UNIVERSITY OF MINDANAO

College of Accounting Education

Program: BSA, BSIA, BSMA, BSAIS

Physically Distanced but Academically Engaged

Self-Instructional Manual (SIM) for

Self-Directed Learning (SDL)

Course/Subject: ACC 312 – Regulatory Framework and Legal Issues

in Business

Name of Instructor: Atty. Alnessa Thea V. Repollo - Uy

THIS SIM/SDL MANUAL IS A DRAFT VERSION ONLY; NOT FOR

REPRODUCTION AND DISTRIBUTION OUTSIDE OF ITS
INTENDED USE. THIS IS INTENDED ONLY FOR THE USE OF
THE STUDENTS WHO ARE OFFICIALLY ENROLLED IN THE
COURSE/SUBJECT.
EXPECT REVISIONS OF THE MANUAL.
 College of Accounting Education
3rd Floor, BE Building, Matina, Davao City
Telefax: (082)300- 1496 I Phone No.: (082)227- 5456 local 103

Course Outline: ACC 312 – Regulatory Framework and Legal Issues in

Business

Course Coordinator: Atty. Alnessa Thea V. Repollo - Uy

Email: alnessauy@umindanao.edu.ph
Student Consultation: Through LMS Chatbox
Mobile: 0932-812-5775
Phone: (None)
Effectivity Date: June 2020
Mode of Delivery: Online Blended Delivery
Time Frame: 54 Hours
Student Workload: Expected Self-Directed Learning
Requisites: None
Credit: 3 units
Attendance Requirements: Attendance is only voluntary at all
scheduled virtual sessions; and 100% for face to
face
sessions (on campus)

Course Outline Policy

Areas of Concern Details

Contact and This 3-unit course self-instructional manual is designed for blended
Non-contact Hours learning mode of instructional delivery with scheduled face to face or virtual
sessions. The expected number of hours will be 54 including the face to
face or virtual sessions. The face to face sessions shall include the
summative assessment tasks (exams) since this course is crucial in the
licensure examination for certified public accountants.

Assessment Task Submission of assessment tasks shall be on 3rd, 5th, 7 and 9th week of the
th

Submission term. The assessment paper shall be attached with a cover page indicating
the title of the assessment task, the name of the course coordinator, date of
submission and name of the student. The document should be emailed to
the course coordinator. It is also expected that the student has already paid
tuition and other fees before the submission of the assessment task. If the
assessment task is done in real time through the features in the Blackboard
Learning Management System, the schedule shall be arranged ahead of
time by the course coordinator.
Since this course is included in the licensure examination for certified public
accountants, the students will be required to take the Multiple-Choice
Question exam inside the University. This should be scheduled ahead of
time by the course coordinator. This is non-negotiable for all
licensure-based programs.

Turnitin Submission To ensure honesty and authenticity, all assessment tasks are required to
(if necessary) be submitted through Turnitin with a maximum similarity index of 30%
 College of Accounting Education
3rd Floor, BE Building, Matina, Davao City
Telefax: (082)300- 1496 I Phone No.: (082)227- 5456 local 103

allowed. This means that if your paper goes beyond 30%, the students will
either opt to redo his/her paper or explain in writing addressed to the
course coordinator the reasons for the similarity. In addition, if the paper
has reached more than 30% similarity index, the student may be called for
a disciplinary action in accordance with the University’s OPM on Intellectual
and Academic Honesty.

Please note that academic dishonesty such as cheating and

commissioning other students or people to complete the task have severe
punishments (reprimand, warning, expulsion).

Penalties for Late The score for an assessment item submitted after the designated time on
Assignments/Assessm the due date, without an approved extension of time, will be reduced by 5%
ents of the possible maximum score for that assessment item for each day or
part day that the assessment item is late. However, if the late submission of
assessment paper has a valid reason, a letter of explanation should be
submitted and approved by the course coordinator. If necessary, the
student will also be required to present/attach evidences.

