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Category: CASE DIGESTS

Adelfa Properties v. CA

G.R. No. 111238; 25 January 1995

Regalado, J.

FORMATION/PERFECTION OF CONTRACT OF SALE | Option Contract

Private respondents and their brothers Jose and Dominador Jimenez were registered owners of a parcel
of land in Las Piñas. Jose and Dominador sold their share (1/2 parcel of land) pursuant to “Kasulatan sa
Bilihan ng Lupa” to petitioner, Adelfa Properties. Eastern portion belonged to them while western
portion belonged to Rosario and Salud. Adelfa Properties (now owners of eastern portion) expressed
interest in buying the western portion by executing “Exclusive Option to Purchase” with ₱50,000.00 as
option money. Before petitioner could make payment, it received summons that the nephews and nieces
of private respondents filed an annulment of deed of sale. As a result, petitioner withheld payment of
full purchase price. Salud a ributed the suspension of payment to “lack of word of honor.” Francisca
Jimenez was sent to see the counsel of petitioner to inform him that they were cancelling the
transactions. Subsequently, a Deed of Conditional Sale was executed in favor of Emylene Chua. Private
respondents’ counsel sent ₱25,000.00 refund of the option money. According to the RTC, agreement
entered into was merely an option contract and the suspension of payment by petitioner is a counter-
offer which is tantamount to a rejection of option. Thus, the sale to Chua was valid. CA ruled that failure
of petitioner to pay the purchase price in the period agreed upon was tantamount to election not to buy
such land.

ISSUE:

Is the agreement between Adelfa Properties and private respondents strictly an option contract?

HELD:
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The contract between the parties is a contract to sell and not an option contract nor a contract of sale.
Two features which convince that parties never intended to transfer ownership except upon full
payment of purchase price: (1) the exclusive option to purchase does not mention that petitioner is
obliged to return possession or ownership of property as consequence of non-payment; and (2) no
delivery, actual or constructive, was made to petitioner; option to purchase was not included in a public
instrument which would have effect of delivery. Neither did petitioner take actual, physical possession
of the property at any given time. With this regard, there was an implied agreement that ownership shall
not pass to the purchaser until he had fully paid the price. Also, the alleged option money was actually
earnest money since the amount was not distinct from the cause or consideration for the sale of the
property, but was itself a part thereof.

By jabmenriquez in CASE DIGESTS, Uncategorized | September 15, 2017September 15, 2017 | 412
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Swedish Match v. CA

G.R. No. 128120; 20 October 2004

Tinga, J.

PRICE | Meeting of minds as to price

Swedish Match AB (SMAB) had 3 subsidiary corporations in the Philippines, all organized under
Philippine laws, to wit: Phimco Industries (Phimco), Provident Tree Farms (PTF), and OTT/Louie.
STORA, the parent company of SMAB, decided to sell SMAB of Sweden and its worldwide match,
lighter, and shaving products operation to Swedish Match NV (SMNV).

Ed Enriquez, VP of Swedish Match Sociedad Anonimas (SMSA) which is SMAB’s management

On November 1989, Litonjua submi ed to SMAB a firm offer to buy all of the la er’s shares in Phimco
and all of Phimco’s shares in PTF and OTT for P750,000,000.00. However, CEO Massimo Rossi informed
respondents that their price offer was below their expectations. Again, on May 1990, Litonjua offered to
buy the disputed shares, excluding the lighter division for US$36M. Rossi wrote that ALS should
undertake a due diligence process or pre-acquisition audit and review of the draft contract for the Match
and Forestry activities of Phimco at ALS convenience. 2 days prior to the deadline for submission of the
final bid, Litonjua told Rossi that they would be unable to submit the final offer by 30 June 1990,
considering that the acquisition audit of Phimco and the review of the draft agreements had not yet been
completed. Thus, Enriquez sent notice to Litonjua that they would be constrained to entertain bids from
other parties in view of Litonjua’s failure to make a firm commitment for the shares of Swedish Match.
In his le er, Litonjua asserted that they submi ed the best bid and that they were already finalizing the
terms of the sale.
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More than 2 months from receipt of Litonjua’s last le er, Enriquez advised the former that the proposed
sale of SMAB’s shares in Phimco with local buyers did not materialize. Enriquez then invited Litonjua to
resume negotiations with SMAB for the sale of Phimco shares. He indicated that SMAB would be
prepared to negotiate with ALS on an exclusive basis for a period of 15 days from 26 September 1990
subject to the terms contained in the le er. Additionally, Enriquez clarified that if the sale would not be
completed at the end of the 15-day period, SMAB would enter into negotiations with other buyers.
Litonjua emphasized that the new offer constituted an a empt to reopen the already perfected contract
of sale of the shares in his favor. CA ruled that the series of wri en communications between petitioners
and respondents collectively constitute a sufficient memorandum of their agreement under Article 1403
of the Civil Code. Thus, le ers exchanged by and between the parties, taken together, were sufficient to
establish that an agreement to sell the disputed shares to respondents was reached. On the other hand,
petitioners stress that Litonjua made it clear in his le ers that the quoted prices were merely tentative
and still subject to further negotiations between him and the seller. They point out that there was no
meeting of the minds on the essential terms and conditions of the sale because SMAB did not accept
respondent’s offer that consideration would be paid in Philippine pesos. They argued as well that the
foregoing circumstances prove that they failed to reach an agreement on the sale of the Phimco shares.
(h p://sc.judiciary.gov.ph/jurisprudence/2004/oct2004/128120.htm#_ftn5)

