Sales - First Set of Cases

8/19/2019 Sales - First Set of Cases

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[Syllabus]

THIRD DIVISION

[G.R. No. 103577. October 7, 1996]

ROMULO A. CORONEL, ALARICO A. CORONEL, ANNETTE A. CORONEL, ANNABELLE CGONALE! "#or $er%e&# '() o( be$'&# o# *&or'+)' C. T--er, '% 'ttor(e/+(/#'ctCIELITO A. CORONEL, *LORAIA A. ALMONTE, '() CATALINA BALAI!MABANAG,petitioners,vs. T2E COURT O* AEAL!, CONCECION . ALCARA '()RAMONA ATRICIA ALCARA, '%%+%te) b GLORIA *. NOEL '% 'ttor(e/+(/#'ct,respondents.

E C I ! I O N

MELO,J.4

The petition before us has its roots in a complaint for specic performance to compel hereinpetitioners (ecept the last name!" #atalina $alais %abana&' to consummate the sale of a parcel oflan! ith its impro)ements locate! alon& Roose)elt *)enue in +ue,on #ity entere! into by the partiessometime in -anuary ./01 for the price of 2."345"5556556

The un!ispute! facts of the case ere summari,e! by respon!ent court in this ise7

On -anuary ./" ./01" !efen!ants8appellants Romulo #oronel"et. al6 (hereinafter referre! to as#oronels' eecute! a !ocument entitle! Receipt of Don 2ayment (9h6 *' in fa)or of plainti: Ramona2atricia *lcara, (hereinafter referre! to as Ramona' hich is repro!uce! hereun!er7

RECEIPT OF DOWN PAYMENT

P1,240,000.00 - Total amount

50,000.00 - Down payment

------------------------------------------

P1,190,000.00 - Balance

Received from Miss Ramona Patricia Alcaraz of 146 Timog, Quezon City, the sum of Fifty ThousandPesos purchase price of our inherited house and lot, covered by TCT No. 119627 of the Registry ofDeeds of Quezon City, in the total amount of P1,240,000.00.

We bind ourselves to effect the transfer in our names from our deceased father, Constancio P. Coronel,the transfer certificate of title immediately upon receipt of the down payment above-stated.

On our presentation of the TCT already in or name, We will immediately execute the deed of absolutesale of said property and Miss Ramona Patricia Alcaraz shall immediately pay the balance oftheP1,190,000.00.

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#learly" the con!itions appurtenant to the sale are the folloin&7

.6 Ramona ill ma;e a !on payment of <ifty Thousan! (215"555655' pesos upon eecution of the!ocument aforestate!=

36 The #oronels ill cause the transfer in their names of the title of the property re&istere! in the nameof their !ecease! father upon receipt of the <ifty Thousan! (215"555655' 2esos !on payment=

>6 ?pon the transfer in their names of the sub@ect property" the #oronels ill eecute the !ee! ofabsolute sale in fa)or of Ramona an! the latter ill pay the former the hole balance of One %illion OneHun!re! Ninety Thousan! (2."./5"555655' 2esos6

On the same !ate (-anuary .1" ./01'" plainti:8appellee #oncepcion D6 *lcara, (hereinafter referre! toas #oncepcion'" mother of Ramona" pai! the !on payment of <ifty Thousan! (215"555655' 2esos(9h6 $" 9h6 3'6

On <ebruary A" ./01" the property ori&inally re&istere! in the name of the #oronels father astransferre! in their names un!er T#T No6 >3B54> (9h6 D= 9h 4'

On <ebruary .0" ./01" the #oronels sol! the property co)ere! by T#T No6 >3B54> to inter)enor8appellant #atalina $6 %abana& (hereinafter referre! to as #atalina' for One %illion <i)e Hun!re! 9i&htyThousan! (2."105"555655' 2esos after the latter has pai! Three Hun!re! Thousan! (2>55"555655'2esos (9hs6 <8>= 9h6 A8#'

<or this reason" #oronels cancele! an! rescin!e! the contract (9h6 *' ith Ramona by !epositin& the!on payment pai! by #oncepcion in the ban; in trust for Ramona 2atricia *lcara,6

On <ebruary 33" ./01" #oncepcion"et. al6" le! a complaint for a specic performance a&ainst the#oronels an! cause! the annotation of a notice of lis pendensat the bac; of T#T No6 >3B45> (9h6 9

9h6 1'6

On *pril 3" ./01" #atalina cause! the annotation of a notice of a!)erse claim co)erin& the sameproperty ith the Re&istry of Dee!s of +ue,on #ity (9h6 <= 9h6 A'6

On *pril 31" ./01" the #oronels eecute! a Dee! of *bsolute Sale o)er the sub@ect property in fa)or of#atalina (9h6 C= 9h6 B'6

On -une 1" ./01" a ne title o)er the sub@ect property as issue! in the name of #atalina un!er T#TNo6 >1.103 (9h6 H= 9h6 0'6

(Rollo" pp6 .>48.>A'

In the course of the procee!in&s before the trial court ($ranch 0>" RT#" +ue,on #ity' the partiesa&ree! to submit the case for !ecision solely on the basis of !ocumentary ehibits6Thus" plainti:stherein (no pri)ate respon!ents' pro:ere! their !ocumentary e)i!ence accor!in&ly mar;e! as 9hibits* throu&h -" inclusi)e of their correspon!in& submar;in&s6 *!optin& these same ehibits as their onthen !efen!ants (no petitioners' accor!in&ly o:ere! an! mar;e! them as 9hibits . throu&h .5"li;eise inclusi)e of their correspon!in& submar;in&s6?pon motion of the parties" the trial court &a)ethem thirty (>5' !ays ithin hich to simultaneously submit their respecti)e memoran!a" an! an



a!!itional .1 !ays ithin hich to submit their correspon!in& comment or reply thereto" after hich" thecase oul! be !eeme! submitte! for resolution6

On *pril .4" ./00" the case as submitte! for resolution before -u!&e Reynal!o Roura" ho asthen temporarily !etaile! to presi!e o)er $ranch 03 of the RT# of +ue,on #ity6 On%arch ." ./0/@u!&ment as han!e! !on by -u!&e Roura from his re&ular bench at %acabebe" 2ampan&a forthe +ue,on #ity branch" !isposin& as follos7

H9R9<OR9" @u!&ment for specic performance is hereby ren!ere! or!erin& !efen!ant to eecute infa)or of plainti:s a !ee! of absolute sale co)erin& that parcel of lan! embrace! in an! co)ere! byTransfer #erticate of Title No6 >3B45> (no T#T No6 >>.103' of the Re&istry of Dee!s for +ue,on#ity" to&ether ith all the impro)ements eistin& thereon free from all liens an! encumbrances" an!once accomplishe!" to imme!iately !eli)er the sai! !ocument of sale to plainti:s an! upon receiptthereof" the plainti:s are or!ere! to pay !efen!ants the hole balance of the purchase price amountin&to2."./5"555655 in cash6 Transfer #erticate of Title No6 >>.103 of the Re&istry of Dee!s for +ue,on#ity in the name of inter)enor is hereby cancele! an! !eclare! to be ithout force an!e:ect6 Defen!ants an! inter)enor an! all other persons claimin& un!er them are hereby or!ere! to)acate the sub@ect property an! !eli)er possession thereof to plainti:s6 2lainti:s claim for !ama&es an!attorneys fees" as ell as the counterclaims of !efen!ants an! inter)enors are hereby !ismisse!6

No pronouncement as to costs6

So Or!ere!6

%acabebe" 2ampan&a for +ue,on #ity" %arch ." ./0/6

(Rollo" p6 .5A'

* motion for reconsi!eration as le! by petitioners before the ne presi!in& @u!&e of the +ue,on

#ity RT# but the same as !enie! by -u!&e 9strella T6 9stra!a" thusly7

The prayer containe! in the instant motion" i6e6" to annul the !ecision an! to ren!er ane !ecision by theun!ersi&ne! 2resi!in& -u!&e shoul! be !enie! for the folloin& reasons7 (.' The instant case becamesubmitte! for !ecision as of *pril .4" ./00 hen the parties terminate! the presentation of theirrespecti)e !ocumentary e)i!ence an! hen the 2resi!in& -u!&e at that time as -u!&e Reynal!oRoura6 The fact that they ere alloe! to le memoran!a at some future !ate !i! not chan&e the factthat the hearin& of the case as terminate! before -u!&e Roura an! therefore the same shoul! besubmitte! to him for !ecision= (3' hen the !efen!ants an! inter)enor !i! not ob@ect to the authority of-u!&e Reynal!o Roura to !eci!e the case prior to the ren!ition of the !ecision" hen they met for therst time before the un!ersi&ne! 2resi!in& -u!&e at the hearin& of a pen!in& inci!ent in #i)il #ase No6

+84A.41 on No)ember .." ./00" they ere !eeme! to ha)e acEuiesce! thereto an! they are noestoppe! from Euestionin& sai! authority of -u!&e Roura after they recei)e! the !ecision in Euestionhich happens to be a!)erse to them= (>' hile it is true that -u!&e Reynal!o Roura as merely a-u!&e8on8!etail at this $ranch of the #ourt" he as in all respects the 2resi!in& -u!&e ith full authorityto act on any pen!in& inci!ent submitte! before this #ourt !urin& his incumbency6 hen he returne! tohis OFcial Station at %acabebe" 2ampan&a" he !i! not lose his authority to !eci!e or resol)e casessubmitte! to him for !ecision or resolution because he continue! as -u!&e of the Re&ional Trial #ourtan! is of co8eEual ran; ith the un!ersi&ne! 2resi!in& -u!&e6 The stan!in& rule an! supporte! by@urispru!ence is that a -u!&e to hom a case is submitte! for !ecision has the authority to !eci!e the



case notithstan!in& his transfer to another branch or re&ion of the same court (Sec6 /" Rule .>1" Ruleof #ourt'6

#omin& no to the tin prayer for reconsi!eration of the Decision !ate! %arch ." ./0/ ren!ere! in theinstant case" resolution of hich no pertains to the un!ersi&ne! 2resi!in& -u!&e" after a meticulouseamination of the !ocumentary e)i!ence presente! by the parties" she is con)ince! that the Decisionof %arch ." ./0/ is supporte! by e)i!ence an!" therefore" shoul! not be !isturbe!6

IN VI9 O< TH9 <OR9COINC" the %otion for Reconsi!eration an!Gor to *nnul Decision an! Ren!er*ne Decision by the Incumbent 2resi!in& -u!&e !ate! %arch 35" ./0/ is hereby D9NI9D6

SO ORD9R9D6

+ue,on #ity" 2hilippines" -uly .3" ./0/6

(Rollo" pp6 .508.5/'

2etitioners thereupon interpose! an appeal" but on December .A" .//." the #ourt of *ppeals

($uena" Con,a&a8Reyes" *ba!8Santos (2'" --6' ren!ere! its !ecision fully a&reein& ith the trial court6Hence" the instant petition hich as le! on %arch 1" .//36 The last plea!in&" pri)ate

respon!ents Reply %emoran!um" as le! on September .1" .//>6 The case as" hoe)er" re8rae!to un!ersi&ne!ponenteonly on *u&ust 30" .//A" !ue to the )oluntary inhibition of the -ustice to homthe case as last assi&ne!6

hile e !eem it necessary to intro!uce certain renements in the !isEuisition of respon!ent courtin the aFrmance of the trial courts !ecision" e !enitely n! the instant petition bereft of merit6

The heart of the contro)ersy hich is the ultimate ;ey in the resolution of the other issues in thecase at bar is the precise !etermination of the le&al si&nicance of the !ocument entitle! Receipt of

Don 2ayment hich as o:ere! in e)i!ence by both parties6 There is no !ispute as to the fact that thesai! !ocument embo!ie! the bin!in& contract beteen Ramona 2atricia *lcara, on the one han!" an!the heirs of #onstancio 26 #oronel on the other" pertainin& to a particular house an! lot co)ere! by T#TNo6 ../A3B" as !ene! in *rticle .>51 of the #i)il #o!e of the 2hilippines hich rea!s as follos7

Art. 13056 * contract is a meetin& of min!s beteen to persons hereby one bin!s himself" ithrespect to the other" to &i)e somethin& or to ren!er some ser)ice6

hile" it is the position of pri)ate respon!ents that the Receipt of Don 2ayment embo!ie! aperfecte! contract of sale" hich perforce" they see; to enforce by means of an action for specicperformance" petitioners on their part insist that hat the !ocument si&nie! as a mere eecutory

contract to sell" sub@ect to certain suspensi)e con!itions" an! because of the absence of Ramona 26*lcara," ho left for the ?nite! States of *merica" sai! contract coul! not possibly ripen into a contractof absolute sale6

2lainly" such )ariance in the conten!in& parties contention is brou&ht about by the ay eachinterprets the terms an!Gor con!itions set forth in sai! pri)ate instrument6 ithal" base! on hate)errele)ant an! a!missible e)i!ence may be a)ailable on recor!" this #ourt" as ere the courts belo" isno calle! upon to a!@u!&e hat the real intent of the parties as at the time the sai! !ocument aseecute!6

The #i)il #o!e !enes a contract of sale" thus7



Art. 156 $y the contract of sale one of the contractin& parties obli&ates himself to transfer theonership of an! to !eli)er a !eterminate thin&" an! the other to pay therefor a price certain in money orits eEui)alent6

Sale" by its )ery nature" is a consensual contract because it is perfecte! by mere consent6 Theessential elements of a contract of sale are the folloin&7

a' #onsent or meetin& of the min!s" that is" consent to transfer onership in echan&e for the price=

b' Determinate sub@ect matter= an!

c' 2rice certain in money or its eEui)alent6

?n!er this !enition" a #ontract to Sell may not be consi!ere! as a #ontract of Sale because therst essential element is lac;in&6 In a contract to sell" the prospecti)e seller eplicitly reser)es thetransfer of title to the prospecti)e buyer" meanin&" the prospecti)e seller !oes not as yet a&ree orconsent to transfer onership of the property sub@ect of the contract to sell until the happenin& of ane)ent" hich for present purposes e shall ta;e as the full payment of the purchase price6 hat the

seller a&rees or obli&es himself to !o is to fulll his promise to sell the sub@ect property hen the entireamount of the purchase price is !eli)ere! to him6 In other or!s the full payment of the purchase priceparta;es of a suspensi)e con!ition" the non8fulllment of hich pre)ents the obli&ation to sell fromarisin& an! thus" onership is retaine! by the prospecti)e seller ithout further reme!ies by theprospecti)e buyer6 InRoque vs. Lapuz (96 SCRA 741 [1980])" this #ourt ha! occasion to rule7

Hence" e hol! that the contract beteen the petitioner an! the respon!ent as a contract to sellhere the onership or title is retaine! by the seller an! is not to pass until the full payment of the price"such payment bein& a positi)e suspensi)e con!ition an! failure of hich is not a breach" casual orserious" but simply an e)ent that pre)ente! the obli&ation of the )en!or to con)ey title from acEuirin&bin!in& force6

State! positi)ely" upon the fulllment of the suspensi)e con!ition hich is the full payment of thepurchase price" the prospecti)e sellers obli&ation to sell the sub@ect property by enterin& into a contractof sale ith the prospecti)e buyer becomes !eman!able as pro)i!e! in *rticle .4B/ of the #i)il #o!ehich states7

Art. 1796 * promise to buy an! sell a !eterminate thin& for a price certain is reciprocally !eman!able6

*n accepte! unilateral promise to buy or to sell a !eterminate thin& for a price certain is bin!in& uponthe promissor of the promise is supporte! by a consi!eration !istinct from the price6

* contract to sell may thus be !ene! as a bilateral contract hereby the prospecti)e seller" hileepressly reser)in& the onership of the sub@ect property !espite !eli)ery thereof to the prospecti)ebuyer" bin!s himself to sell the sai! property eclusi)ely to the prospecti)e buyer upon fulllment of thecon!ition a&ree! upon" that is" full payment of the purchase price6

* contract to sell as !ene! hereinabo)e" may not e)en be consi!ere! as a con!itional contract ofsale here the seller may li;eise reser)e title to the property sub@ect of the sale until the fulllment of asuspensi)e con!ition" because in a con!itional contract of sale" the rst element of consent is present"althou&h it is con!itione! upon the happenin& of a contin&ent e)ent hich may or may not occur6 If thesuspensi)e con!ition is not fullle!" the perfection of the contract of sale is completely abate!



(cf6Homesite and Housing Corp. vs. Court of Appeals, 133 SCRA 777 [1984]'6 Hoe)er" if thesuspensi)e con!ition is fullle!" the contract of sale is thereby perfecte!" such that if there ha! alrea!ybeen pre)ious !eli)ery of the property sub@ect of the sale to the buyer" onership thereto automaticallytransfers to the buyer by operation of la ithout any further act ha)in& to be performe! by the seller6

In a contract to sell" upon the fulllment of the suspensi)e con!ition hich is the full payment of thepurchase price" onership ill not automatically transfer to the buyer althou&h the property may ha)ebeen pre)iously !eli)ere! to him6 The prospecti)e seller still has to con)ey title to the prospecti)e buyer

by enterin& into a contract of absolute sale6

It is essential to !istin&uish beteen a contract to sell an! a con!itional contract of sale specially incases here the sub@ect property is sol! by the oner not to the party the seller contracte! ith" but to athir! person" as in the case at bench6 In a contract to sell" there bein& no pre)ious sale of the property" athir! person buyin& such property !espite the fulllment of the suspensi)e con!ition such as the fullpayment of the purchase price" for instance" cannot be !eeme! a buyer in ba! faith an! the prospecti)ebuyer cannot see; the relief of recon)eyance of the property6 There is no !ouble sale in such case6 Titleto the property ill transfer to the buyer after re&istration because there is no !efect in the oner8sellerstitleper se" but the latter" of course" may be sue! for !ama&es by the inten!in& buyer6

In a con!itional contract of sale" hoe)er" upon the fulllment of the suspensi)e con!ition" the sale

becomes absolute an! this ill !enitely a:ect the sellers title thereto6 In fact" if there ha! been pre)ious!eli)ery of the sub@ect property" the sellers onership or title to the property is automatically transferre!to the buyer such that" the seller ill no lon&er ha)e any title to transfer to any thir! person6 *pplyin&*rticle .144 of the #i)il #o!e" such secon! buyer of the property ho may ha)e ha! actual orconstructi)e ;nole!&e of such !efect in the sellers title" or at least as char&e! ith the obli&ation to!isco)er such !efect" cannot be a re&istrant in &oo! faith6 Such secon! buyer cannot !efeat the rstbuyers title6 In case a title is issue! to the secon! buyer" the rst buyer may see; recon)eyance of theproperty sub@ect of the sale6

ith the abo)e postulates as &ui!elines" e no procee! to the tas; of !ecipherin& the real natureof the contract entere! into by petitioners an! pri)ate respon!ents6

It is a canon in the interpretation of contracts that the or!s use! therein shoul! be &i)en theirnatural an! or!inary meanin& unless a technical meanin& as inten!e! (Tan vs. Court of Appeals, 212SCRA 586 [1992]'6 Thus" hen petitioners !eclare! in the sai! Receipt of Don 2ayment that they 88

Recei)e! from %iss Ramona 2atricia *lcara, of .4A Timo&" +ue,on #ity" the sum of <ifty Thousan!2esos -rc$'%e -r+ce o# or +($er+te) $o%e '() &ot " co)ere! by T#T No6 ..//A3B of the Re&istryof Dee!s of +ue,on #ity" in the total amount of 2."345"5556556

ithout any reser)ation of title until full payment of the entire purchase price" the natural an! or!inaryi!ea con)eye! is that they sol! their property6

hen the Receipt of Don payment is consi!ere! in its entirety" it becomes more manifest thatthere as a clear intent on the part of petitioners to transfer title to the buyer" but since the transfercerticate of title as still in the name of petitioners father" they coul! not fully e:ect such transferalthou&h the buyer as then illin& an! able to imme!iately pay the purchase price6 Thereforepetitioners8sellers un!ertoo; upon receipt of the !on payment from pri)ate respon!ent Ramona 2*lcara," to cause the issuance of a ne certicate of title in their names from that of their father" afterhich" they promise! to present sai! title" no in their names" to the latter an! to eecute the !ee! ofabsolute sale hereupon" the latter shall" in turn" pay the entire balance of the purchase price6



The a&reement coul! not ha)e been a contract to sell because the sellers herein ma!e no epressreser)ation of onership or title to the sub@ect parcel of lan!6 <urthermore" the circumstance hichpre)ente! the parties from enterin& into an absolute contract of sale pertaine! to the sellers themsel)es(the certicate of title as not in their names' an! not the full payment of the purchase price6 ?n!er theestablishe! facts an! circumstances of the case" the #ourt may safely presume that" ha! the certicateof title been in the names of petitioners8sellers at that time" there oul! ha)e been no reason hy anabsolute contract of sale coul! not ha)e been eecute! an! consummate! ri&ht there an! then6

%oreo)er" unli;e in a contract to sell" petitioners in the case at bar !i! not merely promise to sell theproperty to pri)ate respon!ent upon the fulllment of the suspensi)e con!ition6 On the contrary" ha)in&alrea!y a&ree! to sell the sub@ect property" they un!ertoo; to ha)e the certicate of title chan&e to theirnames an! imme!iately thereafter" to eecute the ritten !ee! of absolute sale6

Thus" the parties !i! not merely enter into a contract to sell here the sellers" after compliance bythe buyer ith certain terms an! con!itions" promise! to sell the property to the latter6hat may bepercei)e! from the respecti)e un!erta;in&s of the parties to the contract is that petitioners ha! alrea!ya&ree! to sell the house an! lot they inherite! from their father" completely illin& to transfer onershipof the sub@ect house an! lot to the buyer if the !ocuments ere then in or!er6 It @ust so happene!"hoe)er" that the transfer certicate of title as then still in the name of their father6 It as more

epe!ient to rst e:ect the chan&e in the certicate of title so as to bear their names6 That is hy theyun!ertoo; to cause the issuance of a ne transfer of the certicate of title in their names upon receipt ofthe !on payment in the amount of 215"5556556 *s soon as the ne certicate of title is issue! in theirnames" petitioners ere committe! to imme!iately eecute the !ee! of absolute sale6 Only then ill theobli&ation of the buyer to pay the remain!er of the purchase price arise6

There is no !oubt that unli;e in a contract to sell hich is most commonly entere! into so as toprotect the seller a&ainst a buyer ho inten!s to buy the property in installment by ithhol!in&onership o)er the property until the buyer e:ects full payment therefor" in the contract entere! into inthe case at bar" the sellers ere the ones ho ere unable to enter into a contract of absolute sale byreason of the fact that the certicate of title to the property as still in the name of their father6 It as the

sellers in this case ho" as it ere" ha! the impe!iment hich pre)ente!" so to spea;" the eecution ofan contract of absolute sale6

hat is clearly establishe! by the plain lan&ua&e of the sub@ect !ocument is that hen the sai!Receipt of Don 2ayment as prepare! an! si&ne! by petitioners Romulo *6 #oronel"et. al.,the partiesha! a&ree! to a con!itional contract of sale" consummation of hich is sub@ect only to the successfultransfer of the certicate of title from the name of petitioners father" #onstancio 26 #oronel" to theirnames6

The #ourt si&nicantly notes that this suspensi)e con!ition as" in fact" fullle! on <ebruary A"./01 (9h6 D= 9h6 4'6 Thus" on sai! !ate" the con!itional contract of sale beteen petitioners an!pri)ate respon!ent Ramona 26 *lcara, became obli&atory" the only act reEuire! for the consummation

thereof bein& the !eli)ery of the property by means of the eecution of the !ee! of absolute sale in apublic instrument" hich petitioners uneEui)ocally committe! themsel)es to !o as e)i!ence! by theReceipt of Don 2ayment6

*rticle .4B1" in correlation ith *rticle ..0." both of the #i)il #o!e" plainly applies to the case atbench6 Thus"

Art. 1756 The contract of sale is perfecte! at the moment there is a meetin& of min!s upon the thin&hich is the ob@ect of the contract an! upon the price6



<rom that moment" the parties may reciprocally !eman! performance" sub@ect to the pro)isions of thela &o)ernin& the form of contracts6

Art. 1116 In con!itional obli&ations" the acEuisition of ri&hts" as ell as the etin&uishment or loss ofthose alrea!y acEuire!" shall !epen! upon the happenin& of the e)ent hich constitutes the con!ition6

Since the con!ition contemplate! by the parties hich is the issuance of a certicate of title inpetitioners names as fullle! on <ebruary A" ./01" the respecti)e obli&ations of the parties un!er thecontract of sale became mutually !eman!able" that is" petitioners" as sellers" ere obli&e! to presentthe transfer certicate of title alrea!y in their names to pri)ate respon!ent Ramona 26 *lcara," thebuyer" an! to imme!iately eecute the !ee! of absolute sale" hile the buyer on her part" as obli&e! toforthith pay the balance of the purchase price amountin& to 2."./5"5556556

It is also si&nicant to note that in the rst para&raph in pa&e / of their petition" petitionersconclusi)ely a!mitte! that7

>6 The petitioners8sellers #oronel boun! themsel)es to e:ect the transfer in our names from our!ecease! father #onstancio 26 #oronel" the transfer certicate of title imme!iately uponreceipt of the !onpayment abo)e8state!6 T$e %'&e '% %t+&& %b8ect to t$+% %%-e(%+e

co()+t+o(6 (9mphasis supplie!6'

(Rollo" p6 .A'

2etitioners themsel)es reco&ni,e! that they entere! into a contract of sale sub@ect to a suspensi)econ!ition6 Only" they conten!" continuin& in the same para&raph" that7

6 6 6 Ha! petitioners8sellers (ot co:-&+e) ith this con!ition of rst transferrin& the title to the propertyun!er their names" there coul! be no perfecte! contract of sale6 (9mphasis supplie!6'

(Ibid6'

not aare that they ha)e set their on trap for themsel)es" for *rticle ..0A of the #i)il #o!e epresslypro)i!es that7

Art. 1166 The con!ition shall be !eeme! fullle! hen the obli&or )oluntarily pre)ents its fulllment6

$esi!es" it shoul! be stresse! an! emphasi,e! that hat is more controllin& than these merehypothetical ar&uments is the fact that the co()+t+o( $ere+( re#erre) to '% 'ct'&& '()+()+%-t'b& #&;&&e) o( *ebr'r 6, 195" hen a ne title as issue! in the names of petitionersas e)i!ence! by T#T No6 >3B45> (9h6 D= 9h6 4'6

The ine)itable conclusion is that on -anuary ./" ./01" as e)i!ence! by the !ocument !enominate!as Receipt of Don 2ayment (9h6 *= 9h6 .'" the parties entere! into a contract of sale sub@ect to thesuspensi)e con!ition that the sellers shall e:ect the issuance of ne certicate title from that of theirfathers name to their names an! that" on <ebruary A" ./01" this con!ition as fullle! (9h6 D= 9h6 4'6

e" therefore" hol! that" in accor!ance ith *rticle ..0B hich pertinently pro)i!es 8

Art. 1176 The e:ects of con!itional obli&ation to &i)e" once the con!ition has been fullle!" shallretroact to the !ay of the constitution of the obli&ation 6 6 6



In obli&ations to !o or not to !o" the courts shall !etermine" in each case" the retroacti)e e:ect of thecon!ition that has been complie! ith6

the ri&hts an! obli&ations of the parties ith respect to the perfecte! contract of sale became mutually!ue an! !eman!able as of the time of fulllment or occurrence of the suspensi)e con!ition on <ebruaryA" ./016 *s of that point in time" reciprocal obli&ations of both seller an! buyer arose6

2etitioners also ar&ue there coul! been no perfecte! contract on -anuary ./" ./01 because they

ere then not yet the absolute oners of the inherite! property6

e cannot sustain this ar&ument6

*rticle BB4 of the #i)il #o!e !enes Succession as a mo!e of transferrin& onership as follos7

Art. 776 Succession is a mo!e of acEuisition by )irtue of hich the property" ri&hts an! obli&ations tothe etent an! )alue of the inheritance of a person are transmitte! throu&h his !eath to another or othersby his ill or by operation of la6

2etitioners8sellers in the case at bar bein& the sons an! !au&hters of the !ece!ent #onstancio 26#oronel are compulsory heirs ho ere calle! to succession by operation of la6Thus" at the point their

father !re his last breath" petitioners steppe! into his shoes insofar as the sub@ect property isconcerne!" such that any ri&hts or obli&ations pertainin& thereto became bin!in& an! enforceable uponthem6 It is epressly pro)i!e! that ri&hts to the succession are transmitte! from the moment of !eath ofthe !ece!ent (*rticle BBB" #i)il #o!e=Cuison vs. Villanueva, 90 Phil. 850 [1952]'6

$e it also note! that petitioners claim that succession may not be !eclare! unless the cre!itorsha)e been pai! is ren!ere! moot by the fact that they ere able to e:ect the transfer of the title to theproperty from the !ece!ents name to their names on <ebruary A" ./016

*si!e from this" petitioners are preclu!e! from raisin& their suppose! lac; of capacity to enter intoan a&reement at that time an! they cannot be alloe! to no ta;e a posture contrary to that hich they

too; hen they entere! into the a&reement ith pri)ate respon!ent Ramona 26 *lcara,6 The #i)il #o!eepressly states that7

Art. 1316 Throu&h estoppel an a!mission or representation is ren!ere! conclusi)e upon the personma;in& it" an! cannot be !enie! or !ispro)e! as a&ainst the person relyin& thereon6

Ha)in& represente! themsel)es as the true oners of the sub@ect property at the time of salepetitioners cannot claim no that they ere not yet the absolute oners thereof at that time6

2etitioners also conten! that althou&h there as in fact a perfecte! contract of sale beteen theman! Ramona 26 *lcara," the latter breach her reciprocal obli&ation hen she ren!ere! impossible theconsummation thereof by &oin& to the ?nite! States of *merica" ithout lea)in& her a!!ress" telephonenumber" an! Special 2oer of *ttorney (Paragraphs 14 and 15, Answer with Compulsory Counterclaimto the Amended Complaint, p. 2; Rollo, p. 43'" for hich reason" so petitioners conclu!e" they erecorrect in unilaterally rescin!in& the contract of sale6

e !o not a&ree ith petitioners that there as a )ali! rescission of the contract of sale in theinstant case6 e note that these suppose! &roun!s for petitioners rescission" are mere alle&ationsfoun! only in their responsi)e plea!in&s" hich by epress pro)ision of the rules" are !eeme!contro)erte! e)en if no reply is le! by the plainti:s (Sec. 11, Rule 6, Revised Rules of Court'6 Therecor!s are absolutely bereft of any supportin& e)i!ence to substantiate petitioners alle&ations6 eha)e stresse! time an! a&ain that alle&ations must be pro)en by suFcient e)i!ence (Ng Cho Cio vs.