Return of Assessment tasks will be returned to the students two (2) weeks after the
Assignments/Assessm submission. This will be returned by email or via Blackboard portal. For
ents group assessment tasks, the course coordinator will require some or few of
the students for online or virtual sessions to ask clarificatory questions to
validate the originality of the assessment task submitted and to ensure that
all the group members are involved.

Assignment The student should request in writing addressed to the course coordinator
Resubmission his/her intention to resubmit an assessment task. The resubmission is
premised on the student’s failure to comply with the similarity index and
other reasonable grounds such as academic literacy standards or other
reasonable circumstances e.g. illness, accidents financial constraints.

Re-marking of The student should request in writing addressed to the course coordinator
Assessment Papers the intention to appeal or contest the score given to an assessment task.
and Appeal The letter should explicitly explain the reasons/points to contest the grade.
The course coordinator shall communicate with the student on the approval
and disapproval of the request. If disapproved by the course coordinator,
the student can elevate the case to the program head or the dean with the
original letter of request. The final decision will come from the dean of the
college.

Grading System All culled from BlackBoard sessions and traditional contact:

Course discussions/exercises – 30%

1st formative assessment – 10%
2nd formative assessment – 10%
3rd formative assessment – 10%

All culled from on-campus/onsite sessions (TBA):

Final exam – 40%

Submission of the final grades shall follow the usual University system and
procedures.
 College of Accounting Education
3rd Floor, BE Building, Matina, Davao City
Telefax: (082)300- 1496 I Phone No.: (082)227- 5456 local 103

Preferred Referencing Use the general practice of the APA 6th Edition.
Style
(if the tasks require)

Student The students are required to have a umindanao email account which is a
Communication requirement to access the BlackBoard portal. Then, the course
coordinator shall enroll the students to have access to the materials and
resources of the course. All communication formats: chat, submission of
assessment tasks, requests etc. shall be through the portal and other
university recognized platforms.

The students can also meet the course coordinator in person through the
scheduled face to face sessions to raise issues and concerns.

For students who do not have their student emails, please contact the
course coordinator or program head.

Contact Details of the Esterlina B. Gevera, CPA, MBA

Dean 0956-815-2738
esterlina_gevera@umindanao.edu.ph

Contact Details of the For BSA/BsMAc:

Program Head Mary Grace S. Sombilon, CPA, MSA
0956-816-2430
mgsombilon@yahoo.com

For BSAT/BSIA/BSAIS:
Devzon U. Porras, CPA, MSA
0915-210-2083
devzonp@gamil.com
Students with Special Students with special needs shall communicate with the course coordinator
Needs about the nature of his or her special needs. Depending on the nature of
the need, the course coordinator with the approval of the program
coordinator may provide alternative assessment tasks or extension of the
deadline of submission of
assessment tasks. However, the alternative
assessment tasks should still be in the service of
achieving the desired course learning outcomes.

Instructional Help College Dean:

Desk Contact Lord Eddie I. Aguilar, CPA, MBA
0949-668-2557
aguilar_lordeddie@umindanao.edu.ph

Library Contact Library Head:

Brigida E. Bacani
Email: library@umindanao.edu.ph
09513766681

for inquiries, you can email at umlic.eresources@gmail.com,

raphael_digal@umindanao.edu.ph or
chat with us here http://library.umindanao.edu.ph/
Facebook page:
https://www.facebook.com/UM-Learning-and-Information-Center-Davao-City-9623
 College of Accounting Education
3rd Floor, BE Building, Matina, Davao City
Telefax: (082)300- 1496 I Phone No.: (082)227- 5456 local 103

31877193048/

Well-being Welfare GSTC Head:

Support Held Ronadora E. Deala
Desk Contact Details 09212122846
ronadora_deala@umindanao.edu.ph

GSTC CAE Facilitator:

Zerdsen P. Ranises
09058924090
09504665431
gstcmain@umindanao.edu.ph

Course Information – see/download course syllabus in the Black Board LMS

Course Facilitator’s (CF) Voice: Welcometo this course, ACC 312 – Regulatory
Framework and Legal Issues in Business. This is a self-instructional manual that will help
you in your self-directed learning. I will be your guide as you go through this module, and let
you work at your own pace. Of course, there will be deadlines and submissions to be made.
Feel free to ask questions and let us help one another so that everything will run smooth
according to your self-directed learning.

