Rosario Elena A. Laborte-Cuevas Senior State Counsel Department of Justice Philippines

UNCITRAL – SINGAPORE SEMINAR ON :

35 YEARS OF THE CISG :

Achievements and Perspectives

23 – 24 April 2015

Singapore

In ASEAN, only Singapore ratified CISG;

9/10 of ASEAN Member States have not signed or ratified the UN Convention on CISG.

Philippines is not yet a signatory to CISG.

Discussion on possible accession to CISG is in preliminary stage.

Various informal initiatives and consultations have taken place over the years.

No specific law on contracts for international sale of goods.

Civil Code of the Philippines, Book IV, generally applies to international sale of goods transactions, and similar transactions.

The Bulk Sales Law (Act No. 3953, 1972)

Consumer Act of the Philippines (RA 7394,

1992)

Price Act (RA 7581, 1992)

Retail Trade Liberalization Act (RA 8762,

2000)

Electronic Commerce Act (RA 8792, 2000)

Laws on Products Liability

Philippine laws

and

the CISG :

Comparative Analysis

PH : Acceptance of the offer binds the offeror“from the time that it came to his knowledge”. (Art. 1319,

Civil Code)

CISG : Acceptance of the offer binds the offeror “at the moment the indication of assent reaches the offeror”. (Art. 18 (2), CISG)

Formation of Contract :

== CISG provides more comprehensive provision how anacceptance would bind the offer, taking into accountdifferent systems of contract formation.

PH : Offeror can revoke his offer anytime before his knowledge of the acceptance, by “communicating” his withdrawal or

revocation. (Art. 1324, Civil

Code)

CISG : For the offerorto revoke his offer, revocation must “reach” the offereebefore the offeree has dispatched his acceptance. (Art. 16, CISG)

Revocation of Offer :

== There is similarity with regard to revocability of anoffer;

PH : If the words of the contract appear to be contrary to the evident intention of the parties, the latter shall prevail over the former. (Art. 1370-1371, Civil

Code)

CISG : Statements or conduct of a party are to be interpreted according to his intent where the other party knew or could not have been unaware what the intent was. (Art. 8, CISG)

On Interpretation of Contract :

PH : Contracts are obligatory

on the parties, in whatever form they may have been entered into, provided all essential requisites for validity are present. However, when law requires that a contract be in some form to be valid or enforceable, that requirement

is absolute and indispensable.(Art. 1356, Civil Code)

CISG : A contract of sale need not be concluded in or evidenced by writing and is not subject to any other requirement as to form. (Art. 10, CISG)

Form of Contract :

== Conflict on this point.

PH : Contract of sale is null and void and no effect if it is without cause or consideration. (Art. 1318

and 1352, Civil Code)

CISG : Where a contract has been validly concluded but does not expressly or implicitly fix or make a provision for determining the price, parties are considered to have impliedly made reference to the price generally charged at the time of the

conclusion of the contract.(Art. 55, CISG)

Price :

== Conflict on this point.

PH : Obligation to pay the price by buyer is correlative to the obligation of the seller to deliver the thing sold. Non-performance by one party authorizes the other to exercise the right to demand performance or its rescission. (Art. 1191, Civil

Code)

CISG : Both seller and buyer have the option to rescind the contract, if the failure of the other party to perform his obligations under the contract or the Convention amounts to a fundamental breach. (Art.

49 and 64, CISG)

Rescission and Fundamental Breach :

== Both in agreement that rescission is permitted only forbreaches, substantial or fundamental in nature.

PH : Injured party, in case of breach of reciprocal obligations, may choose, as a matter of right, between specific performance and rescission of contract, with payment of damages in either case. (Art. 1191,

Civil Code)

CISG : Injured party may also file a case for specific performance, however, a court isnot bound to enter a judgment for specific performance unless it may do so under its own law in respect of similar contracts of sale not governed by the Convention. (Art. 28, CISG)

Specific Performance :

== Both in agreement.

CISG : Party may suspend performance of his obligations if it becomes apparent that the other party will not perform substantial part of his obligations. (Art. 71, CISG)

PH : There can be suspension of payment by buyer on account of anticipatory breach of the seller of his obligations. However, there is no corresponding remedy on the part of the seller. (Art.

1590, Civil Code)

Anticipatory Breach :

PH : In case of insolvency of buyer, unpaid seller has the right of stopping the goods in transitu after he has parted with the possession of them. (Art.

1526 & 1534, Civil Code)

CISG : In case of serious deficiency in a buyer’s ability to perform or in his creditworthiness, or his conduct in preparing to perform the contract. (Art. 71 (2), CISG)

Stoppage in Transit by Seller :

= PH allows only in case of insolvency. CISG provides a morecomprehensive enumeration of grounds for stoppage intransit.

PH : In breach of warranty of conformity of the goods, buyer may withdraw from the contract or demand a proportionate reduction of the price, with damages in either case. Appropriate action must be filed within 6 months from the delivery of the thing sold. (Art. 1571 &

1567, Civil Code)

CISG : Buyer has remedy of specific performance or rescission in case of breachof warranty of conformity of goods by seller. Prescriptive period is 2 years from date goods were actually handed to buyer, unless time-limit is inconsistent with contractual period of

guarantee. (Art. 39 (2), CISG)

Limitations for Warranty Claims :

== Conflict with CISG; PH statute of limitation is shorter.

CISG : allocation of risk does not depend on ownership over the goods. Risk of loss transfers to the buyer when the goods effectively leave the control of the seller. (Articles 67, 68, 69, CISG)

PH : Determination of who bears the risk of loss depends on who owns the goods (res perit domino). Before perfection, it is the seller. After delivery, it is the buyer. In case of “after perfection and before delivery”: buyer (Art. 1480 / 1538); seller (Art. 1504).

Passing of risk :

== CISG provides simpler uniform rule.

Similarities and differences exist betweenCISG and PH laws;

Differences do not represent clash betweenthe solutions offered by each one to legalproblems in the sale of goods;

CISG leaves domestic relations on the sale ofgoods totally preserved;

Uniform rules of CISG, appropriate for sale ofgoods between parties in different countrieswith different legal traditions;

Nothing in rules of CISG that would offendfundamental principles of PH contract law;

Nothing legally objectionable to PHaccession to the Convention;

Considering that :efforts on ASEAN to harmonize trade laws, including

accession to CISG. . .

largest trading partners of the PH are parties toCISG . . .

CISG is the uniform sales law of countries overthree-quarters of world trade . . .

It is to the advantage of PH to take steps toaccede to CISG before it finds itself left behindby its neighbors and other countries aiming topromote international trade.

Policy decision is required;

Consultation with relevant agencies and secure concurrence;

Accession package to be prepared;

DFA to secure CTC of the Convention and Summary of Benefits;

DFA will prepare Accession/Ratification Package for the Office of the President;

* Department of Foreign Affairs

Determination if CISG is treaty;Deposit of Instrument of Accession to the

UN Secretary General;DFA to inform agencies of entry into force

of the Convention for the Philippines; If determined to be a treaty, after

presidential ratification, Convention to be transmitted to Senate for its concurrence (PH Constitution requires 2/3 concurrence of Members of the Senate to ratify. * Department of Foreign Affairs

Maraming salamat po…

Thank you..

Rosario Elena A. Laborte-Cuevas

Senior State Counsel

Department of Justice