fault may obtain redress against the party in fault! Choice: o Rescission + damages o Fulfillment + damages! court shall fix the price Art. 1470. Gross inadequacy of the price does not affect the contract of sale, except as it may indicate a defect in consent, or that the parties really intended a donation or some other act or contract. EFFECT OF GROSS INADEQUACY OF THE PRICE
GR: Lesion or inadequacy of cause will NOT invalidate a contract (1335) o E: if there if FRAUD, MISTAKE OR UNDUE INFLUENCE
In determining whether the price is adequate or not, the price obtaining at the date of the execution of the contract, not those obtaining a number of years later, should be considered
Allegation of inadequacy must be proven WHERE LOW PRICE INDICATES A DEFECT IN CONSENT
When fraud, mistake or undue influence is present = contract may be annulled because CONSENT is defective
Ex. Contracts of sale entered into by guardians are rescissible if ward suffers lesion more than ¼ of the value of the thing WHERE PRICE SO LOW SO AS TO INDICATE THAT THE PARTIES INTENDED ANOTHER CONTRACT
Where the price is so low that “ a man in his senses and not under a delusion” would not accept it! the contract may be shown to be a donation or some other contract
BUT where the price paid is much higher than the assessed value of the property and the sale is effected by a father to his daughter in which filial love must be taken into account, the price is not to be construed “as so inadequate as to shock the court’s conscience” EFFECT OF GROSS INADEQUACY OF PRICE IN VOLUNTARY SALES
A JUDICIAL OR EXECUTION SALE - is one made by the court with respect to the property of a debtor for the satisfaction of his indebtedness
GR: Mere inadequacy of price is X sufficient ground for the cancellation of an execution sale if there is no showing that in the event of a resale, a better price can be obtained o E: Where the price is so low as to be “shocking to the conscience” ! judicial sale of property will be set aside WHERE SELLER IS GIVEN RIGHT OF REPURCHASE
The validity of the sale is NOT necessarily affected where the law gives to the owner the right to redeem, as when a sale is made at public option, upon the theory that the lesser the price, the easier it is for the owner to effect the redemption
He may reacquire the property or also sell his right to redeem and thus recover the loss he claims he suffered by reason of the price obtained at the execution sale 1471. If the price is simulated, the sale is void, but the act may be shown to have been in reality a donation or some other act or contract SIMULATION OF CONTRACT
May be absolute or relative
ABSOLUTE o When the parties do not intend to be bound at all o VOID

!!!!!! © Michelle Duguil,

10 NOTE: In case parties do not intend to be bound until after the price is settled! the buyer must return the goods already received

If unable to do so, must pay reasonable value at the time of delivery and the seller must return any portion of the amount received CONCEPT OF REASONABLE PRICE
Generally the market price at the time and place fixed by the contract or by law for the delivery of goods
SC: A reasonable price may or may not agree with the current price of the commodity at the port of shipment is made DETERMINATION OF FAIR MARKET VALUE
Reasonable sum which property would bring on a fair sale by a man willing, but not obliged to sell to a man willing but not obliged to buy ART. 1475. The contract of sale is perfect at the moment there is a meeting of minds upon the thing which is the object of the contract and upon the price, From that moment, the parties may reciprocally demand performance, subject to the provisions of law governing the form of contracts. PERFECT OF CONTRACT OF SALE GR: Contracts are perfect by mere consent 1. MOMENT OF CONSENT
Contract of sale = consensual
Perfected at the moment of consent without the necessity of any other circumstances
The reciprocal obligations of the parties arise even when neither has been delivered
Mutual consent = state of mind! **inferred from 2 acts:

Offer certain** as to the object of the contract and its consideration 2. Acceptance by one of the offer made by the other