Course Outcome (CO): Before we begin, the secret to excel in this subject is to read. When
you read with comprehension, you will be familiar with the provisions in the law. You will be
able to explain the different legal terminologies used in this course – law on sales,
credit transactions and negotiable instruments (CO 1). Eventually, you will be using
your knowledge from this course and apply it to solve business-related problems with
legal basis (CO 2).

This module is designed in accordance with the updated syllabi for CPA Licensure
Examination. You are encouraged to read from the different sources suggested by the
course facilitator. This module only highlights the very important topics every student should
know in preparation for the licensure examination. By the end of this course, you are
reasonably expected to meet the aforementioned course outcomes.

Let us start!

Big Picture

Week 1-3: Unit Learning Outcomes (ULO) 1: At the end of the unit, you are expected to:

a. Understand the nature, characteristics, elements and forms of a contract of

sale.
b. Distinguish earnest money from option money.
 College of Accounting Education
3rd Floor, BE Building, Matina, Davao City
Telefax: (082)300- 1496 I Phone No.: (082)227- 5456 local 103

Big Picture in Focus:

ULO 1a. Understand the nature, characteristics, elements and forms of
a contract of sale.

ULO 1b. Distinguish earnest money from option money

Metalanguage

In this section, essential terms relevant to understanding the nature of the contract of
sale are introduced first with their definitions. This will help you establish a foundation in
internalizing the concepts found in this unit.

1. Agency to sell – a contract in which a person renders service to sell a thing with
authority in behalf of another

2. Barter – one person binds himself to give one thing in consideration of other
person’s another thing

3. Dacion en pago – or dation in payment, is payment to the creditor by way of

property in satisfaction of an obligation

4. Emptio rei speratae – sale of an expected thing (future).

5. Emptio spei – sale of a mere hope or expectancy (present).

6. Earnest money – a partial payment by the vendee to the vendor of the purchase
price to show that he is willing to bind the bargain

7. Option money – a consideration paid to hold a person to his promise to buy or sell a
determinate thing, which is distinct from the purchase price

8. Statute of Frauds – (Art. 1483) a law which requires certain executory contracts to
be in writing.

9. Sale – a contract in which the vendor obligates himself to deliver the thing sold to the
vendee who in turn, pay a certain amount of money

Essential Knowledge

Concept of contract of sale (Art. 1458)

It is an agreement wherein the vendor (seller) has an obligation to deliver the thing sold
to the vendee (buyer) who, in turn, has an obligation to pay for the price.

Characteristics of a contract of sale

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3rd Floor, BE Building, Matina, Davao City
Telefax: (082)300- 1496 I Phone No.: (082)227- 5456 local 103

The contract of sale is: (COC-PNB)

(1) Consensual, because it is perfected by mere consent only.

(2) Bilateral, because both the contracting parties has an obligation to each
other

(3) Onerous, because the thing sold is conveyed in consideration of the price
and vice versa;

(4) Commutative, because the thing sold is considered the equivalent of the
price paid and vice versa.

(5) Nominate, because it is designated in the Civil Code as “sale”.

(6) Principal, because this contract can stand on its own, meaning it is
independent from any other contracts

Essential requisites of a contract of sale

1. Essential elements – a contract of sale would not exist without any of the following:
a. Consent of the contracting parties
b. Subject matter which should be a determinate thing
c. Price certain in money or its equivalent

2. Natural elements – already inherent in a contract of sale; deemed to exist even

without stipulation
a. Warranty against eviction
b. Warranty against hidden defects and encumbrances

3. Accidental elements – particular stipulations of the parties such as terms, place and
time of payment, and other conditions agreed upon.

