REBOROSO, KIRK ROBERTS P. SALES

Polytechnic University of the Philippines vs Court of Appeals and Firestone CeramicsNational Development Corporation vs Firestone Ceramics Inc.[GR No. 143513 and 143590. November 14, 2001]

Bellosilo, J.:Facts:Petitioner National Development Corp., a government owned and controlled corporation, had in its disposal a 10 hectares property. Sometime in May 1965, private respondent Firestone Corporation manifested its desire to lease a portion of it for ceramic manufacturing business. On August 24, 1965, both parties entered into a contract of lease for a term of 10 years renewable for another 10 years. Prior to the expiration of the aforementioned contract, Firestone wrote NDC requesting for an extension of their lease agreement. It was renewed with an express grant to Firestone of the first option to purchase the leased premise in the event that it was decided "to dispose and sell the properties including the lot..."Cognizant of the impending expiration of the leased agreement, Firestone informed NDC through letters and calls that it was renewing its lease. No answer was given. Firestone's predicament worsened when it learned of NDC's supposed plans to dispose the subject property in favor of petitioner Polytechnic University of the Philippines. PUP referred to Memorandum Order No. 214 issued by then President Aquino ordering the transfer of the whole NDC compound to the National Government. The order of conveyance would automatically result in the cancellation of NDC's total obligation in favor of the National Government.Firestone instituted an action for specific performance to compel NDC to sell the leased property in its favor.

Issue:1. Whether or not there is a valid sale between NDC and PUP.

RulingA contract of sale, as defined in the Civil Code, is a contract where one of the parties obligates himself to transfer the ownership of and to deliver a determinate thing to the other or others who shall pay therefore a sum certain in money or its equivalent. It is therefore a general requisite for the existence of a valid and enforceable contract of sale that it be mutually obligatory, i.e., there should be a concurrence of the promise of the vendor to sell a determinate thing and the promise of the vendee to receive and pay for the property so delivered and transferred.  The Civil Code provision is, in effect, a "catch-all" provision which effectively brings within its grasp a whole gamut of transfers whereby ownership of a thing is ceded for a consideration.All three (3) essential elements of a valid sale, without which there can be no sale, were attendant in the "disposition" and "transfer" of the property from NDC to PUP - consent of the parties, determinate subject matter, and consideration therefor.

Consent to the sale is obvious from the prefatory clauses of Memorandum Order No. 214 which explicitly states the acquiescence of the parties to the sale of the property. Furthermore, the cancellation of NDC's liabilities in favor of the National Government constituted the "consideration" for the sale.

Gaite v. Fonacier

Facts:

Gaite was appointed by Fonacier as attorney-in-fact to contract any party for the exploration and development of mining claims. Gaite executed a deed of assignment in favor of a single proprietorship owned by him. For some reasons, Fonacier revoked the agency, which was acceded to by Gaite, subject to certain conditions, one of which being the transfer of ores extracted from the mineral claims for P75,000, of which P10,000 has already been paid upon signing of the agreement and the balance to be paid from the first letter of credit for the first local sale of the iron ores. To secure payment, Fonacier delivered a surety agreement with Larap Mines and some of its stockholders, and another one with Far Eastern Insurance. When the second surety agreement expired with no sale being made on the ores, Gaite demanded the P65,000 balance. Defendants contended that the payment was subject to the condition that the ores will be sold.

Issue:

(1) Whether the sale is conditional or one with a period

(2) Whether there were insufficient tons of ores

Held:

(1) The shipment or local sale of the iron ore is not a condition precedent (or suspensive) to the payment of the balance of P65,000.00, but was only a suspensive period or term. What characterizes a conditional obligation is the fact that its efficacy or obligatory force (as distinguished from its demandability) is subordinated to the happening of a future and uncertain event; so that if the suspensive condition does not take place, the parties would stand as if the conditional obligation had never existed.

A contract of sale is normally commutative and onerous: not only does each one of the parties assume a correlative obligation (the seller to deliver and transfer ownership of the thing sold and the buyer to pay the price),but each party anticipates performance by the other from the very start. While in a sale the obligation of one party can be lawfully subordinated to an uncertain event, so that the other understands that he assumes the risk of receiving nothing for what he gives (as in the case of a sale of hopes or expectations,emptio spei), it is not in the usual course of business to do so; hence, the contingent character of the obligation must clearly appear. Nothing is found in the record to evidence that Gaite desired or assumed to run the risk of losing his right over the ore

without getting paid for it, or that Fonacier understood that Gaite assumed any such risk. This is proved by the fact that Gaite insisted on a bond a to guarantee payment of the P65,000.00, an not only upon a bond by Fonacier, the Larap Mines & Smelting Co., and the company's stockholders, but also on one by a surety company; and the fact that appellants did put up such bonds indicates that they admitted the definite existence of their obligation to pay the balance of P65,000.00.