Ng Diong, 110 Phil. 882 [1961]; Recaro vs. Embisan, 2 SCRA 598 [1961]'6 %ere alle&ation is not ane)i!ence (Lagasca vs. De Vera, 79 Phil. 376 [1947]'6

9)en assumin&arguendothat Ramona 26 *lcara, as in the ?nite! States of *merica on <ebruaryA" ./01" e cannot @ustify petitioners8sellers act of unilaterally an! etra@u!icially rescin!in& the contractof sale" there bein& no epress stipulation authori,in& the sellers to etra@u!icially rescin! the contract ofsale6 (cf6Dignos vs. CA, 158 SCRA 375 [1988]; Taguba vs. Vda. De Leon, 132 SCRA 722 [1984]'

%oreo)er" petitioners are estoppe! from raisin& the alle&e! absence of Ramona 26 *lcara,because althou&h the e)i!ence on recor! shos that the sale as in the name of Ramona 26 *lcara, asthe buyer" the sellers ha! been !ealin& ith #oncepcion D6 *lcara," Ramonas mother" ho ha! acte!for an! in behalf of her !au&hter" if not also in her on behalf6 In!ee!" the !on payment as ma!e by#oncepcion D6 *lcara, ith her on personal #hec; (9h6 $= 9h6 3' for an! in behalf of Ramona 26*lcara,6 There is no e)i!ence shoin& that petitioners e)er Euestione! #oncepcions authority torepresent Ramona 26 *lcara, hen they accepte! her personal chec;6 Neither !i! they raise anyob@ection as re&ar!s payment bein& e:ecte! by a thir! person6 *ccor!in&ly" as far as petitioners areconcerne!" the physical absence of Ramona 26 *lcara, is not a &roun! to rescin! the contract of sale6

#orollarily" Ramona 26 *lcara, cannot e)en be !eeme! to be in !efault" insofar as her obli&ation topay the full purchase price is concerne!6 2etitioners ho are preclu!e! from settin& up the !efense of

the physical absence of Ramona 26 *lcara, as abo)e8eplaine! o:ere! no proof hatsoe)er to shothat they actually presente! the ne transfer certicate of title in their names an! si&nie! theirillin&ness an! rea!iness to eecute the !ee! of absolute sale in accor!ance ith theira&reement6 Ramonas correspon!in& obli&ation to pay the balance of the purchase price in the amountof 2."./5"555655 (as buyer' ne)er became !ue an! !eman!able an!" therefore" she cannot be !eeme!to ha)e been in !efault6

*rticle ..A/ of the #i)il #o!e !enes hen a party in a contract in)ol)in& reciprocal obli&ations maybe consi!ere! in !efault" to it7

Art. 11696 Those obli&e! to !eli)er or to !o somethin&" incur in !elay from the time the obli&ee @u!icially

or etra@u!icially !eman!s from them the fulllment of their obli&ation6

In reciprocal obli&ations" neither party incurs in !elay +# t$e ot$er )oe% (ot co:-& or +% (ot re')to co:-& +( ' -ro-er :'((er +t$ $'t +% +(c:be(t -o( $+: 6 <rom the moment one of theparties fulll his obli&ation" !elay by the other be&ins6 (9mphasis supplie!6'

There is thus neither factual nor le&al basis to rescin! the contract of sale beteen petitioners an!respon!ents6

ith the fore&oin& conclusions" the sale to the other petitioner" #atalina $6 %abana&" &a)e rise to acase of !ouble sale here *rticle .144 of the #i)il #o!e ill apply" to it7

Art. 156 If the same thin& shoul! ha)e been sol! to !i:erent )en!ees" the onership shall betransferre! to the person ho may ha)e rst ta;en possession thereof in &oo! faith" if it shoul! bemo)able property6

Shoul! it be immo)able property" the onership shall belon& to the person acEuirin& it ho in &oo! faithrst recor!e! it in the Re&istry of 2roperty6



Shoul! there be no inscription" the onership shall pertain to the person ho in &oo! faith as rst inthe possession= an!" in the absence thereof to the person ho presents the ol!est title" pro)i!e! there is&oo! faith6

The recor! of the case shos that the Dee! of *bsolute Sale !ate! *pril 31" ./01 as proof of thesecon! contract of sale as re&istere! ith the Re&istry of Dee!s of +ue,on #ity &i)in& rise to theissuance of a ne certicate of title in the name of #atalina $6 %abana& on -une 1" ./016 Thus" thesecon! para&raph of *rticle .144 shall apply6

The abo)e8cite! pro)ision on !ouble sale presumes title or onership to pass to the buyer" theeceptions bein&7 (a' hen the secon! buyer" in &oo! faith" re&isters the sale ahea! of the rst buyer"an! (b' shoul! there be no inscription by either of the to buyers" hen the secon! buyer" in &oo! faith"acEuires possession of the property ahea! of the rst buyer6 ?nless" the secon! buyer satises thesereEuirements" title or onership ill not transfer to him to the pre@u!ice of the rst buyer6

In his commentaries on the #i)il #o!e" an accepte! authority on the sub@ect" no a !istin&uishe!member of the #ourt" -ustice -ose #6 Vitu&" eplains7

The &o)ernin& principle isprius tempore, potior jure(rst in time" stron&er in ri&ht'6 Jnole!&e by the

rst buyer of the secon! sale cannot !efeat the rst buyers ri&hts ecept hen the secon! buyer rstre&isters in &oo! faith the secon! sale (Olivares vs. Gonzales, 159 SCRA 33'6 #on)ersely" ;nole!&e&aine! by the secon! buyer of the rst sale !efeats his ri&hts e)en if he is rst to re&ister" since;nole!&e taints his re&istration ith ba! faith (see alsoAstorga vs. Court of Appeals, G.R. No. 58530,26 December 1984'6 InCruz vs. Cabana (G.R. No. 56232, 22 June 1984, 129 SCRA 656)" it as hel!that it is essential" to merit the protection of *rt6 .144" secon! para&raph" that the secon! realty buyermust act in &oo! faith in re&isterin& his !ee! of sale (citin& Carbonell vs. Court of Appeals, 69 SCRA99, Crisostomo vs. CA, G.R. No. 95843, 02 September 1992'6(J. Vitug, Compendium of Civil Law and Jurisprudence, 1993 Edition, p. 604'6

2etitioners point out that the notice of lis pendensin the case at bar as annotate! on the title of the

sub@ect property only on <ebruary 33" ./01" hereas" the secon! sale beteen petitioners #oronelsan! petitioner %abana& as suppose!ly perfecte! prior thereto or on <ebruary .0" ./016 The i!eacon)eye! is that at the time petitioner %abana&" the secon! buyer" bou&ht the property un!er a cleantitle" she as unaare of any a!)erse claim or pre)ious sale" for hich reason she is a buyer in &oo!faith6

e are not persua!e! by such ar&ument6

In a case of !ouble sale" hat n!s rele)ance an! materiality is not hether or not the secon! buyerin &oo! faith but hether or not sai! secon! buyer re&isters such secon! sale in &oo! faith" that is"ithout ;nole!&e of any !efect in the title of the property sol!6

*s clearly borne out by the e)i!ence in this case" petitioner %abana& coul! not ha)e in &oo! faith"re&istere! the sale entere! into on <ebruary .0" ./01 because as early as <ebruary 33" ./01" a noticeoflis pendensha! been annotate! on the transfer certicate of title in the names of petitioners" hereaspetitioner %abana& re&istere! the sai! sale sometime in *pril" ./016 *t the time of re&istrationtherefore" petitioner %abana& ;ne that the same property ha! alrea!y been pre)iously sol! to pri)aterespon!ents" or" at least" she as char&e! ith ;nole!&e that a pre)ious buyer is claimin& title to thesame property6 2etitioner %abana& cannot close her eyes to the !efect in petitioners title to the propertyat the time of the re&istration of the property6

This #ourt ha! occasions to rule that7



If a )en!ee in a !ouble sale re&isters the sale after he has acEuire! ;nole!&e that there as apre)ious sale of the same property to a thir! party or that another person claims sai! property in apre)ious sale" the re&istration ill constitute a re&istration in ba! faith an! ill not confer upon him anyri&ht6 (Salvoro vs. Tanega, 87 SCRA 349 [1978]; citing Palarca vs. Director of Land, 43 Phil. 146;Cagaoan vs. Cagaoan, 43 Phil. 554; Fernandez vs. Mercader, 43 Phil. 581.'

Thus" the sale of the sub@ect parcel of lan! beteen petitioners an! Ramona 26 *lcara," perfecte!on <ebruary A" ./01" prior to that beteen petitioners an! #atalina $6 %abana& on <ebruary .0" ./01"as correctly uphel! by both the courts belo6

*lthou&h there may be ample in!ications that there as in fact an a&ency beteen Ramona asprincipal an! #oncepcion" her mother" as a&ent insofar as the sub@ect contract of sale is concerne!" theissue of hether or not #oncepcion as also actin& in her on behalf as a co8buyer is not sEuarelyraise! in the instant petition" nor in such assumption !ispute! beteen mother an! !au&hter6 Thus" eill not touch this issue an! no lon&er !isturb the loer courts rulin& on this point6

<2ERE*ORE" premises consi!ere!" the instant petition is hereby DIS%ISS9D an! the appeale!@u!&ment *<<IR%9D6

!O ORERE.

Narvasa, C.J. (Chairman), Davide, Jr.,an! Francisco, JJ.,concur.Panganiban, J.,no part.

36

G.R. No. 107=07 Noe:ber =3, 1995

>IRGILIO R. ROMERO, petitioner"

)s6

2ON. COURT O* AEAL! '() ENRI?UETA C2UA >A. E ONG!IONG, respon!ents.

>ITUG,J.:

The parties pose this Euestion7 %ay thevendor!eman! the rescission of a contract for the sale of aparcel of lan! for a cause traceable to his on failure to ha)e the sEuatters on the sub@ect property

e)icte! ithin the contractually8stipulate! perio!K

2etitioner Vir&ilio R6 Romero" a ci)il en&ineer" as en&a&e! in the business of pro!uction" manufacture

an! eportation of perlite lter ai!s" permalite insulation an! processe! perlite ore6 In ./00" petitioner

an! his forei&n partners !eci!e! to put up a central arehouse in %etro %anila on a lan! area of

approimately 3"555 sEuare meters6 The pro@ect as ma!e ;non to se)eral freelance real estate

bro;ers6



* !ay or so after the announcement" *lfonso <lores an! his ife" accompanie! by a bro;er" o:ere! a

parcel of lan! measurin& ."/13 sEuare meters6 Locate! in $aran&ay San Dionisio" 2araMaEue" %etro

%anila" the lot as co)ere! by T#T No6 >A.453 in the name of pri)ate respon!ent 9nriEueta #hua )!a6

!e On&sion&6 2etitioner )isite! the property an!" ecept for the presence of sEuatters in the area" he

foun! the place suitable for a central arehouse6

Later" the <lores spouses calle! on petitioner ith a proposal that shoul! he a!)ance the amount of

215"555655 hich coul! be use! in ta;in& up an e@ectment case a&ainst the sEuatters" pri)ate

respon!ent oul! a&ree to sell the property for only 2055655 per sEuare meter6 2etitioner epresse! his

concurrence6 On 5/ -une ./00" a contract" !enominate! Dee! of #on!itional Sale" as eecute!

beteen petitioner an! pri)ate respon!ent6 The simply8!ran contract rea!7

DEED OF CONDITIONAL SALE

JNO *LL %9N $ TH9S9 2R9S9NTS7

This #ontract" ma!e an! eecute! in the %unicipality of %a;ati" 2hilippines this /th !ay of

-une" ./00 by an! beteen7

9NRI+?9T* #H?* VD*6 D9 ONCSIONC" of le&al a&e" i!o" <ilipino

an! resi!in& at .51 Simoun St6" +ue,on #ity" %etro %anila" hereinafter

referre! to as the V9NDOR=

8an!8

VIRCILIO R6 RO%9RO" marrie! to Se)erina L6 Lat" of Le&al a&e" <ilipino"

an! resi!in& at ..5 San %i&uel St6" 2lain)ie Sub!6" %an!aluyon& %etro%anila" hereinafter referre! to as the V9ND997

I T N 9 S S 9 T H 7 That

H9R9*S" the V9NDOR is the oner of One (.' parcel of lan! ith a total area of ON9

THO?S*ND NIN9 H?NDR9D <I<T TO (."/13' S+?*R9 %9T9RS" more or less"

locate! in $arrio San Dionisio" %unicipality of 2araMaEue" 2ro)ince of Ri,al" co)ere! by

T#T No6 >A.453 issue! by the Re&istry of Dee!s of 2asi& an! more particularly

!escribe! as follos7

H9R9*S" the V9ND99" for (sic' has o:ere! to buy a parcel of lan! an! the V9NDOR

has accepte! the o:er" sub@ect to the terms an! con!itions hereinafter stipulate!7

NO" TH9R9<OR9" for an! in consi!eration of the sum of ON9 %ILLION <IV9

H?NDR9D SIT ON9 THO?S*ND SI H?NDR9D 29SOS (2."1A."A55655' ONL"

2hilippine #urrency" payable by V9ND99 to in to (sic' manner set forth" the V9NDOR



a&rees to sell to the V9ND99" their heirs" successors" a!ministrators" eecutors" assi&n"

all her ri&hts" titles an! interest in an! to the property mentione! in the <IRST H9R9*S

#L*?S9" sub@ect to the folloin& terms an! con!itions7

.6 That the sum of <I<T THO?S*ND 29SOS (215"555655' ONL

2hilippine #urrency" is to be pai! upon si&nin& an! eecution of this

instrument6

36 The balance of the purchase price in the amount of ON9 %ILLION <IV9

H?NDR9D 9L9V9N THO?S*ND SI H?NDR9D 29SOS (2."1.."A55655'

ONL shall be pai! 41 !ays after the remo)al of all sEuatters from the

abo)e !escribe! property6

>6 ?pon full payment of the o)erall purchase price as aforesai!" V9NDOR

ithout necessity of !eman! shall imme!iately si&n" eecute"

ac;nole!&e! (sic' an! !eli)er the correspon!in& !ee! of absolute sale in

fa)or of the V9ND99 free from all liens an! encumbrances an! all Real9state taes are all pai! an! up!ate!6

It is hereby a&ree!" co)enante! an! stipulate! by an! beteen the parties hereto that if

after A5 !ays from the !ate of the si&nin& of this contract the V9NDOR shall not be able to

remo)e the sEuatters from the property bein& purchase!" the !onpayment ma!e by the

buyer shall be returne!Greimburse! by the V9NDOR to the V9ND996

That in the e)ent that the V9ND99 shall not be able to pay the V9NDOR the balance of

the purchase price of ON9 %ILLION <IV9 H?NDR9D 9L9V9N THO?S*ND SI

H?NDR9D 29SOS (2."1.."A55655' ONL after 41 !ays from ritten notication to theV9ND99 of the remo)al of the sEuatters from the property bein& purchase!" the <I<T

THO?S*ND 29SOS (215"555655' pre)iously pai! as !onpayment shall be forfeite! in

fa)or of the V9NDOR6

9penses for the re&istration such as re&istration fees" !ocumentary stamp" transfer fee"

assurances an! such other fees an! epenses as may be necessary to transfer the title to

the name of the V9ND99 shall be for the account of the V9ND99 hile capital &ains ta

shall be pai! by the V9NDOR6

IN ITN9SS H9R9O<" the parties hereunto si&ne! those (sic' presents in the #ity of

%a;ati %%" 2hilippines on this /th !ay of -une" ./006

(S&!6' (S&!6'

VIRCILIO R6 RO%9RO 9NRI+?9T* #H?* VD*6

D9 ONCSIONC



Ven!ee Ven!or

SICN9D IN TH9 2R9S9N#9 O<7

(S&!6' (S&!6'

Roena #6 On&sion& -ac; %6 #ru, 1

*lfonso <lores" in behalf of pri)ate respon!ent" forthith recei)e! an! ac;nole!&e! a chec; for

215"555655 = from petitioner6 3

2ursuant to the a&reement" pri)ate respon!ent le! a complaint for e@ectment (#i)il #ase No6 B1B/'

a&ainst %elchor %usa an! 3/ other sEuatter families ith the %etropolitan Trial #ourt of 2araMaEue6 *

fe months later" or on 3. <ebruary ./0/" @u!&ment as ren!ere! or!erin& the !efen!ants to )acate

the premises6 The !ecision as han!e! !on beyon! the A58!ay perio! (epirin& 5/ *u&ust ./00'

stipulate! in the contract6 The rit of eecution of the @u!&ment as issue!" still later" on >5 %arch

./0/6

In a letter" !ate! 5B *pril ./0/" pri)ate respon!ent sou&ht to return the 215"555655 she recei)e! from

petitioner since" she sai!" she coul! not &et ri! of the sEuatters on the lot6 *tty6 Ser&io *6<6 *postol"

counsel for petitioner" in his reply of .B *pril ./0/" refuse! the ten!er an! state!76

Our client belie)es that ith the eercise of reasonable !ili&ence consi!erin& the

fa)orable !ecision ren!ere! by the #ourt an! the rit of eecution issue! pursuant

thereto" it is no possible to e@ect the sEuatters from the premises of the sub@ect property"

for hich reason" he proposes that he shall ta;e it upon himself to e@ect the sEuatters"

pro)i!e!" that epenses hich shall be incurre! by reason thereof shall be char&eable tothe purchase price of the lan!6

%eanhile" the 2resi!ential #ommission for the ?rban 2oor (2#?D'" throu&h its Re&ional Director for

Lu,on" <arley O6 Viloria" as;e! the %etropolitan Trial #ourt of 2araMaEue for a &race perio! of 41 !ays

from 3. *pril ./0/ ithin hich to relocate an! transfer the sEuatter families6 *ctin& fa)orably on the

reEuest" the court suspen!e! the enforcement of the rit of eecution accor!in&ly6

On 50 -une ./0/" *tty6 *postol remin!e! pri)ate respon!ent on the epiry of the 418!ay &race perio!

an! his clientPs illin&ness to un!errite the epenses for the eecution of the @u!&ment an! e@ectment

of the occupants6 5

In his letter of ./ -une ./0/" *tty6 -oaEuin useco" -r6" counsel for pri)ate respon!ent" a!)ise! *tty6

*postol that the Dee! of #on!itional Sale ha! been ren!ere! nullan!voidby )irtue of his clientPs failure

to e)ict the sEuatters from the premises ithin the a&ree! A58!ay perio!6 He a!!e! that pri)ate

respon!ent ha! !eci!e! to retain the property6 6

On 3> -une ./0/" *tty6 *postol rote bac; to eplain7



The contract of sale beteen the parties as perfecte! from the )ery moment that there

as a meetin& of the min!s of the parties upon the sub@ect lot an! the price in the amount

of 2."1A."A556556 %oreo)er" the contract ha! alrea!y been partially fullle! an! eecute!

upon receipt of the !onpayment of your client6 %s6 On&sion& is preclu!e! from re@ectin&

its bin!in& e:ects relyin& upon her inability to e@ect the sEuatters from the premises of

sub@ect property !urin& the a&ree! perio!6 SuFce it to state that" the pro)ision of the Dee!

of #on!itional Sale !o not &rant her the option or prero&ati)e to rescin! the contract an!

to retain the property shoul! she fail to comply ith the obli&ation she has assume! un!er

the contract6 In fact" a perusal of the terms an! con!itions of the contract clearly shos

that the ri&ht to rescin! the contract an! to !eman! the returnGreimbursement of the

!onpayment is &rante! to our client for his protection6

Instea!" hoe)er" of a)ailin& himself of the poer to rescin! the contract an! !eman! the

return" reimbursement of the !onpayment" our client ha! opte! to ta;e it upon himself to

e@ect the sEuatters from the premises6 2recisely" e refer you to our letters a!!resse! to

your client !ate! *pril .B" ./0/ an! -une 0" ./0/6

%oreo)er" it is basic un!er the la on contracts that the poer to rescin! is &i)en to the

in@ure! party6 ?n!oubte!ly" un!er the circumstances" our client is the in@ure! party6

<urthermore" your client has not complie! ith her obli&ation un!er their contract in &oo!

faith6 It is un!eniable that %s6 On&sion& !eliberately refuse! to eert e:orts to e@ect the

sEuatters from the premises of the sub@ect property an! her !ecision to retain the property

as brou&ht about by the su!!en increase in the )alue of realties in the surroun!in&

areas6

2lease consi!er this letter as a ten!er of payment to your client an! a !eman! to eecute

the absolute Dee! of Sale6 7

* fe !ays later (or on 3B -une ./0/'" pri)ate respon!ent" prompte! by petitionerPs continue! refusal to

accept the return of the 215"555655 a!)ance payment" le! ith the Re&ional Trial #ourt of %a;ati"

$ranch .>>" #i)il #ase No6 0/84>/4 for rescission of the !ee! of con!itional sale" plus !ama&es" an!

for the consi&nation of 215"555655 cash6

%eanhile" on 31 *u&ust ./0/" the %etropolitan Trial #ourt issue! analiasrit of eecution in #i)il

#ase No6 B1B/ on motion of pri)ate respon!ent but the sEuatters apparently still staye! on6

$ac; to #i)il #ase No6 0/84>/4" on 3A -une .//5" the Re&ional Trial #ourt of %a;ati ren!ere!

!ecision hol!in& that pri)ate respon!ent ha! no ri&ht to rescin! the contract since it as she ho

)iolate! her obli&ation to e@ect the sEuatters from the sub@ect property an! that petitioner" bein& the

in@ure! party" as the party ho coul!" un!er *rticle ../. of the #i)il #o!e" rescin! the a&reement6 The

court rule! that the pro)isions in the contract relatin& to (a' the returnGreimbursement of the 215"555655

if the )en!or ere to fail in her obli&ation to free the property from sEuatters ithin the stipulate! perio!



or (b'" upon the other han!" the sumPs forfeiture by the )en!or if the )en!ee ere to fail in payin& the

a&ree! purchase price" amounte! to penalty clauses6 The court a!!e!7

This #ourt is not con)ince! of the &roun! relie! upon by the plainti: in see;in& the

rescission" namely7 (.' he (sic' is afrai! of the sEuatters= an! (3' she has spent so much to

e@ect them from the premises (p6 A" tsn" ses6 -an6 >" .//5'6 %ilitatin& a&ainst her

profession of &oo! faith is plainti:s con!uct hich is not in accor! ith the rules of fair

play an! @ustice6 Notably" she cause! the issuance of an aliasrit of eecution on *u&ust

31" ./0/ (9h6 A' in the e@ectment suit hich as almost to months after she le! the

complaint before this #ourt on -une 3B" ./0/6 If she ere really afrai! of the sEuatters"

then she shoul! not ha)e pursue! the issuance of an aliasrit of eecution6 $esi!es" she

!i! not e)en report to the police the alle&e! phone threats from the sEuatters6 To the min!

of the #ourt" the so8calle! sEuatter factor is simply factuitous (sic'6 9

The loer court" accor!in&ly" !ismisse! the complaint an! or!ere!" instea!" pri)ate respon!ent

to e@ect or cause the e@ectment of the sEuatters from the property an! to eecute the absolute

!ee! of con)eyance upon payment of the full purchase price by petitioner6

2ri)ate respon!ent appeale! to the #ourt of *ppeals6 On 3/ %ay .//3" the appellate court ren!ere! its

!ecision610 It opine! that the contract entere! into by the parties as sub@ect to a resolutory

con!ition"i6e6" the e@ectment of the sEuatters from the lan!" the non8occurrence of hich resulte! in the

failure of the ob@ect of the contract= that pri)ate respon!ent substantially complie! ith her obli&ation to

e)ict the sEuatters= that it as petitioner ho as not rea!y to pay the purchase price an! fulll his part

of the contract" an! that the pro)ision reEuirin& a man!atory returnGreimbursement of the 215"555655 in

case pri)ate respon!ent oul! fail to e@ect the sEuatters ithin the A58!ay perio! as not a penal

clause6 Thus" it conclu!e!6

H9R9<OR9" the !ecision appeale! from is R9V9RS9D an! S9T *SID9" an! a ne

one entere! !eclarin& the contract of con!itional sale !ate! -une /" ./00 cancelle! an!

or!erin& the !efen!ant8appellee to accept the return of the !onpayment in the amount of

215"555655 hich as !eposite! in the court belo6 No pronouncement as to costs6 11

<ailin& to obtain a reconsi!eration" petitioner le! this petition for re)ie oncertiorariraisin& issues that"

in ne" center on the nature of the contract a!)erte! to an! the 215"555655 remittance ma!e by

petitioner6

* perfecte! contract of sale may either be absolute or con!itional 1= !epen!in& on hether the

a&reement is !e)oi! of" or sub@ect to" any con!ition impose! on the passingof title of the thin& to be

con)eye! or on theobligationof a party thereto6 hen onership is retaine! until the fulllment of a

positi)e con!ition the breach of the con!ition ill simply pre)ent the !uty to con)ey title from acEuirin&

anobligatory force6 If the con!ition is impose! on an obligationof a party hich is not complie! ith"

theother partymay either refuse to procee! or ai)e sai! con!ition (*rt6 .141" #i)il #o!e'6 here" of

course" the con!ition is impose! upon the perfectionof the contract itself" the failure of such con!ition

oul! pre)ent the @uri!ical relation itself from comin& into eistence6 13



In !eterminin& the real character of the contract" the title &i)en to it by the parties is not as much

si&nicant as its substance6 <or eample" a !ee! of sale" althou&h !enominate! as a !ee! of

con!itional sale" may be treate! as absolute in nature" if title to the property sol! is not reser)e! in the

)en!or or if the )en!or is not &rante! the ri&ht to unilaterally rescin! the contract pre!icate!

on the fulllment or non8fulllment" as the case may be" of the prescribe! con!ition6 1

The term con!ition in the contet of a perfectedcontract of sale pertains" in reality" to the compliance

by one party of an un!erta;in& the fulllment of hich oul! bec;on" in turn" the !eman!ability of the

reciprocal prestation of the other party6 The reciprocal obli&ations referre! to oul! normally be" in the

case of )en!ee" the payment of the a&ree! purchase price an!" in the case of the )en!or" the fulllment

of certain epress arranties (hich" in the case at bench is the timely e)iction of the sEuatters on the

property'6

It oul! be futile to challen&e the a&reement here in Euestion as not bein& a !uly perfecte! contract6 *

sale is at once perfecte! hen a person (the seller' obli&ates himself" for a price certain" to !eli)er an!

to transfer onership of a specie! thin& or ri&ht to another (the buyer' o)er hich the latter a&rees6 15

The ob@ect of the sale" in the case before us" as specically i!entie! to be a ."/138sEuare meter lot in

San Dionisio" 2araMaEue" Ri,al" co)ere! by Transfer #erticate of Title No6 >A.453 of the Re&istry of

Dee!s for 2asi& an! therein technically !escribe!6 The purchase price as e! at 2."1A."A55655" of

hich 215"555655 as to be pai! upon the eecution of the !ocument of sale an! the balance of

2."1.."A55655 payable 41 !ays after the remo)al of all sEuatters from the abo)e !escribe! property6

<rom the moment the contract is perfecte!" the parties are boun! not only to the fulllment of hat has

been epressly stipulate! but also to all the conseEuences hich" accor!in& to their nature" may be in

;eepin& ith &oo! faith" usa&e an! la6 ?n!er the a&reement" pri)ate respon!ent is obli&ate! to e)ict

the sEuatters on the property6 The e@ectment of the sEuatters is a conditionthe operati)e act of hich

sets into motion the perio! of compliance by petitioner of his on obli&ation" i6e6" to pay the balance of

the purchase price6 2ri)ate respon!entPs failure to remo)e the sEuatters from the property ithin the

stipulate! perio! &i)es petitioner the ri&ht to either refuse to procee! ith the a&reement or ai)e that

con!ition in consonance ith *rticle .141 of the #i)il #o!e6 16This option clearly belon&s to petitioner

an! not to pri)ate respon!ent6

e share the opinion of the appellate court that the un!erta;in& reEuire! of pri)ate respon!ent !oes not

constitute a potestati)e con!ition !epen!ent solely on his ill that mi&ht" otherise" be )oi! in

accor!ance ith *rticle ..03 of the #i)il #o!e 17

but a mie! con!ition !epen!ent not on the ill ofthe )en!or alone but also of thir! persons li;e the sEuatters an! &o)ernment a&encies an! personnel

concerne!6 1 e must hasten to a!!" hoe)er" that here the so8calle! potestati)e con!ition is

impose! not on the birth of the obli&ation but on its fulllment" only the obli&ation is a)oi!e!" lea)in&

una:ecte! the obli&ation itself6 19

In contracts of sale particularly" *rticle .141 of the #i)il #o!e" aforementione!" allos the obli&ee to

choose beteen procee!in& ith the a&reement or ai)in& the performance of the con!ition6 It is this



pro)ision hich is the pertinent rule in the case at bench6 Here" e)i!ently" petitioner has ai)e! the

performance of the con!ition impose! on pri)ate respon!ent to free the property from sEuatters6 =0

In any case" pri)ate respon!entPs action for rescission is not arrante!6 She is not the in@ure!

party6 =1 The ri&ht of resolution of a party to an obli&ation un!er *rticle ../. of the #i)il #o!e is

pre!icate! on a breach of faith by the other party that )iolates the reciprocity beteen them6 == It is

pri)ate respon!ent ho has faile! in her obli&ation un!er the contract6 2etitioner !i! not breach the

a&reement6 He has a&ree!" in fact" to shoul!er the epenses of the eecution of the @u!&ment in the

e@ectment case an! to ma;e arran&ements ith the sheri: to e:ect such eecution6 In his letter of 3>

-une ./0/" counsel for petitioner has ten!ere! payment an! !eman!e! forthith the eecution of the

!ee! of absolute sale6 2arenthetically" this o:er to pay" ha)in& been ma!e prior to the !eman! for

rescission" assumin& for the sa;e of ar&ument that such a !eman! is proper un!er *rticle .1/3 =3 of the

#i)il #o!e" oul! li;eise suFce to !efeat pri)ate respon!entPs prero&ati)e to rescin! thereun!er6

There is no nee! to still belabor the Euestion of hether the 215"555655 a!)ance payment is

reimbursable to petitioner or forfeitable by pri)ate respon!ent" since" on the basis of our fore&oin&

conclusions" the matter has cease! to be an issue6 SuFce it to say that petitioner ha)in& opte! toprocee! ith the sale" neither may petitioner !eman! its reimbursement from pri)ate respon!ent nor

may pri)ate respon!ent sub@ect it to forfeiture6

H9R9<OR9" the Euestione! !ecision of the #ourt of *ppeals is hereby R9V9RS9D *ND S9T

*SID9" an! another is entere! or!erin& petitioner to pay pri)ate respon!ent the balance of the

purchase price an! the latter to eecute the !ee! of absolute sale in fa)or of petitioner6 No costs6

SO ORD9R9D6

Feliciano, Romero, Melo and Panganiban, JJ., concur.

*oot(ote%

>6

G.R. No. 11==1= M'rc$ =, 199

GREGORIO *ULE, petitioner"

)s6

COURT O* AEAL!, NINE>ETC2 CRU '() @UAN BELARMINO, respon!ents6



ROMERO,J.:

This petition for re)ie oncertiorariEuestions the aFrmance by the #ourt of *ppeals of the !ecision 1 of

the Re&ional Trial #ourt of San 2ablo #ity" $ranch >5" !ismissin& the complaint that praye! for the

nullication of a contract of sale of a .58hectare property in Tanay" Ri,al in consi!eration of the amount

of 245"555655 an! a 361 carat emeral!8cut !iamon! (#i)il #ase No6 S283411'6 The loer courtPs!ecision !ispose! of the case as follos7

H9R9<OR9" premises consi!ere!" the #ourt hereby ren!ers @u!&ment !ismissin& the

complaint for lac; of merit an! or!erin& plainti: to pay7

.6 Defen!ant Dra6 Nine)etch %6 #ru, the sum of 2>55"555655 as an! for moral !ama&es

an! the sum of 2.55"555655 as an! for eemplary !ama&es=

36 Defen!ant *tty6 -uan $elarmino the sum of 2315"555655 as an! for moral !ama&es

an! the sum of 2.15"555655 as an! for eemplary !ama&es=

>6 Defen!ant Dra6 #ru, an! *tty6 $elarmino the sum of 231"555655 each as an! for

attorneyPs fees an! liti&ation epenses= an!

46 The costs of suit6

SO ORD9R9D6

*s foun! by the #ourt of *ppeals an! the loer court" the antece!ent facts of this case are as follos7

2etitioner Cre&orio <ule" a ban;er by profession an! a @eeler at the same time" acEuire! a .58hectare

property in Tanay" Ri,al (hereinafter Tanay property'" co)ere! by Transfer #erticate of Title No6

>35B31 hich use! to be un!er the name of <r6 *ntonio -acobe6 The latter ha! mort&a&e! it earlier to

the Rural $an; of *laminos (the $an;'" La&una" Inc6 to secure a loan in the amount of 2.5"555655" but

the mort&a&e as later foreclose! an! the property o:ere! for public auction upon his !efault6

In -uly ./04" petitioner" as corporate secretary of the ban;" as;e! Remelia Dichoso an! Oli)a %en!o,a

to loo; for a buyer ho mi&ht be intereste! in the Tanay property6 The to foun! one in the person of

herein pri)ate respon!ent Dr6 Nine)etch #ru,6 It so happene! that at the time" petitioner ha! shoninterest in buyin& a pair of emeral!8cut !iamon! earrin&s one! by Dr6 #ru, hich he ha! seen in

-anuary of the same year hen his mother eamine! an! appraise! them as &enuine6 Dr6 #ru,"

hoe)er" !ecline! petitionerPs o:er to buy the @eelry for 2.55"5556556 2etitioner then ma!e another bi!

to buy them for ?SQA"555655 at the echan&e rate of Q.655 to 2316556 *t this point" petitioner inspecte!

sai! @eelry at the lobby of the 2ru!ential $an; branch in San 2ablo #ity an! then ma!e a s;etch

thereof6 Ha)in& s;etche! the @eelry for tenty to thirty minutes" petitioner &a)e them bac; to Dr6 #ru,

ho a&ain refuse! to sell them since the echan&e rate of the peso at the time appreciate! to 2./655 to

a !ollar6

http://www.lawphil.net/judjuris/juri1998/mar1998/gr_112212_1998.html#fnt1





SubseEuently" hoe)er" ne&otiations for the barter of the @eelry an! the Tanay property ensue!6 Dr6

#ru, reEueste! herein pri)ate respon!ent *tty6 -uan $elarmino to chec; the property ho" in turn"

foun! out that no sale or barter as feasible because the one8year perio! for re!emption of the sai!

property ha! not yet epire! at the time6

In an e:ort to cut throu&h any le&al impe!iment" petitioner eecute! on October ./" ./04" a !ee! of

re!emption on behalf of <r6 -acobe purporte!ly in the amount of 2.1"/0B6B0" an! on e)en !ate" <r6

-acobe sol! the property to petitioner for 2B1"5556556 The haste ith hich the to !ee!s ere

eecute! is shon by the fact that the !ee! of sale as notari,e! ahea! of the !ee! of re!emption6 *s

Dr6 #ru, ha! alrea!y a&ree! to the propose! barter" petitioner ent to 2ru!ential $an; once a&ain to

ta;e a loo; at the @eelry6

In the afternoon of October 3>" ./04" petitioner met *tty6 $elarmino at the latterPs resi!ence to prepare

the !ocuments of sale6= Dr6 #ru, herself as not aroun! but *tty6 $elarmino as aare that she an!

petitioner ha! pre)iously a&ree! to echan&e a pair of emeral!8cut !iamon! earrin&s for the Tanay

property6 *tty6 $elarmino accor!in&ly cause! the preparation of a !ee! of absolute sale hile petitioner

an! Dr6 #ru, atten!e! to the safe;eepin& of the @eelry6

The folloin& !ay" petitioner" to&ether ith Dichoso an! %en!o,a" arri)e! at the resi!ence of *tty6

$elarmino to nally eecute a !ee! of absolute sale6 2etitioner si&ne! the !ee! an! &a)e *tty6

$elarmino the amount of 2.>"B55655 for necessary epenses in the transfer of title o)er the Tanay

property6 2etitioner also issue! a certication to the e:ect that the actual consi!eration of the sale as

2355"555655 an! not 205"555655 as in!icate! in the !ee! of absolute sale6 The !isparity beteen the

actual contract price an! the one in!icate! on the !ee! of absolute sale as purporte!ly aime! at

minimi,in& the amount of the capital &ains ta that petitioner oul! ha)e to shoul!er6 Since the @eelry

as appraise! only at 2.A5"555655" the parties a&ree! that the balance of 245"555655 oul! @ust be

pai! later in cash6

*s pre8arran&e!" petitioner left *tty6 $elarminoPs resi!ence ith Dichoso an! %en!o,a an! hea!e! for

the ban;" arri)in& there at past 1755 p6m6 Dr6 #ru, also arri)e! shortly thereafter" but the cashier ho

;ept the other ;ey to the !eposit bo ha! alrea!y left the ban;6 Dr6 #ru, an! Dichoso" therefore" loo;e!

for sai! cashier an! foun! him ha)in& a haircut6 *s soon as his haircut as nishe!" the cashier

returne! to the ban; an! arri)e! there at 1740 p6m6" ahea! of Dr6 #ru, an! Dichoso ho arri)e! at 1711

p6m6 Dr6 #ru, an! the cashier then opene! the safety !eposit bo" the former retrie)in& a transparent

plastic or cellophane ba& ith the @eelry insi!e an! han!in& o)er the same to petitioner6 The latter too;

the @eelry from the ba&" ent near the electric li&ht at the ban;Ps lobby" hel! the @eelry a&ainst theli&ht an! eamine! it for ten to fteen minutes6 *fter a hile" Dr6 #ru, as;e!" Okay na ba iyan?

