sales - first cases 1-7

7/28/2019 Sales - First Cases 1-7

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FERNANDO A. GAITE, plaintiff-appellee, vs.

ISABELO FONACIER, GEORGE KRAKOWER, LARAP MINES & SMELTING CO., INC., SEGUNDINA VIVAS,

FRNACISCO DANTE, PACIFICO ESCANDOR and FERNANDO TY, defendants-appellants.

G.R. No. L-11827 July 31, 1961

FACTS: Fonacier was the owner and/or holder of 11 iron lode mineral claims, known as the Dawahan

Group. By a "Deed of Assignment" dated September 29, 1952, Fonacier constituted and appointed

Gaite as his true and lawful attorney-in-fact to enter into a contract with any individual or juridical

person for the exploration and development of the mining claims.

On March 19, 1954, Gaite in turn executed a general assignment conveying the development and

exploitation of said mining claims into the Larap Iron Mines, a single proprietorship owned solely by

and belonging to him, on the same royalty basis provided by the Deed of Assignment".

Fonacier decided to revoke the authority granted by him to Gaite to exploit and develop the mining

claims in question, and Gaite assented thereto subject to certain conditions.

Conditions were:

i. Consideration of P20,000.00, plus 10% of the royalties that Fonacier would receive from the

mining claimsii. All his rights and interests on all the roads, improvements, and facilities in or outside said claims,

iii. Right to use the business name "Larap Iron Mines" and its goodwill, and all the records and

documents relative to the mines.

iv. Gaite transferred to Fonacier all his rights and interests over the "24,000 tons of iron ore, more

or less" that the former had already extracted from the mineral claims.

As a result, a "Revocation of Power of Attorney and Contract" was executed on December 8, 1954,

wherein Gaite transferred to Fonacier, all his rights and interests on development and exploitation of

said mining claims, in consideration of the sum of P75,000.00, P10,000.00 of which was paid upon the

signing of the agreement, and.

B. The balance of P65,000.00 will be paid from and out of the first letter of credit covering the firstshipment of iron ores and of the first amount derived from the local sale of iron ore made by the

Larap Mines & Smelting Co. Inc., its assigns, administrators, or successors in interests. Payment of

P65, 000.00 was secured by two surety bonds: One from Larap Mines and its stockholders and the

other from Far Eastern Surety and Insurance Co.

ISSUE: Was the transfer of ORE (24K tons) a type of SALE?

RULING: The only rational view that can be taken is that the sale of the ore to Fonacier was a

credit, and not an aleatory contract where the transferor, Gaite, would assume the risk of no

paid at all; and that the previous sale or shipment of the ore was not a suspensive condition

payment of the balance of the agreed price, but was intended merely to fix the future date

payment.

A contract of sale is normally commutative and onerous: not only does each one of the

assume a correlative obligation (the seller to deliver and transfer ownership of the thing s old

buyer to pay the price),but each party anticipates performance by the other from the ver

While in a sale the obligation of one party can be lawfully subordinated to an uncertain event,the other understands that he assumes the risk of receiving nothing for what he gives (as in th

of a sale of hopes or expectations, emptio spei), it is not in the usual course of business to

hence, the contingent character of the obligation must clearly appear. Nothing is found in the

to evidence that Gaite desired or assumed to run the risk of losing his right over the ore w

getting paid for it, or t hat Fonacier understood that Gaite assumed any such risk. This is proved

fact that Gaite insisted on a bond a to guarantee payment of the P65,000.00, an not only upon

by Fonacier, the Larap Mines & Smelting Co., and the companys stockholders, but also on on

surety company; and the fact that appellants did put up such bonds indicates that they admit

definite existence of their obligation to pay the balance of P65,000.00.