The appellant have forfeited the right court below that the appellants have forfeited the right to compel Gaite to wait for the sale of the ore before receiving payment of the balance of P65,000.00, because of their failure to renew the bond of the Far Eastern Surety Company or else replace it with an equivalent guarantee. The expiration of the bonding company's undertaking on December 8, 1955 substantially reduced the security of the vendor's rights as creditor for the unpaid P65,000.00, a security that Gaite considered essential and upon which he had insisted when he executed the deed of sale of the ore to Fonacier.

(2) The sale between the parties is a sale of a specific mass or iron ore because no provision was made in their contract for the measuring or weighing of the ore sold in order to complete or perfect the sale, nor was the price of P75,000,00 agreed upon by the parties based upon any such measurement.(see Art. 1480, second par., New Civil Code). The subject matter of the sale is, therefore, a determinate object, the mass, and not the actual number of units or tons contained therein, so that all that was required of the seller Gaite was to deliver in good faith to his buyer all of the ore found in the mass, notwithstanding that the quantity delivered is less than the amount estimated by them.

COMMISSIONER OF INTERNAL REVENUE vs. COURT OF APPEALSG.R. No. 115349 April 18, 1997

Facts:

ADMU Institute of Philippine Culture is engaged in social science studies of Philippine society and culture. Occasionally, it accepts sponsorships for its research activities from international organizations, private foundations and government agencies.

On July 1983, CIR sent a demand letter assessing the sum of P174,043.97 for alleged deficiency contractor’s tax. Accdg to CIR, ADMU falls under the purview of independent contractor pursuant to Sec 205 of Tax Code and is also subject to 3% contractor’s tax under Sec 205 of the same code. (Independent Contractor means any person whose activity consists essentially of the sale of all kinds of services for a fee regardless of whether or not the performance of the service calls for the exercise or use of the physical or mental faculties of such contractors or their employees.)

Issue:

1) WON ADMU is an independent contractor hence liable for tax? NO.2) WON the acceptance of research projects by the IPC of ADMU a contract of sale or a contract for a piece of work? NEITHER.

Held:

1)

Hence, to impose the three percent contractor’s tax on Ateneo’s Institute of Philippine Culture, it should be sufficiently proven that the private respondent is indeed selling its services for a fee in pursuit of an independent business.

2)

Records do not show that Ateneo’s IPC in fact contracted to sell its research services for a fee. In the first place, the petitioner has presented no evidence to prove its bare contention that, indeed, contracts for sale of services were ever entered into by the private respondent. Funds received by the Ateneo de Manila University are technically not a fee. They may however fall as gifts or donations which are tax-exempt. Another fact that supports this contention is that for about 30 years, IPC had continuously operated at a loss, which means that sponsored funds are less than actual expenses for its research projects.

In fact, private respondent is mandated by law to undertake research activities to maintain its university status. In fact, the research activities being carried out by the IPC is focused not on business or profit but on social sciences studies of Philippine society and culture. Since it can only finance a limited number of IPC’s research projects, private respondent occasionally accepts sponsorship for unfunded IPC research projects from international organizations, private foundations and governmental agencies. However, such sponsorships are subject to private respondent’s terms and conditions, among which are, that the research is confined to topics consistent with the private respondent’s academic agenda; that no proprietary or commercial purpose research is done; and that private respondent retains not only the absolute right to publish but also the ownership of the results of the research conducted by the IPC.

SALE vs. CONTRACT FOR PIECE OF WORK

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 therefore a price certain in money or its equivalent. By its very nature, a contract of sale requires a transfer of ownership. In the case of a contract for a piece of work, the contractor binds himself to execute a piece of work for the employer, in consideration of a certain price or

compensation. If the contractor agrees to produce the work from materials furnished by him, he shall deliver the thing produced to the employer and transfer dominion over the thing. Whether the contract be one of sale or one for a piece of work, a transfer of ownership is involved and a party necessarily walks away with an object. In this case, there was no sale either of objects or services because there was no transfer of ownership over the research data obtained or the results of research projects undertaken by the Institute of Philippine Culture.