Kinds of contract of sale

A sale may be either:
a. Absolute - the sale is not subject to any condition and the title will pass to the
buyer upon delivery of the thing sold.

b. Conditional – the sale is subject to certain conditions either in the part of the
vendor or vendee

c. Other kinds - as to the nature of the subject matter (real or personal, tangible
or intangible), as to manner of payment of the price (cash or installment), as
to its validity (valid, rescissible, unenforceable, void), etc.

Requisites concerning object (Art. 1459)

1. Things - (a) determinate
(b) licit or lawful, it should not be contrary to law, morals, good customs,
public order, or public policy and;
(c) not be impossible, it must be within the commerce of men.
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Telefax: (082)300- 1496 I Phone No.: (082)227- 5456 local 103

2. Rights - All rights that are transmissible may also be an object of the contract of sale,
like the right of usufruct, the right of conventional redemption, credit, etc.

Sale of things having potential existence (Emptio rei speratae) (Art. 1461)
Even a future thing, not existing at the time of the contract, may be the object of sale
provided it has a potential or possible existence. It must be reasonably certain to come into
existence as the usual incident of something in existence already belonging to the vendor,
and the title will only vest to the vendee the moment the thing comes into existence. For
example, the sale of the offspring of animals, or the agricultural produce harvested from a
farm.

Sale of a mere hope or expectancy (Emptio spei)

By substance, what is being sold is not really the mere hope or expectancy, but the thing
that will come into existence. However, even if the expected thing will not come into
existence, the sale is still valid, provided that the hope or expectancy is not vain. The sale of
a vain hope or expectancy is void. For example, the sale of a raffle ticket to be drawn next
week to win a car is valid, but the sale of a raffle ticket that was already drawn last week, an
indication of a vain hope, is void.

Sale distinguished from agency to sell (Art. 1466)

In a contract of agency to sell, a person renders service to sell something in behalf of
another, with the latter’s authority. A contract of sale may be distinguished from an agency to
sell, as follows:
1. In a sale, the vendee receives the goods as owner, while in an agency to sell, the
agent receives the goods as the goods of the principal who retains his ownership
over them and has the right to fix the price and the terms of the sale and receive the
proceeds less the agent’s commission upon the sale is made;
2. In a sale, the vendee has to pay the price, while in an agency to sell, the agent has
simply to account for the proceeds of the sale that he makes on the principal’s behalf;
3. In a sale, the vendee, as a general rule, cannot return the object sold, while in an
agency to sell, the agent can return the object to the principal in case he is unable to
sell the same to others;
4. In a sale, the seller warrants the thing sold, while in an agency to sell, the agent
makes no warranty for which he assumes personal liability as long as he acts within
his authority and in the name of the seller; and
5. In a sale, the buyer can deal with the thing sold as he pleases being the owner; while
in an agency to sell, the agent in dealing with the thing received, must act according
only to the instructions of his principal.

Sale distinguished from contract for a piece of work (Art. 1467)

In a contract for a piece of work, the contractor binds himself to execute a piece of
work for the employer for compensation. The contractor may either employ his labor or skill,
or also furnish the materials.

1. In a contract for a piece of work, the risk of loss before delivery is borne by the worker
or contractor, not by the employer (the person who ordered). A contract is for a piece
of work if services dominate that contract even though there is a sale of goods
involved thereafter. On the other hand, a contract of sale of a manufactured item is a
 College of Accounting Education
3rd Floor, BE Building, Matina, Davao City
Telefax: (082)300- 1496 I Phone No.: (082)227- 5456 local 103

sale of goods even though the goods are manufactured by labor, because in this
case the primary objective is the sale of the item, not the services.