SPS BERNARDO BUENAVENTURA and CONSOLACION JOAQUIN, SPOUSES JUANITO EDRA and

JOAQUIN, SPOUSES RUFINO VALDOZ and EMMA JOAQUIN, and NATIVIDAD JOAQUIN, petitio

vs. COURT OF APPEALS, SPOUSES LEONARDO JOAQUIN and FELICIANA LANDRITO, SPOUSES F

JOAQUIN and CONCHITA BERNARDO, SPOUSES TOMAS JOAQUIN and SOLEDAD ALCORAN,

SPOUSES ARTEMIO JOAQUIN and SOCORRO ANGELES, SPOUSES ALEXANDER MENDOZA and

CLARITA JOAQUIN, SPOUSES TELESFORO CARREON and FELICITAS JOAQUIN, SPOUSES DANILO

VALDOZ and FE JOAQUIN, and SPOUSES GAVINO JOAQUIN and LEA ASIS, respondents.

[G.R. No. 126376. November 20, 2003]

FACTS: Sps Leonardo Joaquin & Feliciano Landrito are the parents of petitioners.

Petitioners assail the sale of several lands ( 6 Land Titles ) by their parents to their other sibling

being void ab initio based on the following grounds:

1. no actual valid consideration


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2. properties are more than 3x more valuable t han the measly purchase price (purchase price was

grossly inadequate)

3. deeds of sale do not reflect & express the true intent of the parties

4. deliberate conspiracy designed to unjustly deprive the rest of the compulsory heirs of their

legitime.

Meanwhile the Defense of the respondents are:

1. no cause of action, requisite standing & interest2. sales were with sufficient considerations & made by their parents voluntarily in good faith &

with full knowledge of the consequences

3. certificates of title were issued with factual & legal basis.Trial court dismissed the case WRT Gavino Joaquin & Lea Asis. Ruled in favor of the respondents &

dismissed the complaint.

1. The right of the compulsory heirs to a legitime is contingent & it only commences from themoment of the death of the decedent (CC Art.777). The value of the property left at the

death of the testator is the basis for determining the legitime (Art. 908). Plaintiffs cannot

claim an impairment of their legitime since their parents are still alive.

2. Deeds of Sale were executed for valuable consideration.CA affirmed Trial Court decision. In addition to the grounds stated by t he trial court, CA also

mentioned that:

1. While still alive, parents are free to dispose of their properties provided such is not done in fraud of

creditors.

2. Petitioners are not parties in interest since theyre not parties to the deeds of sale nor are they

creditors of their parents

ISSUE: Was the deed of sale void?

RULING: NO. The sale was valid on all counts.

A contract of sale is not a real contract, but a consensual contract. As a consensual contract, a

contract of sale becomes a binding and valid contract upon the meeting of the minds as to price. If

there is a meeting of the minds of the parties as to the price, the contract of sale is valid, despite the

manner of payment, or even the breach of that manner of payment. If the real price is not stated in

the contract, then the contract of sale is valid but subject to reformation. If there is no meeting of the

minds of the parties as t o the price, because the price stipulated in the contract is simulated, t

contract is void.

It is not the act of payment of price that determines the validity of a contract of sale. Paymen

price has nothing to do with the perfection of the contract. Payment of the price goes in

performance of the contract. Failure to pay the consideration is different from

consideration. The former results in a right to demand the fulfillment or cancellation

obligation under an existing valid contract while the latter prevents the existence of a valid con

Deed of sale was also valid even if there was gross inadequacy of price.

Art. 1470. Gross inadequacy of price does not affect a contract of sale, except as may ind

defect in the consent, or that the parties really intended a donation or some other act or contr

Art. 1355. Except in cases specified by law, lesion or inadequacy of cause shall not inva

contract, unless there has been fraud, mistake or undue influence.