CELESTINO CO & Co. v Collector of Internal Revenue (99 SCRA 1956)

FACTS:Celestino Co & Company is the owner of“Oriental Sash Factory”. It paid percentage

taxes of 7% on the gross receipts of its sash, door and window factory, in accordance with rule of the National Internal Revenue Code which is a tax on the original sales of articles by manufacturer, producer or importer. However, in 1952 it began to claim only 3% tax under which is a tax on sales of services. Petitioner claims that it does not manufacture ready-made doors, sash and windows for the public, but only upon special orders from the customers, hence, they contend that they were selling service rather than the item.

BIR was not impressed with the contention of petitioner. Petitioner then filed a case on Court of Tax Appeal. CTA rule in favor of BIR and contends that by putting the word “factory” in their name, they were out to do business in a larger scale rather than rendering service. CTA ruled that even if we were to believe petitioner’s claim that it does not manufacture ready-made items for the public and that it makes these articles only special order of its customers that does not make it a contractor.

ISSUE:I. Is petitioner engaged in the manufacturing business?

HELD:I. Yes. The fact that windows and doors are made by it only when customers place

their orders, does not alter the nature of the establishment, it makes petitioner a habitual manufacturer. Petitioner does nothing more than sell the goods that it mass-produces or habitually makes.

Appellant invokes Article 1467 of the New Civil Code to defend its contention that it did not sell, but merely contracted for particular pieces of work or sold its services. SC however ruled that the factory accepts a job that requires the does not use of extraordinary or additional equipment, or involves services not generally performed by it. The orders herein exhibited were not shown to be special. They were merely orders for work nothing is shown to call them special services. The Supreme Court affirms the assailed decision by the CTA.

Quiroga vs ParsonsG.R. No. L-11491

Subject: SalesDoctrine: Contract of Agency to Sell vs Contract of SaleFacts: On Jan 24, 1911, plaintiff and the respondent entered into a contract making the latter an “agent” of the former. The contract stipulates that Don Andres Quiroga, here in petitioner, grants exclusive rights to sell his beds in the Visayan region to J. Parsons. The contract only stipulates that J.Parsons should pay Quiroga within 6 months upon the delivery of beds.Quiroga files a case against Parsons for allegedly violating the following stipulations: not to sell the beds at higher prices than those of the invoices; to have an open establishment in Iloilo; itself to conduct the agency; to keep the beds on public exhibition, and to pay for the advertisement expenses for the same; and to order the beds by the dozen and in no other manner. With the exception of the obligation on the part of the defendant to order the beds by the dozen and in no other manner, none of the obligations imputed to the defendant in the two causes of action are expressly set forth in the contract. But the plaintiff alleged that the defendant was his agent for the sale of his beds in Iloilo, and that said obligations are implied in a contract of commercial agency. The whole question, therefore, reduced itself to a determination as to whether the defendant, by reason of the contract hereinbefore transcribed, was a purchaser or an agent of the plaintiff for the sale of his beds.Issue: Whether the contract is a contract of agency or of sale.Held: In order to classify a contract, due attention must be given to its essential clauses. In the contract in question, what was essential, as constituting its cause and subject matter, is that the plaintiff was to furnish the defendant with the beds which the latter might order, at the price stipulated, and that the defendant was to pay the price in the manner stipulated. Payment was to be made at the end of sixty days, or before, at the plaintiff’s request, or in cash, if the defendant so preferred, and in these last two cases an additional discount was to be allowed for prompt payment. These are precisely the essential features of a contract of purchase and sale. There was the obligation on the part of the plaintiff to supply the beds, and, on the part of the defendant, to pay their price. These features exclude the legal conception of an agency or order to sell whereby the mandatory or agent received the thing to sell it, and does not pay its price, but delivers to the principal the price he obtains from the sale of the thing to a third person, and if he does not succeed in selling it, he returns it. By virtue of the contract between the plaintiff and the defendant, the latter, on receiving the beds, was necessarily obliged to pay their price within the term fixed, without any other consideration and regardless as to whether he had or had not sold the beds.In respect to the defendant’s obligation to order by the dozen, the only one expressly imposed by the contract, the effect of its breach would only entitle the plaintiff to disregard the orders which the defendant might place under other conditions; but if the plaintiff consents to fill them, he waives his right and cannot complain for having acted thus at his own free will.For the foregoing reasons, we are of opinion that the contract by and between the plaintiff and the defendant was one of purchase and sale, and that the obligations the breach of which is alleged as a cause of action are not imposed upon the defendant, either by agreement or by law.