2. Another important distinction of a contract for a piece of work from sale is that the
former is not bound with the Statute of Frauds as stated in Art. 1483.

Sale distinguished from barter (Art. 1468)

In a contract of barter or sometimes called exchange, one of the parties binds himself to
give one thing in consideration of the other’s promise to give another thing. On the other
hand, in a contract of sale, the vendor gives a thing in consideration for a price in money.
Where the consideration of the contract is partly in money, and partly in another thing,
the transaction shall be categorized based on the intention of the parties. If there is no clear
manifestation of the intention of the parties, it shall be considered as a barter if the value of
the thing given as part of the payment is greater than the amount of money paid; otherwise,
it is considered as a sale.

Sale distinguished from lease

In a contract of lease, a person (lessor) obligates himself to give to the other party
(lessee) the enjoyment of the former’s property in consideration for money. The lessor
merely transfers the temporary possession of the property leased. As distinguished from a
contract of sale, wherein the ownership is transferred from the vendor to the vendee.

Sale distinguished from dation in payment

Dation in payment (or dacion en pago) is the payment of a property to the creditor in
satisfaction of the debtor’s obligation. As distinguished from a contract of sale, the following
must be considered:
1. In a sale, there is no preexisting credit, while in dation in payment, there is;
2. In a sale, obligations are created, while in dation in payment, obligations are
extinguished;
3. In a sale, the cause is the price paid, from the seller’s standpoint, or the thing sold,
from the viewpoint of the buyer, while in dation in payment, the extinguishment of the
debt, from the viewpoint of the debtor, or the object acquired in lieu of the credit, from
the viewpoint of the creditor;
4. In sale, there is more freedom in fixing the price than in dation in payment.

Perfection of contract of sale (Art. 1475)

Being a consensual contract, the sale is perfected when consented by both parties or
when there is a meeting of the minds. At this point, reciprocal obligations of the parties arise:
the obligation to deliver the thing sold for the vendor, and the obligation to pay in money
equivalent for the vendee.
1. Conduct of the parties – the action or intention of the parties is essential to establish
an agreement because sometimes there are instances that the transaction does not
explicitly state what contract did the parties entered into.

2. Transfer of ownership – As a general rule, the ownership is transferred upon the

delivery of the thing. However, the parties may also agree that ownership will only
transfer upon the exact fulfillment of the purchase price.
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3. Form of contract - Generally, a contract of sale is binding regardless of its form.

However, in case the contract of sale falls within the provisions of the Statute of
Frauds, then that form must be complied with. A contract of sale may be in a private
instrument; the contract is valid and binding between the parties upon its perfection
and a party may compel the other to execute a public instrument embodying the
contract.

4. Notarized deed of sale against verbal claims – When a seller verbally argues that the
sale of a thing was not perfected because the buyer is in default, the seller’s claim
cannot defeat the evidence of a notarized deed of sale, where it is expressly stated
therein that the thing was “sold, transferred and conveyed” to the purchaser for
consideration. To overcome a public document solemnly executed before a notary
public, the evidence to the contrary must be clear, strong, and convincing.

5. Non-fulfillment of one party by his obligation - In case one of the parties did not
comply to his obligation, the injured party may sue for fulfillment or rescission of the
contract, with payment for damages in either case. This right is predicated on the
violation of the reciprocity between the parties brought about by a breach of
obligation by one of them.

Forms of a contract of sale

1. Subject to the provisions of the Statute of Frauds and of any other applicable statute,
a contract of sale may be in any of the following forms:
a. In writing, or
b. By word of mouth, or
c. Partly in writing and partly by word of mouth, or
d. May be inferred from the conduct of the parties.

2. Under the Statute of Frauds, the sale involving the following must be in writing to be
enforceable:
a. Sale of real property or of any interest therein (regardless of the price).
b. Sale of goods, chattels or things in action, the price of which is P500.00 or
more. (Art. 1403) Things in action include credit, shares of stock and other
incorporeal properties.