In the instant case, the trial court found that the lots were sold for a valid consideration, and t

defendant children actually paid the purchase price stipulated in their respective Deeds of Sale

CELESTINO CO & COMPANY, petitioner, vs. COLLECTOR OF INTERNAL REVENUE, Respondent

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

FACTS: Celestino Co & Company is a duly registered general co-partnership doing business und

trade name of Oriental Sash Factory. From 1946 to 1951 it paid percentage taxes of 7% on th

receipts of its sash, door and window factory, in accordance with section 186 of the National R

Code imposing taxes on sales of manufactured articles.

However in 1952 it began to claim liability only to the contractors 3% tax (instead of 7%) unde

section 191 of the same Code. It bolstered its contention by claiming that it does not manufact

ready-made sash, doors and windows for the public and that it makes these articles only upon

order of its customers; hence it is a contractor within the purview of section 191 of the Nation

Internal Revenue Code which enumerates no less 50 occupations subject to taxation. Having fa

convince the Bureau of Internal Revenue, it brought the matter to the Court of Tax Appeals, w

also failed.

Defense of petitioner:

1. They only make doors and windows as special orders. ( Evidence presented were coletter, sketches )


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2. Factory does not make ready-made doors, sash and or windows.3. That the doors and windows must meet certain desired specifications

Courts findings:

1. Celestino Company Habitually makes sash, windows and doors, as it is showed in theirstationaries and ads to the public.

2. That said company manufactures the same and is practically admitted by the appellantitself.

3.

The factory does nothing more than sell the goods that it mass-produced or habituallymakes.

ISSUE: WON Celestino Co & Cos business is a matter of contract of sale or contract of piece of work?

RULLING: Art. 1467. A contract for the delivery at a certain price of an article which the vendor in the

ordinary course of his business manufactures or procures for the general market, whether the same

is on hand at the time or not, is a contract of sale, but if t he goods are to be manufactured specially

for the customer and upon his special order, and not for the general market, it is contract for a piece

of work.

When it 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 filing special orders

within the meaning of Article 1467.

The orders herein exhibited ( Celestino Co& Co.) were not shown to be SPECIAL.

They were merely orders for work nothing is shown to call them special requiring extraordinary

service of the factory.

Other Ruling from case below:

In Celestino Co, the Court held the taxpayer to be a manufacturer rather than a contractor of sash,

doors and windows manufactured in its factory. From the very start, Celestino Co intended itself to

be a manufacturer of doors, windows, sashes etc. as it did register a special trade name for its sash

business and ordered company stationery carrying the bold print ORIENTAL SASH FACTORY. As a

general rule, sash factories receive orders for doors and windows of special design only in particular

cases, but the bulk of their sales is derived from ready-made doors and windows of standard sizes for

the average home, which sales were re flected in their books of accounts totaling P118,754.69 for

the period of only nine (9) months. The Court found said sum difficult to have been derived from its

few customers who placed special orders for these items.

THE COMMISSIONER OF INTERNAL REVENUE, petitioner, vs.

ENGINEERING EQUIPMENT AND SUPPLY COMPANY AND THE COURT OF TAX APPEALS,

respondents.

G.R. No. L-27044 June 30, 1975

FACTS: Engineering Equipment and Supply Co., an engineering and machinery firm, is engage

design and installation of central type air conditioning system, pumping plants and steel fabrica

CIR received an anonymous letter (a certain juan dela cruz) denouncing Engineering for tax evamisdeclaring its imported articles and failing to pay the correct percentage taxes due the

connivance with its foreign suppliers. Engineering was likewise denounced to the Central Ba

for alleged fraud in obtaining its dollar allocations.

So, NBI and Central Bank conducted a raid and search on which occasion voluminous record

firm were seized and confiscated.

CIR also reported about deficiency advance sales tax. CIR assessed against the Company paym

the increased amount and suggested that P10,000 be paid as compromise in extrajudicial sett

of the Companys penal liability for violation of the Tax Code.

The firm, however, contested the tax assessment and requested that it be furnished with the

and particulars of the Commissioners assessment.