Gonzalo Puyat & Sons, Inc. vs Arco Amusement Company (former Teatro Arco)

Facts:

Arco is engaged in the business of cinematographs here in the country. Gonzalo Puyat & Sons was also doing business here in the country and also acting as agent of Starr Piano Co. of Richmond, Indiana, USA.

Arco approached Gonzalo and made an agreement that Gonzalo would order sound reproducing equipment from Starr Piano and that Arco would just pay Gonzalo plus a 10% commission. Gonzalo received a list price of $1700 for the order. The equipment arrived and was delivered to Arco. Arco paid Gonzalo $1700 plus the commission.

Then, Arco placed another order for the same equipment with Gonzalo. $1600 was the price quoted by Starr Piano for the equipment. It was delivered and Arco paid $1600 for it with commission.

3 years later, a civil case was filed in Vigan by Fidel Reyes against Gonzalo. There, Arco discovered that the price quoted to them with regard to the 2 orders was not the net price but the list price, and that Gonzalo obtained a discount from Starr Piano in ordering the equipment. Moreover, by reading reviews on prices of machinery and cinematograph equipment, Arco was convinced that the prices charged by Gonzalo were too high.

Arco filed a case for recovery of sum of money. Trial court held that the contract between Arco and Gonzalo is one of sale so it absolved Gonzalo. CA reversed the ruling holding that the contract was one of agency and that Gonzalo should return the overpayment to Arco.

Issue: WON the contract is a contract of agency or is one of sale.

Held: The contract between the petitioner and the respondent was one of sale.

The contract is the law between the parties and should include all the things they are supposed to have been agreed upon. What does not appear on the face of the contract should be regarded merely as "dealer's" or "trader's talk", which can not bind either party.

Arco admitted in its complaint filed with Manila CFI that Gonzalo agreed to sell to it the first sound reproducing equipment and machinery.

While Gonzalo was to receive a 10% commission, this does not necessarily make Gonzalo an agent of Arco as this provision is only an additional price which Arco bound itself to pay, and which stipulation is not incompatible with the contract of purchase and sale.

Whatever unforeseen events might have taken place unfavorable to Arco such as change in prices, mistake in their quotation, Gonzalo might still legally hold Arco to the prices fixed at $1,700 and $1,600. This is incompatible with the pretended relation of agency between the petitioner and the respondent, because in agency, the agent is exempted from all liability in the discharge of his commission provided

he acts in accordance with the instructions received from his principal and the principal must indemnify the agent for all damages which the latter may incur in carrying out the agency without fault or imprudence on his part.

It follows that the petitioner as vendor is not bound to reimburse the respondent as vendee for any difference between the cost price and the sales price which represents the profit realized by the vendor out of the transaction.

Moreover, the 25% discount granted by the Starr piano to the Gonzalo is available only to the latter as the former's exclusive agent in the Philippines. Arco could not have secured this discount from the Starr Piano and neither was Gonzalo willing to waive that discount in favor of Arco. Not every concealment is fraud; and short of fraud, it were better that, within certain limits, business acumen permit of the loosening of the sleeves and of the sharpening of the intellect of men and women in the business world.

PHILIPPINE LAWIN BUS, CO., MASTER TOURS & TRAVEL CORP., MARCIANO TAN, ISIDRO TAN, ESTEBAN TAN and HENRY TAN, Petitioners, v. COURT OF APPEALS and ADVANCE CAPITAL CORPORATION, Respondents.

[G.R. No. 130972. January 23, 2002]

In dacion en pago, property is alienated to the creditor in satisfaction of a debt in money. It is "the delivery and transmission of ownership of a thing by the debtor to the creditor as an accepted equivalent of the performance of the obligation."

It extinguishes the obligation to the extent of the value of the thing delivered, either as agreed upon by the parties or as may be proved, unless the parties by agreement, express or implied, or by their silence, consider the thing as equivalent to the obligation, in which case the obligation is totally extinguished.

Article 1245 of the Civil Code provides that the law on sales shall govern an agreement of dacion en pago.