ISSUE:

Was there a perfected contract of sale with respect to Phimco shares?

HELD:

No. There was no perfected contract of sale since Litonjua’s le er of proposing acquisition of the Phimco
shares for US$36M was merely an offer. Consent in a contract of sale should be manifested by the
meeting of the offer and acceptance upon the thing and the cause which are to constitute the contract.
The lack of a definite offer on the part of respondents could not possibly serve as the basis of their claim
that the sale of the Phimco shares in their favor was perfected, for one essential element of a contract of
sale was obviously wanting the price certain in money or its equivalent. The price must be certain,
otherwise there is no true consent between the parties. Respondents’ failure to submit their final bid on
the deadline set by petitioners prevented the perfection of the contract of sale. It was not perfected due
to the absence of one essential element which was the price certain in money or its equivalent.
(h p://sc.judiciary.gov.ph/jurisprudence/2004/oct2004/128120.htm#_ftn44)

By jabmenriquez in CASE DIGESTS | December 21, 2016 | 789 Words | Leave a comment

Mapalo v. Mapalo

G.R. Nos. L-21489 & L-21628; 19 May 1966

Bengzo, JP, J.

PRICE | Meeting of minds as to price

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Spouses Miguel Mapalo and Candida Quiba, simple illiterate farmers, were registered owners of a
residential land in Manaoag, Pangasinan. Said spouses out of love for Maximo Mapalo — Miguel’s
brother who was about to get married — decided to donate the eastern half of the land to him. As a
result, in 1936, they were deceived into signing a deed of absolute sale over the entire land in Maximo’s
favor. The document of sale stated a consideration of P500.00 which Spouses Mapalo did not receive
anything. Following the execution of document, Miguel and Candida built a fence of permanent
structure in the middle of the land segregating the eastern portion from its western portion. 13 years
later, Maximo sold for P2,500.00 the entire land in favor of the Narcicos and they registered the same.
Narcisos filed to be declared owners of the entire land with possession of its western portion. Spouses
Mapalo contend that the deed of sale of 1936 was procured with fraud and the Narcicos were buyers in
bad faith. Also, it was invoked that the deeds of sale be declared null and void as to the western half of
said land for being fictitious. In reversing the ruling of the CFI, the CA averred that having obtained the
deed of sale by fraud, the same was voidable, not void ab initio and the action to annul the same had
already prescribed which was within 4 years of notice of fraud. While they are definitely victims, they
lost their right by prescription.

ISSUE:

Does the contract involve ‘no consideration’ or ‘false consideration’?

HELD:

The rule under the Civil Code, be it the old or the new, is that contracts without a cause or consideration
produce no effect whatsoever. Nonetheless, under the Old Civil Code, the statement of a false
consideration renders the contract voidable, unless it is proven that it is supported by another real and
licit consideration. And it is further provided by the Old Civil Code that the action for annulment of a
contract on the ground of falsity of consideration shall last 4 years, the term to run from the date of the
consummation of the contract. In the present case, the contract of sale has no consideration and
therefore it is void and inexistent for the said consideration of P500.00 was totally absent. Purchase price
which appears thereon as paid has in fact never been paid by the purchaser to vendor. This is contrary to
what is meant by a contract that states a false consideration is one that has in fact a real consideration but
the same is not the one stated in the document. Needless to add, the inexistence of a contract is
permanent and incurable and cannot be the subject of prescription.