2etitioner epresse! his satisfaction by no!!in& his hea!6

<or ser)ices ren!ere!" petitioner pai! the a&ents" Dichoso an! %en!o,a" the amount of ?SQ>55655

an! some pieces of @eelry6 He !i! not" hoe)er" &i)e them half of the pair of earrin&s in Euestion hich

he ha! earlier promise!6





Later" at about 0755 oPcloc; in the e)enin& of the same !ay" petitioner arri)e! at the resi!ence of *tty6

$elarmino complainin& that the @eelry &i)en to him as fa;e6 He then use! a tester to pro)e the

alle&e! fa;ery6 %eanhile" at 07>5 p6m6" Dichoso an! %en!o,a ent to the resi!ence of Dr6 #ru, to

borro her car so that" ith *tty6 $elarmino" they coul! re&ister the Tanay property6 *fter Dr6 #ru, ha!

a&ree! to len! her car" Dichoso calle! up *tty6 $elarmino6 The latter" hoe)er" instructe! Dichoso to

procee! imme!iately to his resi!ence because petitioner as there6 $elie)in& that petitioner ha! nally

a&ree! to &i)e them half of the pair of earrin&s" Dichoso ent posthaste to the resi!ence of *tty6

$elarmino only to n! petitioner alrea!y !emonstratin& ith a tester that the earrin&s ere fa;e6

2etitioner then accuse! Dichoso an! %en!o,a of !ecei)in& him hich they" hoe)er" !enie!6 They

countere! that petitioner coul! not ha)e been foole! because he ha! )ast eperience re&ar!in& @eelry6

2etitioner nonetheless too; bac; the ?SQ>55655 an! @eelry he ha! &i)en them6

Thereafter" the &roup !eci!e! to &o to the house of a certain %acario Dimayu&a" a @eeler" to ha)e the

earrin&s teste!6 Dimayu&a" after ta;in& one loo; at the earrin&s" imme!iately !eclare! them counterfeit6

*t aroun! /7>5 p6m6" petitioner ent to one *tty6 Reynal!o *lcantara resi!in& at La;esi!e Sub!i)ision in

San 2ablo #ity" complainin& about the fa;e @eelry6 ?pon bein& a!)ise! by the latter" petitioner

reporte! the matter to the police station here Dichoso an! %en!o,a li;eise eecute! sornstatements6

On October 3A" ./04" petitioner le! a complaint before the Re&ional Trial #ourt of San 2ablo #ity

a&ainst pri)ate respon!ents prayin&" amon& other thin&s" that the contract of sale o)er the Tanay

property be !eclare! null an! )oi! on the &roun! of frau! an! !eceit6

On October >5" ./04" the loer court issue! a temporary restrainin& or!er !irectin& the Re&ister of

Dee!s of Ri,al to refrain from actin& on the pertinent !ocuments in)ol)e! in the transaction6 On

No)ember 35" ./04" hoe)er" the same court lifte! its pre)ious or!er an! !enie! the prayer for a rit of

preliminary in@unction6

*fter trial" the loer court ren!ere! its !ecision on %arch B" ./0/6 #onfrontin& the issue of hether or

not the &enuine pair of earrin&s use! as consi!eration for the sale as !eli)ere! by Dr6 #ru, to

petitioner" the loer court sai!7

The #ourt n!s that the anser is !enitely in the aFrmati)e6 In!ee!" Dra6 #ru, !eli)ere!

(the' sub@ect @eelries (sic' into the han!s of plainti: ho e)en raise! the same nearer to

the li&hts of the lobby of the ban; near the !oor6 hen as;e! by Dra6 #ru, if e)erythin&

as in or!er" plainti: e)en no!!e! his satisfaction (Hearin& of <eb6 34" ./00'6 *t thatinstance" plainti: !i! not protest" complain or be& for a!!itional time to eamine further

the @eelries (sic'6 $ein& a professional ban;er an! en&a&e! in the @eelry business

plainti: is con)ersant an! competent to !etect a fa;e !iamon! from the real thin&6 2lainti:

as accor!e! the reasonable time an! opportunity to ascertain an! inspect the @eelries

(sic' in accor!ance ith *rticle .104 of the #i)il #o!e6 2lainti: too; !eli)ery of the sub@ect

@eelries (sic' before A755 p6m6 of October 34" ./046 hen he ent at 0755 p6m6 that same

!ay to the resi!ence of *tty6 $elarmino alrea!y ith a tester complainin& about some fa;e

@eelries (sic'" there as alrea!y un!ue !elay because of the lapse of a consi!erable



len&th of time since he &ot hol! of sub@ect @eelries (sic'6 The lapse of to (3' hours more

or less before plainti: complaine! is consi!ere! by the #ourt as unreasonable !elay63

The loer court further rule! that all the elements of a )ali! contract un!er *rticle .410 of the #i)il #o!e

ere present" namely7 (a' consent or meetin& of the min!s= (b' !eterminate sub@ect matter" an! (c' price

certain in money or its eEui)alent6 The same elements" accor!in& to the loer court" ere present

!espite the fact that the a&reement beteen petitioner an! Dr6 #ru, as principally a barter contract6

The loer court eplaine! thus7

6 6 6 6 2lainti:Ps onership o)er the Tanay property passe! unto Dra6 #ru, upon the

constructi)e !eli)ery thereof by )irtue of the Dee! of *bsolute Sale (9h6 D'6 On the other

han!" the onership of Dra6 #ru, o)er the sub@ect @eelries (sic' transferre! to the plainti:

upon her actual personal !eli)ery to him at the lobby of the 2ru!ential $an;6 It is epressly

pro)i!e! by la that the thin& sol! shall be un!erstoo! as !eli)ere!" hen it is place! in

the control an! possession of the )en!ee (*rt6 .4/B" #i)il #o!e= Juen,le Stra: )s6

atson #o6 .> 2hil6 3A'6 The onership an!Gor title o)er the @eelries (sic' as

transmitte! imme!iately before A755 p6m6 of October 34" ./046 2lainti: si&nie! hisappro)al by no!!in& his hea!6 Deli)ery or tra!ition" is one of the mo!es of acEuirin&

onership (*rt6 B.3" #i)il #o!e'6

Similarly" hen 9hibit D as eecute!" it as eEui)alent to the !eli)ery of the Tanay

property in fa)or of Dra6 #ru,6 The eecution of the public instrument (9h6 D' operates as

a formal or symbolic !eli)ery of the Tanay property an! authori,es the buyer" Dra6 #ru, to

use the !ocument as proof of onership (<loren!o )6 <o," 35 2hil6 >//'6 %ore so" since

9hibit D !oes not contain any pro)iso or stipulation to the e:ect that title to the property is

reser)e! ith the )en!or until full payment of the purchase price" nor is there a stipulation

&i)in& the )en!or the ri&ht to unilaterally rescin! the contract the moment the )en!ee fails

to pay ithin a e! perio! (Ta&uba )6 V!a6 De Leon" .>3 S#R* B33= Lu,on $ro;era&e

#o6 Inc6 )s6 %aritime $uil!in& #o6 Inc6 0A S#R* >51= <roilan )6 2an Oriental Shippin& #o6

et al6 .3 S#R* 3BA'6

*si!e from conclu!in& that the contract of barter or sale ha! in fact been consummate! hen petitioner

an! Dr6 #ru, parte! ays at the ban;" the trial court li;eise !elt on the uneplaine! !elay ith hich

petitioner complaine! about the alle&e! fa;ery6 Thus7

6 6 6 6 Verily" plainti: is alrea!y estoppe! to come bac; after the lapse of consi!erablelen&th of time to claim that hat he &ot as fa;e6 He is a $usiness %ana&ement &ra!uate

of La Salle ?ni)ersity" #lass ./B08B/" a professional ban;er as ell as a @eeler in his

on ri&ht6 To hours is more than enou&h time to ma;e a sitch of a Russian !iamon!

ith the real !iamon!6 It must be remembere! that in -uly ./04 plainti: ma!e a s;etch of

the sub@ect @eelries (sic' at the 2ru!ential $an;6 2lainti: ha! a tester at 0755 p6m6 at the

resi!ence of *tty6 $elarmino6 hy then !i! he not brin& it out hen he as eaminin& the

sub@ect @eelries (sic' at about A755 p6m6 in the ban;Ps lobbyK Ob)iously" he ha! no nee!

for it after bein& satise! of the &enuineness of the sub@ect @eelries (sic'6 hen Dra6 #ru,








an! plainti: left the ban; both of them ha! fully performe! their respecti)e prestations6

Once a contract is shon to ha)e been consummate! or fully performe! by the parties

thereto" its eistence an! bin!in& e:ect can no lon&er be !ispute!6 It is irrele)ant an!

immaterial to !ispute the !ue eecution of a contract if both of them ha)e in fact

performe! their obli&ations thereun!er an! their respecti)e si&natures an! those of their

itnesses appear upon the face of the !ocument (el!on #onstruction )6 #* C6R6 No6 L8

>1B3." Oct6 .3" ./0B'65

<inally" in aar!in& !ama&es to the !efen!ants" the loer court remar;e!7

The #ourt n!s that plainti: acte! in anton ba! faith6 9hibit 38$elarmino purports to

sho that the Tanay property is orth 231"5556556 Hoe)er" also on that same !ay it as

eecute!" the propertyPs orth as ma&nie! at 2B1"555655 (9h6 >8$elarmino'6 Ho

coul! in less than a !ay (Oct6 ./" ./04' the )alue oul! (sic' triple un!er normal

circumstancesK 2lainti:" ith the assistance of his a&ents" as able to echan&e the

Tanay property hich his ban; )alue! only at 231"555655 in echan&e for a &enuine pair

of emeral! cut !iamon! orth 2355"555655 belon&in& to Dra6 #ru,6 He also retrie)e! the?SQ>55655 an! @eelries (sic' from his a&ents6 $ut he as not satise! in bein& able to

&et sub@ect @eelries for a son&6 He ha! to le a malicious an! unfoun!e! case a&ainst

Dra6 #ru, an! *tty6 $elarmino ho are ell ;non" respecte! an! hel! in hi&h esteem in

San 2ablo #ity here e)erybo!y practically ;nos e)erybo!y6 2lainti: came to #ourt ith

unclean han!s !ra&&in& the !efen!ants an! soilin& their clean an! &oo! name in the

process6 $oth of them are near the tili&ht of their li)es after maintainin& an! nurturin&

their &oo! reputation in the community only to be stunne! ith a court case6 Since the

lin& of this case on October 3A" ./04 up to the present they ere li)in& un!er a pall of

!oubt6 Surely" this a:ecte! not only their earnin& capacity in their practice of theirrespecti)e professions" but also they su:ere! besmirche! reputations6 Dra6 #ru, runs her

on hospital an! !efen!ant $elarmino is a ell respecte! le&al practitioner6 The len&th of

time this case !ra&&e! on !urin& hich perio! their reputation ere (sic' tarnishe! an!

their names mali&ne! by the pen!ency of the case" the #ourt is of the belief that some of

the !ama&es they praye! for in their ansers to the complaint are reasonably

proportionate to the su:erin&s they un!erent (*rt6 33./" Ne #i)il #o!e'6 %oreo)er"

because of the falsity" malice an! baseless nature of the complaint !efen!ants ere

compelle! to liti&ate6 Hence" the aar! of attorneyPs fees is arrante! un!er the

circumstances (*rt6 3350" Ne #i)il #o!e'66

<rom the trial courtPs a!)erse !ecision" petitioner ele)ate! the matter to the #ourt of *ppeals6 On

October 35" .//3" the #ourt of *ppeals" hoe)er" ren!ere! a !ecision 7 aFrmin&in totothe loer

courtPs !ecision6 His motion for reconsi!eration ha)in& been !enie! on October ./" .//>" petitioner

no les the instant petition alle&in& that7

I6 TH9 TRI*L #O?RT 9RR9D IN DIS%ISSINC 2L*INTI<<PS #O%2L*INT *ND IN

HOLDINC TH*T TH9 2L*INTI<< *#T?*LL R9#9IV9D * C9N?IN9 2*IR O<

9%9R*LD #?T DI*%OND 9*RRINC(S' <RO% D9<9ND*NT #R? 6 6 6 =









II6 TH9 TRI*L #O?RT 9RR9D IN **RDINC %OR*L *ND 99%2L*R D*%*C9S

*ND *TTORN9PS <99S IN <*VOR O< D9<9ND*NTS *ND *C*INST TH9

2L*INTI<< IN THIS #*S9= an!

III6 TH9 TRI*L" #O?RT 9RR9D IN NOT D9#L*RINC TH9 D99D O< S*L9 O< TH9

T*N* 2RO29RT (9H6 D' *S N?LL *ND VOID OR IN NOT *NN?LLINC TH9

S*%9" *ND IN <*ILINC TO CR*NT R9*SON*$L9 D*%*C9S IN <*VOR O< TH9

2L*INTI<<6

*s to the rst alle&ation" the #ourt obser)es that petitioner is essentially raisin& a factual issue as it

in)ites us to eamine an! ei&h ane the facts re&ar!in& the &enuineness of the earrin&s bartere! in

echan&e for the Tanay property6 This" of course" e cannot !o ithout un!uly transcen!in& the limits

of our re)ie poer in petitions of this nature hich are conne! merely to pure Euestions of la6 e

accor!" as a &eneral rule" conclusi)eness to a loer courtPs n!in&s of fact unless it is shon" inter alia"

that7 (.' the conclusion is a n!in& &roun!e! on speculations" surmises or con@ectures= (3' the inference

is manifestly mista;en" absur! an! impossible= (>' hen there is a &ra)e abuse of !iscretion= (4' hen

the @u!&ment is base! on a misapprehension of facts= (1' hen the n!in&s of fact are conictin&= an!(A' hen the #ourt of *ppeals" in ma;in& its n!in&s" ent beyon! the issues of the case an! the same

is contrary to the a!mission of both parties6 9 e n! nothin&" hoe)er" that arrants the application of

any of these eceptions6

#onseEuently" this #ourt uphol!s the appellate courtPs n!in&s of fact especially because these concur

ith those of the trial court hich" upon a thorou&h scrutiny of the recor!s" are rmly &roun!e! on

e)i!ence presente! at the trial6 10 To reiterate" this #ourtPs @uris!iction is only limite! to re)iein& errors

of la in the absence of any shoin& that the n!in&s complaine! of are totally !e)oi! of support in the

recor! or that they are &larin&ly erroneous as to constitute serious abuse of !iscretion6 11

Nonetheless" this #ourt has to closely !el)e into petitionerPs alle&ation that the loer courtPs !ecision of

%arch B" ./0/ is a rea!y8ma!e one because it as han!e! !on a !ay after the last !ate of the trial

of the case6 1=2etitioner" in this re&ar!" n!s it incre!ible that -u!&e -6 *usberto -aramillo as able to

rite a .38pa&e sin&le8space! !ecision" type it an! release it on %arch B" ./0/" less than a !ay after

the last hearin& on %arch A" ./0/6 He stresse! that -u!&e -aramillo replace! -u!&e Sal)a!or !e

Cu,man an! hear! only his rebuttal testimony6

This alle&ation is ob)iously no more than a !esperate e:ort on the part of petitioner to !ispara&e the

loer courtPs n!in&s of fact in or!er to con)ince this #ourt to re)ie the same6 It is noteorthy that *tty6$elarmino clarie! that -u!&e -aramillo ha! issue! the rst or!er in the case as early as %arch /" ./0B

or to years before the ren!ition of the !ecision6 In fact" *tty6 $elarmino terminate! presentation of

e)i!ence on October .>" ./0B" hile Dr6 #ru, nishe! hers on <ebruary 4" ./0/" or more than a month

prior to the ren!ition of the @u!&ment6 The %arch A" ./0/ hearin& as con!ucte! solely for the

presentation of petitionerPs rebuttal testimony6 13 In other or!s" -u!&e -aramillo ha! ample time to

stu!y the case an! rite the !ecision because the rebuttal e)i!ence oul! only ser)e to conrm or

)erify the facts alrea!y presente! by the parties6


















The #ourt n!s nothin& anomalous in the sai! situation6 No proof has been a!!uce! that -u!&e

-aramillo as moti)ate! by a malicious or sinister intent in !isposin& of the case ith !ispatch6 Neither

is there proof that someone else rote the !ecision for him6 The imme!iate ren!ition of the !ecision as

no more than -u!&e -aramilloPs compliance ith his !uty as a @u!&e to !ispose of the courtPs business

promptly an! !eci!e cases ithin the reEuire! perio!s6 1 The to8year perio! ithin hich -u!&e

-aramillo han!le! the case pro)i!e! him ith all the time to stu!y it an! e)en rite !on its facts as

soon as these ere presente! to court6 In fact" this #ourt !oes not see anythin& ron& in the practice of

ritin& a !ecision !ays before the sche!ule! promul&ation of @u!&ment an! lea)in& the !ispositi)e

portion for typin& at a time close to the !ate of promul&ation" pro)i!e! that no malice or any ron&ful

con!uct atten!s its a!option6 15 The practice ser)es the !ual purposes of safe&uar!in& the

con!entiality of !raft !ecisions an! ren!erin& !ecisions ith promptness6 Neither can -u!&e -aramillo

be ma!e a!ministrati)ely anserable for the imme!iate ren!ition of the !ecision6 The acts of a @u!&e

hich pertain to his @u!icial functions are not sub@ect to !isciplinary poer unless they are committe!

ith frau!" !ishonesty" corruption or ba! faith6 16 Hence" in the absence of suFcient proof to the

contrary" -u!&e -aramillo is presume! to ha)e performe! his @ob in accor!ance ith la an! shoul!

instea! be commen!e! for his close attention to !uty6

Ha)in& !ispose! of petitionerPs rst contention" e no come to the core issue of this petition hich is

hether the #ourt of *ppeals erre! in uphol!in& the )ali!ity of the contract of barter or sale un!er the

circumstances of this case6

The #i)il #o!e pro)i!es that contracts are perfecte! by mere consent6 <rom this moment" the parties

are boun! not only to the fulllment of hat has been epressly stipulate! but also to all the

conseEuences hich" accor!in& to their nature" may be in ;eepin& ith &oo! faith" usa&e an! la6 17 *contract of sale is perfecte! at the moment there is a meetin& of the min!s upon the thin& hich is the

ob@ect of the contract an! upon the price6

1

$ein& consensual" a contract of sale has the force of labeteen the contractin& parties an! they are epecte! to abi!e in &oo! faith by their respecti)e

contractual commitments6 *rticle .>10 of the #i)il #o!e hich reEuires the embo!iment of certain

contracts in a public instrument" is only for con)enience" 19 an! re&istration of the instrument only

a!)ersely a:ects thir! parties6 =0 <ormal reEuirements are" therefore" for the benet of thir! parties6 Non8

compliance thereith !oes not a!)ersely a:ect the )ali!ity of the contract nor the contractual ri&hts an!

obli&ations of the parties thereun!er6

It is e)i!ent from the facts of the case that there as a meetin& of the min!s beteen petitioner an! Dr6

#ru,6 *s such" they are boun! by the contract unless there are reasons or circumstances that arrant

its nullication6 Hence" the problem that shoul! be a!!resse! in this case is hether or not un!er the

facts !uly establishe! herein" the contract can be )oi!e! in accor!ance ith la so as to compel the

parties to restore to each other the thin&s that ha)e been the sub@ect of the contract ith their fruits" an!

the price ith interest6=1

#ontracts that are )oi!able or annullable" e)en thou&h there may ha)e been no !ama&e to the

contractin& parties are7 (.' those here one of the parties is incapable of &i)in& consent to a contract=

an! (3' those here the consent is )itiate! by mista;e" )iolence" intimi!ation" un!ue inuence or

frau!6 == *ccor!in&ly" petitioner no stresses before this #ourt that he entere! into the contract in the


























belief that the pair of emeral!8cut !iamon! earrin&s as &enuine6 On the pretet that those pieces of

@eelry turne! out to be counterfeit" hoe)er" petitioner subseEuently sou&ht the nullication of sai!

contract on the &roun! that it as" in fact" tainte! ith frau! =3 such that his consent as )itiate!6

There is frau! hen" throu&h the insi!ious or!s or machinations of one of the contractin& parties" the

other is in!uce! to enter into a contract hich" ithout them" he oul! not ha)e a&ree! to6 = The

recor!s" hoe)er" are bare of any e)i!ence manifestin& that pri)ate respon!ents employe! such

insi!ious or!s or machinations to entice petitioner into enterin& the contract of barter6 Neither is there

any e)i!ence shoin& that Dr6 #ru, in!uce! petitioner to sell his Tanay property or that she ca@ole! him

to ta;e the earrin&s in echan&e for sai! property6 On the contrary" Dr6 #ru, !i! not initially acce!e to

petitionerPs proposal to buy the sai! @eelry6 Rather" it appears that it as petitioner" throu&h his a&ents"

ho le! Dr6 #ru, to belie)e that the Tanay property as orth echan&in& for her @eelry as he

represente! that its )alue as 2455"555655 or more than !ouble that of the @eelry hich as )alue!

only at 2.A5"5556556 If in!ee! petitionerPs property as truly orth that much" it as certainly contrary

to the nature of a businessman8ban;er li;e him to ha)e parte! ith his real estate for half its price6 In

short" it as in fact petitioner ho resorte! to machinations to con)ince Dr6 #ru, to echan&e her

@eelry for the Tanay property6

%oreo)er" petitioner !i! not clearly alle&e mista;e as a &roun! for nullication of the contract of sale6

9)en assumin& that he !i!" petitioner cannot successfully in)o;e the same6 To in)ali!ate a contract"

mista;e must refer to the substance of the thin& that is the ob@ect of the contract" or to those con!itions

hich ha)e principally mo)e! one or both parties to enter into the contract6 =5 *n eample of mista;e as

to the ob@ect of the contract is the substitution of a specic thin& contemplate! by the parties ith

another6 =6 In his alle&ations in the complaint" petitioner insinuate! that an inferior one or one that ha!

only Russian !iamon!s as substitute! for the @eelry he ante! to echan&e ith his .58hectare lan!6

He" hoe)er" faile! to pro)e the fact that prior to the !eli)ery of the @eelry to him" pri)ate respon!entsen!ea)ore! to ma;e such substitution6

Li;eise" the facts as pro)en !o not support the alle&ation that petitioner himself coul! be ecuse! for

the mista;e6 On account of his or; as a ban;er8@eeler" it can be ri&htfully assume! that he as an

epert on matters re&ar!in& &ems6 He ha! the intellectual capacity an! the business acumen as a

ban;er to ta;e precautionary measures to a)ert such a mista;e" consi!erin& the )alue of both the

@eelry an! his lan!6 The fact that he ha! seen the @eelry before October 34" ./04 shoul! not ha)e

preclu!e! him from ha)in& its &enuineness teste! in the presence of Dr6 #ru,6 Ha! he !one so" he

coul! ha)e a)oi!e! the present situation that he himself brou&ht about6 In!ee!" the n&er of suspicion

of sitchin& the &enuine @eelry for a fa;e ine)itably points to him6 Such a mista;e cause! by manifest

ne&li&ence cannot in)ali!ate a @uri!ical act6 =7 *s the #i)il #o!e pro)i!es" (t'here is no mista;e if the

party alle&in& it ;ne the !oubt" contin&ency or ris; a:ectin& the ob@ect of the contract6=

<urthermore" petitioner as a:or!e! the reasonable opportunity reEuire! in *rticle .104 of the #i)il

#o!e ithin hich to eamine the @eelry as he in fact accepte! them hen as;e! by Dr6 #ru, if he as

satise! ith the same6 =9 $y ta;in& the @eelry outsi!e the ban;" petitioner eecute! an act hich as

more consistent ith his eercise of onership o)er it6 This &ains cre!ence hen it is borne in min! that

he himself ha! earlier !eli)ere! the Tanay property to Dr6 #ru, by aFin& his si&nature to the contract of



















sale6 That after to hours he later claime! that the @eelry as not the one he inten!e! in echan&e for

his Tanay property" coul! not se)er the @uri!ical tie that no boun! him an! Dr6 #ru,6 The nature an!

)alue of the thin& he ha! ta;en preclu!e its return after that super)enin& perio! ithin hich anythin&

coul! ha)e happene!" not eclu!in& the alteration of the @eelry or its bein& sitche! ith an inferior

;in!6

$oth the trial an! appellate courts" therefore" correctly rule! that there ere no le&al bases for the

nullication of the contract of sale6 Onership o)er the parcel of lan! an! the pair of emeral!8cut

!iamon! earrin&s ha! been transferre! to Dr6 #ru, an! petitioner" respecti)ely" upon the actual an!

constructi)e !eli)ery thereof6 30 Sai! contract of sale bein& absolute in nature" title passe! to the )en!ee

upon !eli)ery of the thin& sol! since there as no stipulation in the contract that title to the property sol!

has been reser)e! in the seller until full payment of the price or that the )en!or has the ri&ht to

unilaterally resol)e the contract the moment the buyer fails to pay ithin a e! perio!6 31 Such

stipulations are not manifest in the contract of sale6

hile it is true that the amount of 245"555655 formin& part of the consi!eration as still payable to

petitioner" its nonpayment by Dr6 #ru, is not a suFcient cause to in)ali!ate the contract or bar thetransfer of onership an! possession of the thin&s echan&e! consi!erin& the fact that their contract is

silent as to hen it becomes !ue an! !eman!able6 3=

Neither may such failure to pay the balance of the purchase price result in the payment of interest

thereon6 *rticle .10/ of the #i)il #o!e prescribes the payment of interest by the )en!ee for the perio!

beteen the !eli)ery of the thin& an! the payment of the price in the folloin& cases7

(.' Shoul! it ha)e been so stipulate!=

(3' Shoul! the thin& sol! an! !eli)ere! pro!uce fruits or income=

(>' Shoul! he be in !efault" from the time of @u!icial or etra@u!icial !eman! for the

payment of the price6

Not one of these cases obtains here6 This case shoul!" of course" be !istin&uishe! fromDe la

Cruz v6Legaspi" 33 here the court hel! that failure to pay the consi!eration after the notari,ation

of the contract as pre)iously promise! resulte! in the )en!eePs liability for payment of interest6 In

the case at bar" there is no stipulation for the payment of interest in the contract of sale nor proof

that the Tanay property pro!uce! fruits or income6 Neither !i! petitioner !eman! payment of theprice as in fact he le! an action to nullify the contract of sale6

*ll tol!" petitioner appears to ha)e ele)ate! this case to this #ourt for the principal reason of miti&atin&

the amount of !ama&es aar!e! to both pri)ate respon!ents hich petitioner consi!ers as eorbitant6

He conten!s that pri)ate respon!ents !o not !eser)e at all the aar! of !ama&es6 In fact" he plea!s for

the total !eletion of the aar! as re&ar!s pri)ate respon!ent $elarmino hom he consi!ers a mere

nominal party because no specic claim for !ama&es a&ainst him as alle&e! in the complaint6

hen he le! the case" all that petitioner ante! as that *tty6 $elarmino shoul! return to him the















onerPs !uplicate copy of T#T No6 >35B31" the !ee! of sale eecute! by <r6 *ntonio -acobe" the !ee!

of re!emption an! the chec; allote! for epenses6 2etitioner alle&es further that *tty6 $elarmino shoul!

not ha)e !eli)ere! all those !ocuments to Dr6 #ru, because as the layer for both the seller an! the

buyer in the sale contract" he shoul! ha)e protecte! the ri&hts of both parties6 %oreo)er" petitioner

asserts that there as no rm basis for !ama&es ecept for *tty6 $elarminoPs uncorroborate!

testimony63

%oral an! eemplary !ama&es may be aar!e! ithout proof of pecuniary loss6 In aar!in& such

!ama&es" the court shall ta;e into account the circumstances obtainin& in the case sai! assess

!ama&es accor!in& to its !iscretion635 To arrant the aar! of !ama&es" it must be shon that the

person to hom these are aar!e! has sustaine! in@ury6 He must li;eise establish suFcient !ata upon

hich the court can properly base its estimate of the amount of !ama&es636 Statements of facts shoul!

establish such !ata rather than mere conclusions or opinions of itnesses6 37 Thus7

6 6 6 6 <or moral !ama&es to be aar!e!" it is essential that the claimant must ha)e

satisfactorily pro)e! !urin& the trial the eistence of the factual basis of the !ama&es an!

its causal connection ith the a!)erse partyPs acts6 If the court has no proof or e)i!enceupon hich the claim for moral !ama&es coul! be base!" such in!emnity coul! not be

outri&htly aar!e!6 The same hol!s true ith respect to the aar! of eemplary !ama&es

here it must be shon that the party acte! in a anton" oppressi)e or male)olent

manner6 3

In this re&ar!" the loer court appeare! to ha)e aar!e! !ama&es on a &roun! analo&ous to malicious

prosecution un!er *rticle 33./ (0' of the #i)il #o!e 39 as shon by (.' petitionerPs anton ba! faith in

bloatin& the )alue of the Tanay property hich he echan&e! for a &enuine pair of emeral!8cut

!iamon! orth 2355"55655= an! (3' his lin& of a malicious an! unfoun!e! case a&ainst pri)ate

respon!ents ho ere ell ;non" respecte! an! hel! in hi&h esteem in San 2ablo #ity here

e)erybo!y practically ;nos e)erybo!y an! hose &oo! names in the tili&ht of their li)es ere

soile! by petitionerPs comin& to court ith unclean han!s" thereby a:ectin& their earnin& capacity in

the eercise of their respecti)e professions an! besmirchin& their reputation6

<or its part" the #ourt of *ppeals aFrme! the aar! of !ama&es to pri)ate respon!ents for these

reasons7

The malice ith hich <ule le! this case is apparent6 Ha)in& ta;en possession of the

&enuine @eelry of Dra6 #ru," <ule no ishes to return a fa;e @eelry to Dra6 #ru, an!"more than that" &et bac; the real property" hich his ban; ons6 <ule has obtaine! a

&enuine @eelry hich he coul! sell anytime" anyhere an! to anybo!y" ithout the same

bein& trace! to the ori&inal oner for practically nothin&6 This is plain an! simple" un@ust

enrichment60

hile" as a rule" moral !ama&es cannot be reco)ere! from a person ho has le! a complaint a&ainst

another in &oo! faith because it is not soun! policy to place a penalty on the ri&ht to liti&ate" 1 the same"

hoe)er" cannot apply in the case at bar6 The factual n!in&s of the courtsa quoto the e:ect that





















petitioner le! this case because he as the )ictim of frau!= that he coul! not ha)e been such a )ictim

because he shoul! ha)e eamine! the @eelry in Euestion before acceptin& !eli)ery thereof"

consi!erin& his eposure to the ban;in& an! @eelry businesses= an! that he le! the action for the

nullication of the contract of sale ith unclean han!s" all !eser)e full faith an! cre!it to support the

conclusion that petitioner as moti)ate! more by ill ill than a sincere attempt to protect his ri&hts in

commencin& suit a&ainst respon!ents6

*s pointe! out earlier" a closer scrutiny of the chain of e)ents imme!iately prior to an! on October 34"

./04 itself oul! amply !emonstrate that petitioner as not simply ne&li&ent in failin& to eercise !ue

!ili&ence to assure himself that hat he as ta;in& in echan&e for his property ere &enuine

!iamon!s6 He ha! rather place! himself in a situation from hich it prepon!erantly appears that his

seemin& i&norance as actually @ust a ruse6 In!ee!" he ha! unnecessarily !ra&&e! respon!ents to face

the tra)ails of liti&ation in speculatin& at the possible fa)orable outcome of his complaint hen he shoul!

ha)e reali,e! that his suppose! pre!icament as his on ma;in&6 e" therefore" see here no

semblance of an honest an! sincere belief on his part that he as sin!le! by respon!ents hich

oul! entitle him to re!ress in court6 It must be note! that before petitioner as able to con)ince Dr6

#ru, to echan&e her @eelry for the Tanay property" petitioner too; pains to thorou&hly eamine sai!@eelry" e)en &oin& to the etent of s;etchin& their appearance6 hy at the precise moment hen he

as about to ta;e physical possession thereof he faile! to eert etra e:orts to chec; their &enuineness

!espite the lar&e consi!eration in)ol)e! has ne)er been eplaine! at all by petitioner6 His acts thus

faile! to accor! ith hat an or!inary pru!ent man oul! ha)e !one in the same situation6 $ein& an

eperience! ban;er an! a businessman himself ho !eliberately s;irte! a le&al impe!iment in the sale

of the Tanay property an! to minimi,e the capital &ains ta for its echan&e" it as actually &ross

rec;lessness for him to ha)e merely con!ucte! a cursory eamination of the @eelry hen e)ery

opportunity for !oin& so as not !enie! him6 *pparently" he carrie! on his person a tester hich he later

use! to pro)e the alle&e! fa;ery but hich he !i! not use at the time hen it as most nee!e!6<urthermore" it too; him to more hours of uneplaine! !elay before he complaine! that the @eelry he

recei)e! ere counterfeit6 Hence" e state! earlier that anythin& coul! ha)e happene! !urin& all the

time that petitioner as in complete possession an! control of the @eelry" inclu!in& the possibility of

substitutin& them ith fa;e ones" a&ainst hich respon!ents oul! ha)e a &reat !eal of !iFculty

!efen!in& themsel)es6 The truth is that petitioner e)en faile! to successfully pro)e !urin& trial that the

@eelry he recei)e! from Dr6 #ru, ere not &enuine6 *!! to that the fact that he ha! been shre!

enou&h to bloat the Tanay propertyPs price only a fe !ays after he purchase! it at a much loer )alue6

Thus" it is our consi!ere! )ie that if this sle of circumstances ere connecte!" li;e pieces of fabric

sen into a Euilt" they oul! suFciently !emonstrate that his acts ere not merely ne&li&ent but rather

stu!ie! an! !eliberate6

e !o not ha)e here" therefore" a situation here petitionerPs complaint as simply foun! later to be

base! on an erroneous &roun! hich" un!er settle! @urispru!ence" oul! not ha)e been a reason for

aar!in& moral an! eemplary !ama&es6 = Instea!" the cause of action of the instant case appears to

ha)e been contri)e! by petitioner himself6 In other or!s" he as place! in a situation here he coul!

not honestly e)aluate hether his cause of action has a semblance of merit" such that it oul! reEuire

the epertise of the courts to put it to a test6 His insistent pursuit of such case then couple! ith





circumstances shoin& that he himself as &uilty in brin&in& about the suppose! ron&!oin& on hich

he anchore! his cause of action oul! ren!er him anserable for all !ama&es the !efen!ant may su:er

because of it6 This is precisely hat too; place in the petition at bar an! e n! no co&ent reason to

!isturb the n!in&s of the courts belo that respon!ents in this case su:ere! consi!erable !ama&es

!ue to petitionerPs unarrante! action6

H9R9<OR9" the !ecision of the #ourt of *ppeals !ate! October 35" .//3 is hereby *<<IR%9D

intoto6 Dr6 #ru," hoe)er" is or!ere! to pay petitioner the balance of the purchase price of 245"555655

ithin ten (.5' !ays from the nality of this !ecision6 #osts a&ainst petitioner6

SO ORD9R9D6

Narvasa, C.J., Kapunan and Purisima, JJ., concur.