The Facts

On 7 August 1990 plaintiff Advance Capital Corporation, a licensed lending investor, extended a loan to defendant Philippine Lawin Bus Company (LAWIN), in the amount of

P8,000,000.00 payable within a period of one (1) year. The defendant, through Marciano Tan, its Executive Vice President, executed Promissory Note No. 003, for the amount of P8,000,000.00

To guarantee payment of the loan, defendant Lawin executed in favor of plaintiff the following documents: (1) A Deed of Chattel Mortgage wherein 9 units of buses were constituted as collaterals; (2) A joint and several UNDERTAKING of defendant Master Tours and Travel Corporation, signed by Isidro Tan and Marciano Tan; and (3) A joint and several UNDERTAKING, executed and signed by Esteban, Isidro, Marciano and Henry, all surnamed Tan.

Only P1,800,000.00 was paid from the loan. Thus, defendant Bus Company was able to avail an additional loan of P2,000,000.00 for one (1) month under Promissory Note 00028. Defendant LAWIN failed to pay the aforementioned promissory note and the same was renewed under a separate Promissory Note, 037. Still having not able to pay, defendants offer for re-structuring for another two months which in turn was still not paid. Thus, defendants foreclose the buses and as sole bidder attain the sale which P2, 000, 000 was credited to the account of LAWIN.

Thereafter, identical demand letters were sent to the defendants to pay their obligation, despite repeated demands, the defendants failed to pay their indebtedness which totaled of P16,484,992.42

Thus, the suit for sum of money, wherein the plaintiff prays that defendants solidarily pay plaintiff as of July 31, 1992 the sum of (a) P16,484,994.12 as principal obligation under the two promissory notes Nos. 003 and 00037, plus interests and penalties along with loss of good will of business, litigation expenses and exemplary damages. In answer to the complaint, defendants-appellees assert by way of special and affirmative defense, that there was already an arrangement as to the full settlement of the loan obligation by way of:jgc:chanrobles.com.ph

A. Sale of the nine (9) units passenger buses the proceeds of which will be credited against the loan amount as full payment thereof; or in the alternative.

B. Plaintiff will shoulder and bear the cost of rehabilitating the buses, with the amount thereof to be included in the total obligation of defendant Lawin and the bus operated, with the earnings thereof to be applied to the loan obligation of

defendant Lawin.

Defendants further assert that the foreclosure sale was in violation of the aforequoted arrangement and prayed for the nullification of the same and the dismissal of the complaint.

The Trial court favored the defendants, dismissing the complaint and declaring the foreclosure as null and void. With their pleaded defenses it also considered the obligation of indebtedness, extinguished. On appeal, the Court of appeals reversed the earlier ruling, thus the appeal.

The Issue

The issue raised is whether there was dacion en pago between the parties upon the surrender or transfer of the mortgaged buses to the Respondent.

The Court’s Ruling

We deny the petition

Nonetheless, we agree with the Court of Appeals that there was no dacion en pago that took place between the parties.

In dacion en pago, property is alienated to the creditor in satisfaction of a debt in money. It is "the delivery and transmission of ownership of a thing by the debtor to the creditor as an accepted equivalent of the performance of the obligation." It "extinguishes the obligation to the extent of the value of the thing delivered, either as agreed upon by the parties or as may be proved, unless the parties by agreement, express or implied, or by their silence, consider the thing as equivalent to the obligation, in which case the obligation is totally extinguished.

Article 1245 of the Civil Code provides that the law on sales shall govern an agreement of dacion en pago. A contract of sale is perfected at the moment there is a meeting of the

minds of the parties thereto upon the thing which is the object of the contract and upon the price.

In Filinvest Credit Corporation v. Philippine Acetylene Co., Inc., we said:

". . . In dacion en pago, as a special mode of payment, the debtor offers another thing to the creditor who accepts it as equivalent of payment of an outstanding obligation. The undertaking really partakes in one sense of the nature of sale, that is, the creditor is really buying the thing or property of the debtor, payment for which is to be charged against the debtor’s debt. As such, the essential elements of a contract of sale, namely, consent, object certain, and cause or consideration must be present. In its modern concept, what actually takes place in dacion en pago is an objective novation of the obligation where the thing offered as an accepted equivalent of the performance of an obligation is considered as the object of the contract of sale, while the debt is considered as the purchase price. In any case, common consent is an essential prerequisite, be it sale or novation, to have the effect of totally extinguishing the debt or obligation.

In this case, there was no meeting of the minds between the parties on whether the loan of the petitioners would be extinguished by dacion en pago. The petitioners anchor their claim solely on the testimony of Marciano Tan that he proposed to extinguish petitioners’ obligation by the surrender of the nine buses to the respondent acceded to as shown by receipts its representative made.