By jabmenriquez in CASE DIGESTS | December 10, 2016September 2, 2017 | 472 Words | Leave a
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Payongayong v. CA

G.R. No. 144576; 28 May 2004

Carpio Morales, J.

PRICE | Effect where price is simulated

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Eduardo Mendoza was the registered owner of a parcel of land situated in Barrio San Bartolome,
Caloocan. He mortgaged the land to Meralco Employees Savings and Loan Association (MESALA) to
secure a loan of ₱81,700.00. Mendoza executed a Deed of Absolute Sale with Assumption of Mortgage in
favor of Spouses Isabelo and Erlinda Payongayong and bound themselves to pay the mortgage
indebtedness and consideration of ₱50,000.00. Without knowledge of petitioners, the same property was
mortgaged for a 2nd time to secure a loan of ₱758,000.00. Meanwhile, the subject property was sold to
Spouses Clemente and Rosalinda Salvador. Thus, complaint for annulment of deed of absolute sale was
filed by Spouses Payongayong. They contend that Spouses Mendoza meticulously sold to respondents
the property which was priorly sold to them and that respondents acted in bad faith in acquiring it,
having absolute knowledge of the Deed of Absolute Sale with Assumption of Mortgage between
petitioners and Mendoza. Further, the deed of sale was simulated and therefore, null and void.
Respondents claim that they are entitled to the protection accorded to purchasers in good faith for they
did not rely upon Mendoza’s title. Rosalia personally inspected the property and verified with Registry
of Deeds of Quezon City if Mendoza was indeed the registered owner.

ISSUE:

Was the sale between Mendoza and Spouses Salvador simulated?

HELD:

No. Simulation occurs when an apparent contract is a declaration of a fictitious will, deliberately made
by the agreement of the parties, in order to produce, for the purpose of deception, the appearance of a
juridical act which does not exist or is different from that which is executed. Its requisites are: a) an
outward declaration of will different from the will of the parties; b) the false appearance must have been
by mutual agreement; and c) the purpose is to deceive third persons. The claim of simulation does not
lie. The cancellation of Mendoza’s certificate of title over the property and procurement of one in its
stead in the name of respondents, which acts were directed towards the fulfillment of the purpose of the
contract unmistakably show the parties intention to give effect to their agreement. However, the Court
cannot come to petitioners’ succor at the expense of respondents who are innocent purchasers in good
faith.

By jabmenriquez in CASE DIGESTS | December 10, 2016September 15, 2017 | 390 Words | Leave a
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Almendra v. IAC

G.R. No. 75111; 21 November 1999

Fernan, C.J.

CONTRACT OF SALE, CONCEPTS | Sale of Undivided Interest

Aleja Ceno was first married to Juanso Yu Book with whom she had 3 children: Magdaleno, Melecia,
and Bernardina. During said marriage, Aleja acquired a parcel of land which she declared in her name
under Tax Declaration No. 11500. Book took his family to China where he eventually died. Aleja and

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Bernardina returned to the Philippines. After Book’s death, Bernardina filed against her mother a case
for the partition of the said property in the CFI of Leyte. The lower court rendered a decision finding
that the property had been subdivided into Lots Nos. 6354, 6353, 6352, and 6366.Lots 6354 and 6353
(without prejudice to whatever may be the rights of Melecia) were declared owned by Bernardina while
lots 6352 (subject to whatever may be the rights of Magdaleno) and 6366 were declared owned by Aleja.

Meanwhile, Aleja married Santiago Almendra with whom she had 4 children: Margarito, Angeles,
Roman, and Delia. During said marriage, they acquired a 59,196 square-meter parcel of land in Cagbolo,
Abuyog, Leyte. Also during such time, Aleja inherited from her father, Juan Ceno, a 16,000 square-meter
parcel of land while Santiago inherited from his mother, Nicolasa Alvero, a 164 square-meter parcel of
residential land in Nalibunan, Abuyog, Leyte.

