DEPARTMENT OF ACCOUNTANCY

SCHOOL OF BUSINESS AND MANAGEMENT

XAVIER UNIVERSITY (ATENEO DE CAGAYAN)

COURSE SYLLABUS

COURSE : Law 4

CREDIT : 3 units

COURSE TITLE : The Law on Sales and Credit Transactions

COURSE DESCRIPTION:
The study of the body of rules which deals with the nature and obligations, the
rights and duties arising from the contract of sales and credit transactions.

GENERAL OBJECTIVE:
At the end of the course, the students should have sound knowledge of the legal
provisions, general principles and concepts, and the underlying philosophy governing
the framework on the law on sales and credit transactions.

SPECIFIC OBJECTIVES:

1. To enable the students to understand the legal provisions governing the law
on contract of sales and credit transactions, specifically, pledge and mortgage;

2. To provide illustrations correlating real life situations to further assist the

students in the proper interpretation of the law to insure full understanding of the basic
principles;

3. To expound the reason for the law to help the students comprehend the legal
provisions by demonstrating practical application in specific cases and provide
examples typical of everyday life, to their business courses as well as to their future
endeavors;

4. To guide students in developing analytical approach in understanding legal

provisions in relation to the jurisprudence laid down by the Supreme Court;

5. To design an effective learning environment for graduating accountancy

students in preparation for the CPA Board Examinations.

6. To enhance students mastery on the subject matters for business law in

preparation for the CPA Board Examination.

TEXTBOOK:

The Law on Obligations and Contracts, Hector S.de Leon, Latest Edition

METHODOLOGY:

Oral exam and quiz every meeting (5 minutes before the time) and outline
projects. Lectures shall be conducted at a certain period every meeting to emphasize
certain points and explain the provisions.
TOPIC OUTLINE:
 SALES

1. Nature and Form of Contract of Sales

a) Concept
b) Characteristics
c) Essential requisites
d) 2 kinds of contract of sale
e) Objects of sale: requisites, kinds, right to transfer ownership
f) Sale of undivided interest, undivided share, subject to a resolutory condition
g) Agency to sell
h) Contract for a piece of work
i) Barter
j) Price
k) Perfection
l) Auction sale
m) Rule on transfer of ownership and exception
n) Promise: kinds and effect
o) Loss or deterioration
p) Sale of goods by description and/or sample
q) Earnest money
r) Option money
s) Form of contract of sale: real property, Statute of Frauds
t) Remedies of vendor in sale of personal property by installment: nature, right,
recovery of deficiency – Recto Law
u) Remedies of vendor in sale of real property by installment – Maceda Law
v) Condominum Act PD 957
w) Lease of personal property with option to buy, stipulations, expenses,
x) Expropriation of property for public use

2. Capacity to Buy or sell

a) Parties to a contract of sale
b) Kinds of incapacity
c) Liability for necessaries of minor or other persons without capacity to act
d) Minors
e) Relative incapacity of husband and wife, reason for prohibition, persons who can
question the sale
f) Other incapacity, reason for prohibition, effect of sale in violation
g) Legal redemption
3. Effects of the contract when the thing sold has been lost
4. Obligations of the Vendor
a) Transfer ownership
b) Delivery
 Kinds
 Risk of loss
 Sale by a person not the owner, having a voidable title
 Documents of title: nature, function, form, classes, negotiations
 Non negotiable documents
 Warranties
 Indorsement
 Unpaid seller: remedies and rights
 Rules: loss, deterioration, or improvement of thing before delivery
 Sale by unit of measure or number
  Sale of real estate made for a lump sum
 Prescription of actions
 Double sale: Preference of ownership
c) Conditions and Warranties
 Meaning and effect of conditions
 Kinds of Warranties
 Warranty in case of eviction
 Warranty against hidden defects of, or encumbrances upon, the thing sold
5. Obligations of the Vendee
a) Principal obligations
b) Pertinent rules
c) Rules in installments
d) Rights
e) Liabilities
f) Remedies
6. Actions for Breach of contract of sale of goods
a) Seller’s right
b) Buyer’s right
c) Remedies: nature, measure, rescission
7. Extinguishment of Sale
a) Conventional redemption
b) Legal redemption
8. Assignment of credits and other incorporeal rights
9. General Provisions
10. Barter or exchange
11. Bulk Sales Law: purpose, scheme, protection, effect of violation