46

G.R. No. 9737 @& 6, 1999

@AIME G. ONG, petitioner")s6

T2E 2ONORABLE COURT O* AEAL!, !OU!E! MIGUEL . ROBLE! '() ALE@ANRO M.ROBLE!,respon!ents6

NARE!/!ANTIAGO,J.:

$efore us is a petition for re)ie oncertiorarifrom the @u!&ment ren!ere! by the #ourt of *ppeals

hich" ecept as to the aar! of eemplary !ama&es" aFrme! the !ecision of the Re&ional Trial #ourt

of Lucena #ity" $ranch A5" settin& asi!e the *&reement of 2urchase an! Sale entere! into by herein

petitioner an! pri)ate respon!ent spouses in #i)il #ase No6 0180161âwphi1.nêt

On %ay .5" ./0>" petitioner -aime On&" on the one han!" an! respon!ent spouses %i&uel J6 Robles

an! *le@an!ra Robles" on the other han!" eecute! an *&reement of 2urchase an! Sale respectin&

to parcels of lan! situate! at $arrio 2uri" San *ntonio" +ue,on6 The terms an! con!itions of the

contract rea!7



.6 That for an! in consi!eration of the a&ree! purchase price of TO %ILLION 29SOS

(23"555"555655'" 2hilippine currency" the mo!e an! manner of payment is as follos7

*6 The initial payment of SI H?NDR9D THO?S*ND 29SOS

(2A55"555655' as )erbally a&ree! by the parties" shall be bro;en !on as

follos7

.6 2.5>"4//6/. shall be pai!" an! as alrea!y pai! bytheBUYERto theSELLERSon %arch 33" ./0>" as stipulate!

un!er theCertification of undertaking!ate! %arch 33" ./0>

an! co)ere! by a chec; of e)en !ate6

36 That the sum of 24/A"15565/ shall be pai! !irectly by

theBUYERto the $an; of 2hilippine Islan!s to anser for the

loan of theSELLERShich as of %arch .1" ./0> amounte!

to 21>B">.56.5" an! for the interest that may accrue! (sic'

from %arch .1" ./0>" up to the time sai! obli&ation oftheSELLERSith the sai! ban; has been settle!" pro)i!e!

hoe)er that the amount in ecess of 24/A"15565/" shall be

char&eable from the time !eposit of theSELLERSith the

aforesai! ban;6

$6 That the balance of ON9 %ILLION <O?R H?NDR9D THO?S*ND

(2."455"555655' 29SOS shall be pai! by theBUYERto theSELLERSin

four (4' eEual Euarterly installments of THR99 H?NDR9D <I<T

THO?S*ND 29SOS (2>15"555655'" the rst to be !ue an! payable on

-une .1" ./0>" an! e)ery Euarter thereafter" until the hole amount is fully

pai!" by these presents promise to sell to sai! $?9R the to (3' parcels of

a&ricultural lan! inclu!in& the rice mill an! the pi&&ery hich are the most

notable impro)ements thereon" situate! at $aran&ay 2uri" San *ntonio

+ue,on" 6 6 6

36 That upon the payment of the total purchase price by theBUYERtheSELLERSbin!

themsel)es to !eli)er to the former a &oo! an! suFcient !ee! of sale an! con)eyance for

the !escribe! to (3' parcels of lan!" free an! clear from all liens an! encumbrances6

>6 That imme!iately upon the eecution of this !ocument" theSELLERSshall !eli)er"

surren!er an! transfer possession of the sai! parcels of lan! inclu!in& all the

impro)ements that may be foun! thereon" to theBUYER" an! the latter shall ta;e o)er

from theSELLERthe possession" operation" control an! mana&ement of the RI#9%ILL

an! 2ICC9R foun! on the aforesai! parcels of lan!6



46 That all payments !ue an! payable un!er this contract shall be e:ecte! in the

resi!ence of theSELLERSlocate! at $aran&ay 2uri" San *ntonio" +ue,on unless another

place shall ha)e been subseEuently !esi&nate! by both parties in ritin&6

1

On %ay .1" ./0>" petitioner On& too; possession of the sub@ect parcels of lan! to&ether ith the

pi&&ery" buil!in&" ricemill" resi!ential house an! other impro)ements thereon6

2ursuant to the contract they eecute!" petitioner pai! respon!ent spouses the sum of

2.5>"4//6/. = by !epositin& it ith the ?nite! #oconut 2lanters $an;6 SubseEuently" petitioner

!eposite! sums of money ith the $an; of 2hilippine Islan!s ($2I'" 3 in accor!ance ith their stipulation

that petitioner pay the loan of respon!ents ith $2I6

To anser for his balance of 2."455"555655 petitioner issue! four (4' post8!ate! %etro $an; chec;s

payable to respon!ent spouses in the amount of 2>15"5555655 each" namely7 #hec; No6 .1BB50 !ate!

-une .1" ./0>" #hec; No6 .1BB5/ !ate! September .1" ./0>" 5 #hec; No6 .1BB.5 !ate! December

.1" ./0> 6 an! #hec; No6 .1BB.. !ate! %arch .1" ./046 7 hen presente! for payment" hoe)er" the

chec;s ere !ishonore! !ue to insuFcient fun!s6 2etitioner promise! to replace the chec;s but faile! to

!o so6 To ma;e matters orse" out of the 24/A"155655 loan of respon!ent spouses ith the $an; of the

2hilippine Islan!s" hich petitioner" as per a&reement" shoul! ha)e pai!" petitioner only mana&e! to

!ole out no more than 2>/>"AB/6A56 hen the ban; threatene! to foreclose the respon!ent spousesP

mort&a&e" they sol! three transformers of the rice mill orth 21."4..655 to pay o: their outstan!in&

obli&ation ith sai! ban;" ith the ;nole!&e an! conformity of petitioner6 2etitioner" in return"

)oluntarily &a)e the spouses authority to operate the rice mill6 9 He" hoe)er" continue! to be in

possession of the to parcels of lan! hile pri)ate respon!ents ere force! to use the rice mill for

resi!ential purposes6

On *u&ust 3" ./01" respon!ent spouses" throu&h counsel" sent petitioner a !eman! letter as;in& for the

return of the properties6 Their !eman! as left unhee!e!" so" on September 3" ./01" they le! ith the

Re&ional Trial #ourt of Lucena #ity" $ranch A5" a complaint for rescission of contract an! reco)ery of

properties ith !ama&es6 Later" hile the case as still pen!in& ith the trial court" petitioner

intro!uce! ma@or impro)ements on the sub@ect properties by constructin& a complete fence ma!e of

hollo bloc;s an! epan!in& the pi&&ery6 These prompte! the respon!ent spouses to as; for a rit of

preliminary in@unction6 10 The trial court &rante! the application an! en@oine! petitioner from intro!ucin&

impro)ements on the properties ecept for repairs611

On -une ." ./0/ the trial court ren!ere! a !ecision" the !ispositi)e portion of hich rea!s as follos7

IN VI9 O< TH9 <OR9COINC" @u!&ment is hereby ren!ere!7

a' Or!erin& that the contract entere! into by plainti: spouses %i&uel J6 Robles an!

*le@an!ra %6 Robles an! the !efen!ant" -aime On& captione! *&reement of 2urchase

an! Sale" mar;e! as 9hibit * set asi!e=



b' Or!erin& !efen!ant" -aime On& to !eli)er the to (3' parcels of lan! hich are the

sub@ect matter of 9hibit * to&ether ith the impro)ements thereon to the spouses

%i&uel J6 Robles an! *le@an!ro %6 Robles=

c' Or!erin& plainti: spouses" %i&uel Robles an! *le@an!ra Robles to return to -aime On&

the sum of 24/B".B/61.=

!' Or!erin& !efen!ant -aime On& to pay the plainti:s the sum of 2.55"555655 aseemplary !ama&es= an!

e' Or!erin& !efen!ant -aime On& to pay the plainti:s spouses %i&uel J6 Robles an!

*le@an!ra Robles the sum of 235"555655 as attorneyPs fees an! liti&ation epenses6

The motion of the plainti: spouses %i&uel J6 Roles an! *le@an!ra Robles for the

appointment of recei)ership is ren!ere! moot an! aca!emic6

SO ORD9R9D6 1=

<rom this !ecision" petitioner appeale! to the #ourt of *ppeals" hich aFrme! the !ecision of the

Re&ional Trial #ourt but !elete! the aar! of eemplary !ama&es6 In aFrmin& the !ecision of the trial

court" the #ourt of *ppeals note! that the failure of petitioner to completely pay the purchase price is a

substantial breach of his obli&ation hich entitles the pri)ate respon!ents to rescin! their contract un!er

*rticle ../. of the Ne #i)il #o!e6 Hence" the instant petition6

*t the outset" it must be state! that the issues raise! by the petitioner are &enerally factual in nature an!

ere alrea!y passe! upon by the #ourt of *ppeals an! the trial court6 Time an! a&ain" e ha)e state!

that it is not the function of the Supreme #ourt to assess an! e)aluate all o)er a&ain the e)i!ence"testimonial an! !ocumentary" a!!uce! by the parties to an appeal" particularly here" such as in the

case at bench" the n!in&s of both the trial court an! the appellate court on the matter coinci!e6 There is

no co&ent reason shon that oul! @ustify the court to !iscar! the factual n!in&s of the to courts

belo an! to superimpose its on6 13

The only pertinent le&al issues raise! hich are orthy of !iscussion are (.' hether the contract

entere! into by the parties may be )ali!ly rescin!e! un!er *rticle ../. of the Ne #i)il #o!e= an! (3'

hether the parties ha! no)ate! their ori&inal contract as to the time an! manner of payment6

2etitioner conten!s that *rticle ../. of the Ne #i)il #o!e is not applicable since he has alrea!y pai!

respon!ent spouses a consi!erable sum an! has therefore substantially complie! ith his obli&ation6

He cites *rticle .>0> instea!" to the e:ect that here specic performance is a)ailable as a reme!y"

rescission may not be resorte! to6

* !iscussion of the aforesai! articles is in or!er6

Rescission" as contemplate! in *rticles .>05"et seq6" of the Ne #i)il #o!e" is a reme!y &rante! by

la to the contractin& parties an! e)en to thir! persons" to secure the reparation of !ama&es cause! to



them by a contract" e)en if this shoul! be )ali!" by restoration of thin&s to their con!ition at the moment

prior to the celebration of the contract6 1 It implies a contract" hich e)en if initially )ali!" pro!uces a

lesion or a pecuniary !ama&e to someone6 15

On the other han!" *rticle ../. of the Ne #i)il #o!e refers to rescission applicable to reciprocal

obli&ations6 Reciprocal obli&ations are those hich arise from the same cause" an! in hich each party

is a !ebtor an! a cre!itor of the other" such that the obli&ation of one is !epen!ent upon the obli&ation of

the other6 16 They are to be performe! simultaneously such that the performance of one is con!itione!

upon the simultaneous fulllment of the other6 Rescission of reciprocal obli&ations un!er *rticle ../. of

the Ne #i)il #o!e shoul! be !istin&uishe! from rescission of contracts un!er *rticle .>0>6 *lthou&h

both presuppose contracts )ali!ly entere! into an! subsistin& an! both reEuire mutual restitution hen

proper" they are not entirely i!entical6

hile *rticle ../. uses the term rescission" the ori&inal term hich as use! in the ol! #i)il #o!e"

from hich the article as base!" as resolution6 17 Resolution is a principal action hich is base! on

breach of a party" hile rescission un!er *rticle .>0> is a subsi!iary action limite! to cases of

rescission for lesion un!er *rticle .>0. of the Ne #i)il #o!e" hich epressly enumerates thefolloin& rescissible contracts7

.6 Those hich are entere! into by &uar!ians hene)er the ar!s hom

they represent su:er lesion by more than one fourth of the )alue of the

thin&s hich are the ob@ect thereof=

36 Those a&ree! upon in representation of absentees" if the latter su:er the

lesion state! in the prece!in& number=

>6 Those un!erta;en in frau! of cre!itors hen the latter cannot in anymanner collect the claims !ue them=

46 Those hich refer to thin&s un!er liti&ation if they ha)e been entere! into

by the !efen!ant ithout the ;nole!&e an! appro)al of the liti&ants or of

competent @u!icial authority=

16 *ll other contracts specially !eclare! by la to be sub@ect to rescission6

Ob)iously" the contract entere! into by the parties in the case at bar !oes not fall un!er

any of those mentione! by *rticle .>0.6 #onseEuently" *rticle .>0> is inapplicable6

%ay the contract entere! into beteen the parties" hoe)er" be rescin!e! base! on

*rticle ../.K

* careful rea!in& of the partiesP *&reement of 2urchase an! Sale shos that it is in the

nature of a contract to sell" as !istin&uishe! from a contract of sale6 In a contract of sale"

the title to the property passes to the )en!ee upon the !eli)ery of the thin& sol!= hile in a

contract to sell" onership is" by a&reement" reser)e! in the )en!or an! is not to pass to



the )en!ee until full payment of the purchase price6 1 In a contract to sell" the payment of

the purchase price is a positi)e suspensi)e con!ition" the failure of hich is not a breach"

casual or serious" but a situation that pre)ents the obli&ation of the )en!or to con)ey title

from acEuirin& an obli&atory force6 19

Respon!ents in the case at bar boun! themsel)es to !eli)er a !ee! of absolute sale an!

clean title co)erin& the to parcels of lan! upon full payment by the buyer of the purchase

price of 23"555"5556556 This promise to sell as sub@ect to the fulllment of the

suspensi)e con!ition of full payment of the purchase price by the petitioner6 2etitioner"

hoe)er" faile! to complete payment of the purchase price6 The non8fulllment of the

con!ition of full payment ren!ere! the contract to sell ine:ecti)e an! ithout force an!

e:ect6 It must be stresse! that the breach contemplate! in *rticle ../. of the Ne #i)il

#o!e is the obli&orPs failure to comply ith an obli&ation6 =0 <ailure to pay" in this instance"

is not e)en a breach but merely an e)ent hich pre)ents the )en!orPs obli&ation to con)ey

title from acEuirin& bin!in& force6 =1 Hence" the a&reement of the parties in the case at

bench may be set asi!e" but not because of a breach on the part of petitioner for failure to

complete payment of the purchase price6 Rather" his failure to !o so brou&ht about asituation hich pre)ente! the obli&ation of respon!ent spouses to con)ey title from

acEuirin& an obli&atory force6

2etitioner insists" hoe)er" that the contract as no)ate! as to the manner an! time of

payment6

e are not persua!e!6 *rticle .3/3 of the Ne #i)il #o!e states that" In or!er that an

obli&ation may be etin&uishe! by another hich substitutes the same" it is imperati)e

that it be so !eclare! in uneEui)ocal terms" or that the ol! an! the ne obli&ations be on

e)ery point incompatible ith each other6

No)ation is ne)er presume!" it must be pro)en as a fact either by epress stipulation of

the parties or by implication !eri)e! from an irreconcilable incompatibility beteen the ol!

an! the ne obli&ation6== 2etitioner cites the folloin& instances as proof that the contract

as no)ate!7 the retrie)al of the transformers from petitionerPs custo!y an! their sale by

the respon!ents to %9R*L#O on the con!ition that the procee!s thereof be accounte!

for by the respon!ents an! !e!ucte! from the price of the contract= the ta;e8o)er by the

respon!ents of the custo!y an! operation of the rice mill= an! the continuous an! re&ular

ith!raals by respon!ent %i&uel Robles of installment sums per )ouchers (9hs6 0 to4B' on the con!ition that these installments be cre!ite! to petitionerPs account an!

!e!ucte! from the balance of the purchase price6

#ontrary to petitionerPs claim" recor!s sho that the parties ne)er e)en inten!e! to no)ate

their pre)ious a&reement6 It is true that petitioner pai! respon!ents small sums of money

amountin& to 240"A05655" in contra)ention of the manner of payment stipulate! in their

contract6 These installments ere" hoe)er" ob@ecte! to by respon!ent spouses" an!

petitioner replie! that these represente! the interest of the principal amount hich he



oe! them6 =3 Recor!s further sho that petitioner a&ree! to the sale of %9R*L#O

transformers by pri)ate respon!ents to pay for the balance of their subsistin& loan ith the

$an; of 2hilippine Islan!s6 2etitionerPs letter of authori,ation rea!s7

?n!er this authority" it is mutually un!erstoo! that hate)er payment recei)e! from

%9R*L#O as payment to the transfromers ill be consi!ere! as partial payment of theun!ersi&ne!Ps obli&ation to %r6 an! %rs6 %i&uel J6 Robles6

The same ill be utili,e! as partial payment to eistin& loan ith the $an; of 2hilippine

Islan!s6

It is also mutually un!erstoo! that this payment to the $an; of 2hilippine Islan!s ill be

reimburse! to %r6 an! %rs6 %i&uel J6 Robles by the un!ersi&ne!6 [9mphasis supplie!] =

It shoul! be note! that hile it as6 a&ree! that part of the purchase price in the sum of

24/A"155655 oul! be !irectly !eposite! by petitioner to the $an; of 2hilippine Islan!s to

anser for the loan of respon!ent spouses" petitioner only mana&e! to !eposit

2>/>"AB/6A56 hen the ban; threatene! to foreclose the properties" petitioner apparently

coul! not e)en raise the sum nee!e! to forestall any action on the part of the ban;6

#onseEuently" he authori,e! respon!ent spouses to sell the three (>' transformers6

Hoe)er" althou&h the parties a&ree! to cre!it the procee!s from the sale of the

transformers to petitionerPs obli&ation" he as suppose! to reimburse the same later to

respon!ent spouses6 This can only mean that there as ne)er an intention on the part of

either of the parties to no)ate petitionerPs manner of payment6

2etitioner conten!s that the parties )erbally a&ree! to no)ate the manner of payment

hen respon!ent spouses propose! to operate the rice mill on the con!ition that they ill

account for its earnin&s6 e n! that this is unsubstantiate! by the e)i!ence! on the

recor!6 The tenor of his letter !ate! *u&ust .3" ./04 to respon!ent spouses" in fact"

shos that petitioner ha! a little misun!erstan!in& ith respon!ent spouses hom he

as e)i!ently tryin& to appease by authori,in& them to continue temporarily ith the

operation of the rice mill6 #learly" hile petitioner mi&ht ha)e ante! to no)ate the ori&inal

a&reement as to his manner of payment" the recor!s are bereft of e)i!ence that

respon!ent spouses illin&ly a&ree! to mo!ify their pre)ious arran&ement6

In or!er for no)ation to ta;e place" the concurrence of the folloin& reEuisites is

in!ispensable7 (.' there must be a pre)ious )ali! obli&ation= (3' there must be an

a&reement of the parties concerne! to a ne contract= (>' there must be the

etin&uishment of the ol! contract= an! (4' there must be the )ali!ity of the ne

contract6 =5 The aforesai! reEuisites are not foun! in the case at bench6 The subseEuent

acts of the parties har!ly !emonstrate their intent to !issol)e the ol! obli&ation as a



consi!eration for the emer&ence of the ne one6 e repeat to the point of triteness"

no)ation is ne)er presume!" there must be an epress intention to no)ate6

*s re&ar!s the impro)ements intro!uce! by petitioner to the premises an! for hich he

claims reimbursement" e see no reason to !epart from the rulin& of the trial court an! the

appellate court that petitioner is a buil!er in ba! faith6 He intro!uce! the impro)ements on

the premises ;noin& fully ell that he has not pai! the consi!eration of the contract in ful

an! o)er the )i&orous ob@ections of respon!ent spouses6 %oreo)er" petitioner intro!uce!

ma@or impro)ements on the premises e)en hile the case a&ainst him as pen!in&

before the trial court6

The aar! of eemplary !ama&es as correctly !elete! by the #ourt of *ppeals in as

much as no moral" temperate" liEui!ate! or compensatory !ama&es in a!!ition to

eemplary !ama&es ere aar!e!6

H9R9<OR9" the !ecision ren!ere! by the #ourt of *ppeals is hereby *<<IR%9D ith

the %ODI<I#*TION that respon!ent spouses are or!ere! to return to petitioner the sumof 240"A05655 in a!!ition to the amounts alrea!y aar!e!6 #osts a&ainst

petitioner61âwphi1.nêt

SO ORD9R9D6

Davide, Jr., C.J., Melo, Kapunan and Pardo, JJ., concur.

16

G.R. No. L/11=7 @& 31, 1961

*ERNANO A. GAITE, plainti:8appellee"

)s6

I!ABELO *ONACIER, GEORGE RAO<ER, LARA MINE! !MELTING CO., INC.,!EGUNINA >I>A!, *RNACI!CO ANTE, ACI*ICO E!CANOR '() *ERNANO

T, !efen!ants8appellants6

Alejo Mabanag for plaintiff-appellee.

Simplicio U. Tapia, Antonio Barredo and Pedro Guevarra for defendants-appellants.

REE!, @.B.L.,J.4

This appeal comes to us !irectly from the #ourt of <irst Instance because the claims in)ol)e! a&&re&ate

more than 2355"5556556



only hen there ha! been an actual sale of iron ore by the Larap %ines Smeltin& #o6 for an amount of

not less then 2A1"555655" an! that" furthermore" the liability of sai! surety company oul! automatically

epire on December 0" ./116 $oth bon!s ere attache! to the Re)ocation of 2oer of *ttorney an!

#ontract" 9hibit *" an! ma!e inte&ral parts thereof6

On the same !ay that <onacier re)o;e! the poer of attorney he &a)e to Caite an! the to eecute!

an! si&ne! the Re)ocation of 2oer of *ttorney an! #ontract" 9hibit *" <onacier entere! into a

#ontract of %inin& Operation" ce!in&" transferrin&" an! con)eyin& unto the Larap %ines an! Smeltin&

#o6" Inc6 the ri&ht to !e)elop" eploit" an! eplore the minin& claims in Euestion" to&ether ith the

impro)ements therein an! the use of the name Larap Iron %ines an! its &oo! ill" in consi!eration of

certain royalties6 <onacier li;eise transferre!" in the same !ocument" the complete title to the

approimately 34"555 tons of iron ore hich he acEuire! from Caite" to the Larap Smeltin& #o6" in

consi!eration for the si&nin& by the company an! its stoc;hol!ers of the surety bon!s !eli)ere! by

<onacier to Caite (Recor! on *ppeal" pp6 038/4'6

?p to December 0" ./11" hen the bon! 9hibit $ epire! ith respect to the <ar 9astern Surety an!

Insurance #ompany" no sale of the approimately 34"555 tons of iron ore ha! been ma!e by the Larap%ines Smeltin& #o6" Inc6" nor ha! the 2A1"555655 balance of the price of sai! ore been pai! to Caite

by <onacier an! his sureties payment of sai! amount" on the theory that they ha! lost ri&ht to ma;e use

of the perio! &i)en them hen their bon!" 9hibit $ automatically epire! (9hibits # to #834'6 *n!

hen <onacier an! his sureties faile! to pay as !eman!e! by Caite" the latter le! the present

complaint a&ainst them in the #ourt of <irst Instance of %anila (#i)il #ase No6 3/>.5' for the payment

of the 2A1"555655 balance of the price of the ore" conseEuential !ama&es" an! attorneyPs fees6

*ll the !efen!ants ecept <rancisco Dante set up the uniform !efense that the obli&ation sue! upon by

Caite as sub@ect to a con!ition that the amount of 2A1"555655 oul! be payable out of the rst letter of

cre!it co)erin& the rst shipment of iron ore an!Gor the rst amount !eri)e! from the local sale of the iron

ore by the Larap %ines Smeltin& #o6" Inc6= that up to the time of the lin& of the complaint" no sale of

the iron ore ha! been ma!e" hence the con!ition ha! not yet been fullle!= an! that conseEuently" the

obli&ation as not yet !ue an! !eman!able6 Defen!ant <onacier also conten!e! that only B"1B> tons of

the estimate! 34"555 tons of iron ore sol! to him by Caite as actually !eli)ere!" an! counterclaime!

for more than 2355"555655 !ama&es6

*t the trial of the case" the parties a&ree! to limit the presentation of e)i!ence to to issues7

(.' hether or not the obli&ation of <onacier an! his sureties to pay Caite 2A1"555655 become !ue an!!eman!able hen the !efen!ants faile! to rene the surety bon! un!erritten by the <ar 9astern

Surety an! Insurance #o6" Inc6 (9hibit $'" hich epire! on December 0" ./11= an!

(3' hether the estimate! 34"555 tons of iron ore sol! by plainti: Caite to !efen!ant <onacier ere

actually in eistence in the minin& claims hen these parties eecute! the Re)ocation of 2oer of

*ttorney an! #ontract" 9hibit *6



On the rst Euestion" the loer court hel! that the obli&ation of the !efen!ants to pay plainti: the

2A1"555655 balance of the price of the approimately 34"555 tons of iron ore as one ith a term7 i6e6"

that it oul! be pai! upon the sale of suFcient iron ore by !efen!ants" such sale to be e:ecte! ithin

one year or before December 0" ./11= that the &i)in& of security as a con!ition prece!ent to CaitPs

&i)in& of cre!it to !efen!ants= an! that as the latter faile! to put up a &oo! an! suFcient security in lieu

of the <ar 9astern Surety bon! (9hibit $' hich epire! on December 0" ./11" the obli&ation became

!ue an! !eman!able un!er *rticle ../0 of the Ne #i)il #o!e6

*s to the secon! Euestion" the loer court foun! that plainti: Caite !i! ha)e approimately 34"555 tons

of iron ore at the minin& claims in Euestion at the time of the eecution of the contract 9hibit *6

-u!&ment as" accor!in&ly" ren!ere! in fa)or of plainti: Caite or!erin& !efen!ants to pay him" @ointly

an! se)erally" 2A1"555655 ith interest at AU per annum from December /" ./11 until payment" plus

costs6 <rom this @u!&ment" !efen!ants @ointly appeale! to this #ourt6

Durin& the pen!ency of this appeal" se)eral inci!ental motions ere presente! for resolution7 a motion

to !eclare the appellants Larap %ines Smeltin& #o6" Inc6 an! Ceor&e Jra;oer in contempt" le! byappellant <onacier" an! to motions to !ismiss the appeal as ha)in& become aca!emic an! a motion

for ne trial an!Gor to ta;e @u!icial notice of certain !ocuments" le! by appellee Caite6 The motion for

contempt is unmeritorious because the main alle&ation therein that the appellants Larap %ines

Smeltin& #o6" Inc6 an! Jra;oer ha! sol! the iron ore here in Euestion" hich alle&e!ly is property in

liti&ation" has not been substantiate!= an! e)en if true" !oes not ma;e these appellants &uilty of

contempt" because hat is un!er liti&ation in this appeal is appellee CaitePs ri&ht to the payment of the

balance of the price of the ore" an! not the iron ore itself6 *s for the se)eral motions presente! by

appellee Caite" it is unnecessary to resol)e these motions in )ie of the results that e ha)e reache! in

this case" hich e shall hereafter !iscuss6

The main issues presente! by appellants in this appeal are7

(.' that the loer court erre! in hol!in& that the obli&ation of appellant <onacier to pay appellee Caite

the 2A1"555655 (balance of the price of the iron ore in Euestion'is one ith a perio! or term an! not one

ith a suspensi)e con!ition" an! that the term epire! on December 0" ./11= an!