While Santiago was alive, he apportioned all of his properties among Aleja’s children in the Philippines,
including Bernardina. Upon his death, Aleja sold to Angeles and Roman certain parcels of land. When
Aleja died, Margarito, Delia, and Bernardina filed for the annulment of the deeds of sale in their favor,
partition of the properties and accounting their produce. They contend that the deeds of sale were
obtained through fraud, undue influence, and misrepresentation and that there was a deficit in the
consent of Aleja in the execution of the documents because she was then residing with Angeles.
Furthermore, the uniform price of P2,000.00 in all the sales was grossly inadequate. Also, it was averred
that the IAC erred in having sanctioned the sale of particular portions of yet undivided real properties. It
was the IAC’s view that no conclusive proof was presented to override the duly notarized deed of sale.

ISSUE:

Did the IAC err in having sanctioned the sale of particular portions of yet undivided real properties?

HELD:

The unquestionability of the due execution of the deeds of sale notwithstanding, the Court may not put
an imprimatur on the intrinsic validity of all the sales. The sale to Angeles of 1/2 portion of the conjugal
property (acquired by Aleja and Santiago) may only be considered valid as a sale of Aleja’s 1/2 interest
therein. Aleja could not have sold particular hilly portion specified in the deed of sale in absence of proof
that the conjugal partnership property had been partitioned after the death of Santiago. Before such
partition, Aleja could not claim title to any definite portion of the property for all she had was an ideal or
abstract quota or proportionate share in the entire property. However, the sale of the 1/2 portion of the
16,000 square-meter parcel of land is also valid because said property is paraphernal being Aleja’s
inheritance from her own father. As regards the sale of the property (covered by Tax Declaration No.
11500) to Roman Almendra, the Court held that since the property had been found to have been
subdivided, Aleja could not have intended the sale of the whole property covered by the tax declaration.
She could exercise her right of ownership only over Lot No. 6366 which was unconditionally adjudicated
to her in said case. Lot No. 6352 was given to Aleja “subject to whatever may be the rights thereto of her son
Magdaleno Ceno.” A reading of the deed of sale covering parcel of land would show that the sale is
subject to the condition stated above: hence, the rights of Magdaleno Cena are amply protected. The rule
on caveat emptor applies.

By jabmenriquez in CASE DIGESTS | December 10, 2016December 21, 2016 | 641 Words | Leave a
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Clemeno, Jr. v. Lobregat

G.R. No. 137845; 9 September 2004

Callejo, Sr., J.

CONTRACT OF SALE, CONCEPTS | Contract of Sale v. Contract to Sell

Spouses Nilus and Teresita Sacramento were the owner of the parcel of land and house constructed at
Madaling Araw St., Teresita Heights Subd., Novaliches, Quezon City. Spouses Sacramento mortgaged
the property with the SSS as security for their housing loan and likewise surrendered the owner’s and
duplicate copies of the certificate of title. A Deed of Absolute Sale with Assumption of Mortgage in favor
of Spouses Maria Linda Clemeno and Angel C. Clemeno, Jr. was entered into by Spouses Sacramental
with conformity of the SSS. 5 years after, Romeo Lobregat and Angel, who were relatives by
consanguinity, entered into a verbal contract of sale over the property with the following terms, among
others, that the former would pay the purchase price of the property in the amount of P270,000.00
inclusive of the balance. When Lobregat’s counsel wrote to Angel that he had already paid the purchase
price and was ready to pay the balance, he demanded that petitioner execute a deed of absolute sale over
the property and deliver the title. In reply, Angel stated that he ever sold the property but instead
consented to lease the property. Also, that even if Lobregat wanted to buy the property, the same was
unenforceable, as no document was executed by them to evince the sale. CA ruled that the contract
entered into was a contract of sale since partial payments had been made, thus, contract is partly
performed.

ISSUE:

Are the essential elements of a contract of sale present?

HELD:

Yes. The Court held that the contract between the parties is a perfected verbal contract of sale, not a
contract to sell over the subject property with the petitioner as vendor and respondent as vendee. Sale is
a consensual contract and is perfected by mere consent, which is manifested by a meeting of the minds
as to the offer and acceptance thereof on three elements: subject ma er, price, and terms of payment of
the price. The evidence shows that upon the payment made by the respondent of the amount of
P27,000.00, the petitioners vacated their house and delivered possession. The petitioners cannot re-
acquire ownership and recover possession thereof unless the contract is rescinded in accordance with
law. The contract of sale of the parties is enforceable notwithstanding the fact that it was an oral
agreement and not reduced in writing.

By jabmenriquez in CASE DIGESTS | December 9, 2016December 21, 2016 | 406 Words | Leave a
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Rayos v. CA

G.R. No. 135528; 14 July 2004

Callejo, Sr., J.