GR: A person not incompetent to contract merely because of advanced years or by reason of physical infirmities o E: When such age or infirmities have impaired the mental faculties as to prevent a person from intelligently protecting his property rights = undeniable incapacitated
There is no difference in law where a person gives his consent reluctantly and even against his good sense and judgment as when he acts voluntarily and freely 2. FORM OF THE CONTRACT
GR: Contract of sale is binding regardless of its form o E: If it falls within the provisions of the Statute of Frauds or of any other applicable statute which requires a certain form for its enforceability or validity! form must be complied with 3. CONDUCT OF THE PARTIES
Appropriate conduct by the parties may be sufficient to establish an agreement
The actions of the parties may indicate that a binding obligation has been undertaken
There is no perfected sale where it is conditional (subject to approval of authorities) and the condition is not fulfilled
Letter of intent to buy and sell is just that – X contract to sell nor conditional contract of sale 4. TRANSFER OF OWNERSHIP
Sale, but itself, does not transfer or affect ownership
The most sale does is to CREATE THE OBLIGATION TO TRANSFER OWNERSHIP
Ownership is not transferred until the delivery of the thing o E: if parties stipulate that ownership is not transferred until full payment of the purchase price 4. APPLICAN’T QUALIFICATION TO BUY STILL SUBJECT FOR INVESTIGATION
Agreement was denominated as “contract of sale” BUT subject to revocation after investigation of applicant’s qualification and approval of the board of liquidators showing that applicant is not qualified =X perfected contract of sale! mere application to buy and sell 5. BREACH OF CONTRACT BY ONE PARTY
A party commits breach of contract when he fails without legal reason or justification to comply with the terms which form the whole or part of the contract
Injured party may sue for: o Fulfillment + damages o Rescission + damages RULES WITH RESPECT TO OFFER

Offer must be certain (1319)
Person making the offer may fix the time, place and manner of acceptance, all of which must be complied with (1322)
When the offer has allowed the offeree a certain period to accept, the offer may be withdrawn at any time before acceptance by communication such withdrawal

Except when the option is founded upon a consideration, as something paid or promised (1324)

An offer becomes ineffective upon the death, civil interdiction, insanity or insolvency of either party before acceptance is conveyed (1323) RULES WITH RESPECT TO ACCEPTANCE
The acceptance of an offer must be UNQUALIFIED AND ABSOLUTE

Counter-offer - Anything short of that level of mutuality produces not a contract but a mere awaiting acceptance // where a party sets a different purchase price than the amount of the offer such acceptance was qualified
Must be unanimous both on the rate of the payment and on its term

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An acceptance may contain a request for certain changes in the terms of the offer and yet be binding as an acceptance as long as it is clear that the meaning of the acceptance is positively and unequivocally to accept the offer, whether request is granted or not

Acceptance may be EXPRESS OR IMPLIED WHEN DEFINITE AGREEMENT ON MANNER OF PAYMENT IS ESSENTIAL

GR: Valid contract upon the meeting of the minds. It is not the act of payment of the price that determines the validity of a contract of sale
EXCEPTIONS (Instances when definite agreement is essential):

Purchase price payable in installments

It is not enough that the parties agree on the price as well as the amount of downpayment

Where the parties still have to meet and agree on how and when the downpayment and installment payments are to be made = contract of sale X perfected

Toyota Shaw Inc. vs court of appeals – nothing was mentioned about the full purchase price and the manner the installments were to be paid

The minds of the parties must also meet on the terms or manner of payment of the price, the same is needed! otherwise, there is no sale

A disagreement on the manner of payment is tantamount to failure to agree on the price

An agreement on the price but a disagreement on the manner of its payment will not result in consent

An agreement on the terms of payment is integral to the element of price certain EFFECT OF FAILURE TO PAY STIPULATED PRICE FAILURE TO PAY LACK OF CONSIDERATION Results in a right to demand:
Fulfillment OR
Cancellation of the obligation under an existing valid contract Prevents the existence of a valid contract **EFFECT OF FAILURE TO PAY STIPULATED PRICE