Engineering appealed the case to the Court of Tax Appeals. During the pendency of the ca

investigating revenue examiners reduced the Companys deficiency tax. CTA declare

Engineering is a contractor and is exempt from deficiency manufacturers sales ta

Commissioner, not satisfied with the decision of the CTA, appealed to the Supreme Court.

ISSUE: WON the installation of a centralized air-conditioning system a contact of sale or a cont

piece of work? It is a CONTRACT FOR PIECE OF WORK.

Other side issues: WON Engineering Equipment is a manufacturer or contractor? It is a CONTR

Is Celestino Co vs. CIR case applicable in this case? NO.

RULING: NATURE OF OBJECT TEST:


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The distinction between a contract of sale and one for work, labor and materials is tested by the

inquiry whether the thing transferred is one NOT in existence and which never would have existed

but for the order of the party desiring to acquire it, or a thing which would have existed and has been

the subject of sale to some other persons even if the order had not been given. If the article ordered

by the purchaser is exactly such as the plaintiff makes and keeps on hand for sale to anyone, and no

change or modification of it is made at defendants request, it is a contract of sale, even though it

may be entirely made after, a nd in consequence of, the defendants order for it.

The air conditioning units installed in a central type of air conditioning system would not have existed

but for the order of the party desiring to acquire it and if it existed without the special order ofEngineerings customer, the said air conditioning units were not intended for sale to the general

public. Hence, it is a contract for a piece of work.

ANDRES QUIROGA, plaintiff-appellant, vs. PARSONS HARDWARE CO., defendant-appellee.

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

FACTS: 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 i n 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 60 days 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.

ISSUES: Was it a contract of agency or a contract of sale? It is a CONTRACT OF SALE.

RULING: Payment was to be made at the end of sixty days, or before, at the plaintiffs 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

defendant, to pay their price. These features exclude the legal conception of an agency or o

sell whereby the mandatory or agent received the thing to sell it, and does not pay its pri

delivers to the principal the price he obtains from the sale of the thing to a third person, an

does not succeed in selling it, he returns it. By virtue of the contract between the plaintiff a

defendant, the latter, on receiving the beds, was necessarily obliged to pay their price wit

term fixed, without any other consideration and regardless as to whether he had or had not s

beds.

Not a single one of these clauses necessarily conveys the idea of an agency. The words comon sales used in clause (A) of article 1 mean nothing else, as stated in the contract itself, than

discount on the invoice price. The word agency, also used in articles 2 and 3, only expresses t

defendant was the only one that could sell the plaintiffs beds in the Visayan Islands. With re

the remaining clauses, the least that can be said is that they are not incompatible with the con

purchase and sale.

Puyat & Sons v. Arco Amusement (GR 47538, 20 June 1941) - 72 Phil 402

FACTS: Gonzalo Puyat & Sons is the exclusive agent of Starr Piano Company of Richmond,

USA, in the Philippines. Teatro Arco, or Arco Amusement Company, desiring to eqcinematograph with sound reproducing devices, approached Puyat. It was agreed by the part

Puyat would in behalf of Arco order equipment from Starr Piano and that Arco would pay P

addition to price of the equipment, 10% commission plus all expenses such as freight, insu

banking charges, cables, etc. Puyat informed Arco that the price of the equipment was $1,

which Arco agreed. Later, a similar arrangement was made by Arco for the purchase of

equipment for $1,600 with 10% commission, with Puyat charging an additional flat charge of $

all expenses and charges. 3 years later, Arco learned that the price quoted by Puyat on the 2

were not the net price but the list price for the equipment. Arco filed a complaint with the tri

(CFI) demanding reimbursement from said overpriced sales. The trial court ruled in favor of

but the Court of Appeals reversed such decision and declared Puyat an agent of Arco Amuse

the purchase of said equipment.

ISSUE: Whether the agreement made between Puyat and Arco Amusement is that of purcha

sale or that of agency.