CONTRACT OF SALE, CONCEPTS | Contract of Sale v. Contract to Sell

Spouses Orlando Rayos, a practicing lawyer, and his wife, Mercedes Rayos, secured a short-term loan
from Philippine Savings Bank (PSB) payable within 1 year in quarterly installments of P29,190.28. The
loan was evidenced by a promissory note and to secure its payment, the spouses executed a real estate
mortgage over their property located in Las Piñas, Metro Manila. Petitioners (as vendors) and private
respondents, Spouses Rogelio and Venus Miranda executed a Deed of Sale with Assumption of
Mortgage over the subject property for P214,000.00. A month after, the spouses executed a contract to
sell in favor of Spouses Miranda for P250,000.00 and obliged themselves to execute a deed of absolute
sale upon full payment of the purchase price. Notwithstanding the refusal of PSB to secure the approval
of Rogelio’s assumption of petitioners’ obligation on the loan, Rogelio was able to pay the 3 quarterly
installments. Fearing that respondents would be unable to pay the amount due, Orlando paid P27,981.41
leaving a balance of P1,048.04 which he eventually paid. Spouses Rayos assert that the CA erred in not
finding that respondents commi ed a breach of contract to sell and behooved CA to apply Article 1192
of the Civil Code which states that, “the power to rescind obligation is implied in reciprocal ones, in case one of
the obligors should not comply with what is incumbent upon him.“

ISSUE:

Did Spouses Rayos unilaterally cancel their contract to sell?

HELD:

No. Contrary to the ruling of the CA, the petitioners did not unilaterally cancel their contract to sell with
respondents when they paid the total amount of P29,062.80 to the PSB in December 1986. In fact, the
petitioners wrote the respondents on January 3, 5, and 17, 1987 that they were ready to execute the deed
of absolute sale and turn over the owner’s duplicate of TCT upon the respondents’ remi ance of the
amount of P29,062.80 plus P160.87. The respondents were obliged under the contract to sell to pay the
said amount to PSB as part of the purchase price of the property. On the other hand, it cannot be argued
by the petitioners that the respondents commi ed a breach of their obligation when they refused to
refund the said amount.

By jabmenriquez in CASE DIGESTS | December 9, 2016December 21, 2016 | 380 Words | Leave a
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Dignos v. CA
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G.R. No. L-59266; 29 February 1988

Bidin, J.

CONTRACT OF SALE, CONCEPTS | Contract of Sale v. Contract to Sell

Spouses Silvestre Dignos and Isabela Lumungsod de Dignos sold their parcel of land in Opon, Lapu-
Lapu to private respondent Antonio Jabil for the sum of P28,000.00 payable for 2 installments, with an
assumption of indebtedness with the First Insular Bank of Cebu in the sum of P12,000.00 as was
acknowledged by vendors in the Deed of Absolute Sale (Exh. C), and the next installment to be paid 3
months after. But the same land was also sold by Spouses Dignos (Exh. J) which was registered in the
Registry of Deeds. This prompted Jabil to file a civil suit against Spouses Dignos for the 2nd sale to
Spouses Luciano Cabigas and Jovita de Cabigas, who were then US citizens. CFI of Cebu rendered the
2nd sale to Spouses Cabigas null and void, directing Spouses Dignos to return the P35,000.00 to Spouses
Cabigas and ordered Jabil to pay the remaining balance. Spouses Dignos contend that Exh. C is a
contract to sell and as such, anchored their contention on the very terms of the contract as mentioned in
¶4, that said spouses have agreed to sell the herein mentioned property to Alilano B. Jabil and condition
in ¶5, in which the spouses agreed to sign a final deed of absolute sale upon payment of the remaining
balance of P4,000.00.

ISSUE:

Is the contract between the parties a contract of sale or a contract to sell?

HELD:

The contract between the parties is a contract of sale. It has been held that a deed of sale is absolute in
nature although dominated as a “Deed of Conditional Sale” where nowhere in the contract in question is
a proviso or stipulation to the effect that title to the property sold is reserved in the vendor until full
payment of the purchase price, nor is there a stipulation giving the vendor the right to unilaterally
rescind the contract the moment the vendee fails to pay within a fixed period. All the elements of a valid
contract of sale are present in the document and that Spouses Dignos never notified Jabil by notarial act
that they were rescinding the contract, and neither did they file a suit in court to rescind the sale. There
is no showing that Jabil properly authorized a certain Cipriano Amistad to tell petitioners that he was
already waiving his rights to the land in question.