(3' that the loer court erre! in not hol!in& that there ere only .5"/1461 tons in the stoc;piles of iron

ore sol! by appellee Caite to appellant <onacier6

The rst issue in)ol)es an interpretation of the folloin& pro)ision in the contract 9hibit *7

B6 That <ernan!o Caite or Larap Iron %ines hereby transfers to Isabelo <6 <onacier all his ri&hts

an! interests o)er the 34"555 tons of iron ore" more or less" abo)e8referre! to to&ether ith all his

ri&hts an! interests to operate the mine in consi!eration of the sum of S9V9NT8<IV9

THO?S*ND 29SOS (2B1"555655' hich the latter bin!s to pay as follos7

a6 T9N THO?S*ND 29SOS (2.5"555655' ill be pai! upon the si&nin& of this a&reement6



b6 The balance of SIT8<IV9 THO?S*ND 29SOS (2A1"555655'ill be pai! from an! out of the

rst letter of cre!it co)erin& the rst shipment of iron ore ma!e by the Larap %ines Smeltin&

#o6" Inc6" its assi&ns" a!ministrators" or successors in interest6

e n! the court belo to be le&ally correct in hol!in& that the shipment or local sale of the iron ore is

not a con!ition prece!ent (or suspensi)e' to the payment of the balance of 2A1"555655" but as only a

suspensi)e perio! or term6 hat characteri,es a con!itional obli&ation is the fact that its eFcacy or

obli&atory force (as !istin&uishe! from its !eman!ability' is subor!inate! to the happenin& of a future

an! uncertain e)ent= so that if the suspensi)e con!ition !oes not ta;e place" the parties oul! stan! as

if the con!itional obli&ation ha! ne)er eiste!6 That the parties to the contract 9hibit * !i! not inten!

any such state of thin&s to pre)ail is supporte! by se)eral circumstances7

.' The or!s of the contract epress no contin&ency in the buyerPs obli&ation to pay7 The balance of

Sity8<i)e Thousan! 2esos (2A1"555655'will be paidout of the rst letter of cre!it co)erin& the rst

shipment of iron ores 6 6 6 etc6 There is no uncertainty that the payment ill ha)e to be ma!e sooner or

later= hat is un!etermine! is merely theexact dateat hich it ill be ma!e6 $y the )ery terms of the

contract" therefore" the eistence of the obli&ation to pay is reco&ni,e!= onlyitsmaturityordemandabilityis !eferre!6

3' * contract of sale is normally commutati)e an! onerous7 not only !oes each one of the parties

assume a correlati)e obli&ation (the seller to !eli)er an! transfer onership of the thin& sol! an! the

buyer to pay the price'"but each party anticipates performance by the other from the )ery start6 hile in

a sale the obli&ation of one party can be lafully subor!inate! to an uncertain e)ent" so that the other

un!erstan!s that he assumes the ris; of recei)in& nothin& for hat he &i)es (as in the case of a sale of

hopes or epectations"emptio spei'" it is not in the usual course of business to !o so= hence" the

contin&ent character of the obli&ation must clearly appear6 Nothin& is foun! in the recor! to e)i!ence

that Caite !esire! or assume! to run the ris; of losin& his ri&ht o)er the ore ithout &ettin& pai! for it" or

that <onacier un!erstoo! that Caite assume! any such ris;6 This is pro)e! by the fact that Caite

insiste! on a bon! a to &uarantee payment of the 2A1"555655" an not only upon a bon! by <onacier" the

Larap %ines Smeltin& #o6" an! the companyPs stoc;hol!ers" but also on one by a surety company=

an! the fact that appellants !i! put up such bon!s in!icates that they a!mitte! the !enite eistence of

their obli&ation to pay the balance of 2A1"5556556

>' To subor!inate the obli&ation to pay the remainin& 2A1"555655 to the sale or shipment of the ore as a

con!ition prece!ent" oul! be tantamount to lea)in& the payment at the !iscretion of the !ebtor" for the

sale or shipment coul! not be ma!e unless the appellants too; steps to sell the ore6 *ppellants oul!thus be able to postpone payment in!enitely6 The !esireability of a)oi!in& such a construction of the

contract 9hibit * nee!s no stressin&6

4' *ssumin& that there coul! be !oubt hether by the or!in& of the contract the parties in!ente! a

suspensi)e con!ition or a suspensi)e perio! (dies ad quem' for the payment of the 2A1"555655" the

rules of interpretation oul! incline the scales in fa)or of the &reater reciprocity of interests" since sale

is essentially onerous6 The #i)il #o!e of the 2hilippines" *rticle .>B0" para&raph ." in ne" pro)i!es7



If the contract is onerous" the !oubt shall be settle! in fa)or of the &reatest reciprocity of

interests6

an! there can be no Euestion that &reater reciprocity obtains if the buyerP obli&ation is !eeme! to be

actually eistin&" ith only its maturity (!ue !ate' postpone! or !eferre!" that if such obli&ation ere

)iee! as non8eistent or not bin!in& until the ore as sol!6

The only rational )ie that can be ta;en is that the sale of the ore to <onacier as a sale on cre!it" an!not an aleatory contract here the transferor" Caite" oul! assume the ris; of not bein& pai! at all= an!

that the pre)ious sale or shipment of the ore as not a suspensi)e con!ition for the payment of the

balance of the a&ree! price" but as inten!e! merely to the future !ate of the payment6

This issue settle!" the net point of inEuiry is hether appellants" <onacier an! his sureties" still ha)e

the ri&ht to insist that Caite shoul! ait for the sale or shipment of the ore before recei)in& payment= or"

in other or!s" hether or not they are entitle! to ta;e full a!)anta&e of the perio! &rante! them for

ma;in& the payment6

e a&ree ith the court belo that the appellant ha)e forfeite! the ri&ht court belo that the appellants

ha)e forfeite! the ri&ht to compel Caite to ait for the sale of the ore before recei)in& payment of the

balance of 2A1"555655" because of their failure to rene the bon! of the <ar 9astern Surety #ompany or

else replace it ith an eEui)alent &uarantee6 The epiration of the bon!in& companyPs un!erta;in& on

December 0" ./11 substantially re!uce! the security of the )en!orPs ri&hts as cre!itor for the unpai!

2A1"555655" a security that Caite consi!ere! essential an! upon hich he ha! insiste! hen he

eecute! the !ee! of sale of the ore to <onacier (9hibit *'6 The case sEuarely comes un!er

para&raphs 3 an! > of *rticle ../0 of the #i)il #o!e of the 2hilippines7

*RT6 ../06 The !ebtor shall lose e)ery ri&ht to ma;e use of the perio!7

(.' 6 6 6

(3' hen he !oes not furnish to the cre!itor the &uaranties or securities hich he has promise!6

(>' hen by his on acts he has impaire! sai! &uaranties or securities after their establishment"

an! hen throu&h fortuitous e)ent they !isappear" unless he imme!iately &i)es ne ones eEually

satisfactory6

*ppellantsP failure to rene or eten! the surety companyPs bon! upon its epiration plainly impaire! the

securities &i)en to the cre!itor (appellee Caite'" unless imme!iately renee! or replace!6

There is no merit in appellantsP ar&ument that CaitePs acceptance of the surety companyPs bon! ith full

;nole!&e that on its face it oul! automatically epire ithin one year as a ai)er of its reneal after

the epiration !ate6 No such ai)er coul! ha)e been inten!e!" for Caite stoo! to lose an! ha! nothin&

to &ain barely= an! if there as any" it coul! be rationally eplaine! only if the appellants ha! a&ree! to

sell the ore an! pay Caite before the surety companyPs bon! epire! on December 0" ./116 $ut in the



latter case the !efen!ants8appellantsP obli&ation to pay became absolute after one year from the

transfer of the ore to <onacier by )irtue of the !ee! 9hibit *66

*ll the alternati)es" therefore" lea! to the same result7 that Caite acte! ithin his ri&hts in !eman!in&

payment an! institutin& this action one year from an! after the contract (9hibit *' as eecute!"

either because the appellant !ebtors ha! impaire! the securities ori&inally &i)en an! thereby forfeite!

any further time ithin hich to pay= or because the term of payment as ori&inally of no more than one

year" an! the balance of 2A1"555655 became !ue an! payable thereafter6

#omin& no to the secon! issue in this appeal" hich is hether there ere really 34"555 tons of iron

ore in the stoc;piles sol! by appellee Caite to appellant <onacier" an! hether" if there ha! been a

short8!eli)ery as claime! by appellants" they are entitle! to the payment of !ama&es" e must" at the

outset" stress to thin&s7first" that this is a case of a sale of a specic mass of fun&ible &oo!s for a

sin&le price or a lump sum" the Euantity of 34"555 tons of iron ore" more or less" state! in the contract

9hibit *" bein& a mere estimate by the parties of the total tonna&e ei&ht of the mass= an!second"

that the e)i!ence shos that neither of the parties ha! actually measure! of ei&he! the mass" so that

they both trie! to arri)e at the total Euantity by ma;in& an estimate of the )olume thereof in cubic metersan! then multiplyin& it by the estimate! ei&ht per ton of each cubic meter6

The sale beteen the parties is a sale of a specic mass or iron ore because no pro)ision as ma!e in

their contract for the measurin& or ei&hin& of the ore sol! in or!er to complete or perfect the sale" nor

as the price of 2B1"555"55 a&ree! upon by the parties base! upon any such measurement6(see *rt6

.405" secon! par6" Ne #i)il #o!e'6 The sub@ect matter of the sale is" therefore" a !eterminate ob@ect"

the mass" an! not the actual number of units or tons containe! therein" so that all that as reEuire! of

the seller Caite as to !eli)er in &oo! faith to his buyer all of the ore foun! in the mass" notithstan!in&

that the Euantity !eli)ere! is less than the amount estimate! by them (%obile %achinery Supply #o6"

Inc6 )s6 or; Oilel! Sal)a&e #o6" Inc6 .B. So6 0B3" applyin& art6 341/ of the Louisiana #i)il #o!e'6

There is no char&e in this case that Caite !i! not !eli)er to appellants all the ore foun! in the stoc;piles

in the minin& claims in Euestions= Caite ha!" therefore" complie! ith his promise to !eli)er" an!

appellants in turn are boun! to pay the lump price6

$ut assumin& that plainti: Caite un!ertoo; to sell an! appellants un!ertoo; to buy" not a !enite mass"

but approimately 34"555 tons of ore" so that any substantial !i:erence in this Euantity !eli)ere! oul!

entitle the buyers to reco)er !ama&es for the short8!eli)ery" as there really a short8!eli)ery in this

caseK

e thin; not6 *s alrea!y state!" neither of the parties ha! actually measure! or ei&he! the hole

mass of ore cubic meter by cubic meter" or ton by ton6 $oth parties pre!icate their respecti)e claims

only upon an estimate! number of cubic meters of ore multiplie! by the a)era&e tonna&e factor per

cubic meter6

No" appellee Caite asserts that there as a total of B">B1 cubic meters in the stoc;piles of ore that he

sol! to <onacier" hile appellants conten! that by actual measurement" their itness #irpriano

%anlaM&it foun! the total )olume of ore in the stoc;piles to be only A6A5/ cubic meters6 *s to the



a)era&e ei&ht in tons per cubic meter" the parties are a&ain in !isa&reement" ith appellants claimin&

the correct tonna&e factor to be 36.0 tons to a cubic meter" hile appellee Caite claims that the correct

tonna&e factor is about >6B6

In the face of the conict of e)i!ence" e ta;e as the most reliable estimate of the tonna&e factor of iron

ore in this case to be that ma!e by Leopol!o <6 *ba!" chief of the %ines an! %etallur&ical Di)ision of

the $ureau of %ines" a &o)ernment pensiona!o to the States an! a minin& en&ineerin& &ra!uate of the

?ni)ersities of Ne)a!a an! #alifornia" ith almost 33 years of eperience in the $ureau of %ines6 This

itness place! the tonna&e factor of e)ery cubic meter of iron ore at beteen > metric tons as minimum

to 1 metric tons as maimum6 This estimate" in turn" closely correspon!s to the a)era&e tonna&e factor

of >6> a!opte! in his correcte! report (9hibits << an! <<8.' by en&ineer Nemesio Camatero" ho

as sent by the $ureau of %ines to the minin& claims in)ol)e! at the reEuest of appellant Jra;oer"

precisely to ma;e an oFcial estimate of the amount of iron ore in CaitePs stoc;piles after the !ispute

arose6

9)en &rantin&" then" that the estimate of A"A5/ cubic meters of ore in the stoc;piles ma!e by appellantPs

itness #ipriano %anlaM&it is correct" if e multiply it by the a)era&e tonna&e factor of >6> tons to acubic meter" the pro!uct is 3."05/6B tons" hich is not )ery far from the estimate of 34"555 tons ma!e

by appellee Caite" consi!erin& that actual ei&hin& of each unit of the mass as practically impossible"

so that a reasonable percenta&e of error shoul! be alloe! anyone ma;in& an estimate of the eact

Euantity in tons foun! in the mass6 It must not be for&otten that the contract 9hibit * epressly state!

the amount to be 34"555 tons"more or less6 (ch6 2ine Ri)er Lo&&in& Impro)ement #o6 )s ?6S6" 3B/"

4A L6 9!6 ..A4'6

There as" conseEuently" no short8!eli)ery in this case as oul! entitle appellants to the payment of

!ama&es" nor coul! Caite ha)e been &uilty of any frau! in ma;in& any misrepresentation to appellants

as to the total Euantity of ore in the stoc;piles of the minin& claims in Euestion" as char&e! by

appellants" since CaitePs estimate appears to be substantially correct6

H9R9<OR9" n!in& no error in the !ecision appeale! from" e hereby aFrm the same" ith costs

a&ainst appellants6

Bengzon, C.J., Padilla, Labrador, Concepcion, Barrera, Paredes, Dizon, De Leon and Natividad,

JJ.,concur6

A6

G.R. No. 1111 ece:ber 7, 1995



TEOORO ACA, petitioner"

)s6

COURT O* AEAL! '() E E LO! REE!, respon!ents6

AILLA,J.:

This is a petition for re)ie oncertiorariof the !ecision 1 of the #ourt of *ppeals" 3n! Di)ision" in #*8

C6R6 No6 >A.BB" hich aFrme! the !ecision = of the Re&ional Trial #ourt of Himamaylan" Ne&ros

Occi!ental hol!in& that pri)ate respon!ent 9!y !e los Reyes ha! acEuire! onership of Lot No6 ..>5 of

the #a!astral Sur)ey of Hini&aran" Ne&ros Occi!ental base! on a !ocument entitle! Declaration of

Heirship an! ai)er of Ri&hts" an! or!erin& the !ispossession of petitioner as leasehol! tenant of the

lan! for failure to pay rentals6

The facts of the case are as follos7

The title to Lot No6 ..>5 of the #a!astral Sur)ey of Hini&aran" Ne&ros Occi!ental as e)i!ence! by

O#T No6 R8.3.B/6 The lot has an area of .>"B35 sE6 meters6 The title as issue! an! is re&istere! in

the name of spouses Santia&o VasEue, an! Loren,a Oruma6 *fter both spouses !ie!" their only son

<eliberto inherite! the lot6 In ./B1" <eliberto eecute! a !uly notari,e! !ocument entitle! Declaration

of Heirship an! Dee! of *bsolute Sale in fa)or of #osme 2i!o6

The e)i!ence before the courta quoestablishe! that since ./A5" petitioner Teo!oro *cap ha! been the

tenant of a portion of the sai! lan!" co)erin& an area of nine thousan! )e hun!re! (/"155' meters6

hen onership as transferre! in ./B1 by <eliberto to #osme 2i!o" *cap continue! to be the

re&istere! tenant thereof an! reli&iously pai! his leasehol! rentals to 2i!o an! thereafter" upon 2i!oPs!eath" to his i!o Laurenciana6

The contro)ersy be&an hen 2i!o !ie! intestate an! on 3B No)ember ./0." his sur)i)in& heirs

eecute! a notari,e! !ocument !enominate! as Declaration of Heirship an! ai)er of Ri&hts of Lot

No6 ..>5 Hini&aran #a!astre" herein they !eclare!= to Euote its pertinent portions" that7

6 6 6 #osme 2i!o !ie! in the %unicipality of Hini&aran" Ne&ros Occi!ental" he !ie! intestate

an! ithout any ;non !ebts an! obli&ations hich the sai! parcel of lan! is (sic' hel!

liable6

That #osme 2i!o as sur)i)e! by hisGher le&itimate heirs" namely7 L*?R9N#I*N*

2IDO" ife" 9L" 9RVIN" 9L%9R" an! 9L9#HOR all surname! 2IDO= chil!ren=

That in)o;in& the pro)ision of Section ." Rule B4 of the Rules of #ourt" the abo)e8

mentione! heirs !o hereby !eclare unto [sic] oursel)es the only heirs of the late #osme

2i!o an! that e hereby a!@u!icate unto oursel)es the abo)e8mentione! parcel of lan! in

eEual shares6



On 35 *u&ust .//." the loer court ren!ere! a !ecision in fa)or of pri)ate respon!ent" the !ispositi)e

part of hich rea!s7

H9R9<OR9" premises consi!ere!" the #ourt ren!ers @u!&ment in fa)or of the plainti:"

9!y !e los Reyes" an! a&ainst the !efen!ant" Teo!oro *cap" or!erin& the folloin&" to

it7

.6 Declarin& forfeiture of !efen!antPs preferre! ri&ht to issuance of a #erticate of Lan!Transfer un!er 2resi!ential Decree No6 3B an! his farmhol!in&s=

36 Or!erin& the !efen!ant Teo!oro *cap to !eli)er possession of sai! farm to plainti:"

an!=

>6 Or!erin& the !efen!ant to pay 21"555655 as attorneyPs fees" the sum of 2."555655 as

epenses of liti&ation an! the amount of 2.5"555655 as actual !ama&es6 5

In arri)in& at the abo)e8mentione! @u!&ment" the trial court state! that the e)i!ence ha! establishe!

that the sub@ect lan! as sol! by the heirs of #osme 2i!o to pri)ate respon!ent6 This is clear from the

folloin& !isEuisitions containe! in the trial courtPs si (A' pa&e !ecision7

There is no !oubt that !efen!ant is a re&istere! tenant of #osme 2i!o6 Hoe)er" hen

the latter !ie! their tenancy relations chan&e! since onership of sai! lan! as passe!

on to his heirs ho" by eecutin& aDeed of Sale" hich !efen!ant a!mitte! in his aF!a)it"

li;eise passe! on their onership of Lot ..>5 to herein plainti: (pri)ate respon!ent'6 *s

oner hereof" plainti: has the ri&ht to !eman! payment of rental an! the tenant is

obli&ate! to pay rentals !ue from the time !eman! is ma!e6 6 6 6 6

#ertainly" thesaleof the 2i!o family of Lot ..>5 to herein plainti: !oes not of itself

etin&uish the relationship6 There as only a chan&e of the personality of the lessor in the

person of herein plainti: 9!y !e los Reyes ho bein& the purchaser or transferee"

assumes the ri&hts an! obli&ations of the former lan!oner to the tenant Teo!oro *cap"

herein !efen!ant6 7

*&&rie)e!" petitioner appeale! to the #ourt of *ppeals" imputin& error to the loer court hen it rule!

that pri)ate respon!ent acEuire! onership of Lot No6 ..>5 an! that he" as tenant" shoul! pay rentals

to pri)ate respon!ent an! that failin& to pay the same from ./0> to ./0B" his ri&ht to a certicate of lan!

transfer un!er 26D6 3B as !eeme! forfeite!6

The #ourt of *ppeals brushe! asi!e petitionerPs ar&ument that the Declaration of Heirship an! ai)er

of Ri&hts (9hibit D'" the !ocument relie! upon by pri)ate respon!ent to pro)e his onership to the lot"

as eclu!e! by the loer court in its or!er !ate! 3B *u&ust .//56 The or!er in!ee! note! that the

!ocument as not i!entie! by #osme 2i!oPs heirs an! as not re&istere! ith the Re&istry of Dee!s of

Ne&ros Occi!ental6 *ccor!in& to respon!ent court" hoe)er" since the Declaration of Heirship an!



In the rst place" an asserte! ri&ht or claim to onership or a real ri&ht o)er a thin& arisin& from a

@uri!ical act" hoe)er @ustie!" is not per sesuFcient to &i)e rise to onership o)er theres6 That ri&ht or

title must be complete! by fulllin& certain con!itions impose! by la6 Hence" onership an! real ri&hts

are acEuire! only pursuant to a le&al mo!e or process6 hile title is the @uri!ical @ustication" mo!e is the

actual process of acEuisition or transfer of onership o)er a thin& in Euestion6

?n!er *rticle B.3 of the #i)il #o!e" the mo!es of acEuirin& onership are &enerally classie! into to

(3' classes" namely" theoriginal mode(i6e6" throu&h occupation" acEuisiti)e prescription" la or

intellectual creation' an! thederivative mode(i6e6" throu&h successionmortis causaor tra!ition as a

result of certain contracts" such as sale" barter" !onation" assi&nment or mutuum'6

In the case at bench" the trial court as ob)iously confuse! as to the nature an! e:ect of the Declaration

of Heirship an! ai)er of Ri&hts" eEuatin& the same ith a contract (!ee!' of sale6 They are not the

same6

In a #ontract of Sale" one of the contractin& parties obli&ates himself to transfer the onership of an! to

!eli)er a !eterminate thin&" an! the other party to pay a price certain in money or its eEui)alent6 9

?pon the other han!" a !eclaration of heirship an! ai)er of ri&hts operates as a public instrument

hen le! ith the Re&istry of Dee!s hereby the intestate heirs a!@u!icate an! !i)i!e the estate left by

the !ece!ent amon& themsel)es as they see t6 It is in e:ect an etra@u!icial settlement beteen the

heirs un!er Rule B4 of the Rules of #ourt6 10

Hence" there is a mar;e! !i:erence beteen asaleof here!itary ri&hts an! awaiverof here!itary

ri&hts6 The rst presumes the eistence of a contract or !ee! of sale beteen the parties6 11 The secon!

is" technically spea;in&" a mo!e of etinction of onership here there is an ab!ication or intentional

relinEuishment of a ;non ri&ht ith ;nole!&e of its eistence an! intention to relinEuish it" in favor ofother persons who are co-heirs in the succession6 1= 2ri)ate respon!ent" bein& then a stran&er to the

succession of #osme 2i!o" cannot conclusi)ely claim onership o)er the sub@ect lot on the sole basis of

the ai)er !ocument hich neither recites the elements of either a sale" 13 or a !onation" 1 or any other

!eri)ati)e mo!e of acEuirin& onership6

+uite surprisin&ly" both the trial court an! public respon!ent #ourt of *ppeals conclu!e! that a sale

transpire! beteen #osme 2i!oPs heirs an! pri)ate respon!ent an! that petitioner acEuire! actual

;nole!&e of sai! sale hen he as summone! by the %inistry of *&rarian Reform to !iscuss pri)ate

respon!entPs claim o)er the lot in Euestion6 This conclusion has no basis both in fact an! in la6

On recor!" 9hibit D" hich is the Declaration of Heirship an! ai)er of Ri&hts asexcludedby the

trial court in its or!er !ate!27 August 1990because the !ocument as neither re&istere! ith the

Re&istry of Dee!s nor i!entie! by the heirs of #osme 2i!o6 There is no shoin& that pri)ate

respon!ent ha! the same !ocument attache! to or ma!e part of the recor!6 hat the trial court

a!mitte! as *nne 9" a notice of a!)erse claim le! ith the Re&istry of Dee!s hich containe! the

Declaration of Heirship ith ai)er of ri&hts an! as annotate! at the bac; of the Ori&inal #erticate of

Title to the lan! in Euestion6



* notice of a!)erse claim" by its nature" !oes not hoe)er pro)e pri)ate respon!entPs onership o)er

the tenante! lot6 * notice of a!)erse claim is nothin& but a notice of a claim a!)erse to the re&istere!

oner" the )ali!ity of hich is yet to be establishe! in court at some future !ate" an! is no better than a

notice oflis pendenshich is a notice of a case alrea!y pen!in& in court6 15

It is to be note! that hile the eistence of sai! a!)erse claim as !uly pro)en" there is no e)i!ence

hatsoe)er that a !ee! of sale as eecute! beteen #osme 2i!oPs heirs an! pri)ate respon!ent

transferrin& the ri&hts of 2i!oPs heirs to the lan! in fa)or of pri)ate respon!ent6 2ri)ate respon!entPs

ri&ht or interest therefore in the tenante! lot remains an a!)erse claim hich cannot by itself be

suFcient to cancel the O#T to the lan! an! title the same in pri)ate respon!entPs name6

#onseEuently" hile the transaction beteen 2i!oPs heirs an! pri)ate respon!ent may be bin!in&

on both parties" the ri&ht of petitioner as a re&istere! tenant to the lan! cannot be perfunctorily

forfeite! on a mere alle&ation of pri)ate respon!entPs onership ithout the correspon!in& proof

thereof6

2etitioner ha! been a re&istere! tenant in the sub@ect lan! since ./A5 an! reli&iously pai! lease rentalsthereon6 In his min!" he continue! to be the re&istere! tenant of #osme 2i!o an! his family (after 2i!oPs

!eath'" e)en if in ./03" pri)ate respon!ent alle&e!ly informe! petitioner that he ha! become the ne

oner of the lan!6

?n!er the circumstances" petitioner may ha)e" in &oo! faith" assume! such statement of pri)ate

respon!ent to be true an! may ha)e in fact !eli)ere! .5 ca)ans of palay as annual rental for ./03 to

pri)ate respon!ent6 $ut in ./0>" it is clear that petitioner ha! mis&i)in&s o)er pri)ate respon!entPs claim

of onership o)er the sai! lan! because in the October ./0> %*R conference" his ife Laurenciana

cate&orically !enie! all of pri)ate respon!entPs alle&ations6 In fact" petitioner e)en secure! a certicate

from the %*R !ate! / %ay ./00 to the e:ect that he continue! to be the re&istere! tenant of #osme

2i!o an! not of pri)ate respon!ent6 The reason is that pri)ate respon!ent never registeredthe

Declaration of Heirship ith ai)er of Ri&hts ith the Re&istry of Dee!s or ith the %*R6 Instea!" he

(pri)ate respon!ent' sou&ht to !o in!irectly hat coul! not be !one !irectly"i6e6" le anotice of adverse

claim on the said lot to establish ownership thereover6

It stan!s to reason" therefore" to hol! that there as no unjustified or deliberate refusalby petitioner to

pay the lease rentals or amorti,ations to the lan!onerGa&ricultural lessor hich" in this case" pri)ate

respon!ent faile! to establish in his fa)or by clear an! con)incin& e)i!ence6 16

#onseEuently" the sanction of forfeiture of his preferre! ri&ht to be issue! a #erticate of Lan! Transfer

un!er 26D6 3B an! to the possession of his farmhol!in&s shoul! not be applie! a&ainst petitioners" since

pri)ate respon!ent has not establishe! a cause of action for reco)ery of possession a&ainst petitioner6

H9R9<OR9" premises consi!ere!" the #ourt hereby CR*NTS the petition an! the !ecision of the

#ourt of *ppeals !ate! . %ay .//4 hich aFrme! the !ecision of the RT# of Himamaylan" Ne&ros

Occi!ental !ate! 35 *u&ust .//. is hereby S9T *SID96 The pri)ate respon!entPs complaint for

reco)ery of possession an! !ama&es a&ainst petitioner *cap is hereby DIS%ISS9D for failure to



properly state a cause of action" ithout pre@u!ice to pri)ate respon!ent ta;in& the proper le&al steps to

establish the le&al mo!e by hich he claims to ha)e acEuire! onership of the lan! in Euestion6

SO ORD9R9D6

Davide, Jr., Bellosillo, Kapunan and Hermosisima, Jr., JJ., concur.

B6

!ECON I>I!ION

[G.R. No. 1=6. ece:ber , 199]

AL*ON!O ?UI@AA, CRE!ENTE ?UI@AA, RENELA ?UI@AA, EMETRIO ?UI@AAELIUTERIA ?UI@AA, EULALIO ?UI@AA, '() <ARLITO?UI@AA,petitioners,vs.COURT O* AEAL!, REGALAO MONE@AR, ROUL*OGOLORAN, ALBERTO A!I!, !EGUNINO RA!, ERNE!TO GOLORAN, CEL!O ABI!O,*ERNANO BAUTI!TA, ANTONIO MACA!ERO, '() NE!TORMAGUIN!A,respondents.

E C I ! I O N

MARTINE,J.4

2etitioners" as heirs of the late Trini!a! +ui@a!a" le! a complaint a&ainst pri)ate respon!ents forEuietin& of title" reco)ery of possession an! onership of parcels of lan! ith claim for attorneyPs feesan! !ama&es6 The suit as premise! on the folloin& facts foun! by the #ourt of *ppeals" hich ismaterially the same as that foun! by the trial court7

2lainti:s8appellees (petitioners' are the chil!ren of the late Trini!a! #or)era V!a6 !e +ui@a!a6 Trini!a!as one of the heirs of the late 2e!ro #or)era an! inherite! from the latter the to8hectare parcel oflan! sub@ect of the case" situate! in the barrio of San *&ustin" Talaco&on" *&usan !el Sur6 On *pril 1"./1A" Trini!a! +ui@a!a to&ether ith her sisters Leonila #or)era V!a6 !e SeEuea an! 2a, #or)era#abiltes an! brother 9papia!ito #or)era eecute! a con!itional !ee! of !onation (9h6 #' of the to8

hectare parcel of lan! sub@ect of the case in fa)or of the %unicipality of Talaco&on" the con!ition bein&that the parcel of lan! shall be use! solely an! eclusi)ely as part of the campus of the propose!pro)incial hi&h school in Talaco&on6 *pparently" Trini!a! remaine! in possession of the parcel of lan!!espite the !onation6 On -uly 3/" ./A3" Trini!a! sol! one (.' hectare of the sub@ect parcel of lan! to!efen!ant8appellant Re&ala!o %on!e@ar (9h6 .'6 SubseEuently" Trini!a! )erbally sol! the remainin&one (.' hectare to !efen!ant8appellant (respondent)Re&ala!o %on!e@ar ithout the benet of a ritten!ee! of sale an! e)i!ence! solely by receipts of payment6 In ./05" the heirs of Trini!a!" ho at thattime as alrea!y !ea!" le! a complaint for forcible entry (9h6 9' a&ainst !efen!ant8appellant(respondent' Re&ala!o %on!e@ar" hich complaint as" hoe)er" !ismisse! for failure to prosecute(9h6 <'6 In ./0B" the propose! pro)incial hi&h school ha)in& faile! to materiali,e" the San&&unian&



$ayan of the municipality of Talaco&on enacte! a resolution re)ertin& the to (3' hectares of lan!!onate! bac; to the !onors (9h6 D'6 In the meantime" !efen!ant8appellant (respondent' Re&ala!o%on!e@ar sol! portions of the lan! to !efen!ants8appellants (respondents' <ernan!o $autista (9h6 1'"Ro!olfo Coloran (9h6 A'" 9fren Cu!en (9h6 B' an! 9rnesto Coloran (9h6 0'6

On -uly 1" ./00" plainti:s8appellees (petitioners' le! this action a&ainst !efen!ants8appellants(respondents'6 In the complaint" plainti:s8appellees (petitioners' alle&e! that their !ecease! motherne)er sol!" con)eye!" transferre! or !ispose! of the property in Euestion to any person or entity muchless to Re&ala!o %on!e@ar sa)e the !onation ma!e to the %unicipality of Talaco&on in ./1A= that at thetime of the alle&e! sale to Re&ala!o %on!e@ar by Trini!a! +ui@a!a" the lan! still belon&s to the%unicipality of Talaco&on" hence" the suppose! sale is null an! )oi!6

Defen!ants8appellants (respondents'" on the other han!" in their anser claime! that the lan! in!ispute as sol! to Re&ala!o %on!e@ar" the one (.' hectare on -uly 3/" ./A3" an! the remainin& one(.' hectare on installment basis until fully pai!6 *s aFrmati)e an!Gor special !efense" !efen!ants8appellants (respondents' alle&e! that plainti:sP action is barre! by laches or has prescribe!6

The courta quoren!ere! @u!&ment in fa)or of plainti:s8appellees (petitioners'7 rstly because PTrini!a!

+ui@a!a ha! no le&al title or ri&ht to sell the lan! to !efen!ant %on!e@ar in ./A3" ./AA" ./AB an! ./A0"the same not bein& hers to !ispose of because onership belon&s to the %unicipality of Talaco&onP(Decision" p6 4=Rollo" p6 >/' an!" secon!ly" that the !ee! of sale eecute! by Trini!a! +ui@a!a in fa)orof %on!e@ar !i! not carry ith it the conformity an! acEuiescence of her chil!ren" more so that she asalrea!y A> years ol! at the time" an! a i!o (Decision" p6 A= Rollo" p6 4.'6[.]

The !ispositi)e portion of the trial courtPs !ecision rea!s7

H9R9<OR9" )iee! from the abo)e perceptions" the scale of @ustice ha)in& tilte! in fa)or of theplainti:s" @u!&ment is" as it is hereby ren!ere!7

.' or!erin& the Defen!ants to return an! )acate the to (3' hectares of lan! to 2lainti:s as!escribe! in Ta Declaration No6 .35/ in the name of Trini!a! +ui@a!a=

3' or!erin& any person actin& in Defen!antsP behalf to )acate an! restore the peacefulpossession of the lan! in Euestion to 2lainti:s=

>' or!erin& the cancellation of the Dee! of Sale eecute! by the late Trini!a! +ui@a!a in fa)orof Defen!ant Re&ala!o %on!e@ar as ell as the Dee!s of SaleGRelinEuishments eecute! by%on!e@ar in fa)or of the other Defen!ants=

4' or!erin& Defen!ants to remo)e their impro)ements constructe! on the Euestione! lot=

1' or!erin& the Defen!ants to pay 2lainti:s" @ointly an! se)erally" the amount of 2.5"555655representin& attorneyPs fees=

A' or!erin& Defen!ants to pays the amount of 20"555655 as epenses of liti&ation= an!