VALIDITY OF CONTRACT NOT VITIATED**

Failure to pay stipulated price after the execution of the contract = X convert the contract into one without cause or consideration as to vitiate the contract, it not being essential for the existence of the cause that payment or full payment be made at the time of the contract 2. REMEDY OF THE VENDOR
Specific performance + damages
Rescission + damages 3. PROOF OF PAYMENT
Sales invoice = only evidence of the receipt of goods! X evidence of payment
**Best evidence: Official receipt

NOTARIZED DEED OF SALE STATES RECEIPT OF PRICE**

Strong evidence of payment
X defeated by unsupported verbal claim! Evidence to the contrary must be clear, strong and convincing 5. WHERE THE PRICE STATED AS PAID NEVER BEEN PAID
Null and void
Sale is without cause or consideration RIGHT OF OWNER TO FIX HIS OWN PRICE

The owner of a thing has the right to quote his own price, reasonable or unreasonable! it is up to the prospective buyer to accept it

He may even impose a condition hard to fulfill and name a price quite out of proportion to the real value of the thing offered for sale

He is also well within his right to quote a small or nominal consideration

Such consideration is just as effectual and valuable a consideration as alleger sum stipulated or paid

In the case of a sale by auction: (1) Where goods are put up for sale by auction in lots, each lot is the subject of a separate contract of sale (2) A sale by auction is perfected when the auctioneer announces its perfection by the fall of the hammer, or in any other customary manner. Until such announcement is made, any bidder may retract his bid; and the auctioneer may withdraw the goods from the sale unless the auction has ben announced to be without reserve (3) A right to bid may be reserved expressly by or on behalf of the seller, unless otherwise provided by law or by stipulation (4) Where notice has not been given that a sale by auction is subject to a right to bid on behalf the seller, it shall not be lawful for the seller to bid himself or to employ or induce any person to bid at such sale on his behalf or for the auctioneer, to employ or induce any person to bid at such sale on behalf of the seller or knowingly take any bid from the seller or any person employed by him. Any sale contravening this rule may be treated as fraudulent by the buyer. **RULES GOVERNING AUCTION SALES
SALES OF SEPARATE LOTS BY AUCTION ARE SEPARATE SALES**

Where separate lots are the subject of separate biddings and are separately knocked down, there is a separate contract in regard to each lot 2. SALE PERFECTED BY THE FALL OF THE HAMMER
Each bid is an offer and the contract is perfected only by the fall of the hammer or in other customary manner
The bidder may retratct his bid and the auctioneer may withdraw the goods from sale anytime BEFORE THE HAMMER FALLS o E: If the sale is announced without reserve , the auctioneer cannot withdraw the goods from sale once bid has been made and the highest bidder has right to enforce his bid

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13 o Free on board stipulation – ownership of the products sold is retained by the seller until after the postdated checks evidenced by provisional receipts given as payment by the buyer are cleared, with stipulation that loss or destruction of the product during transit is for the account of the buyer

7. CONTRACT OF INSURANCE - A perfected contract of sale even without delivery bests in the buyer EQUITABLE TITLE, an existing interest over the goods sufficient to be the subject of insurance **Busmente notes:

Constructive Delivery:**
GR : Execution of public document transfers ownership o E: If there is legal impediment (Adisson & ten forty case)
There can only be constructive delivery if there is no legal impediment
Addisson case
Payment for subject or thing has no bearing. It is delivery that transfers ownership – Sampaguita Case 1479. A promise to buy and sell a determinate thing for a price certain is reciprocally demandable. An accepted unilateral promise to buy or to sell a determinate thing for a price certain is binding upon the promissor if the promise is supported by a consideration distinct from the price. KINDS OF PROMISES TREATED IN ART 1479

An accepted unilateral promise to sell in which the promisee (acceptor/buyer) elects to buy
An accepted unilateral promise to buy in which the promisee (acceptor/seller) elects to sell;
A bilateral promise to buy and sell reciprocally accepted in which either of the parties chooses to exact fulfillment EFFECT OF UNACCEPTED UNILATERAL PROMISE – “POLICITACION”