CREDIT TRANSACTIONS

PLEDGE
1. Provisions common to pledge and mortgage
2. Definition, characteristics, cause, kinds, essential requirements
3. Pledge vs Mortgage
4. Obligations of the pledgor and pledgee
5. Extinguishment
6. Effect of sale of the thing pledged
7. Pactum commissorium

REAL MORTGAGE
1. Definition, characteristics
2. Cause
3. Kinds
4. Subject matter
5. Essential requisites
6. Effect and extent of mortgage
7. Foreclosure, kinds
8. Redemption, kinds

CHATTEL MORTGAGE
1. Definition, characteristics
2. Chattel vs pledge, similarities
3. Governing law
4. Subject matter
5. Creation
6. Affidavit of good faith
7. Foreclosure
8. Recovery of deficiency
9. Application of proceeds of sale
10. Right of redemption

LOAN
1. General Provisions
 Definition, cause or consideration, kinds
2. Commodatum
 Nature
 Obligations of the bailee
 Obligations of the bailor
3. Simple Loan or mutuum
 Definition
 Object
 Payment: usury, interest

ANTICHRESIS
1. Definition, characteristics
2. Antichresis vs pledge
3. Antichresis vs real mortgage
4. Measure of application of fruits to interest and principal
5. Form
6. Obligations of parties
7. Right of nonpayment

DEPOSIT
1. Deposit in General and its different kinds
2. Definition
3. Purpose
4. Voluntary Deposit
5. Obligations of the depositary
6. Obligations of the depositor
7. Necessary deposit
8. Sequestration or judicial deposit

GUARANTY
1. Effects of guaranty between the guarantor and creditor, the debtor and guarantor,
co-guarantors
2. Extinguishment

OTHER LAWS ON BUSINESS TRANSACTION

SECURITIES REGULATIONS CODE

SEC CIRCULARS AND ISSUANCES
COOPERATIVES
DATA PRIVACY ACT
E-COMMERCE LAW
INTELLECTUAL PROPERTY LAW

COURSE REQUIREMENT:

The students are expected to submit an OUTLINE on

(a) SALES, SECURITIES REGULATIONS CODE, SEC CIRCULARS AND ISSUANCES
– last meeting before midterm exam
(b) CREDIT TRANSACTIONS, COOPERATIVES, DATA PRIVACY ACT,
E-COMMERCE LAW AND INTELLECTUAL PROPERTY LAW
– last meeting before the final exam

This will be a group work. The articles must be divided proportionately among the
members of the group. A member who fails to submit his/her part of the group outline
will suffer the consequence of forfeiture of the 5% grade.

The codal provisions shall not be stated in the outline. Only the salient points,
elements, definitions and other important explanations in the book. The outline must
be computerized and printed in long size bond paper. Use whatever font and size the
group prefers. The outline will be helpful during the review of Business Law in
preparation for the CPA Board Exam.

GRADING SYSTEM:

MIDTERM GRADE Prelim Exam 20%

Class Standing:
Oral Exam 30%
Outline 5%
Quizzes 60%
Attendance 5% 50%
Midterm Exam 30%
100%
=====
FINAL GRADE Midterm Grade 35%
Class Standing:
Oral Exam 30%
Outline 5%
Quizzes 40%
Attendance 5%
Pre-final exam 20% 35%
Final exam 30%
100%
=====

Prepared by:

ATTY. ROSALIE GRACE M. ESCOBIA, CPA