B' or!erin& Defen!ants to pay the sum of 2>5"555655 representin& moral !ama&es6

SO ORD9R9D6[3]

On appeal" the #ourt of *ppeals re)erse! an! set asi!e the @u!&ment a quo[>] rulin& that the salema!e by Trini!a! +ui@a!a to respon!ent %on!e@ar as )ali! as the4 former retaine! an inchoateinterest on the lots by )irtue of the automatic re)ersion clause in the !ee! of !onation6 [4] Thereafter

http://sc.judiciary.gov.ph/jurisprudence/1998/dec1998/126444.htm#_edn1










petitioners le! a motion for reconsi!eration6 hen the #* !enie! their motion"[1] petitioners institute! apetition for re)ie to this #ourt ar&uin& principally that the sale of the sub@ect property ma!e by Trini!a!+ui@a!a to respon!ent %on!e@ar is )oi!" consi!erin& that at that time" onership as alrea!ytransferre! to the %unicipality of Talaco&on6 On the contrary" pri)ate respon!ents conten! that the saleas )ali!" that they are buyers in &oo! faith" an! that petitionersP case is barre! by laches6 [A]

e aFrm the !ecision of the respon!ent court6

The !onation ma!e on *pril 1" ./1A by Trini!a! +ui@a!a an! her brother an! sisters [B] as sub@ectto the con!ition that the !onate! property shall be use! solely an! eclusi)ely as a part of the campusof the propose! 2ro)incial Hi&h School in Talaco&on6 [0] The !onation further pro)i!es that shoul! thepropose! 2ro)incial Hi&h School be !iscontinue! or if the same shall be opene! but for some reason oranother" the same may in the future be close! the !onate! property shall automatically re)ert to the!onor6[/] Such con!ition" not bein& contrary to la" morals" &oo! customs" public or!er or public policyas )ali!ly impose! in the !onation6[.5]

hen the %unicipalityPs acceptance of the !onation as ma!e ;non to the !onor" the formerbecame the ne oner of the !onate! property 88 !onation bein& a mo!e of acEuirin& an! transmittin&onership[..] 8 notithstan!in& the con!ition impose! by the !onee6 The !onation is perfecte! once theacceptance by the !onee is ma!e ;non to the !onor6 [.3] *ccor!in&ly" onership is imme!iately

transferre! to the latter an! that onership ill only re)ert to the !onor if the resolutory con!ition is notfullle!6

In this case" that resolutory con!ition is the construction of the school6 It has been rule! that hen aperson !onates lan! to another on the con!ition that the latter oul! buil! upon the lan! a school" thecon!ition impose! is not a con!ition prece!ent or a suspensi)e con!ition but a resolutory one6 [.>] Thusat the time of the sales ma!e in ./A3 toar!s ./A0" the alle&e! seller (Trini!a!' coul! not ha)e sol! thelots since she ha! earlier transferre! onership thereof by )irtue of the !ee! of !onation6 So lon& as theresolutory con!ition subsists an! is capable of fulllment" the !onation remains e:ecti)e an! the !oneecontinues to be the oner sub@ect only to the ri&hts of the !onor or his successors8in8interest un!er the!ee! of !onation6 Since no perio! as impose! by the !onor on hen must the !onee comply ith the

con!ition" the latter remains the oner so lon& as he has trie! to comply ith the con!ition ithin areasonable perio!6 Such perio!" hoe)er" became irrele)ant herein hen the !onee8%unicipalitymanifeste! throu&h a resolution that it cannot comply ith the con!ition of buil!in& a school an! thesame as ma!e ;non to the !onor6 Only then 8 hen the non8fulllment of the resolutory con!ition asbrou&ht to the !onorPs ;nole!&e 8 that onership of the !onate! property re)erte! to the !onor aspro)i!e! in the automatic re)ersion clause of the !ee! of !onation6

The !onor may ha)e an inchoate interest in the !onate! property !urin& the time that onership ofthe lan! has not re)erte! to her6 Such inchoate interest may be the sub@ect of contracts inclu!in& acontract of sale6 In this case" hoe)er" hat the !onor sol! as the lan! itself hich she no lon&erons6 It oul! ha)e been !i:erent if the !onor8seller sol! her interests o)er the property un!er the !ee!

of !onation hich is sub@ect to the possibility of re)ersion of onership arisin& from the non8fulllment ofthe resolutory con!ition6

*s to laches" petitionersP action is not yet barre! thereby6 Laches presupposes failure or ne&lect foran unreasonable an! uneplaine! len&th of time" to !o that hich" by eercisin& !ue !ili&ence" coul! orshoul! ha)e been !one earlier= [.4] it is ne&li&ence or omission to assert a ri&ht ithin a reasonable time"thus" &i)in& rise to a presumption that the party entitle! to assert it either has aban!one! or !ecline! toassert it6[.1] Its essential elements of7

a' #on!uct on the part of the !efen!ant" or of one un!er hom he claims" &i)in& rise to thesituation complaine! of=





























b' Delay in assertin& complainantPs ri&ht after he ha! ;nole!&e of the !efen!antPs con!uctan! after he has an opportunity to sue=

c' Lac; of ;nole!&e or notice on the part of the !efen!ant that the complainant oul! assertthe ri&ht on hich he bases his suit= an!"

!' In@ury or pre@u!ice to the !efen!ant in the e)ent relief is accor!e! to the complainant6 [.A]

are absent in this case6 2etitionersP cause of action to Euiet title commence! only hen the property

re)erte! to the !onor an!Gor his successors8in8interest in ./0B6 #ertainly" hen the suit as initiate! thefolloin& year" it cannot be sai! that petitioners ha! slept on their ri&hts for a lon& time6 The ./A5Pssales ma!e by Trini!a! +ui@a!a cannot be the rec;onin& point as to hen petitionersP cause of actionarose6They ha! no interest o)er the property at that time ecept un!er the !ee! of !onation to hichpri)ate respon!ents ere not pri)y6 %oreo)er" petitioners ha! pre)iously le! an e@ectment suit a&ainstpri)ate respon!ents only that it !i! not prosper on a technicality6

$e that at it may" there is one thin& hich militates a&ainst the claim of petitioners6 Sale" bein& aconsensual contract" is perfecte! by mere consent" hich is manifeste! the moment there is a meetin&of the min!s[.B] as to the o:er an! acceptance thereof on three (>' elements7 sub@ect matter" price an!terms of payment of the price6 [.0] onership by the seller on the thin& sol! at the time of the perfection of

the contract of sale is not an element for its perfection6 hat the la reEuires is that the seller has theri&ht to transfer onership at the time the thin& sol! is !eli)ere!6 [./] 2erfectionper se!oes not transferonership hich occurs upon the actual or constructi)e !eli)ery of the thin& sol!6[35] * perfecte!contract of sale cannot be challen&e! on the &roun! of non8onership on the part of the seller at thetime of its perfection= hence" the sale is still )ali!6

The consummation" hoe)er" of the perfecte! contract is another matter6 It occurs upon theconstructi)e or actual !eli)ery of the sub@ect matter to the buyer hen the seller or her successors8in8interest subseEuently acEuires onership thereof6 Such circumstance happene! in this case henpetitioners 88 ho are Trini!a! +ui@a!aPs heirs an! successors8in8interest 88 became the oners of thesub@ect property upon the re)ersion of the onership of the lan! to them6 #onseEuently" onership is

transferre! to respon!ent %on!e@ar an!s those ho claim their ri&ht from him6 *rticle .4>4 of the Ne#i)il #o!e supports the rulin& that the sellerPs title passes by operation of la to the buyer6 [3.] This ruleapplies not only hen the sub@ect matter of the contract of sale is &oo!s" [33] but also to other ;in!s ofproperty" inclu!in& real property6[3>]

There is also no merit in petitionersP contention that since the lots ere one! by the municipality atthe time of the sale" they ere outsi!e the commerce of men un!er *rticle .45/ (4' of the N##= [34]thusthe contract in)ol)in& the same is ineistent an! )oi! from the be&innin&6 Hoe)er" nohere in *rticle.45/ (4' is it pro)i!e! that the properties of a municipality" hether it be those for public use or itspatrimonial property[31] are outsi!e the commerce of men6 $esi!es" the lots in this case erecon!itionally one! by the municipality6 To rule that the !onate! properties are outsi!e the commerce

of men oul! ren!er nu&atory the unchallen&e! reasonableness an! @ustness of the con!ition hich the!onor has the ri&ht to impose as oner thereof6 %oreo)er" the ob@ects referre! to as outsi!es thecommerce of man are those hich cannot be appropriate!" such as the open seas an! the hea)enlybo!ies6

ith respect to the trial courts aar! of attorneys fees" liti&ation epenses an! moral !ama&es"there is neither factual nor le&al basis thereof6 *ttorneys fees an! epenses of liti&ation cannotfolloin& the &eneral rule in *rticle 3350 of the Ne #i)il #o!e" be reco)ere! in this case" there bein&no stipulation to that e:ect an! the case !oes not fall un!er any of the eceptions6 [3A] It cannot be sai!that pri)ate respon!ents ha! compelle! petitioners to liti&ate ith thir! persons6 Neither can it be rule!that the former acte! in &ross an! e)i!ent ba! faith in refusin& to satisfy the latters claims consi!erin&

























#ompanyhabitually makessash" in!os an! !oors" as it has represente! in its stationery an!

a!)ertisements to the public6 That it manufactures the same is practically a!mitte! by appellant itself6

The fact that in!os an! !oors are ma!e by it only hen customers place their or!ers" !oes not alter

the nature of the establishment" for it is ob)ious that it only accepte! such or!ers as calle! for the

employment of such material8moul!in&" frames" panels8as it or!inarily manufacture! or as in a

position habitually to manufacture6

2erhaps the folloin& para&raph represents in brief the appellantPs position in this #ourt7

Since the petitioner" by clear proof of facts not !ispute! by the respon!ent" manufacturers sash"

in!os an! !oors only for special customers an! upon their special or!ers an! in accor!ance

ith the !esire! specications of the persons or!erin& the same an! not for the &eneral mar;et7

since the !oors or!ere! by Don Toribio Teo!oro Sons" Inc6" for instance" are not in eistence

an! hich ne)er oul! ha)e eiste! but for the or!er of the party !esirin& it= an! since

petitionerPs contractual relation ith his customers is that of a contract for a piece of or; or

since petitioner is en&a&e! in the sale of ser)ices" it follos that the petitioner shoul! be tae!

un!er section ./. of the Ta #o!e an! NOT un!er section .01 of the same #o!e6 (*ppellantPsbrief" p6 ..8.3'6

$ut the ar&ument rests on a false foun!ation6 *ny buil!er or homeoner" ith suFcient money" may

or!er in!os or !oors of the ;in! manufacture! by this appellant6 Therefore it is not true that it ser)es

special customersonlyor connes its ser)ices to them alone6 *n! anyone ho sees" an! li;es" the

!oors or!ere! by Don Toribio Teo!oro Sons Inc6 may purchase from appellant !oors of the same

;in!" pro)i!e! he pays the price6 Surely" the appellant ill not refuse" for it can easily !uplicate or e)en

mass8pro!uce the same !oors8it is mechanically eEuippe! to !o so6

That the !oors an! in!os must meet !esire! specications is neither here nor there6 If these

specications !o not happen to be of the ;in! habitually manufacture! by appellant special forms for

sash" moul!in&s of panels it oul! not accept the or!er an! no sale is ma!e6 If they !o" the

transaction oul! be no !i:erent from a purchasers of manufacture! &oo!s hel! is stoc; for sale= they

are bou&ht because they meet the specications !esire! by the purchaser6

Nobo!y ill say that hen a samill cuts lumber in accor!ance ith the peculiar specications of a

customer8si,es not pre)iously hel! in stoc; for sale to the public8it thereby becomes an employee or

ser)ant of the customer". not the seller of lumber6 The same consi!eration applies to this sash

manufacturer6

The Oriental Sash <actory !oes nothin& more than sell the &oo!s that it mass8pro!uces or habitually

ma;es= sash" panels" moul!in&s" frames" cuttin& them to such si,es an! combinin& them in such forms

as its customers may !esire6

On the other han!" petitionerPs i!ea of bein& a contractor !oin& construction @obs is untenable6 Nobo!y

oul! re&ar! the !oin& of to in!o panels a construction or; in common parlance6 3



*ppellant in)o;es *rticle .4AB of the Ne #i)il #o!e to bolster its contention that in lin& or!ers for

in!os an! !oors accor!in& to specications" it !i! not sell" but merely contracte! for particular

pieces of or; or merely sol! its ser)ices6

Sai! article rea!s as follos7

* contract for the !eli)ery at a certain price of an article hich the )en!or in the or!inary course

of his business manufactures or procures for the &eneral mar;et" hether the same is on han! atthe time or not" is a contract of sale" but if the &oo!s are to be manufacture! specially for the

customer an! upon his special or!er" an! not for the &eneral mar;et" it is contract for a piece of

or;6

It is at once apparent that the Oriental Sash <actory !i! not merely sell its servicesto Don Toribio

Teo!oro #o6 (To ta;e one instance' because it also sol! the materials6 The truth of the matter is that it

sol! materials or!inarily manufacture! by it sash" panels" moul!in&s to Teo!oro #o6" althou&h in

such form or combination as suite! the fancy of the purchaser6 Such ne form !oes not !i)est the

Oriental Sash <actory of its character as manufacturer6 Neither !oes it ta;e the transaction out of thecate&ory of sales un!er *rticle .4AB abo)e Euote!" because althou&h the <actory !oes not" in the

or!inary course of its business" manufacture an! ;eep on stoc;doors of the kindsol! to Teo!oro" it

coul! stoc; an!Gor probably ha! in stoc; the sash" moul!in&s an! panels it use! therefor (some of them

at least'6

In our opinion hen this <actory accepts a @ob that reEuires the use of etraor!inary or a!!itional

eEuipment" or in)ol)es ser)ices not &enerally performe! by it8it thereby contracts for a piece of work

lin& special or!ers ithin the meanin& of *rticle .4AB6 The or!ers herein ehibite! ere not shon to

be special6 They ere merely or!ers for or; nothin& is shon to call them special reEuirin&

etraor!inary ser)ice of the factory6

The thou&ht occurs to us that if" as alle&e!8all the or; of appellant is only to ll or!ers pre)iously ma!e"

such or!ers shoul! not be calle!specialor;" but re&ular or;6 oul! a factory !o business

performin& only special" etraor!inary or peculiar merchan!iseK

*nyay" supposin& for the moment that the transactions ere not sales" they ere neither lease of

ser)ices nor contract @obs by a contractor6 $ut as the !oors an! in!os ha! been a!mitte!ly

manufacture! by the Oriental Sash <actory" such transactions coul! be" an! shoul! be tae! as

transfers thereof un!er section .0A of the National Re)enue #o!e6

The appeale! !ecision is conseEuently aFrme!6 So or!ere!6

/6



T2E COMMI!!IONER O* INTERNAL RE>ENUE, petitioner"

)s6

ENGINEERING E?UIMENT AN !UL COMAN AN T2E COURT O* TAAEAL!, respon!ents6

G.R. No. L/=75= @(e 30, 1975

ENGINEERING E?UIMENT AN !UL COMAN, petitioner" %.T2E COMMI!!IONER O* INTERNAL RE>ENUE AN T2E COURT O* TAAEAL!, re%-o()e(t.

Office of the Solicitor General Antonio P. Barredo, Assistant Solicitor General Felicisimo R.

Rosete, Solicitor Lolita O. Gal-lang, and Special Attorney Gemaliel H. Montalino for

Commissioner of Internal Revenue, etc.

Melquides C. Gutierrez, Jose U. Ong, Juan G. Collas, Jr., Luis Ma. Guerrero and J.R. Balonkita

for Engineering and Supply Company.

E!GUERRA,J.:

et+t+o( #or re+e o(certiorario# t$e )ec+%+o( o# t$e Cort o# T'F A--e'&% +( CTA C'%e No.61, )'te) Noe:ber =9, 1966, '%%e%%+(D ' co:-e(%'t+(D t'F o# 17,1.6= o( t$eE(D+(eer+(D E+-:e(t '() !--& Co:-'(.

A% #o() b t$e Cort o# T'F A--e'&%, '() '% e%t'b&+%$e) b t$e e+)e(ce o( recor), t$e#'ct% o# t$+% c'%e 're '% #o&&o%4

E(D+(eer+(D E+-:e(t '() !--& Co. "E(D+(eer+(D #or %$ort, ' )o:e%t+c cor-or't+o(, +% '(e(D+(eer+(D '() :'c$+(er ;r:. A% o-er'tor o# '( +(teDr'te) e(D+(eer+(D %$o-, +t +%e(D'De), ':o(D ot$er%, +( t$e )e%+D( '() +(%t'&&'t+o( o# ce(tr'& t-e '+r co()+t+o(+(D %%te:,-:-+(D -&'(t% '() %tee& #'br+c't+o(%. ">o&. I --. 1=/16 T.!.N. AD%t =3, 1960

O( @& =7, 1956, o(e @'( )e &' CrH, rote t$e t$e( Co&&ector, (o Co::+%%+o(er, o#

I(ter('& Ree(e )e(o(c+(D E(D+(eer+(D #or t'F e'%+o( b :+%)ec&'r+(D +t% +:-orte)'rt+c&e% '() #'+&+(D to -' t$e correct -erce(t'De t'Fe% )e t$ereo( +( co((+'(ce +t$ +t%#ore+D(!ULIER! "EF$. = -. 1 BIR recor) >o&. I. E(D+(eer+(D '% &+Je+%e )e(o(ce) tot$e Ce(tr'& B'(J "CB #or '&&eDe) #r') +( obt'+(+(D +t% )o&&'r '&&oc't+o(%. Act+(D o( t$e%e)e((c+'t+o(%, ' r'+) '() %e'rc$ '% co()cte) b ' 8o+(t te': o# Ce(tr'& B'(J, "CB,N't+o('& Bre' o# I(e%t+D't+o( "NBI '() Bre' o# I(ter('& Ree(e "BIR 'De(t% o(!e-te:ber =7, 1956, o( $+c$ occ'%+o( o&:+(o% recor)% o# t$e ;r: ere %e+He) '()co(;%c'te). "--. 173/177 T.!.N.

http://www.lawphil.net/judjuris/juri1975/jun1975/gr_27044_1975.html#98180332

http://www.lawphil.net/judjuris/juri1975/jun1975/gr_27044_1975.html#98180332



O( !e-te:ber 30, 1957, ree(e eF':+(er% ?e%')' '() C't)'( re-orte) '()reco::e()e) to t$e t$e( Co&&ector, (o Co::+%%+o(er, o# I(ter('& Ree(e "$ere+('#terre#erre) to '% Co::+%%+o(er t$'t E(D+(eer+(D be '%%e%%e) #or 0,91=.01 '% )e;c+e(c')'(ce %'&e% t'F o( t$e t$eor t$'t +t :+%)ec&'re) +t% +:-ort't+o( o# '+r co()+t+o(+(D (+t%'() -'rt% '() 'cce%%or+e% t$ereo# $+c$ 're %b8ect to t'F ()er !ect+o( 15": 1 o# t$e T'FCo)e, +(%te') o# !ect+o( 16 o# t$e %':e Co)e. "EF$. 3 --. 59/63 BIR rec. >o&. I T$+%'%%e%%:e(t '% re+%e) o( @'('r =3, 1959, +( &+(e +t$ t$e ob%er't+o( o# t$e C$+e#, BIRL' ++%+o(, '() '% r'+%e) to 916,36=.56 re-re%e(t+(D )e;c+e(c ')'(ce %'&e% t'F '():'(#'ctrer% %'&e% t'F, +(c&%+e o# t$e =5K '() 50K %rc$'rDe%. "--. 7=/0 BIR rec. >o&. I

O( M'rc$ 3, 1959. t$e Co::+%%+o(er '%%e%%e) 'D'+(%t, '() )e:'()e) -o(, E(D+(eer+(D-':e(t o# t$e +(cre'%e) ':o(t '() %DDe%te) t$'t 10,000 be -'+) '% co:-ro:+%e +(eFtr'8)+c+'& %ett&e:e(t o# E(D+(eer+(D% -e('& &+'b+&+t #or +o&'t+o( o# t$e T'F Co)e. T$e ;r:,$oeer, co(te%te) t$e t'F '%%e%%:e(t '() ree%te) t$'t +t be #r(+%$e) +t$ t$e )et'+&%'() -'rt+c&'r% o# t$e Co::+%%+o(er% '%%e%%:e(t. "EF$. B '() 15, --. 6/ BIR rec. >o&.I T$e Co::+%%+o(er re-&+e) t$'t t$e '%%e%%:e(t '% +( 'ccor)'(ce +t$ &' '() t$e #'ct% o#

t$e c'%e.

O( @& 30, 1959, E(D+(eer+(D '--e'&e) t$e c'%e to t$e Cort o# T'F A--e'&% '() )r+(D t$e-e()e(c o# t$e c'%e t$e +(e%t+D't+(D ree(e eF':+(er% re)ce) E(D+(eer+(D% )e;c+e(ct'F &+'b+&+t+e% #ro: 916,36=.65 to 70,57.6 "EF$%. R '() 9 --. 16=/170, BIR rec., b'%e)o( ;()+(D% '#ter co(#ere(ce% $') +t$ E(D+(eer+(D% Acco(t'(t '() A)+tor.

O( Noe:ber =9, 1966, t$e Cort o# T'F A--e'&% re()ere) +t% )ec+%+o(, t$e )+%-o%+t+e-ort+o( o# $+c$ re')% '% #o&&o%4

*or ALL T2E *OREGOING CON!IERATION!, t$e )ec+%+o( o# re%-o()e(t'--e'&e) #ro: +% $ereb :o)+;e), '() -et+t+o(er, '% ' co(tr'ctor, +% )ec&'re)eFe:-t #ro: t$e )e;c+e(c :'(#'ctrer% %'&e% t'F coer+(D t$e -er+o) #ro:@(e 1, 19. to !e-te:ber =, 1956. 2oeer, -et+t+o(er +% or)ere) to -'re%-o()e(t, or $+% )& 't$or+He) co&&ect+o( 'De(t, t$e %: o# 17,11.6= '%co:-e(%'t+(D t'F '() =5K %rc$'rDe #or t$e -er+o) #ro: 1953 to !e-te:ber1956. <+t$ co%t% 'D'+(%t -et+t+o(er.

T$e Co::+%%+o(er, (ot %'t+%;e) +t$ t$e )ec+%+o( o# t$e Cort o# T'F A--e'&%, '--e'&e) to

t$+% Cort o( @'('r 1, 1967, "G.R. No. L/=70. O( t$e ot$er $'(), E(D+(eer+(D, o(@'('r , 1967, ;&e) +t$ t$e Cort o# T'F A--e'&% ' :ot+o( #or reco(%+)er't+o( o# t$e)ec+%+o( 'boe:e(t+o(e). T$+% '% )e(+e) o( A-r+& 6, 1967, -ro:-t+(D E(D+(eer+(D to ;&e'&%o +t$ t$+% Cort +t% '--e'&, )ocJete) '% G.R. No. L/=75=.

!+(ce t$e to c'%e%, G.R. No. L/=70 '() G.R. No. L/=75=, +(o&e t$e %':e -'rt+e% '()+%%e%, <e $'e )ec+)e) to co(%o&+)'te '() 8o+(t& )ec+)e t$e:.



E(D+(eer+(D +( +t% et+t+o( c&'+:% t$'t t$e Cort o# T'F A--e'&% co::+tte) t$e #o&&o+(Derror%4

1. T$'t t$e Cort o# T'F A--e'&% erre) +( $o&)+(D E(D+(eer+(D E+-:e(t !--& Co:-'( &+'b&e to t$e 30K co:-e(%'t+(D t'F o( +t% +:-ort't+o(% o#e+-:e(t '() or)+('r 'rt+c&e% %e) +( t$e ce(tr'& t-e '+r co()+t+o(+(D%%te:% +t )e%+D(e), #'br+c'te), co(%trcte) '() +(%t'&&e) +( t$e b+&)+(D% '()

-re:+%e% o# +t% c%to:er%, r't$er t$'( to t$e co:-e(%'t+(D t'F o# o(& 7K

=. T$'t t$e Cort o# T'F A--e'&% erre) +( $o&)+(D E(D+(eer+(D E+-:e(t !--& Co:-'( D+&t o# #r') +( eect+(D t$e %'+) +:-ort't+o(% o( t$e b'%+% o#+(co:-&ete ot't+o(% #ro: t$e co(te(t% o# '&&eDe) -$oto%t't co-+e% o#)oc:e(t% %e+He) +&&eD'&& #ro: E(D+(eer+(D E+-:e(t '() !--& Co:-'($+c$ %$o&) (ot $'e bee( '):+tte) +( e+)e(ce

3. T$'t t$e Cort o# T'F A--e'&% erre) +( $o&)+(D E(D+(eer+(D E+-:e(t

!--& Co:-'( &+'b&e to t$e =5K %rc$'rDe -re%cr+be) +( !ect+o( 190 o# t$eT'F Co)e

. T$'t t$e Cort o# T'F A--e'&% erre) +( $o&)+(D t$e '%%e%%:e(t '% (ot $'+(D-re%cr+be)

5. T$'t t$e Cort o# T'F A--e'&% erre) +( $o&)+(D E(D+(eer+(D E+-:e(t !--& Co:-'( &+'b&e #or t$e %: o# 17,11.6= '% 30K co:-e(%'t+(D t'F '()=5K %rc$'rDe +(%te') o# co:-&ete& 'b%o&+(D +t #ro: t$e )e;c+e(c'%%e%%:e(t o# t$e Co::+%%+o(er.

T$e Co::+%%+o(er o( t$e ot$er $'() c&'+:% t$'t t$e Cort o# T'F A--e'&% erre)4

1. I( $o&)+(D t$'t t$e re%-o()e(t co:-'( +% ' co(tr'ctor '() (ot ':'(#'ctrer.

=. I( $o&)+(D re%-o()e(t co:-'( &+'b&e to t$e 3K co(tr'ctor% t'F +:-o%e) b!ect+o( 191 o# t$e T'F Co)e +(%te') o# t$e 30K %'&e% t'F -re%cr+be) +( !ect+o(15": +( re&'t+o( to !ect+o( 19"F bot$ o# t$e %':e Co)e

3. I( $o&)+(D t$'t t$e re%-o()e(t co:-'( +% %b8ect o(& to t$e 30Kco:-e(%'t+(D t'F ()er !ect+o( 190 o# t$e T'F Co)e '() (ot to t$e 30K')'(ce %'&e% t'F +:-o%e) b %ect+o( 13 "b, +( re&'t+o( to %ect+o( 15": bot$o# t$e %':e Co)e, o( +t% +:-ort't+o(% o# -'rt% '() 'cce%%or+e% o# '+rco()+t+o(+(D (+t%

. I( (ot $o&)+(D t$e co:-'( &+'b&e to t$e 50K #r') %rc$'rDe ()er !ect+o(13 o# t$e T'F Co)e o( +t% +:-ort't+o(% o# -'rt% '() 'cce%%or+e% o# '+r



%':e Co)e, $+c$ +% e%%e(t+'&& ' t'F o( t$e %'&e o# %er+ce% or &'bor o# ' co(tr'ctor r't$ert$'( o( t$e %'&e o# 'rt+c&e% %b8ect to t$e t'F re#erre) to +( !ect+o(% 1, 15 '() 16 o# t$eCo)e.

T$e 'rD:e(t% o# bot$ t$e E(D+(eer+(D '() t$e Co::+%%+o(er c'&& #or ' c&'r+;c't+o( o# t$eter: co(tr'ctor '% e&& '% t$e )+%t+(ct+o( betee( ' co(tr'ct o# %'&e '() co(tr'ct #or#r(+%$+(D %er+ce%, &'bor '() :'ter+'&%. T$e )+%t+(ct+o( betee( ' co(tr'ct o# %'&e '() o(e

#or orJ, &'bor '() :'ter+'&% +% te%te) b t$e +(+r $et$er t$e t$+(D tr'(%#erre) +% o(e (ot+( eF+%te(ce '() $+c$ (eer o&) $'e eF+%te) bt #or t$e or)er o# t$e -'rt )e%+r+(D to'c+re +t, or ' t$+(D $+c$ o&) $'e eF+%te) '() $'% bee( t$e %b8ect o# %'&e to %o:eot$er -er%o(% ee( +# t$e or)er $') (ot bee( D+e(. = I# t$e 'rt+c&e or)ere) b t$e -rc$'%er +%eF'ct& %c$ '% t$e -&'+(t+ :'Je% '() Jee-% o( $'() #or %'&e to '(o(e, '() (o c$'(De or:o)+;c't+o( o# +t +% :')e 't )e#e()'(t% ree%t, +t +% ' co(tr'ct o# %'&e, ee( t$oD$ +t :'be e(t+re& :')e '#ter, '() +( co(%ee(ce o#, t$e )e#e()'(t% or)er #or +t. 3

Or Ne C++& Co)e, &+Je+%e )+%t+(D+%$e% ' co(tr'ct o# %'&e #ro: ' co(tr'ct #or ' -+ece o#

orJ t$%4

Art. 167. A co(tr'ct #or t$e )e&+er 't ' cert'+( -r+ce o# '( 'rt+c&e $+c$ t$ee()or +( t$e or)+('r cor%e o# $+% b%+(e%% :'(#'ctre% or -rocre% #or t$eDe(er'& :'rJet, $et$er t$e %':e +% o( $'() 't t$e t+:e or (ot, +% ' co(tr'ct o#%'&e, bt +# t$e Doo)% 're to be :'(#'ctre) %-ec+'&& #or t$e c%to:er '()-o( $+% %-ec+'& or)er '() (ot #or t$e De(er'& :'rJet, +t +% ' co(tr'ct #or ' -+eceo# orJ.

T$e or) co(tr'ctor $'% co:e to be %e) +t$ %-ec+'& re#ere(ce to ' -er%o( $o, +( t$e

-r%+t o# t$e +()e-e()e(t b%+(e%%, ()ert'Je% to )o ' %-ec+;c 8ob or -+ece o# orJ #orot$er -er%o(%, %+(D $+% o( :e'(% '() :et$o)% +t$ot %b:+tt+(D $+:%e&# to co(tro& '% tot$e -ett )et'+&%. "Ar'P'%, A((ot't+o(% '() @r+%-r)e(ce o( t$e N't+o('& I(ter('& Ree(eCo)e, -. 31, -'r. 191 "=, 1970 E). T$e tre te%t o# ' co(tr'ctor '% '% $e&) +( t$e c'%e%o#Luzon Stevedoring Co., vs. Trinidad,3, $+&. 03, 07/0, '()La Carlota Sugar Central vs.Trinidad,3, $+&. 16, 19, o&) %ee: to be t$'t $e re()er% %er+ce +( t$e cor%e o# '(+()e-e()e(t occ-'t+o(, re-re%e(t+(D t$e +&& o# $+% e:-&oer o(& '% to t$e re%&t o# $+%orJ, '() (ot '% to t$e :e'(% b $+c$ +t +% 'cco:-&+%$e).

<+t$ t$e #oreDo+(D cr+ter+' '% D+)e-o%t%, <e %$'&& (o eF':+(e $et$er E(D+(eer+(D re'&&)+) :'(#'ctre '() %e&&, '% '&&eDe) b t$e Co::+%%+o(er to $o&) +t &+'b&e to t$e ')'(ce%'&e% t'F ()er !ect+o( 15":, or +t o(& $') +t% %er+ce% co(tr'cte) #or +(%t'&&'t+o(-r-o%e% to $o&) +t &+'b&e ()er %ect+o( 19 o# t$e T'F Co)e.

I

A#ter Do+(D oer t$e t$ree o&:e% o# %te(oDr'-$+c (ote% '() t$e o&:+(o% recor) o# t$eBIR '() t$e CTA '% e&& '% t$e eF$+b+t% %b:+tte) b bot$ -'rt+e%, <e ;() t$'t E(D+(eer+(D



)+) (ot :'(#'ctre '+r co()+t+o(+(D (+t% #or %'&e to t$e De(er'& -b&+c, bt +:-orte) %o:e+te:% "'% re#r+Der't+o( co:-re%%or% +( co:-&ete %et, $e't eFc$'(Der% or co+&%, t.%.(. -. 39$+c$ ere %e) +( eFect+(D co(tr'ct% e(tere) +(to b +t. E(D+(eer+(D, t$ere#ore, ()ertooJ(eDot+'t+o(% '() eFect+o( o# +()++)'& co(tr'ct% #or t$e )e%+D(, %--& '() +(%t'&&'t+o( o#'+r co()+t+o(+(D (+t% o# t$e ce(tr'& t-e "t.%.(. --. =0/36 EF$%. *, G, 2, I, @, , L,'() M, t'J+(D +(to co(%+)er't+o( +( t$e -roce%% %c$ #'ctor% '% t$e 're' o# t$e %-'ce to be'+r co()+t+o(e) t$e (:ber o# -er%o(% occ-+(D or o&) be occ-+(D t$e -re:+%e% t$e-r-o%e #or $+c$ t$e 'r+o% '+r co()+t+o(+(D 're'% 're to be %e) '() t$e %orce% o# $e'tD'+( or coo&+(D &o') o( t$e -&'(t %c$ '% %( &o'), &+D$t+(D, '() ot$er e&ectr+c'& '--&+'(ce%$+c$ 're or :' be +( t$e -&'(. "t.%.(. -. 3, >o&. I E(D+(eer+(D '&%o te%t+;e) )r+(D t$e$e'r+(D +( t$e Cort o# T'F A--e'&% t$'t re&'t+e to t$e +(%t'&&'t+o( o# '+r co()+t+o(+(D %%te:,E(D+(eer+(D )e%+D(e) '() e(D+(eere) co:-&ete e'c$ -'rt+c&'r -&'(t '() t$'t (o to -&'(t%ere +)e(t+c'& bt e'c$ $') to be e(D+(eere) %e-'r'te&.

A% #o() b t$e &oer cort, $+c$ ;()+(D <e ')o-t

E(D+(eer+(D, +( ' (t%$e&&, #'br+c'te%, '%%e:b&e%, %--&+e% '() +(%t'&&% +( t$eb+&)+(D% o# +t% 'r+o% c%to:er% t$e ce(tr'& t-e '+r co()+t+o(+(D %%te:-re-'re% t$e -&'(% '() %-ec+;c't+o(% t$ere#or $+c$ 're )+%t+(ct '() )+ere(t#ro: e'c$ ot$er t$e '+r co()+t+o(+(D (+t% '() %-'re -'rt% or 'cce%%or+e%t$ereo# %e) b -et+t+o(er 're (ot t$e +()o t-e o# '+r co()+t+o(er $+c$ 're:'(#'ctre), '%%e:b&e) '() -ro)ce) &oc'&& #or %'&e to t$e De(er'& :'rJet'() t$e +:-orte) '+r co()+t+o(+(D (+t% '() %-'re -'rt% or 'cce%%or+e% t$ereo#'re %--&+e) '() +(%t'&&e) b -et+t+o(er -o( -re+o% or)er% o# +t% c%to:er%co(#or:'b& +t$ t$e+r (ee)% '() re+re:e(t%.