Created no juridical effect or legal bond
Unaccepted imperfect promise or offer
A period may be given to the offeree within which to accept the offer OPTION
A contractual privilege existing in one person for which he has paid a consideration which gives him the right to buy or sell NATURE OF OPTION CONTRACT

Preparatory contract separate and distinct from the main contract itself
Merely secures a privilege to buy/sell
Gives the party granted the option the right to decide w/n to enter into a principal contract
Binds the party who has given the option not to enter into the principal contract with any other person during the agreed time and within that period
To enter into such contract with the one to whom the option was granted if the latter should decide to use the option
Imposes no binding obligation on the person holding the option aside from the consideration for the offer! it is only when the option is exercised may a sale be perfected
Option must be supported by a consideration distinct from the price
Optionee or promisee has the burden of proving such consideration a. Lacking any proof of such consideration, the option is unenforceable
Consideration need not be monetary or actual cash a. May consists of other thins or undertakings but they must be something of value (onerous nature of option contract) b. When such consideration is not monetary, it must be clearly specified as such in the option contract or clause
The consideration is “the why of the contract, the essential reason which moves the contract parties to enter into the contract” a. An option without consideration is void EFFECT OF ACCEPTED UNILATERAL PROMISE
2 nd^ paragraph = Option the commercial world
GR: A unilateral promise to sell or to buy a determinate thing for a price certain does NOT bind the promissor even if accepted and may be withdrawn at any time o E: It is only if the promise is SUPPORTED BY A CONSIDERATION DISTINCT AND SEPARATE FROM THE PRICE that its acceptance will give rise to a perfected contract
The optionee (holder of the option) AFTER accepting the option and BEFORE he exercises it! has the right , but not the obligation to buy or sell, as the case may be
Once the option is exercised (offer is accepted before the breach of the option), a BILATERAL PROMISE to sell and to buy ensues! both parties are then reciprocally bound to comply with their respective undertakings
If he withdraws the offer BEFORE THE ACCEPTANCE (exercise of the option) by the optionee-offeree! The optionee-offeree may NOT sue for specific performance on the proposed contract since it has failed to reach its own stage of perfection o BUT offerror is liable for damages for breach of the option FULL PAYMENT OF PRICE NOT NECESSARY FOR EXERCISE OF OPTION TO BUY

Obligations under an option to buy are reciprocal obligations – the performance of one obligation is conditioned upon the simultaneous fulfillment of the other obligation
The party who has an option may validly and effectively exercise his right by: o Merely notifying the owner of the former’s decision to buy and o Expressing his readiness to pay the stipulated price

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14 o Notice need NOT be coupled with actual payment of the purchase price so long as this is delivered to the owner of the property upon the execution and delivery by him of the deed of sale