3. Sale of a piece of land through an agent

The authority of the agent to sell a piece of land must be in writing; otherwise,
the sale is void. (Art. 1874)
a. If the authority of the agent to sell a piece of land is not in writing – the sale is
void whatever may have been the form it was entered into, i.e., oral, private
instrument or public instrument.
b. If the authority of the agent is in a private instrument and the sale was:
1) Entered into orally – the sale is unenforceable.
2) In a private instrument – the sale is valid.
3) In a public instrument – the sale is valid.

4. If the authority of the agent is in a public instrument and the sale was:
1) Entered into orally – the sale is unenforceable.
2) In a private instrument – the sale is valid.
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3) In a public instrument – the sale is valid.

Note: In order, however, that the sale may be recorded in the Register of Deeds, both the
authority of the agent and the sale must be in a public instrument. (See Art. 1358)

Meaning of earnest money and option money (Art. 1482)

Earnest money is an advance payment made by the buyer to show that he is really in
earnest or interested to bind the bargain. It is also considered as proof of the perfection of
the contract. On the other hand, option money is the money paid for the purpose of holding
the person to his promise to buy or sell a determinate thing for a certain period and it is not
part of the purchase price.

Earnest money and option money distinguished

They may be distinguished as follows:
1. Earnest money is part of the purchase price, while option money is the money given
as distinct consideration for an option contract;
2. Earnest money is given only where there is already a sale, while option money
applies to a sale not yet perfected; and
3. When earnest money is given, the buyer is bound to pay the balance, while the
would-be buyer who gives option money is not required to buy.

Example
Facts: Received from Ling the sum of P40,000 as earnest money with option to
purchase a parcel of land owned by Harry located at Juan Luna St. with an area of 350
square meters.

Issue: Is the P40,000, earnest money or option money?

Answer: Option money. — Although, the consideration of P40,000.00 paid by Ling was
referred to as “earnest money”, a careful examination of the words used indicates that the
money is not earnest money but option money.

Another example
Facts: Bright is interested in buying the car of Sarawat for P1,000,000 payable within 60
days from the date of sale. To show that he is really in earnest, Bright gives Sarawat
P10,000 upon the execution of their agreement, which amount Sarawat accepts.
Accordingly, on the due date for the payment of the price, Bright will have to pay Sarawat the
amount of P990,000 only.

Issue: Was there a perfected contract of sale?

Answer: The mere acceptance of Sarawat of the earnest money does not mean that he
consented to the sale of his car. It must always be noted that in every sale there must be
acceptance of the offer by the buyer, or meeting of the minds.

Self-Help: Refer to the sources provided below, or to the material

uploaded in LMS to help you further understand the lesson.
 College of Accounting Education
3rd Floor, BE Building, Matina, Davao City
Telefax: (082)300- 1496 I Phone No.: (082)227- 5456 local 103

Domingo, A.D. (2017). Regulatory Framework for Business Transactions MCQ CPA Reviewer. Benguet,
Philippines: Coaching for Results Publishing

Soriano, F.R. (2016). Notes in Business Law (For Accountancy Students and CPA Reviewees). Manila,
Philippines: GIC Enterprises & Co.

De Leon, Hector S. (2013). The Law on Sales, Agency and Credit Transactions. Manila: Rex Book Store

Let’s Check

Activity 1. Now that you are familiar with the legal terminologies and basic concepts of the
contract of sale, let us check your understanding by answering the following questions.
Choose the letter of your answer.

1. 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.
a. Barter
b. Sales
c. Partnership
d. Agency

2. Statement I. A contract of sale is a consensual contract, thus, is perfected by delivery.

Statement II. A contract of sale is perfected by the meeting of the offer and the
acceptance upon the thing and the cause which are to constitute the contract.
a. Only Statement I is true.
b. Only Statement II is true.
c. Both statements are true.
d. Both statements are false.