T$e #'ct% '() c+rc:%t'(ce% '#oreote) %--ort t$e t$eor t$'t E(D+(eer+(D +% ' co(tr'ctorr't$er t$'( ' :'(#'ctrer.

T$e Co::+%%+o(er +( $+% Br+e# 'rDe% t$'t +t +% :ore +( 'ccor) +t$ re'%o( '() %o()b%+(e%% :'('De:e(t to %' t$'t '(o(e $o )e%+re% to $'e '+r co()+t+o(+(D (+t% +(%t'&&e)+( $+% -re:+%e% '() $o +% +( ' -o%+t+o( '() +&&+(D to -' t$e -r+ce c'( or)er t$e %':e #ro:t$e co:-'( "E(D+(eer+(D '(), t$ere#ore, E(D+(eer+(D co&) $'e :'%% -ro)ce) '()%tocJ-+&e) '+r co()+t+o(+(D (+t% #or %'&e to t$e -b&+c or to '( c%to:er +t$ e(oD$ :o(eto b t$e %':e. T$+% +% (te('b&e +( t$e &+D$t o# t$e #'ct t$'t '+r co()+t+o(+(D (+t%,

-'cJ'De), or $'t e J(o '% %e&#/co(t'+(e) '+r co()+t+o(+(D (+t%, 're )+%t+(ct #ro: t$ece(tr'& %%te: $+c$ E(D+(eer+(D )e'&t +(. To Or :+(), t$e )+%t+(ct+o( '% eF-&'+(e) bE(D+(eer+(D, +( +t% Br+e#, ot+(D #ro: booJ%, +% (ot '( +)&e -&' o# or)% '% c&'+:e) b t$eCo::+%%+o(er, bt ' %+D(+;c'(t #'ct $+c$ <e 8%t c'((ot +D(ore. A% ote) b E(D+(eer+(DE+-:e(t !--& Co., #ro: '( E(D+(eer+(D $'()booJ b L.C. Morro, '() $+c$ <ere-ro)ce $ere()er #or e'% re#ere(ce4

... t$ere +% ' Dre't 'r+et o# e+-:e(t +( %e to )o t$+% 8ob "o# '+r co()+t+o(+(D.!o:e )e+ce% 're )e%+D(e) to %ere ' %-ec+;c t-e o# %-'ce ot$er% to -er#or: '



%-ec+;c #(ct+o( '() %t+&& ot$er% '% co:-o(e(t% to be '%%e:b&e) +(to ' t'+&or/:')e %%te: to ;t ' -'rt+c&'r b+&)+(D. Ge(er'&&, $oeer, t$e :' beDro-e) +(to to c&'%%+;c't+o(% (+t'r '() ce(tr'& %%te:.

T$e (+t'r e+-:e(t c&'%%+;c't+o( +(c&)e% t$o%e )e%+D(% %c$ '% roo: '+rco()+t+o(er, $ere '&& o# t$e #(ct+o('& co:-o(e(t% 're +(c&)e) +( o(e or to-'cJ'De%, '() +(%t'&&'t+o( +(o&e% o(& :'J+(D %er+ce co((ect+o( %c$ '%

e&ectr+c+t, 'ter '() )r'+(%. Ce(tr'&/%t't+o( %%te:%, o#te( re#erre) to '% '--&+e)or b+&t/- %%te:%, re+re t$e +(%t'&&'t+o( o# co:-o(e(t% 't )+ere(t -o+(t% +( 'b+&)+(D '() t$e+r +(terco((ect+o(.

T$e roo: '+r co()+t+o(er +% ' (+t'r e+-:e(t )e%+D(e) %-ec+;c'&& #or ' roo:or %+:+&'r %:'&& %-'ce. It +% (+e ':o(D '+r co()+t+o(+(D e+-:e(t +( tore%-ect%4 It +% +( t$e e&ectr+c'& '--&+'(ce c&'%%+;c't+o(, '() +t +% :')e b ' Dre't(:ber o# :'(#'ctrer%.

T$ere +% '&%o t$e te%t+:o( o# o(e C'r&o% N''rro, ' &+ce(%e) Mec$'(+c'& '() E&ectr+c'&E(D+(eer, $o '% o(ce t$e C$'+r:'( o# t$e Bo'r) o# EF':+(er% #or Mec$'(+c'& E(D+(eer%'() $o '% '&&eDe)& re%-o(%+b&e #or t$e -re-'r't+o( o# t$e re#r+Der't+o( '() '+rco()+t+o(+(D co)e o# t$e C+t o# M'(+&', $o %'+) t$'t t$e ce(tr'& t-e '+r co()+t+o(+(D%%te: +% '( e(D+(eer+(D 8ob t$'t re+re% -&'((+(D '() :et+c&o% &'ot )e to t$e #'ctt$'t %'&& 'rc$+tect% '%%+D( )e;(+te %-'ce '() %'&& t$e %-'ce% t$e '%%+D( 're er%:'&& '() o# 'r+o% %+He%. Co(t+(+(D #rt$er, $e te%t+;e)4

I )o(t t$+(J I $'e %ee( ce(tr'& t-e o# '+r co()+t+o(+(D :'c$+(er roo: t$'t 'reeF'ct& '&+Je bec'%e '&& or b+&)+(D% $ere 're )e%+D(e) b 'rc$+tect% )+%%+:+&'r

to eF+%t+(D b+&)+(D%, '() %'&& t$e )o(t coor)+('te '() Det t$e ')+ce o# '+rco()+t+o(+(D '() re#r+Der't+(D e(D+(eer% %o :c$ %o t$'t $e( e co:e to)e%+D(, e $'e to :'Je %e o# t$e ''+&'b&e %-'ce t$'t t$e 're '%%+D(+(D to %%o t$'t e $'e to )e%+D( t$e )+ere(t co:-o(e(t -'rt% o# t$e '+r co()+t+o(+(D%%te: +( %c$ ' ' t$'t +&& be 'cco::o)'te) +( t$e %-'ce '%%+D(e) '()'#ter'r)% t$e %%te: :' be co(%+)ere) '% ' )e;(+te -ort+o( o# t$e b+&)+(D. ...

e;(+te& t$ere +% +te ' b+D )+ere(ce +( t$e o-er't+o( bec'%e t$e +()ot-e '+r co()+t+o(er +% ' %ort o# co:-ro:+%e. I( #'ct +t c'((ot co(tro& $:+)+t to

t$e )e%+re) &ee& r't$er t$e :'(#'ctrer%, b $+t '() :+%%, ere 'b&e to %'t+%#t$e:%e&e% t$'t t$e )e%+re) co:#ort +t$+( ' roo: co&) be :')e b ' )e;(+te%ett+(D o# t$e :'c$+(e '% +t co:e% #ro: t$e #'ctor $ere'% t$e ce(tr'& t-e%%te: )e;(+te& re+re% '( +(te&&+De(t o-er'tor. "t.%.(. --. 301/305, >o&. II

T$e -o+(t, t$ere#ore, +% t$+% E(D+(eer+(D )e;(+te& )+) (ot '() '% (ot e(D'De) +( t$e:'(#'ctre o# '+r co()+t+o(+(D (+t% bt $') +t% %er+ce% co(tr'cte) #or t$e +(%t'&&'t+o( o# 'ce(tr'& %%te:. T$e c'%e% c+te) b t$e Co::+%%+o(er "A)ert+%+(D A%%oc+'te%, I(c. %.Co&&ector o# C%to:%, 97, $+&. 636 Ce&e%t+(o Co Co. %. Co&&ector o# I(ter('& Ree(e, 99



$+&. 1 '() M'(+&' Tr')+(D !--& Co. %. C+t o# M'(+&', 56 O.G. 36=9, 're (ot +( -o+(t.Ne+t$er 're t$e '--&+c'b&e bec'%e t$e #'ct% +( '&& t$e c'%e% c+te) 're e(t+re& )+ere(t. T'Je#or +(%t'(ce t$e c'%e o# Ce&e%t+(o Co $ere t$+% Cort $e&) t$e t'F-'er to be ' :'(#'ctrerr't$er t$'( ' co(tr'ctor o# %'%$, )oor% '() +()o% :'(#'ctre) +( +t% #'ctor. I()ee), #ro:t$e er %t'rt, Ce&e%t+(o Co +(te()e) +t%e&# to be ' :'(#'ctrer o# )oor%, +()o%, %'%$e%etc. '% +t )+) reD+%ter ' %-ec+'& tr')e (':e #or +t% %'%$ b%+(e%% '() or)ere) co:-'(%t't+o(er c'rr+(D t$e bo&) -r+(t ORIENTAL !A!2 *ACTOR "CELE!TINO CO ANCOMAN, RO. 9=6 R'o( !t., ?+'-o, M'(+&', Te&. No. etc., M'(#'ctrer% o# A&& +()% o#oor%, <+()o% ... . L+Je+%e, Ce&e%t+(o Co (eer -t - ' co(tr'ctor% bo() '% re+re) bArt+c&e 17=9 o# t$e C++& Co)e. A&%o, '% ' De(er'& r&e, %'%$ #'ctor+e% rece+e or)er% #or )oor%'() +()o% o# %-ec+'& )e%+D( o(& +( -'rt+c&'r c'%e%, bt t$e b&J o# t$e+r %'&e% +% )er+e)#ro: re')/:')e )oor% '() +()o% o# %t'()'r) %+He% #or t$e 'er'De $o:e, $+c$ %'&e%ere reQecte) +( t$e+r booJ% o# 'cco(t% tot'&&+(D 11,75.69 #or t$e -er+o) #ro: @'('r,195= to !e-te:ber 30, 195=, or #or ' -er+o) o# o(& (+(e "9 :o(t$%. T$+% Cort #o() %'+)%: )+c&t to $'e bee( )er+e) #ro: +t% #e c%to:er% $o -&'ce) %-ec+'& or)er% #ort$e%e +te:%. A--&+(D t$e 'boe%t'te) #'ct% to t$e c'%e 't b'r, <e #o() t$e: to $e

+('--o%+te. E(D+(eer+(D ')ert+%e) +t%e&# '% E(D+(eer+(D E+-:e(t '() !--& Co:-'(,M'c$+(er Mec$'(+c'& !--&+e%, E(D+(eer%, Co(tr'ctor%, 17 M're% )e Co:+&&'%, M'(+&'"EF$. B '() 15 BIR rec. -. 16, '() (ot '% :'(#'ctrer%. It &+Je+%e -'+) t$e co(tr'ctor%t'F o( '&& t$e co(tr'ct% #or t$e )e%+D( '() co(%trct+o( o# ce(tr'& %%te: '% te%t+;e) to b Mr.Re 'rJer, +t% re%+)e(t '() Ge(er'& M'('Der. "t.%.(. -. 10=, 103 !+:+&'r&, E(D+(eer+(D )+)(ot $'e re')/:')e '+r co()+t+o(+(D (+t% #or %'&e bt '% -er te%t+:o( o# Mr. 'rJer -o(+(+r o# @)De Lc+'(o o# t$e CTA

? A%+)e #ro: t$e De(er'& co:-o(e(t%, $+c$ Do +(to '+r

co()+t+o(+(D -&'(t or %%te: o# t$e ce(tr'& t-e $+c$ orco:-'( ()ert'Je%, '() t$e -roce)re #o&&oe) b o +(obt'+(+(D '() eFect+(D co(tr'ct% $+c$ o $'e '&re') te%t+;e)to +( -re+o% $e'r+(D, o&) o %' t$'t t$e coer+(D co(tr'ct% #ort$e%e )+ere(t -ro8ect% &+%te) ... re#erre) to +( t$e &+%t, EF$. * 're+)e(t+c'& +( eer re%-ectS I :e'( eer -&'( or %%te: coere) bt$e%e )+ere(t co(tr'ct% 're +)e(t+c'& +( %t'()'r) +( eer re%-ect,%o t$'t o c'( re-ro)ce t$e:S

A No, %+r. T$e 're (ot '&& %t'()'r). O( t$e co(tr'r, (o(e o# t$e:'re t$e %':e. E'c$ o(e :%t be )e%+D(e) '() co(%trcte) to :eett$e -'rt+c&'r re+re:e(t%, $et$er t$e '--&+c't+o( +% to beo-er'te). "t.%.(. --. 101/10=

<$'t <e co(%+)er '% o( '&& #or% +t$ t$e c'%e 't b'r +% t$e c'%e o# S.M. Lawrence Co. vs.McFarland,Co::+%%+o(er o# I(ter('& Ree(e o# t$e !t'te o# Te((e%%ee '() McC'(&e%%, 355!< =), 100, 101, $ere t$e c'%e -re%e(t% t$e e%t+o( o# $et$er o(e e(D'De) +( t$eb%+(e%% o# co(tr'ct+(D #or t$e e%t'b&+%$:e(t o# '+r co()+t+o(+(D %%te: +( b+&)+(D%, $+c$orJ re+re%, +( '))+t+o( to t$e #r(+%$+(D o# ' coo&+(D (+t, t$e co((ect+o( o# %c$ (+t +t$



... <e 're ':-& co(+(ce) #ro: t$e e+)e(ce -re%e(te) b re%-o()e(t t$'t-et+t+o(er )e&+ber'te& '() -r-o%e& :+%)ec&'re) +t% +:-ort't+o(%. T$+%e+)e(ce co(%+%t% o# &etter% r+tte( b -et+t+o(er to +t% #ore+D( %--&+er%,+(%trct+(D t$e: o( $o to +(o+ce '() )e%cr+be t$e '+r co()+t+o(+(D (+t%or)ere) b -et+t+o(er. ... "-. =1 CTA rec.

e%-+te t$e 'boe ;()+(D%, $oeer, t$e Cort o# T'F A--e'&% 'b%o&e) E(D+(eer+(D #ro:

-'+(D t$e 50K %rc$'rDe -re%cr+be b !ect+o( 13"' o# t$e T'F Co)e b re'%o(+(D ot '%#o&&o%4

T$e +:-o%+t+o( o# t$e 50K %rc$'rDe -re%cr+be) b !ect+o( 13"' o# t$e T'FCo)e +% b'%e) o( +&&#& (eD&ect to ;&e t$e :o(t$& retr( +t$+( =0 )'% '#ter t$ee() o# e'c$ :o(t$ or +( c'%e ' #'&%e or #r')&e(t retr( +% +&&#&& :')e, +t c'(re')+& be %ee(, t$'t -et+t+o(er c'((ot &eD'&& be $e&) %b8ect to t$e 50K%rc$'rDe +:-o%e) b !ect+o( 13"' o# t$e T'F Co)e. Ne+t$er c'( -et+t+o(er be$e&) %b8ect to t$e 50K %rc$'rDe ()er !ect+o( 190 o# t$e T'F Co)e )e'&+(D o(

co:-e(%'t+(D t'F bec'%e t$e -ro+%+o(% t$ereo# )o (ot +(c&)e t$e 50K%rc$'rDe. <$ere ' -'rt+c&'r -ro+%+o( o# t$e T'F Co)e )oe% (ot +:-o%e t$e50K %rc$'rDe '% #r') -e('&t e c'((ot e(#orce ' (o(/eF+%t+(D -ro+%+o( o#&' (ot+t$%t'()+(D t$e '%%e%%:e(t o# re%-o()e(t to t$e co(tr'r. I(%t'(ce% o#t$e eFc&%+o( +( t$e T'F Co)e o# t$e 50K %rc$'rDe 're t$o%e )e'&+(D o( t'F o(b'(J%, t'Fe% o( rece+-t% o# +(%r'(ce co:-'(+e%, '() #r'(c$+%e t'F. 2oeer, +#t$e T'F Co)e +:-o%e% t$e 50K %rc$'rDe '% #r') -e('&t, +t eF-re%%& %o-ro+)e% '% +( t$e c'%e% o# +(co:e t'F, e%t'te '() +($er+t'(ce t'Fe%, D+#t t'Fe%,:+(+(D t'F, ':%e:e(t t'F '() t$e :o(t$& -erce(t'De t'Fe%. Accor)+(D&, e

$o&) t$'t -et+t+o(er +% (ot %b8ect to t$e 50K %rc$'rDe )e%-+te t$e eF+%te(ce o##r') +( t$e 'b%e(ce o# &eD'& b'%+% to %--ort t$e +:-ort't+o( t$ereo#. "-. ==CTA rec.

<e $'e Do(e oer t$e eF$+b+t% %b:+tte) b t$e Co::+%%+o(er e+)e(c+(D #r') co::+tte)b E(D+(eer+(D '() <e re-ro)ce %o:e o# t$e: $ere()er #or c&'r+t.

A% e'r& '% M'rc$ 1, 1953, E(D+(eer+(D +( ' &etter o# ee( )'te rote to Tr'(e Co. "EF$. 3/--. 15=/155, BIR rec.viz:

or +(o+ce% %$o&) be :')e +( t$e (':e o# M')r+D'& Co., I(c., M'(+&',$+&+--+(e%, co E(D+(eer+(D E+-:e(t !--& Co., M'(+&', $+&+--+(e% #or'r)+(D '&& corre%-o()e(ce '() %$+--+(D -'-er% co(cer(+(D t$+% or)er to %o(& '() (ot to t$e c%to:er.

<$e( +(o+c+(D, or +(o+ce% %$o&) be eF'ct& '% )et'+&e) +( t$e c%to:er%Letter Or)er )'te) M'rc$ 1t$, 1953 'tt'c$e). T$+% +% +( 'ccor)'(ce +t$ t$e$+&+--+(e +:-ort &+ce(%e% Dr'(te) to M')r+D'& Co., I(c. '() %c$ )et'+&% :%to(& be %$o( o( '&& -'-er% '() %$+--+(D )oc:e(t% #or t$+% %$+-:e(t. No



mention of words air conditioning equipment should be made on any shipping

documents as well as on the cases.&e'%e D+e t$+% :'tter or c're#&'tte(t+o(, ot$er+%e Dre't )+c&t+e% +&& be e(co(tere) +t$ t$e $+&+--+(eBre' o# C%to:% $e( c&e'r+(D t$e %$+-:e(t o( +t% 'rr+'& +( M'(+&'. A&&+(o+ce% '() c'%e% %$o&) be :'rJe) T2I! E?UIMENT *OR RIAL CEMENTCO.

T$e %':e +(%trct+o( '% :')e to Ac:e I()%tr+e%, I(c., !'( *r'(c+%co, C'&+#or(+' +( ' &etter)'te) M'rc$ 19, 1953 "EF$. 3/@/1 --. 150/151, BIR rec.

O( A-r+& 6, 1953, E(D+(eer+(D rote to Oe(%/Cor(+(D *+berD&'%% Cor-., Ne orJ, U.!.A."EF$. 3/1 --. 17/19, BIR rec. '&%o e(8o+(+(D t$e &'tter #ro: :e(t+o(+(D or re#err+(D to t$eter: '+r co()+t+o(+(D '() to )e%cr+be t$e Doo)% o( or)er '% *+berD&'%% -+-e '() -+-e ;tt+(D+(%&'t+o( +(%te'). L+Je+%e o( A-r+& 30, 1953, E(D+(eer+(D t$re'te(e) to )+%co(t+(e t$e#or'r)+(D %er+ce o# U(+er%'& Tr'(%co(t+(e(t'& Cor-or't+o( $e( +t rote Tr'(e Co. "EF$.3/2 -. 16, BIR rec.4

It +&& be (ote) t$'t t$e U(+er%'& Tr'(%co(t+(e(t'& Cor-or't+o( +% (ot #o&&o+(Dt$roD$ o( t$e +(%trct+o(% $+c$ $'e bee( coere) b t$e 'boecorre%-o()e(ce, '() $+c$ +()+c'te% t$e (ece%%+t o# )+%co(t+(+(D t$e %e o#t$e ter: A+r co()+t+o(+(D M'c$+(er or A+r Coo&er%. Or +(%trct+o(%co(cer(+(D t$+% De(er'& %+t't+o( $'e bee( %e(t to o +( ':-&e t+:e to $'e'o+)e) t$+% error +( ter:+(o&oD, '() e +&& '%J t$'t o( rece+-t o# t$+% &ettert$'t o 'D'+( r+te to U(+er%'& Tr'(%co(t+(e(t'& Cor-. '() +(#or: t$e: t$'t, +#+( t$e #tre, t$e 're ('b&e to coo-er'te +t$ % o( t$+% re+re:e(t, e +&&t$ere'#ter be ('b&e to t+&+He t$e+r #or'r)+(D %er+ce. &e'%e +(#or: t$e: t$'te +&& (ot to&er'te '(ot$er #'+&re to #o&&o or re+re:e(t%.

A() o( @& 17, 1953 "EF$/ 3/D -. 15, BIR rec. E(D+(eer+(D rote Tr'(e Co. '(ot$er&etter,viz:

I( t$e -'%t, e $'e '&'% -'+) t$e '+r co()+t+o(+(D t'F o( c&+:'te c$'(Der% '()t$'t :'rJ +% recoD(+He) +( t$e $+&+--+(e%, '% '+r co()+t+o(+(D e+-:e(t. T$+%:'tter o# 'o+)+(D '( t+e/+( o( '+r co()+t+o(+(D +% er +:-ort'(t to %, '() e're '%J+(D t$'t #ro: $ereo( t$'t $oeer t'Je% c're o# t$e -roce%%+(D o# or

or)er% be c're#&& +(%trcte) %o '% to 'o+) 'D'+( %+(D t$e ter: C&+:'tec$'(Der% or +( '( ' re#err+(D to t$e e+-:e(t '% '+r co()+t+o(+(D.

A() +( re%-o(%e to t$e '#oreote) &etter, Tr'(e Co. rote o( @& 30, 1953, %DDe%t+(D '%o&t+o(,viz:

<e #ee& t$'t e c'( -rob'b& %o&e '&& t$e -rob&e:% b #o&&o+(D t$e -roce)reot&+(e) +( or &etter o# M'rc$ =5, 1953 $ere+( o %t'te) t$'t +( '&& #tre 8ob%o o&) e(c&o%e -$oto%t't+c co-+e% o# or +:-ort &+ce(%e %o t$'t e :+D$t



:'Je - to %et% o# +(o+ce%4 o(e %et )e%cr+b+(D e+-:e(t or)ere) %+:-&'ccor)+(D to t$e ' t$'t t$e 're &+%te) o( t$e +:-ort &+ce(%e '() '(ot$er'ccor)+(D to or or)+('r reD&'r :et$o)% o# or)er r+te/-. <e o&) t$e(+(c&)e t$e %et :')e - 'ccor)+(D to t$e +:-ort &+ce(%e +( t$e %$+--+(D boFe%t$e:%e&e% '() %e t$o%e +te:% '% or 'ct'& %$+--+(D )oc:e(t% '() +(o+ce%,'() e +&& %e() t$e ot$er reD&'r +(o+ce to o, b %e-'r'te corre%-o()e(ce."EF$/ No. 3/*/1, -. 1 BIR rec.

A(ot$er +(tere%t+(D &etter o# E(D+(eer+(D +% o(e )'te) AD%t =7, 1955 "EF$. 3/C -. 11 BIRrec.

I( t$e -roce%% o# c&e'r+(D t$e %$+-:e(t #ro: t$e -+er%, o(e o# t$e C%to:%+(%-ector% ree%te) to %ee t$e -'cJ+(D &+%t. U-o( -re%e(t+(D t$e -'cJ+(D &+%t, +t'% )+%coere) t$'t t$e %':e '% -re-'re) o( ' co- o# or &etter$e') $+c$+()+c'te) t$'t t$e Tr'(e Co. :'(#'ctre) '+r co()+t+o(+(D, $e't+(D '() $e'ttr'(%#er e+-:e(t. Accor)+(D&, t$e +(%-ector% +(%+%te) t$'t t$+% e+-:e(t '%

be+(D +:-orte) #or '+r co()+t+o(+(D -r-o%e%. To date, we have not been able toclear the shipment and it is possible that we will be required to pay heavy taxes

on equipment.

The purpose of this letter is to request that in the future, no documents of any

kind should be sent with the order that indicate in any way that the equipment

could possibly be used for air conditioning.

It +% re'&+He) t$'t t$+% ' bro') ree%t '() #'+r& )+c&t to 'cco:-&+%$ '()'):+(+%ter, bt e be&+ee +t$ -ro-er c't+o( +t c'( be eFecte). or

coo-er't+o( '() c&o%e %-er+%+o( co(cer(+(D t$e%e :'tter% +&& be '--rec+'te)."E:-$'%+% %--&+e)

T$e '#oreote) co::(+c't+o(% 're %tro(D& +()+c't+e o# t$e #r')&e(t +(te(t o#E(D+(eer+(D to :+%)ec&'re +t% +:-ort't+o( o# '+r co()+t+o(+(D (+t% '() %-'re -'rt% or'cce%%or+e% t$ereo# to e')e -':e(t o# t$e 30K t'F. A() %+(ce t$e co::+%%+o( o# #r') +%'&toDet$er too D&'r+(D, <e c'((ot 'Dree +t$ t$e Cort o# T'F A--e'&% +( 'b%o&+(DE(D+(eer+(D #ro: t$e 50K #r') %rc$'rDe, ot$er+%e <e +&& be D++(D -re:+: to ' -&'+(&+(to&er'b&e 'ct o# t'F e'%+o(. A% '-t& %t'te) b t$e( !o&+c+tor Ge(er'&, (o @%t+ce, A(to(+o

. B'rre)o4 t$+% c+rc:%t'(ce +&& (ot #ree +t #ro: t$e 50K %rc$'rDe bec'%e +( '( c'%e$et$er +t +% %b8ect to ')'(ce %'&e% t'F or co:-e(%'t+(D t'F, +t +% re+re) b &' to tr&)ec&'re +t% +:-ort't+o( +( t$e +:-ort e(tr+e% '() +(ter('& ree(e )ec&'r't+o(% be#ore t$e+:-ort't+o(% :'be re&e'%e) #ro: c%to:% c%to). T$e %'+) e(tr+e% 're t$e er)oc:e(t% $ere t$e ('tre, '(t+t '() '&e o# t$e +:-orte) Doo)% )ec&'re) '() $eret$e c%to:% )t+e%, +(ter('& ree(e t'Fe%, '() ot$er #ee% or c$'rDe% +(c+)e(t to t$e+:-ort't+o( 're co:-te). T$e%e e(tr+e%, t$ere#ore, %ere t$e %':e -r-o%e '% t$e retr(%re+re) b !ect+o( 13"' o# t$e Co)e.



A(e(t t$e =5K )e&+(e(c %rc$'rDe, <e #&& 'Dree to t$e r&+(D :')e b t$e Cort o# T'FA--e'&% '() $o&) E(D+(eer+(D &+'b&e #or t$e %':e. A% $e&) b t$e &oer cort4

At ;r%t b&%$ +t o&) %ee: t$'t t$e co(te(t+o( o# -et+t+o(er t$'t +t +% (ot %b8ectto t$e )e&+(e(c, %rc$'rDe o# =5K +% %o(), '&+) '() te('b&e. 2oeer, '%er+o% %t) '() cr+t+c'& '('&%+% o# t$e $+%tor+c'& -ro+%+o(% o# !ect+o( 190 o#t$e T'F Co)e )e'&+(D o( co:-e(%'t+(D t'F +( re&'t+o( to !ect+o( 13"' o# t$e

%':e Co)e, +&& %$o t$'t t$e co(te(t+o( o# -et+t+o(er +% +t$ot :er+t. T$eor+D+('& teFt o# !ect+o( 190 o# Co::o(e'&t$ Act 66, ot$er+%e J(o( '% t$eN't+o('& I(ter('& Ree(e Co)e, '% ':e()e) b Co::o(e'&t$ Act No. 503,eect+e o( October 1, 1939, )oe% (ot -ro+)e #or t$e ;&+(D o# ' co:-e(%'t+o(t'F retr( '() -':e(t o# t$e =5 K %rc$'rDe #or &'te -':e(t t$ereo#. U()ert$e or+D+('& teFt o# !ect+o( 190 o# t$e T'F Co)e '% ':e()e) b Co::o(e'&t$Act No. 503, t$e co(te(t+o( o# t$e -et+t+o(er t$'t +t +% (ot %b8ect to t$e =5K%rc$'rDe '--e'r% to be &eD'&& te('b&e. 2oeer, !ect+o( 190 o# t$e T'F Co)e'% %b%ee(t& ':e()e) b t$e Re-b&+c Act% No%. =53, 361, 1511 '() 161=

eect+e October 1, 196, @& 1, 19, @(e 9, 199, @(e 16, 1956 '() AD%t =,1956 re%-ect+e&, $+c$ +('r+'b& -ro+)e% ':o(D ot$er%, t$e #o&&o+(D4

... I# '( 'rt+c&e +t$)r'( #ro: t$e c%to:$o%e or t$e -o%t oce+t$ot -':e(t o# t$e co:-e(%'t+(D t'F +% %b%ee(t& %e) bt$e +:-orter #or ot$er -r-o%e%, corre%-o()+(D e(tr %$o&) be:')e +( t$e booJ% o# 'cco(t% +# '( 're Je-t or ' r+tte( (ot+cet$ereo# %e(t to t$e Co&&ector o# I(ter('& Ree(e '() -':e(t o# t$ecorre%-o()+(D co:-e(%'t+(D t'F :')e +t$+( 30 )'% #ro: t$e )'te

o# %c$ e(tr or (ot+ce '() +# t'F +% (ot -'+) +t$+( %c$ -er+o) t$e':o(t o# t$e t'F %$'&& be +(cre'%e) b =5K t$e +(cre:e(t to be '-'rt o# t$e t'F.

!+(ce t$e +:-orte) '+r co()+t+o(+(D (+t%/'() %-'re -'rt% or 'cce%%or+e% t$ereo# 're %b8ectto t$e co:-e(%'t+(D t'F o# 30K '% t$e %':e ere %e) +( t$e co(%trct+o( b%+(e%% o#E(D+(eer+(D, +t +% +(c:be(t -o( t$e &'tter to co:-& +t$ t$e '#oreote) re+re:e(t o#!ect+o( 190 o# t$e Co)e, b -o%t+(D +( +t% booJ% o# 'cco(t% or (ot+#+(D t$e Co&&ector o#I(ter('& Ree(e t$'t t$e +:-orte) 'rt+c&e% ere %e) #or ot$er -r-o%e% +t$+( 30 )'%. ...Co(%ee(t& '% t$e 30K co:-e(%'t+(D t'F '% (ot -'+) b -et+t+o(er +t$+( t$e t+:e

-re%cr+be) b !ect+o( 190 o# t$e T'F Co)e '% ':e()e), +t +% t$ere#ore %b8ect to t$e =5K%rc$'rDe #or )e&+(e(c +( t$e -':e(t o# t$e %'+) t'F. "--. ==/==6 CTA rec.

III

L'%t& t$e e%t+o( o# -re%cr+-t+o( o# t$e t'F '%%e%%:e(t $'% bee( -t +( +%%e. E(D+(eer+(Dco(te()% t$'t +t '% (ot D+&t o# t'F #r') +( eect+(D t$e +:-ort't+o(% '(), t$ere#ore,!ect+o( 33="' -re%cr+b+(D te( e'r% +% +('--&+c'b&e, c&'+:+(D t$'t t$e -ert+(e(t -re%cr+-t+e-er+o) +% ;e e'r% #ro: t$e )'te t$e e%t+o(e) +:-ort't+o(% ere :')e. A re+e o# t$e



#ourt of <irst Instance of Ri,al" $ranch II4 " in #i)il #ase No6 .4B.3" hich or!ere! petitioner to pay

pri)ate respon!ent the amount nee!e! to rectify the faults an! !eciencies of the air8con!itionin&

system installe! by petitioner in pri)ate respon!entPs buil!in&" plus !ama&es" attorneyPs fees an! costs'

$y a resolution of the <irst Di)ision of this #ourt !ate! No)ember .>" .//1" this case as transferre! to

the Thir!6 *fter !eliberatin& on the )arious submissions of the parties" inclu!in& the petition" recor! on

appeal" pri)ate respon!entPs comment an! briefs for the petitioner an! the pri)ate respon!ent" the

#ourt assi&ne! the ritin& of this Decision to the un!ersi&ne!" ho too; his oath as a member of the

#ourt on October .5" .//16

The Facts

2ursuant to the contract !ate! September .5" ./A3 beteen petitioner an! pri)ate respon!ent" the

former un!ertoo; to fabricate" furnish an! install the air8con!itionin& system in the latterPs buil!in& alon&

$uen!ia *)enue" %a;ati in consi!eration of 23.5"5556556 2etitioner as to furnish the materials" labor"

tools an! all ser)ices reEuire! in or!er to so fabricate an! install sai! system6 The system as

complete! in ./A> an! accepte! by pri)ate respon!ent" ho pai! in full the contract price6

On September 3" ./A1" pri)ate respon!ent sol! the buil!in& to the National In)estment an!