The payment of the price is contingent upon the delivery of the deed of sale o Unless and until the owner shall have delivered DOS, the buyer who has the option does NOT and CANNOT be held in default in the discharge of his obligation to pay o Consignation in court of the purchase price not required o Option to buy = X contract of purchase and sale ART. 1479 AND ART. 1324 COMPARED ART. 1324
GR: When the offerer has allowed the offeree a certain period to accept, the offer may be withdrawn at any time before acceptance by communicating such withdrawal o E: When the option is founded upon a separate consideration, the offerrer cannot withdraw his offer, even if the same has not yet been accepted, before the expiration of the stipulated period SOUTHERN SUGAR AND MOLASSES COMPANY VS. ATLANTIC GULF
It is true that under 1324 of the CC, the GR regarding offer and acceptance is that, when the offerer gives to the offeree a certain period to accept, “ the offer may be withdrawn at any time before acceptance” except when the option is founded upon a consideration
But this GR must be interpreted as modified by the provision of 1479 which applies to a “promise to buy and sell” specifically! this rule requires that for a promise to sell to be valid, it must be supported by a consideration distinct from the price
**ABANDANDONED DOCTRINE ★ SANCHEZ VS. RIGOS
Even supposing that petitioner granted an option which is not binding for lack of consideration, the authorities hold that: if the option is given without a consideration, it is a mere offer of a contract of sale, which is not binding until accepted. If however, acceptance is made before a withdrawal, it constitutes a binding contract of sale, even though the option was not supported by a sufficient consideration ★ ATKINS, KROLL and CO, INC VS CU HIAN TEK
If the option is given WITHOUT CONSIDERATION! it is a mere offer of a contract of sale, which is NOT binding until accepted
If, however, THE ACCEPTANCE IS MADE BEFORE A WITHDRAWAL! it constitutes a binding contract of sale, even though the option was not supported by sufficient consideration RIGHT OF FIRST REFUSAL
The right of first refusal is an integral part of the contract of lease! consideration is built into the reciprocal obligation of the parties
Assurance that lessee will be given first crack or first option to buy the property at the price which lessor is willing to accept
If 3rd^ person buyer is in BF because he was aware of the existence of the contract of lease! lessee who has the right of first refusal he may have the fraudulent sale SET ASIDE OR RESCINDED
A right of first refusal means identity of terms and conditions to be offered to the lessee and all other prospective buyers
A contract of sale entered into in violation of a right of first refusal of another person, while VALID, IS RESCISSIBLE
Basis of the right of first refusal must be the current offer to sell of the seller or offer to purchase of any prospective buyer RIGHT OF FIRST REFUSAL OPTION CONTRACT X stand on its own (accessory contract) Can stand on it own (principal contract) X Require separate consideration – consideration is integral part of the contract of lease already Requires a separate consideration distinct from that of the contract of sale in order to be valid Conditional Not conditional Can be subjected to specific performance Remedy: Set aside or rescind fraudulent sale X subject to specific performance since there is no perfected contract of sale yet OPTION MONEY VS EARNEST MONEY OPTION MONEY EARNEST MONEY Money given as a distinct consideration for an option contract Money which is part of the purchase price Applies to contract of sale X perfected Applies to contracts of sale already perfected The would be buyer who gives the option money is X bound to buy The buyer who gives the earnest money is bound to pay the balance EFFECT OF BILATERAL PROMISE TO BUY AND SELL
When the promise is BILATERAL - one party accepts the other’s promise to buy and the latter, the former’s promise to sell a determinate thing for a price certain! Practically has the same effect as a perfected contract of sale since it is reciprocally demandable 1480. An injury or benefit from the thing sold, after the contract has been perfected, from the moment the perfection of the contract to the time of delivery shall be governed by articles 1163-1165, and 126 2 This rule shall apply to sale of fungible things, made independently and for a single price, or without consideration of their weight, number or measure. Should fungible things be sold for a price fixed according to weight, number, or measure, the risk shall not be imputed to the vendee until they have been

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16 DELIVERY! seller bears risk of loss

Buyer may choose between:

Rescission + damages
Fulfillment + damages AFTER DELIVERY Buyer 1504. Unless otherwise agreed, the goods remain at the seller’s risk until the ownership therein is transferred to the buyer, but when the ownership therein is transferred to the buyer, the goods are at the buyer’s risk whether actual delivery has been made or not, except that: (1) Where delivery of the goods has been made to the buyer or a bailee for the buyer, in pursuance of the contract and the ownership in the goods has been retained by the seller merely to secure performance by the buyer of his obligation under the contract,! the goods are at the BUYER’S RISK from the time of such delivery; (2) Where actual delivery has been delayed through the fault of either the buyer or seller the goods! are at the RISK OF THE PARTY IN FAULT RISK OF LOSS GENERALLY ATTENDS TITLE

GR: If the thing is lost through FE, the risk is borne by the owner of the thing at the time of the loss under the principle of res perit domino o EXCEPTIONS:

Seller reserves the ownership of the goods MERELY TO SECURE THE PERFORMANCE OF THE BUYER OF HIS OBLIGATIONS! ownership is considered transferred to the buyer, who therefore assumes the risk from the time of delivery
Where actually delivery has been DELAYED THROUGH THE FAULT OF EITHER BUYER OR SELL! goods are at the risk of the party at fault with respect to any loss which might not have occurred but for such fault CONFLICT BETWEEN 1480 and 1504 1480 1504 WHO BEARS RISK If the thing is lost after perfection of the contract but before delivery (even before ownership is passed), the risk of loss by FE without seller’s fault! risk is borne by the BUYER = Buyer is still obliged to pay the price if he has not yet paid = He cannot recover from the seller when he has paid already although the seller’s obligation to deliver the thing is extinguished by its loss Until ownership of goods is transferred to the buyer! goods generally remain at the SELLER’S risk

WHAT IS

ESSENTIAL

After perfection of contract even before delivery (before transfer of ownership) + lost thru FE! Buyer’s risk **follows roman law – risk is transferred to buyer upon perfection of contract Before Delivery aka transfer of ownership! Seller’s risk After transfer of ownership (delivery)! Buyer’s risk SOLUTION SUGGESTED

Sale of things (ex. Sale of real estate)
General Rule
- Sale of goods
- Exception AUTHOR’S OPINION

DE LEON PARAS

BUSMENTE’S

VIEW –

Circumstantial (Needs legislation to avoid irreconcilable conflict) SELLER should use this as defense BUYER should use this as defense ART. 1481. In the contract of sale of goods by description or by sample, the contract may be rescinded! if the bulk of the goods delivered do not correspond with the description or the sample, // and If the contract be by sample as well as by description, it is not sufficient that the bulk of goods correspond with the sample if they do not correspond with the description. The buyer shall have a reasonable opportunity of comparing the bulk with the description or the sample. SALE OF GOODS BY DESCRIPTION AND/OR SAMPLE

Sale of goods by:
1. Description
2. Sample
3. Sample and description
Provides for cause for rescission distinct from those stated in 1597 Note: 1597 – Where the goods have not been delivered to the buyer, and the byer has repudiated the contract of sale, or had manifested his inability to perform his obligations thereunder, or has committed a breach thereof, the seller may totally rescind the contract of sale by giving notice of his election so to do to the buyer SALE BY DESCRIPTION
Occurs where a seller sells things as being of a particular kind, the buyer not knowing whether the seller’s representations are true or false, but relying on them as true