RULING: Gonzalo Puyat & Sons cannot be the agent of Arco Amusement in the purch

equipment from Starr Piano Company as Puyat & Sons is already the exclusive agent of Starr P


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the Philippines. Puyat cannot be the agent of both vendor and purchaser. The fact that a commission

was offered to the other does not necessarily mean that the latter has become the agent of the

former, as this was only an additional price which Arco bound itself to pay and which is not

incompatible with the contract of purchase and sale. Puyat is not bound to reimburse the profit

acquired in the transaction, as this is the very essence of commerce involving middlemen and

merchants. The contract is the law between the parties. What does not appear on the face of the

contract should be regarded as dealers or traders talk which cannot bind either party. Not every

concealment is fraud, short of fraud, and such as that in this case, is considered as business acumen.

DAO HENG BANK, INC., now BANCO DE ORO UNIVERSAL BANK ( Petitioner ) Vs. SPS. LILIA and

REYNALDO LAIGO (Respondents)

G.R. No. 173856 Nov. 20, 2008

FACTS: Rey and Linda obtained loans from a bank (DHB) amounting to P11 million (October 28, 1996,

November 18, 1996 and April 18, 1997 three Real Estate Mortgages ) and to secure their payment,

the spouses mortgaged their two parcels of land located in Fairview, Quezon City containing areas of

569 and 537 square meters respectively. The loan was payable in installments for 12 months, but as

of 2000, Rey and Linda failed to settle their outstanding obligation.

Hence they instead verbally offered to cede to DHB one of the two mortgaged lots by way of dacion

en pago. To appraise the value of the lands DHB commissioned an appraiser whose fees wereshouldered by it and the couple.

After the appraisal, no further action was taken by any of the parties until DHB wrote the couple on

August 18, 2000 demanding settlement of their obligation then amounting P10,385,109.92 inclusive

of interests and other charges.

Since Rey and Linda failed to heed the demand, DHB foreclosed the mortgage wherein the two

parcels were sold for P10,776,242 to another universal bank (BOUB) as the highest bidder.

Thereafter, the couple negotiated for the redemption of the properties. In r esponse to their proposal,

BOUB to which DHB was merged wrote them on June 29, 2001 fixing a redemption price of P11.5

million plus 12 percent interest payable in staggered payments up to January 2, 2002.

Nothing was heard from Rey and Linda, hence BOUB advised them that in view of their failure toconform to the conditions for the redemption, it would proceed to consolidate titles immediately

after the expiration of the redemption period on January 2, 2002.

Six days before January 2, 2002 however, Rey and Linda filed a complaint before the Regional Trial

Court (RTC) praying for annulment of the foreclosure and for them to be allowed to deliver by way of

dacion en pago one of the mortgaged properties as full payment of their mortgaged obligatio

couple claimed that DHB verbally agreed to enter into a dacion en pago as in fact they delive

titles to the properties and the bank had them appraised wherein they even shared in the ap

expenses.

ISSUE: Was the dacion en pago in this case relates to a contract of sale?

RULING: In its modern concept, what actually takes place in dacion en pago is an objective nov

of the obligation where the thing offered as an accepted equivalent of the performance of an

obligation is considered the object of the contract of sale while the debt is considered the purc

price. In any case, the essential requisites of common consent of the parties and object or caus

the obligation must concur and be established to have the effect of t otally extinguishing the de

obligation.

In this case, there is no concrete showing that after the appraisal of t he properties, DHB appro

couples proposal to settle their obligation via dacion en pago. The delivery to it of the titles

properties is a usual condition sine qua non to the execution of the mortgage, both for secur

registration purposes. For if the title to the property is not delivered, there is nothing to preve

mortgagor from again mortgaging it or even selling it to a third party.

Finally, the couple did not also deny proposing to redeem the mortgages as reflected in the

letter to them on June 29, 2001. This fact dooms their claim of the existence of a perfected dapago.

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