However, the receipts executed by respondent’s representative as proof of an agreement of the parties that delivery of the buses to private respondent would result in extinguishing petitioner’s obligation do not in any way reflect the intention of the parties that ownership thereof by respondent would be complete and absolute. The receipts show that the two buses were delivered to respondent in order that it would take custody for the purpose of selling the same. The receipts themselves in fact show that petitioners deemed respondent as their agent in the sale of the two vehicles whereby the proceeds thereof would be applied in payment of petitioners’ indebtedness to Respondent. Such an agreement negates transfer of absolute ownership over the property to respondent, as in a sale.

Thus, in Philippine National Bank v. Pineda 22 we held that where machinery and equipment were repossessed to secure the payment of a loan obligation and not for the purpose of transferring ownership thereof to the creditor in satisfaction of said loan, no dacion en pago was ever accomplished.

178 SCRA 188, G.R. No. 82508September 29, 1989

FILINVEST CREDIT CORPORATION, petitioner,vs.THE COURT OF APPEALS, JOSE SY BANG and ILUMINADA TAN SY BANG, respondents

FACTS:

Herein private respondents spouses Jose Sy Bang and Iluminada Tan were engaged in the sale of gravel produced from crushed rocks and used for construction purposes. They intended to buy rock crusher from Rizal Consolidated Corporation which carried a cash price tag of P550,000.00. They applied for financial assistance from herein petitioner Filinvest Credit Corporation, who agreed to extend financial aid on the certain conditions.

A contract of lease of machinery (with option to purchase) was entered into by the parties whereby the private respondents agreed to lease from the petitioner the rock crusher for two years starting from July 5, 1981, payable as follows: P10,000.00 – first 3 months, P23,000.00 – next 6 months, P24,800.00 – next 15 months. It was likewise stipulated that at the end of the two-year period, the machine would be owned by the private respondents. Thus the private respondent issued in favor of the petitioner a check for P150,550.00, as initial rental (or guaranty deposit), and 24 postdated checks corresponding to the 24 monthly rentals. In addition, to guarantee their compliance with the lease contract, the private respondent executed a real estate mortgage over two parcels of land in favor of the petitioner. The rock crusher was delivered to the spouses.

However, 3 months later, the spouses stopped payment when petitioner had not acted on the complaints of the spouses about the machine. As a consequence, petitioner extra-judicially foreclosed the real estate mortgage. The spouses filed a complaint before the RTC. The RTC rendered a decision in favor of private respondent. The petitioner elevated the case to CA which affirmed the decision in toto. Hence, this petition.

ISSUES:

1. Whether or not the nature of the contract is one of a contract of sale.2. Whether or not the remedies of the seller provided for in Article 1484 are cumulative.

HELD:

1. Yes. The intent of the parties to the subject contract is for the so-called rentals to be the installment payments. Upon the completion of the payments, then the rock crusher, subject matter of the contract, would become the property of the private respondents. This form of agreement has been criticized as a lease only in name.

Sellers desirous of making conditional sales of their goods, but who do not wish openly to make a bargain in that form, for one reason or another, have frequently restored to the device of making contracts in the form of leases either with options to the buyer to purchase for a small consideration at the end of term, provided the so-called rent has been duly paid, or with stipulations that if the rent throughout the term is paid, title shall thereupon vest in the lessee. It is obvious that such transactions are leases only in name. The so-called rent must necessarily be regarded as payment of the price in installments since the due payment of the agreed amount results, by the terms of bargain, in the transfer of title to the lessee.

2. No, it is alternative. The seller of movable in installments, in case the buyer fails to pay 2 or more installments, may elect to pursue either of the following remedies: (1) exact fulfilment by the purchaser of the obligation; (2) cancel the sale; or (3) foreclose the mortgage on the purchased property if one was constituted thereon. It is now settled that the said remedies are alternative and not cumulative, and therefore, the exercise of one bars the exercise of the others. Indubitably, the device – contract of lease with option to buy – is at times resorted to as a means to circumvent Article 1484, particularly paragraph (3) thereof. Through the set-up, the vendor, by retaining ownership over the property in the guise of being the lessor, retains, likewise the right to repossess the same, without going through the process of foreclosure, in the event the vendee-lessee defaults in the payment of the installments. There arises therefore no need to constitute a chattel mortgage over the movable sold. More important, the vendor, after repossessing the property and, in effect, cancelling the contract of sale, gets to keep all the installments-cum-rentals already paid.