3. S sold his only cat to B. Before delivery and payment, the cat gave birth to a kitten.
a. B should pay the fair market value of the kitten.
b. S is entitled to the fruit as he is the owner.
c. B is entitled to the kitten which was born after the perfection of the sale.
d. S is entitled to the fruit because it was born before delivery.

4. The essential elements of a contract of sale are, except:

a. Consent or meeting of the minds
b. Determinate subject matter
c. Written contract
d. Price certain in money or its equivalent

5. Statement I. Sale by itself does not transfer or affect ownership; the most that sale
does is to create the obligation to transfer ownership.
Statement II. The perfection of a contract of sale should not, however, be confused
with its consummation. In relation to the acquisition and transfer of ownership, it
should be nted that sale is not a mode, but merely a title.
a. Only Statement I is true.
b. Only Statement II is true.
c. Both statements are true.
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d. Both statements are false.

6. Statement I. A contract to sell may not be considered as a contract of sale because

the second essential element is lacking.
Statement II. In contract to sell, what the seller agrees or obliges himself to do is to
fulfill his promise to sell the subject property when the entire amount of the purchase
price is delivered to him.
a. Only Statement I is true.
b. Only Statement II is true.
c. Both statements are true.
d. Both statements are false.

7. Is manifested by the meeting of the offer and the acceptance upon the thing and the
cause which are to constitute the agreement.
a. Determinate subject matter.
b. Consent
c. Policitacion
d. Price certain in money or its equivalent

8. Statement I. The object of every contract must be determinate as to its kind.

Statement II. The fact that the quantity in contract of sale is not determinate shall not
be an obstacle to the existence of the contract, provided it is possible to determine the
same, without the need of a new contract between the parties.
a. Only Statement I is true.
b. Only Statement II is true.
c. Both statements are true.
d. Both statements are false.

9. Statement I. In general, the object is the why of the contract or the essential reason
which moves the contracting parties to enter into the contract.
Statement II. For the cause to be valid, it must be lawful such that it is not contrary to
law, morals, good customs, public order or public policy.
a. Only Statement I is true.
b. Only Statement II is true.
c. Both statements are true.
d. Both statements are false.

10. Statement I. A contract of sale is classified as a consensual contract, which means

that the sale is perfected by mere consent. A private instrument is required for its
validity.
Statement II. A contract of sale is normally commutative but not onerous.
a. Only Statement I is true.
b. Only Statement II is true.
c. Both statements are true.
d. Both statements are false.

11. It is also sometimes called an “unaccepted offer”.

a. Option
b. Earnest
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c. Absolute
d. Conditional

12. It is not a sale of property but a sale of the right to purchase.

a. Option
b. Earnest
c. Absolute
d. Conditional

13. It shall be considered as part of the price and as proof of the perfection of the
contract.
a. Option money
b. Initial payment
c. Downpayment
d. Earnest money

14. It constitutes an advance payment and must, therefore, be deducted from the total
price.
a. Option money
b. Initial payment
c. Downpayment
d. Earnest money

15. A special mode of payment where the debtor offers another thing to the creditor who
accepts it as equivalent of payment of an outstanding debt.
a. Application of payment
b. Cession in payment
c. Dation in payment
d. Tender of payment and consignation

Let’s Analyze

Activity 1. To further test your understanding, in this task, you are required to apply your
critical thinking skills in answering the following cases and support your claims with legal
basis.

Case 1
S offered in writing to sell his house and lot for P1,000,000 to B on January 20, 2017. B
requested to give him one month to raise the amount. On January 25, 2017, S informed B
that he has raised the price to P1,200,000. Can B compel S to accept the payment of
P1,000,000 for the sale of the house and lot?

Case 2
A sold to B orally a parcel of land for P300,000. Delivery and payment were to be made
after six months. When the said date arrived, A refused to deliver the land. Can B compel A
to deliver?