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Where the purchaser has not seen the article sold and relies on the description given him by the vendor, or has seen the goods but the wants o identity is not apparent on inspection
Reason: Dealer should understand that purchaser relies upon the description as a representation by the seller that is the thing described
Creates an implied warranty that the goods will conform to that description and that the goods are of merchantable quality
If the bulk of the goods do not correspond with the description,! the contract may be rescinded
But if the thing delivered is as described, the fact that the buyer cannot use the thing sold for the purpose for which it was intended without the seller’s fault! X exempt buyer from paying the purchase price agreed upon SALE BY SAMPLE
There is a sale by sample when a small quantity is exhibited by the seller as a fair specimen of the bulk, which is not present and there is no opportunity to examine or inspect the same
Parties treated sample as the standard of quality and that they contracted with reference to the sample with the understanding that the product to be delivered would correspond with the sample
E: Mere exhibition of a sample by the seller in the absence of any showing that it was an inducement of the sale or formed the sole basis thereof! X sale by sample as where the quality of the articles to be furnished is expressly described in the contract w/o reference to the sample or the parties agree that the goods ordered shall differ from the sample in some particular matter
Species of sale by description
Implied warranty that the goods shall be free from any defect which is not apparent on reasonable examination of the sample and which would render the goods not merchantable SALE BY DESCRIPTION AND SAMPLE
When a sale is made both by sample and by description, the goods must satisfy all the warranties appropriate to either kind of sale
It is not sufficient that the bulk of goods correspond with the sample if they do not also correspond with the description and vice versa MEANING OF BULK OF GOODS
Used to denote the goods as distinguished from the sample with which they correspond
X used to designate the greater portion of the goods
Goods which as a while body should correspond substantially with the sample and description THE BUYER IS GIVEN REASONABLE OPPORTUNITY OF COMPARING THE BULK WITH THE DESCRIPTION OR THE EXAMPLE DESCRIPTION SAMPLE BOTH WHAT • Where the purchaser has not seen the article sold
Relies on the description given him by the vendor
Or has seen the goods but the wants of identity is not apparent on inspection
There is a sale by sample when a small quantity is exhibited by the seller as a fair specimen of the bulk,
Which is not present and there is no opportunity to examine or inspect the same When a sale is made both by sample and by description, WARRANTY Implied warranty Implied warranty Implied warranty REMEDY Rescission Rescission ART. 1482. Whenever earnest money is given in a contract of sale, it shall be considered as party of the price and as proof of the perfection of the contract. EARNEST MONEY
Something of value given by the buyer to the seller to show that the buyer is really in earnest, and to bind the bargain
It is actually a partial payment of the purchase price
Considered as proof of perfection of contract
Forms part of the consideration only if the sale is perfected and the sale is consummated upon full payment of the purchase price
It must be deducted from the total price
Delivery of part of the purchase price should not be understood as constituting earnest money to bind the agreement in the absence of something in the contract showing that such was the intention of the parties
If the earnest money was given in a contract to sell! X apply 1482 DISPUTABLE PRESUMPTION
Disputable presumption that prevails in the absence of contrary or rebuttal evidence OPTION MONEY VS. EARNEST MONEY OPTION MONEY EARNEST MONEY Money given as a distinct consideration for an option contract Money which is part of the purchase price Applies to contract of sale X perfected Applies to contracts of sale already perfected The would be buyer who gives the option money is X bound to buy The buyer who gives the earnest money is bound to pay the balance

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Reason for the rule: o Partial performance like the writing, furnishes reliable evidence of the intention of the parties or the existence of the contract
Circumstances indicating partial performance o Relinquishment of rights o Continued possession by a purchaser who is already in possession o Building of improvements o Tender of payment o Rendition of services o Payment of taxes o Surveying of the land at the vendee’s expense o Where there is partial performance of a parol contract of sale of realty, the principle excluding evidence of such contract does not apply
Contracts not to be performed within 1 year o To be taken out of the SF, all that is required if complete performance within the year by one party! there should be nothing left to be than but the payment of the consideration for the performance SALE OF REAL PROPERTY
- A sale of a piece of land or interest therein when made thru an agent is! VOID o E: If the agent’s authority be in writing
- To be effective against 3rd^ persons! sale must be registered in the RD of the province or city where the property is located + public document o Registration = X mode of acquiring ownership o Actual notice = registration
- Sale of land in private instrument is valid between the contracting parties
- Deed of sale X need to be notarized, sufficient that it is in writing LEGAL RECOGNITION OF ELECTRONIC DATA MESSAGES AND ELECTRONIC DOCUMENT - RA 8792 – ELECTRONIC COMMERCE ACT 1. VALIDITY AND ENFORCEABILITY
  - Electronic date messages or electronic documents shall have the legal effect, validity or enforceability as any other document or legal writing 2. INCORPORATION BY REFERENCE
  - Information shall not be denied validity or enforceability solely on the ground that it is not contained in the electronic data message or electronic document but is merely incorporated by reference therein 3. WRITING
  - An electronic document or electronic data message shall be sufficient if it:
    1. Maintains its integrity and reliability
    2. TESTS: Can be authenticated so as to be usable for subsequent reference
      - Integrity - It has remained complete and unaltered
      - Reliability - Reliable in light of the purpose for which it was generated and in light of relevant circumstances 4. ORIGINAL
  - When the law requires that a document be presented or retained in its original form, that requirement is met by an ED or EDM if:
    1. Reliable assurance of integrity of ED or EDM from the time it was first generated in its final form and such is shown by evidence aliunde (evidence other than EDM itself)! see tests above 2. ED OR EDM is capable of being displayed to the person to whom it is to be presented 5. SOLEMN CONTRACTS
X apply when the law required that contract be in some form in order that it may be valid and enforceable, or that a contract is proved in a certain way! requirement is absolute and indispensible LEGAL RECOGNITION OF ELECTRONIC SIGNATURES
An electronic signature relating to an ED or EDM shall be equivalent to the signature of a person on a written document if the signature **COMMUNICATION OF ELECTRONIC DATA MESSAGES AND ELECTRONIC DOCUMENTS