By jabmenriquez in CASE DIGESTS | December 9, 2016December 21, 2016 | 409 Words | Leave a
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Quiroga v. Parsons

G.R. No. L-11491; 23 August 1918

Avanceña, J.

CONTRACT OF SALE, CONCEPTS | Agency to Sell

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FACTS:

A contract was entered into between Andres Quiroga and J. Parsons, who were both merchants, which
granted the exclusive right to sell his beds in the Visayan Islands to Parsons under the following
conditions: 1) There be a discount of 2.5% as commission for the sale; 2) Parsons shall order the beds by
the dozen, whether of the same or of different styles; 3) Expenses for transportation and shipment shall
be borne by Quiroga; 4) Parsons is bound to pay Quiroga for the beds received within 60 days from the
date of their shipment; 5) If Quiroga should request payment before the invoice falls due, it shall be
considered as prompt payment with 2% deduction; 6) 15-day notice must at least be given by Quiroga
before any alteration in price of beds; and 7) Parsons binds himself to only sell Quiroga beds. Quiroga
alleged that Parsons breached its contract by selling the beds at a higher price, not having an open
establishment in Iloilo, not maintaining a public exhibition, and for not ordering the beds by the dozen.
Only the last imputation was provided for by the contract, the others were not stipulated. Quiroga
argued that since there was a contract of agency between them, such obligations were necessarily
implied.

ISSUE:

Is the contract between them one of agency, not of sale?

HELD:

No. The agreement between Quiroga and Parsons was that of a simple purchase and sale — not an
agency. Quiroga supplied the beds, while Parsons had the obligation to pay their purchase 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 la er, 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. There was mutual tolerance in the performance
of the contract in disregard of its terms; and it gives no right to have the contract considered, not as the
parties stipulated it, but as they performed it. Only the acts of the contracting parties, subsequent to, and
in connection with, the execution of the contract, must be considered for the purpose of interpreting the
contract, when such interpretation is necessary.

By jabmenriquez in CASE DIGESTS | December 8, 2016 | 436 Words | Leave a comment

CIR v. Arnoldus Carpentry

G.R. No. 71122; 25 March 1988

Cortes, J.

CONTRACT OF SALE, CONCEPTS | Contract for Piece of Work

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Arnoldus Carpentry Shop is a domestic corporation whose second purpose is the “preparing,
processing, buying, selling, exporting, importing, manufacturing, trading and dealing in cabinet shop
products, wood and metal home and office furniture, cabinets, doors, windows, etc., including their
component parts and materials.” Thus, furniture, cabinets, and other woodwork were sold locally and
exported abroad. Examiners of the Commissioner of Internal Revenue (CIR) conducted an investigation
of the business tax liabilities of Arnoldus Carpentry. Based on such examination, a report was made to
the Commissioner classifying such as an “other independent contractor” under Section 205 (16) [now
Section 169 (9)] of the Tax Code. The corporation renders service in the course of an independent
occupation representing the will of his employer only as to the result of his work, and not as to the
means by which it is accomplished. Hence, it is recommended that 3% contractor’s tax be imposed. A
protest le er was made maintaining that the carpentry shop is a manufacturer and thus entitled to 7%
tax exemption on export sales.

ISSUE:

Is Arnoldus Carpentry a manufacturer?

HELD:

Yes. “Manufacturer” includes every person who by physical or chemical process alters the exterior
texture or form or inner substance of any raw material or manufactured or partially manufactured
product in such manner as to prepare it for a special use. Based on Article 1467, what determines
whether the contract is one of work or sale is whether the thing has been manufactured specially for the
customer and “upon his special order.” Thus, if the thing is specially done at the order of another, this is
a contract for a piece of work. If, on the other hand, the thing is manufactured or procured for the
general market in the ordinary course of one’s business, it is a contract of sale. The one who has ready
for the sale to the general public finished furniture is a manufacturer, and the mere fact that he did not
have on hand a particular piece or pieces of furniture ordered does not make him a contractor only. The
facts show that the company had a ready stock of its shop products for sale to its foreign and local
buyers. As a ma er of fact, the purchase orders from its foreign buyers showed that they ordered by
referring to the models designated by petitioner. Even purchases by local buyers for television cabinets
were by orders for existing models except only for some adjustments in sizes and accessories utilized.