Case 3
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Santiago sells to Bermejo 500 sacks of rice at P1,000 per sack from the stock then
stored in the warehouse of Santiago. Unknown to the parties, the warehouse contains only
480 sacks of rice. What is the status of the contract between Santiago and Bermejo?

Case 4
S and B entered into a contract whereby S transferred to B a specific car for the price of
P200,000, while B gave to S P90,000 in cash and a diamond ring worth P110,000. The
heading of the written contract signed by the parties reads “Contract of Sale”. Is the contract
between S and B valid?

Case 5
S orally offered to sell a certain diamond ring to B for P50,000. B accepted the offer and
to prove that he was in earnest, he gave S P1,000. The parties agreed that the delivery of
the ring and the payment of the price would be made 30 days later. On due date, how much
S can collect from B?

(Note: The questions on Let’s Check – A1 and Let’s Analyze – A1 are adapted from the
references provided by the facilitator.)

In a Nutshell

Activity 1. To help you remember the gist of the lesson, this task requires you to complete
the tables below by determining the unique characteristics of the contract of sale as
compared to other kinds of contracts.

Table 1
Sale Agency to sell

Table 2
Sale Barter

Table 3
Sale Contract for a piece of work
 College of Accounting Education
3rd Floor, BE Building, Matina, Davao City
Telefax: (082)300- 1496 I Phone No.: (082)227- 5456 local 103

Table 4
Sale Dation in payment

Bonus table
Earnest money Option money

Q&A LIST
Do you have any questions for clarification?

Questions/Issues Answers

1. 1.
2. 2.
3. 3.
4. 4.
5. 5.

Keyword Index

Agency to sell Earnest money

Barter Option money
Dacion en pago Statute of Frauds
Emptio rei speratae Sale
Emptio spei Contract for a piece of work
 College of Accounting Education
3rd Floor, BE Building, Matina, Davao City
Telefax: (082)300- 1496 I Phone No.: (082)227- 5456 local 103

Course Schedule
This section calendars all the activities and exercises, including readings and lectures, as
well as time for making assignments and doing other requirements.
Activity Date Where to submit
Orientation August 19, 2020 Blackboard LMS
Let’s Check – A1 August 26, 2020 Blackboard LMS
Let’s Analyze – A1 August 28, 2020 Blackboard LMS
In a Nutshell – A1 August 31, 2020 Blackboard LMS
Q&A – ULO 1 Any day Blackboard LMS – Forum
st
1 Formative Assessment September 4, 2020 Blackboard LMS

Note: Schedule for virtual meetings will be announced ahead of time by the teacher.

Online Code of Conduct

1. Students are expected to abide by and honor code of conduct, and thus everyone and
all are exhorted to exercise self-management and self-regulation.
2. All students are guided by professional conduct as learners in attending On-Line
Blended Delivery (OBD) course. Any breach and violation shall be dealt with properly under
existing guidelines, specifically in Section 7 (Student Discipline) in the Student Handbook.
3. Professional conduct refers to the embodiment and exercise of the University’s Core
Values, specifically in the adherence to intellectual honesty and integrity; academic
excellence by giving due diligence in virtual class participation in all lectures and activities,
as well as fidelity in doing and submitting performance tasks and assignments; personal
discipline in complying with all deadlines; and observance of data privacy.
4. Plagiarism is a serious intellectual crime and shall be dealt with accordingly. The
University shall institute monitoring mechanisms online to detect and penalize plagiarism.
5. Students shall independently and honestly take examinations and do assignments,
unless collaboration is clearly required or permitted. Students shall not resort to dishonesty
to improve the result of their assessments (e.g. examinations, assignments).
6. Students shall not allow anyone else to access their personal LMS account. Students
shall not post or share their answers, assignment or examinations to others to further
academic fraudulence online.
7. By enrolling in OBD course, students agree and abide by all the provisions of the Online
Code of Conduct, as well as all the requirements and protocols in handling online courses.