FORMULATION AND VALIDITY OF ELECTRONIC CONTRACTS** o Offer, acceptance of an offer and other such elements required under existing laws for the formation and perfection of contracts may be expressed thru EDM! Valid (except as otherwise agreed by the parties 2. CONSUMMATION OF ELECTRONIC TRANSACTION WITH BANKS o Transactions made throught networking among bank is deemed consummated upon the actual dispensing of cash or the debit of one account and the corresponding credit to another o Applies to ATM switching network 3. RECOGNITION BY PARTIES OF EDM o A declaration of will or other statement shall not be denied legal effect, validity or enforceability on the ground that it is in the form of an EDM or ED ART. 1484. In a contract of sale of personal property the price of which is payable in installments, the vendor may exercise any of the following remedies: (1) Exact fulfillment of the obligation, should the vendee fail to pay (2) Cancel the sale, should the vendee’s failure to pay cover two or more installments (3) Foreclose the chattel mortgage on the thing sold, if one has been constituted, should the vendee’s failure to covert two or more installments. In this case, he shall have no further action against the purchaser to recover any unpaid balance of the price. Any agreement to contrary shall be void. REMEDIES OF VENDOR IN A SALE OF PERSONAL PROPERTY PAYABLE IN INSTALLMENTS

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Exact fulfillment of the obligation, should the vendee fail to pay
Cancel the sale , should the vendee’s failure to pay cover two or more installments
Foreclose the chattel mortgage on the thing sold, if one has been constituted, should the vendee’s failure to covert two or more installments. In this case, he shall have no further action against the purchaser to recover any unpaid balance of the price. Any agreement to contrary shall be void. REMEDIES ALTERNATIVE

X cumulative
Election of one is a waiver of the right to resort to other remedies
Alternative remedies as distinguished from alternative obligations o In alternative obligations – mere choice communicated by the person entitled to exercise the option concludes the parties " E: if the chosen alternative proves to be ineffectual or unavailing due to no fault on his part o In alternative remedies – choice generally becomes conclusive only upon the EXERCISE of the remedy APPLICABILITY OF ART 1484
The contract of sale of personal property
Payable in installment
And there has been a failure to pay 2 or more installments
X apply to sale of personal property not payable in installments
X apply to sale of personal property on straight term or partly in cash and partly in term
X apply to sale of immovable property nor to real estate mortgage
X apply to contracts to sell **MEANING OF CERTAIN TERMS AS USED IN ART 1484

EXERCISE**

Desistance of plaintiff on its own initiative from proceeding with the auction sale without gaining any advantage or benefit and without causing disadvantage or harm to the defendant-mortgagor! X considered exercise of remedy of foreclosure! incomplete implementation! X barred from suing the unpaid account 2. ACTION
Refers to any judicial or extra-judicial proceeding by virtue of which the vendor may be lawfully enabled to exact recovery of the supposed unsatisfied balance of the purchase price from the purchaser or his privy 3. ANY UNPAID BALANCE
Deficiency judgment which the mortgagee may be entitled, where after the mortgaged chattel is sold at public auction, the proceeds obtained therefrom are insufficient to cover the full amount of the secured obligation
Includes principal, atty’s fees, expenses of collection and costs
If the mortgagor unjustifiable refused to surrender the chattel or if he concealed the chattel to place it beyond the reach of the mortgagee! expenses incurred for prosecution of the case such as atty’s fees! could be rightly awarded 4. FORECLOSURE
Foreclosure by the usual methods including sale of thing at public auction