By jabmenriquez in CASE DIGESTS | December 8, 2016December 8, 2016 | 423 Words | Leave a

Co v. CIR

G.R. No. L-8506; 31 August 1956

Bengzon, J.

CONTRACT OF SALE, CONCEPTS | Contract for Piece of Work

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Celestino Co & Company is a duly registered copartnership doing business under the trade name of
“Oriental Sash Factory.” From 1946 to 1951, it paid percentage taxes of 7% on the gross receipts of its
sash, door, and window factory pursuant to Section 16 of the National Internal Revenue Code (NIRC).
However, in 1952, it began to claim liability only to the contract’s 3% tax under Section 191 of the NIRC.
The company contends that it is only an ordinary contractor that does not manufacture ready-made
sash, doors, and windows for the public but rather makes these articles only upon special order of its
customers. On the other hand, the Court of Tax Appeals aver that it cannot believe that petitioner
company would take, as in fact it has taken, all the trouble and expenses of registering a special trade
name for its business solely for the purpose of supplying the needs of it special and limited customers.
Further, it has offered itself to the public as a “Factory,” which means it is out to do business, in its
chosen lines on a big scale. The court also found it difficult to believe that the six figures income derived
by petitioner from its few customers was due to the special orders of sash, doors, and windows.

ISSUE:

Is the petitioner engaged in a contract for a piece of work?

HELD:

No. The important thing to remember is that Celestino Co & Company habitually makes sash, windows,
and doors, as it has represented in its stationery and advertisements to the public. That it
“manufactures” the same is practically admi ed by appellant itself. The fact that windows and doors are
made by it only when customers place their orders, does not alter the nature of the establishment, for it
is obvious that it only accepted such orders as called for the employment of such material-molding,
frames, panels — as it ordinarily manufactured or was in a position habitually to manufacture. It is the
Court’s opinion that when this Factory accepts a job that requires the use of extraordinary or additional
equipment, or involves services not generally performed by it, it thereby contracts for a piece of work —
filling special orders within the meaning of Article 1467. The orders herein exhibited were not shown to
be special. They were merely orders for work — nothing is shown tho call them special, requiring
extraordinary service of the factory. If, as alleged, all the work of the appellant is only to fill orders
previously made, such orders should not be called special work but regular work.

By jabmenriquez in CASE DIGESTS | December 8, 2016December 8, 2016 | 438 Words | Leave a

Leabres v. CA

G.R. No. L-41847; 12 December 1986

Paras, J.

CONTRACT OF SALE, CONCEPTS | Essential Requisites of a Contract of Sale

FACTS:
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1/12/2021 CASE DIGESTS – CARRY ON

Clara Tambunting de Legarda died testate on 22 April 1950. Among the properties left behind by the
deceased is the “Legarda Tambunting Subdivision.” Shortly after her death, plaintiff Catalino Leabres
bought on a partial payment of P1,000.00 a portion of said Subdivision from surviving husband Vicente
Legarda, who acted as special administrator. The sale was evidenced by a receipt. In the meantime,
Philippine Trust Company took over as administrator and advertised the sale of the subdivision which
includes the lot contested. Manotoc Realty emerged as the successful bidder at the price of P840,000.00. It
must be noted that no adverse claim or interest over the subdivision or any other portion was ever
presented before. Subsequently, a complaint was filed by Leabres which sought, among others, for
quieting of title and continued possession of said lot. He anchored his claim on the receipt which he
contends as evidence of the sale.

ISSUE:

Can the receipt be a basis of a valid sale?

HELD:

No. An examination of the receipt reveals that the same can neither be regarded as a contract of sale or a
promise to sell. There was merely an acknowledgment of the sum of P1,000.00. There was also no
agreement as to the total purchase price of the land nor to the monthly installment to be paid by the
petitioner. The requisites of a valid Contract of Sale namely: 1) consent or meeting of the minds of the
parties; 2) determinate subject ma er; and 3) price certain in money or its equivalent — are lacking in the
said receipt and therefore, the “sale” is not valid or enforceable. Assuming that the receipt could be
regarded as sufficient proof, petitioner should have submi ed the receipt of the alleged sale to the
Probate Court for approval of transactions given that Don Vicente Legarda entered into said sale in his
own personal capacity without court approval. Consequently, said sale cannot bind the estate of Clara
Tambunting.

By jabmenriquez in CASE DIGESTS | December 8, 2016July 1, 2017 | 338 Words | Leave a comment

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