De)elopment #orporation (NID#'6 The latter too; possession of the buil!in& but on account of NID#Ps

noncompliance ith the terms an! con!itions of the !ee! of sale" pri)ate respon!ent as able to secure

@u!icial rescission thereof6 The onership of the buil!in& ha)in& been !ecree! bac; to pri)ate

respon!ent" he re8acEuire! possession sometime in ./B.6 It as then that he learne! from some NID#"

employees of the !efects of the air8con!itionin& system of the buil!in&6

*ctin& on this information" pri)ate respon!ent commissione! 9n&ineer Da)i! R6 Sapico to ren!er a

technical e)aluation of the system in relation to the contract ith petitioner6 In his report" Sapicoenumerate! the !efects of the system an! conclu!e! that it as not capable of maintainin& the !esire!

room temperature of BAW< 8 3W< (9hibit #'1 6

On the basis of this report" pri)ate respon!ent le! on %ay 0" ./B. an action for !ama&es a&ainst

petitioner ith the then #ourt of <irst Instance of Ri,al (#i)il #ase No6 .4B.3'6 The complaint alle&e!

that the air8con!itionin& system installe! by petitioner !i! not comply ith the a&ree! plans an!

specications6 Hence" pri)ate respon!ent praye! for the amount of 23.5"555655 representin& the

rectication cost" 2.55"555655 as !ama&es an! 2.1"555655 as attorneyPs fees6

2etitioner mo)e! to !ismiss the complaint" alle&in& that the prescripti)e perio! of si months ha! set in

pursuant to *rticles .1AA an! .1AB" in relation to *rticle .1B. of the #i)il #o!e" re&ar!in& the

responsibility of a )en!or for any hi!!en faults or !efects in the thin& sol!6

2ri)ate respon!ent countere! that the contract !ate! September .5" ./A3 as not a contract for sale

but a contract for a piece of or; un!er *rticle .B.> of the #i)il #o!e6 Thus" in accor!ance ith *rticle

..44 (.' of the same #o!e" the complaint as timely brou&ht ithin the ten8year prescripti)e perio!6

http://lawphil.net/judjuris/juri1996/jan1996/gr_52267_1996.html#fnt4






In its reply" petitioner ar&ue! that *rticle .1B. of the #i)il #o!e pro)i!in& for a si8month prescripti)e

perio! is applicable to a contract for a piece of or; by )irtue of *rticle .B.4" hich pro)i!es that such a

contract shall be &o)erne! by the pertinent pro)isions on arranty of title an! a&ainst hi!!en !efects

an! the payment of price in a contract of sale A 6

The trial court !enie! the motion to !ismiss6 In its anser to the complaint" petitioner reiterate! its claim

of prescription as an aFrmati)e !efense6 It alle&e! that hate)er !efects mi&ht ha)e been !isco)ere! in

the air8con!itionin& system coul! ha)e been cause! by a )ariety of factors" inclu!in& or!inary ear an!

tear an! lac; of proper an! re&ular maintenance6 It pointe! out that !urin& the one8year perio! that

pri)ate respon!ent ithhel! nal payment" the system as sub@ecte! to )ery ri&i! inspection an!

testin& an! corrections or mo!ications e:ecte! by petitioner6 It interpose! a compulsory counterclaim

su&&estin& that the complaint as le! to o:set the a!)erse e:ects of the @u!&ment in #i)il #ase No6

B.4/4" #ourt of <irst Instance of %anila" in)ol)in& the same parties" herein pri)ate respon!ent as

a!@u!&e! to pay petitioner the balance of the unpai! contract price for the air8con!itionin& system

installe! in another buil!in& of pri)ate respon!ent" amountin& to 2.>0"4036316

Thereafter" pri)ate respon!ent le! anex-partemotion for preliminary attachment on the stren&th ofpetitionerPs on statement to the e:ect that it ha! sol! its business an! as no lon&er !oin& business in

%anila6 The trial court &rante! the motion an!" upon pri)ate respon!entPs postin& of a bon! of

<P15"555655" or!ere! the issuance of a rit of attachment6

In !ue course" the trial court ren!ere! a !ecision n!in& that petitioner faile! to install certain parts an!

accessories calle! for by the contract" an! !e)iate! from the plans of the system" thus re!ucin& its

operational e:ecti)eness to the etent that >1 in!o8type units ha! to be installe! in the buil!in& to

achie)e a fairly !esirable room temperature6 On the Euestion of prescription" the trial court rule! that the

complaint as le! ithin the ten8year court prescripti)e perio! althou&h the contract as one for a

piece of or;" because it in)ol)e! the installation of an air8con!itionin& system hich the !efen!ant

itself manufacture!" fabricate!" !esi&ne! an! installe!6

2etitioner appeale! to the #ourt of *ppeals" hich aFrme! the !ecision of the trial court6 Hence" it

institute! the instant petition6

The Submissions of the Parties

In the instant 2etition" petitioner raise! three issues6 <irst" it conten!e! that pri)ate respon!entPs

acceptance of the or; an! his payment of the contract price etin&uishe! any liability ith respect tothe !efects in the air8con!itionin& system6 Secon!" it claime! that the #ourt of *ppeals erre! hen it

hel! that the !efects in the installation ere not apparent at the time of !eli)ery an! acceptance of the

or; consi!erin& that pri)ate respon!ent as not an epert ho coul! reco&ni,e such !efects6 Thir!" it

insiste! that" assumin&arguendothat there ere in!ee! hi!!en !efects" pri)ate respon!entPs complaint

as barre! by prescription un!er *rticle .1B. of the #i)il #o!e" hich pro)i!es for a si8month

prescripti)e perio!6





2ri)ate respon!ent" on the other han!" a)erre! that the issues raise! by petitioner" li;e the Euestion of

hether there as an acceptance of the or; by the oner an! hether the hi!!en !efects in the

installation coul! ha)e been !isco)ere! by simple inspection" in)ol)e Euestions of fact hich ha)e been

passe! upon by the appellate court6

The Court's Ruling

The Supreme #ourt re)ies only errors of la in petitions for re)ie on certiorariun!er Rule 416 It is notthe function of this #ourt to re8eamine the n!in&s of fact of the appellate court unless sai! n!in&s are

not supporte! by the e)i!ence on recor! or the @u!&ment is base! on a misapprehension of factsB of

*ppeals erre! hen it hel! that the !efects in the installation ere not apparent at the time of !eli)ery

an! acceptance of the or; consi!erin& that pri)ate respon!ent as not an epert ho coul! reco&ni,e

such !efects6 Thir!6 it insiste! that" assumin&arguendothat there ere in!ee! hi!!en !efects" pri)ate

respon!entPs complaint as barre! by prescription un!er *rticle .1B. of the #i)il #o!e" hich pro)i!es

for a si8month prescripti)e perio!6

2ri)ate respon!ent" on the other han!" a)erre! that the issues raise! by petitioner" li;e the Euestion ofhether here as an acceptance of the or; by the oner an! hether the hi!!en !efects in the

installation coul! ha)e been !isco)ere! by simple inspection" in)ol)e Euestions of fact hich ha)e been

passe! upon by the appellate court6

The #ourt has consistently hel! that the factual n!in&s of the trial court" as ell as the #ourt of

*ppeals" are nal an! conclusi)e an! may not be re)iee! on appeal6 *mon& the eceptional

circumstances here a reassessment of facts foun! by the loer courts is alloe! are hen the

conclusion is a n!in& &roun!e! entirely on speculation" surmises or con@ectures= hen the

inference ma!e is manifestly absur!" mista;en or impossible= hen there is &ra)e abuse of

!iscretion in the appreciation of facts= hen the @u!&ment is premise! on a misapprehension of

facts= hen the n!in&s ent beyon! the issues of the case an! the same are contrary to the

a!missions of both appellant an! appellee6 *fter a careful stu!y of the case at bench" e n!

none of the abo)e &roun!s present to @ustify the re8e)aluation of the n!in&s of fact ma!e by the

courts belo60

e see no )ali! reason to !iscar! the factual conclusions of the appellate court6 6 6 6 (I't is not the

function of this #ourt to assess an! e)aluate all o)er a&ain the e)i!ence" testimonial an!

!ocumentary" a!!uce! by the parties" particularly here" such as here"the findings of both the

trial court and the appellate court on the matter coincide6/

(9mphasis supplie!'

Hence" the rst to issues ill not be resol)e! as they raise Euestions of fact6

Thus" the only Euestion left to be resol)e! is that of prescription6 In their submissions" the parties ar&ue!

len&thily on the nature of the contract entere! into by them" viz6" hether it as one of sale or for a piece

of or;6

*rticle .B.> of the #i)il #o!e !enes a contract for a piece of or; thus7











$y the contract for a piece of or; the contractor bin!s himself to eecute a piece of or; for the

employer" in consi!eration of a certain price or compensation6 The contractor may either employ

only his labor or s;ill" or also furnish the material6

* contract for a piece of or;" labor an! materials may be !istin&uishe! from a contract of sale by the

inEuiry as to hether the thin& transferre! is one not in eistence an! hich oul! ne)er ha)e eiste!

but for the or!er" of the person !esirin& it.5 6 In such case" the contract is one for a piece of or;" not a

sale6 On the other han!" if the thin& sub@ect of the contract oul! ha)e eiste! an! been the sub@ect of a

sale to some other person e)en if the or!er ha! not been &i)en" then the contract is one of sale.. 6

Thus" %r6 -ustice Vitu&.3 eplains that 8

* contract for the !eli)ery at a certain price of an article hich the )en!or in the or!inary course

of his business manufactures or procures for the &eneral mar;et" hether the same is on han! at

the time or not is a contract of sale" but if the &oo!s are to be manufacture! specially for the

customer an! upon his special or!er" an! not for the &eneral mar;et" it is a contract for a piece

of work(*rt6 .4AB" #i)il #o!e'6 The mere fact alone that certain articles are ma!e upon pre)iousor!ers of customers ill not ar&ue a&ainst the imposition of the sales ta if such articles are

or!inarily manufacture! by the tapayer for sale to the public (#elestino #o6 )s6 #ollector" // 2hil

04.'6

To Tolentino" the !istinction beteen the to contracts !epen!s on the intention of the parties6 Thus" if

the parties inten!e! that at some future !ate an ob@ect has to be !eli)ere!" ithout consi!erin& the or;

or labor of the party boun! to !eli)er" the contract is one of sale6 $ut if one of the parties accepts the

un!erta;in& on the basis of some plan" ta;in& into account the or; he ill employ personally or throu&h

another" there is a contract for a piece of or;.> 6

#learly" the contract in Euestion is one for a piece of or;6 It is not petitionerPs line of business to

manufacture air8con!itionin& systems to be sol! o:8the8shelf6 Its business an! particular el! of

epertise is the fabrication an! installation of such systems as or!ere! by customers an! in accor!ance

ith the particular plans an! specications pro)i!e! by the customers6 Naturally" the price or

compensation for the system manufacture! an! installe! ill !epen! &reatly on the particular plans an!

specications a&ree! upon ith the customers6

The obli&ations of a contractor for a piece of or; are set forth in *rticles .B.4 an! .B.1 of the #i)il

#o!e" hich pro)i!e7

*rt6 .B.46 If the contractor a&rees to pro!uce the or; from material furnishe! by him" he shall

!eli)er the thin& pro!uce! to the employer an! transfer !ominion o)er the thin&6 This contract

shall be &o)erne! by the folloin& articles as ell as by the pertinent pro)isions on arranty of

title an! a&ainst hi!!en !efects an! the payment of price in a contract of sale6

*rt6 .B.16 The contractor shall eecute the or; in such a manner that it has the Eualities a&ree!

upon an! has no !efects hich !estroy or lessen its )alue or tness for its or!inary or stipulate!













use6 Shoul! the or; be not of such Euality" the employer may reEuire that the contractor remo)e

the !efect or eecute another or;6 If the contractor fails or refuses to comply ith this obli&ation"

the employer may ha)e the !efect remo)e! or another or; eecute!" at the contractorPs cost6

The pro)isions on arranty a&ainst hi!!en !efects" referre! to in *rt6 .B.4 abo)e8Euote!" are foun! in

*rticles .1A. an! .1AA" hich rea! as follos7

*rt6 .1A.6 The )en!or shall be responsible for arranty a&ainst the hi!!en !efects hich thethin& sol! may ha)e" shoul! they ren!er it unt for the use for hich it is inten!e!" or shoul! they

!iminish its tness for such use to such an etent that" ha! the )en!ee been aare thereof" he

oul! not ha)e acEuire! it or oul! ha)e &i)en a loer price for it= but sai! )en!or shall not be

anserable for patent !efects or those hich may be )isible" or for those hich are not )isible if

the )en!ee is an epert ho" by reason of his tra!e or profession" shoul! ha)e ;non them6

*rt6 .1AA6 The )en!or is responsible to the )en!ee for any hi!!en faults or !efects in the thin&

sol!" e)en thou&h he as not aare thereof6

This pro)ision shall not apply if the contrary has been stipulate!" an! the )en!or as not aare

of the hi!!en faults or !efects in the thin& sol!6

The reme!y a&ainst )iolations of the arranty a&ainst hi!!en !efects is either to ith!ra from the

contract (re!hibitory action' or to !eman! a proportionate re!uction of the price (accion quanti

manoris'" ith !ama&es in either case.4 6

InVillostas vs6 Court of Appeals.1

" e hel! that" hile it is true that *rticle .1B. of the #i)il #o!epro)i!es for a prescripti)e perio! of si months for a re!hibitory action" a cursory rea!in& of the ten

prece!in& articles to hich it refers ill re)eal that sai! rule may be applie! only in case of implie!

arranties= an! here there is an epress arranty in the contract" as in the case at bench" the

prescripti)e perio! is the one specie! in the epress arranty" an! in the absence of such perio!" the

&eneral rule on rescission of contract" hich is four years (*rticle .>0/" #i)il #o!e' shall apply.A 6

#onsistent ith the abo)e !iscussion" it oul! appear that this suit is barre! by prescription because

the complaint as le! more than four years after the eecution of the contract an! the completion of

the air8con!itionin& system6

Hoe)er" a close scrutiny of the complaint le! in the trial court re)eals that the ori&inal action is not

really for enforcement of the arranties a&ainst hi!!en !efects" but one for breach of the contract itself6

It alle&e!.B that the petitioner" in the installation of the air con!itionin& system !i! not comply ith the

specications pro)i!e! in the ritten a&reement beteen the parties" an! an e)aluation of the air8

con!itionin& system as installe! by the !efen!ant shoe! the folloin& !efects an! )iolations of the

specications of the a&reement" to it7

CRO?ND <LOOR7












Defects Note!7

Same as ri&ht in&6 ecept No6 4" *ll other !efects on ri&ht in& are common to the left in&6

S9#OND <LOOR7 (#ommon up to 9ICHT <LOORS'

#ompressors installe! are %9L#O ith B61 Hp V8belt !ri)en by .055 R2%" 8335 )olts" A5

cycles" > phase" Thri&e electric motor ith starters6

*s state! in the specications un!er" Section No6 IV" the %9L#O compressors !o not satisfy the

con!itions state! therein !ue to the folloin&7

.6 %9L#O #ompressors are not pro)i!e! ith automatic capacity unloa!er6

36 Not pro)i!e! ith oil pressure safety control6

>6 2articular compressors !o not ha)e pro)ision for reneal slee)es6

Out of the total .1 %9L#O compressors installe! to ser)e the 3n! oor up to 0th oors" only si

(A' units are in operation an! the rest ere alrea!y replace!6 Of the remainin& si (A' units"

se)eral of them ha)e been replace! ith bi&&er cran;shafts6

NINTH <LOOR7

To (3' orthin&ton 3V#4 !ri)en by .1 Hp" > phase" 335 )olts" A5 cycles" .B15 rpm" Hi&&s

motors ith starters6

Defects Note! are similar to &roun! oor6

C9N9R*L R9%*RJS7

?n!er Section III" Desi&n con!itions of specication for air con!itionin& or;" an! ta;in& into

account * $ same" the present systems are not capable of maintainin& the !esire!

temperature of BA X 3W< (sic'6

The present tenant ha)e installe! >1 in!o type air con!itionin& units !istribute! amon& the

!i:erent oor le)els6 Temperature measurements con!ucte! on %arch 3/6 ./B." re)eale! that

B0W< room (sic' is only maintaine! !ue to the a!!itional in!o type units6

The trial court" after e)aluatin& the e)i!ence presente!" hel! that" in!ee!" petitioner faile! to install

items an! parts reEuire! in the contract an! substitute! some other items hich ere not in accor!ance

ith the specications.0 " thus7

<rom all of the fore&oin&" the #ourt is persua!e! to belie)e the plainti: that not only ha! the

!efen!ant faile! to install items an! parts pro)i!e! for in the specications of the air8con!itionin&

system be installe!" li;e face an! by8pass !ampers an! mo!ulatin& thermostat an! many others"





but also that there are items" parts an! accessories hich ere use! an! installe! on the air8

con!itionin& system hich ere not in full accor! ith contract specications6 These omissions

to install the eEuipments" parts an! accessories calle! for in the specications of the contract" as

ell as the !e)iations ma!e in puttin& into the air8con!itionin& system eEuipments" parts an!

accessories not in full accor! ith the contract specication naturally resulte! to a!)ersely a:ect

the operational e:ecti)eness of the air8con!itionin& system hich necessitate! the installation of

thirty8)e in!o type of air8con!itionin& units !istribute! amon& the !i:erent oor le)els in or!er

to be able to obtain a fairly !esirable room temperature for the tenants an! actual occupants of

the buil!in&6 The #ourt opines an! so hol!s that the failure of the !efen!ant to follo the contract

specications an! sai! omissions an! !e)iations ha)in& resulte! in the operational

ine:ecti)eness of the system installe! ma;es the !efen!ant liable to the plainti: in the amount

necessary to rectify to put the air con!itionin& system in its proper operational con!ition to ma;e

it ser)e the purpose for hich the plainti: entere! into the contract ith the !efen!ant6

The respon!ent #ourt aFrme! the trial courtPs !ecision thereby ma;in& the latterPs n!in&s also its on6

Ha)in& conclu!e! that the ori&inal complaint is one for !ama&es arisin& from breach of a rittencontract 8 an! not a suit to enforce arranties a&ainst hi!!en !efects 8 e here 8 ith !eclare that the

&o)ernin& la is *rticle .B.1 (supra'6 Hoe)er" inasmuch as this pro)ision !oes not contain a specic

prescripti)e perio!" the &eneral la on prescription" hich is *rticle ..44 of the #i)il #o!e" ill apply6

Sai! pro)ision states"inter alia" that actions upon a ritten contract prescribe in ten (.5' years6 Since

the &o)ernin& contract as eecute! on September .5" ./A3 an! the complaint as le! on %ay 0"

./B." it is clear that the action has not prescribe!6

hat about petitionerPs contention that acceptance of the or; by the employer relie)es the contractor

of liability for any !efect in the or;K This as ansere! by respon!ent #ourt./ as follos7

*s the breach of contract hich &a)e rise to the instant case consiste! in appellantPs omission to

install the eEuipments (sic'" parts an! accessories not in accor!ance ith the plan an!

specications pro)i!e! for in the contract an! the !e)iations ma!e in puttin& into the air

con!itionin& system parts an! accessories not in accor!ance ith the contract specications" it

is e)i!ent that the !efect in the installation as not apparent at the time of the !eli)ery an!

acceptance of the or;" consi!erin& further that plainti: is not an epert to reco&ni,e the same6

<rom the )ery nature of thin&s" it is impossible to !etermine by the simple inspection of air

con!itionin& system installe! in an 08oor buil!in& hether it has been furnishe! an! installe! as

per a&ree! specications6

Verily" the mere fact that the pri)ate respon!ent accepte! the or; !oes not" ipso facto" relie)e the

petitioner from liability for !e)iations from an! )iolations of the ritten contract" as the la &i)es him ten

(.5' years ithin hich to le an action base! on breach thereof6

H9R9<OR9" the petition is hereby D9NI9D an! the assaile! Decision is *<<IR%9D6 No costs6

SO ORD9R9D6





Narvasa, C.J., Davide Jr., Melo and Francisco, JJ.,concur6

*oot(ote%

..6

G.R. No. L/753 @(e =0, 191

GONALO UAT !ON!, INC., petitioner"

)s6

ARCO AMU!EMENT COMAN "#or:er& J(o( '% Te'tro Arco, respon!ent6

Feria & Lao for petitioner.J. W. Ferrier and Daniel Me. Gomez for respondent.

LAUREL,J.4

This is a petition for the issuance of a rit of certiorarito the #ourt of *ppeals for the purpose of

re)iein& its *musement #ompany (formerly ;non as Teatro *rco'" plainti:8appellant" )s6 Con,alo

2uyat an! Sons6 Inc6" !efen!ant8appellee6

It appears that the respon!ent herein brou&ht an action a&ainst the herein petitioner in the #ourt of <irst

Instance of %anila to secure a reimbursement of certain amounts alle&e!ly o)erpai! by it on account of

the purchase price of soun! repro!ucin& eEuipment an! machinery or!ere! by the petitioner from the

Starr 2iano #ompany of Richmon!" In!iana" ?6S6*6 The facts of the case as foun! by the trial court an!

conrme! by the appellate court" hich are a!mitte! by the respon!ent" are as follos7

In the year ./3/" the Teatro *rco" a corporation !uly or&ani,e! un!er the las of the 2hilippine

Islan!s" ith its oFce in %anila" as en&a&e! in the business of operatin& cinemato&raphs6 In

./>5" its name as chan&e! to *rco *musement #ompany6 #6 S6 Salmon as the presi!ent"

hile *6 $6 #oulette as the business mana&er6 *bout the same time" Con,alo 2uyat Sons"

Inc6" another corporation !oin& business in the 2hilippine Islan!s" ith oFce in %anila" in a!!itionto its other business" as actin& as eclusi)e a&ents in the 2hilippines for the Starr 2iano

#ompany of Richmon!" In!iana" ?6S6 *6 It oul! seem that this last company !ealt in

cinemato&rapher eEuipment an! machinery" an! the *rco *musement #ompany !esirin& to

eEuipt its cinemato&raph ith soun! repro!ucin& !e)ices" approache! Con,alo 2uyat Sons"

Inc6" thru its then presi!ent an! actin& mana&er" Cil 2uyat" an! an employee name! Santos6

*fter some ne&otiations" it as a&ree! beteen the parties" that is to say" Salmon an! #oulette

on one si!e" representin& the plainti:" an! Cil 2uyat on the other" representin& the !efen!ant"

that the latter oul!" on behalf of the plainti:" or!er soun! repro!ucin& eEuipment from the Starr



2iano #ompany an! that the plainti: oul! pay the !efen!ant" in a!!ition to the price of the

eEuipment" a .5 per cent commission" plus all epenses" such as" frei&ht" insurance" ban;in&

char&es" cables" etc6 *t the epense of the plainti:" the !efen!ant sent a cable" 9hibit >" to the

Starr 2iano #ompany" inEuirin& about the eEuipment !esire! an! ma;in& the sai! company to

Euote its price ithout !iscount6 * reply as recei)e! by Con,alo 2uyat Sons" Inc6" ith the

price" e)i!ently the list price of Q."B55 f6o6b6 factory Richmon!" In!iana6 The !efen!ant !i! not

sho the plainti: the cable of inEuiry nor the reply but merely informe! the plainti: of the price of

Q."B556 $ein& a&reeable to this price" the plainti:" by means of 9hibit ." hich is a letter

si&ne! by #6 S6 Salmon !ate! No)ember ./" ./3/" formally authori,e! the or!er6 The eEuipment

arri)e! about the en! of the year ./3/" an! upon !eli)ery of the same to the plainti: an! the

presentation of necessary papers" the price of Q.6B55" plus the .5 per cent commission a&ree!

upon an! plus all the epenses an! char&es" as !uly pai! by the plainti: to the !efen!ant6

Sometime the folloin& year" an! after some ne&otiations beteen the same parties" plainti: an!

!efen!ants" another or!er for soun! repro!ucin& eEuipment as place! by the plainti: ith the

!efen!ant" on the same terms as the rst or!er6 This a&reement or or!er as conrme! by the

plainti: by its letter 9hibit 3" ithout !ate" that is to say" that the plainti: oul! pay for theeEuipment the amount of Q."A55" hich as suppose! to be the price Euote! by the Starr 2iano

#ompany" plus .5 per cent commission" plus all epenses incurre!6 The eEuipment un!er the

secon! or!er arri)e! in !ue time" an! the !efen!ant as !uly pai! the price of Q."A55 ith its .5

per cent commission" an! Q.A5" for all epenses an! char&es6 This amount of Q.A5 !oes not

represent actual out8of8poc;et epenses pai! by the !efen!ant" but a mere at char&e an! rou&h

estimate ma!e by the !efen!ant eEui)alent to .5 per cent of the price of Q."A55 of the

eEuipment6

*bout three years later" in connection ith a ci)il case in Vi&an" le! by one <i!el Reyes a&ainstthe !efen!ant herein Con,alo 2uyat Sons" Inc6" the oFcials of the *rco *musement #ompany

!isco)ere! that the price Euote! to them by the !efen!ant ith re&ar! to their to or!ers

mentione! as not the net price but rather the list price" an! that the !efen!ants ha! obtaine! a

!iscount from the Starr 2iano #ompany6 %oreo)er" by rea!in& re)ies an! literature on prices of

machinery an! cinemato&raph eEuipment" sai! oFcials of the plainti: ere con)ince! that the

prices char&e! them by the !efen!ant ere much too hi&h inclu!in& the char&es for out8of8

poc;et epense6 <or these reasons" they sou&ht to obtain a re!uction from the !efen!ant or

rather a reimbursement" an! failin& in this they brou&ht the present action6

The trial court hel! that the contract beteen the petitioner an! the respon!ent as one of outri&ht

purchase an! sale" an! absol)e! that petitioner from the complaint6 The appellate court" hoe)er" by

a !i)ision of four" ith one @ustice !issentin& hel! that the relation beteen petitioner an! respon!ent

as that of a&ent an! principal" the petitioner actin& as a&ent of the respon!ent in the purchase of the

eEuipment in Euestion" an! sentence! the petitioner to pay the respon!ent alle&e! o)erpayments in the

total sum of Q.">>1613 or 23"AB.654" to&ether ith le&al interest thereon from the !ate of the lin& of the

complaint until sai! amount is fully pai!" as ell as to pay the costs of the suit in both instances6 The

appellate court further ar&ue! that e)en if the contract beteen the petitioner an! the respon!ent as



one of purchase an! sale" the petitioner as &uilty of frau! in concealin& the true price an! hence oul!

still be liable to reimburse the respon!ent for the o)erpayments ma!e by the latter6

The petitioner no claims that the folloin& errors ha)e been incurre! by the appellate court7

I6 9l Tribunal !e *pelaciones incurrio en error !e !erecho al !eclarar Eue" se&un hechos" entre la

recurrente y la recurri!a eistia una relacion implicita !e man!ataria a man!ante en la

transaccion !e Eue se trata" en )e, !e la !e )en!e!ora a compra!ora como ha !eclara!o el-u,&a!o !e 2rimera Instncia !e %anila" presi!i!o entonces por el hoy %a&istra!o Honorable

%arcelino %ontemayor6

II6 9l Tribunal !e *pelaciones incurrio en error !e !erecho al !eclarar Eue" suponien!o Eue !icha

relacion fuerra !e )en!e!ora a compra!ora" la recurrente obtu)o" me!iante !olo" el

consentimiento !e la recurri!a en cuanto al precio !e Q."B55 y Q."A55 !e las maEuinarias y

eEuipos en cuestion" y con!enar a la recurrente ha obteni!o !e la Starr 2iano #ompany of

Richmon!" In!iana6

e sustain the theory of the trial court that the contract beteen the petitioner an! the respon!ent as

one of purchase an! sale" an! not one of a&ency" for the reasons no to be state!6

In the rst place" the contract is the la beteen the parties an! shoul! inclu!e all the thin&s they are

suppose! to ha)e been a&ree! upon6 hat !oes not appear on the face of the contract shoul! be

re&ar!e! merely as !ealerPs or tra!erPs tal;" hich can not bin! either party6 (Nolbroo; )6 #onner" 1A

So6" 1BA" .. *m6 Rep6" 3.3= $an; )6 $rosscell" .35 III6" .A.= $an; )6 2almer" 4B III6" /3= Hosser )6

#opper" 0 *llen" >>4= Doles )6 %errill" .B> %ass6" 4..6' The letters" 9hibits . an! 3" by hich the

respon!ent accepte! the prices of Q."B55 an! Q."A55" respecti)ely" for the soun! repro!ucin&

eEuipment sub@ect of its contract ith the petitioner" are clear in their terms an! a!mit no otherinterpretation that the respon!ent in Euestion at the prices in!icate! hich are e! an! !eterminate6

The respon!ent a!mitte! in its complaint le! ith the #ourt of <irst Instance of %anila that the

petitioner a&ree! tosellto it the rst soun! repro!ucin& eEuipment an! machinery6 The thir! para&raph

of the respon!entPs cause of action states7

>6 That on or about No)ember ./" ./3/" the herein plainti: (respon!ent' an! !efen!ant

(petitioner' entere! into an a&reement" un!er an! by )irtue of hich the herein !efen!ant as to

secure from the ?nite! States" an!sellan! !eli)er to the herein plainti:" certain soun!

repro!ucin& eEuipment an! machinery" for hich the sai! !efen!ant" un!er an! by )irtue of sai!a&reement" as to recei)e the actual cost price plus ten per cent (.5U'" an! as also to be

reimburse! for all out of poc;et epenses in connection ith the purchase an! !eli)ery of such

eEuipment" such as costs of tele&rams" frei&ht" an! similar epenses6 (9mphasis ours6'

e a&ree ith the trial @u!&e that hate)er unforseen e)ents mi&ht ha)e ta;en place unfa)orable to the

!efen!ant (petitioner'" such as chan&e in prices" mista;e in their Euotation" loss of the &oo!s not

co)ere! by insurance or failure of the Starr 2iano #ompany to properly ll the or!ers as per

specications" the plainti: (respon!ent' mi&ht still le&ally hol! the !efen!ant (petitioner' to the prices



e! of Q."B55 an! Q."A556 This is incompatible ith the preten!e! relation of a&ency beteen the

petitioner an! the respon!ent" because in a&ency" the a&ent is eempte! from all liability in the

!ischar&e of his commission pro)i!e! he acts in accor!ance ith the instructions recei)e! from his

principal (section 314" #o!e of #ommerce'" an! the principal must in!emnify the a&ent for all !ama&es

hich the latter may incur in carryin& out the a&ency ithout fault or impru!ence on his part (article

.B3/" #i)il #o!e'6

hile the latters" 9hibits . an! 3" state that the petitioner as to recei)e ten per cent (.5U'

commission" this !oes not necessarily ma;e the petitioner an a&ent of the respon!ent" as this pro)ision

is only an a!!itional price hich the respon!ent boun! itself to pay" an! hich stipulation is not

incompatible ith the contract of purchase an! sale6 (See+uiro&avs.2arsons Har!are #o6" >0 2hil6"

15.6'

In the secon! place" to hol! the petitioner an a&ent of the respon!ent in the purchase of eEuipment an!

machinery from the Starr 2iano #ompany of Richmon!" In!iana" is incompatible ith the a!mitte! fact

that the petitioner is the eclusi)e a&ent of the same company in the 2hilippines6 It is out of the or!inary

for one to be the a&ent of both the )en!or an! the purchaser6 The facts an! circumstances in!icate! !onot point to anythin& but plain or!inary transaction here the respon!ent enters into a contract of

purchase an! sale ith the petitioner" the latter as eclusi)e a&ent of the Starr 2iano #ompany in the

?nite! States6

It follos that the petitioner as )en!or is not boun! to reimburse the respon!ent as )en!ee for any

!i:erence beteen the cost price an! the sales price hich represents the prot reali,e! by the )en!or

out of the transaction6 This is the )ery essence of commerce ithout hich merchants or mi!!leman

oul! not eist6

The respon!ents conten!s that it merely a&ree! to pay the cost price as !istin&uishe! from the list

price" plus ten per cent (.5U' commission an! all out8of8poc;et epenses incurre! by the petitioner6

The !istinction hich the respon!ents see;s to !ra beteen the cost price an! the list price e

consi!er to be spacious6 It is to be obser)e! that the tenty8)e per cent (31U' !iscount &rante! by the

Starr piano #ompany to the petitioner is a)ailable only to the latter as the formerPs eclusi)e a&ent in the

2hilippines6 The respon!ent coul! not ha)e secure! this !iscount from the Starr 2iano #ompany an!

neither as the petitioner illin& to ai)e that !iscount in fa)or of the respon!ent6 *s a matter of fact" no

reason is a!)ance! by the respon!ent hy the petitioner shoul! ai)e the 31 per cent !iscount &rante!

it by the Starr 2iano #ompany in echan&e for the .5 percent commission o:ere! by the respon!ent6

%oreo)er" the petitioner as not !uty boun! to re)eal the pri)ate arran&ement it ha! ith the Starr2iano #ompany relati)e to such !iscount to its prospecti)e customers" an! the respon!ent as not

e)en aare of such an arran&ement6 The respon!ent" therefore" coul! not ha)e o:ere! to pay a .5 per

cent commission to the petitioner pro)i!e! it as &i)en the benet of the 31 per cent !iscount en@oye!

by the petitioner6 It is ell ;non that local !ealers actin& as a&ents of forei&n manufacturers" asi!e

from obtainin& a !iscount from the home oFce" sometimes a!! to the list price hen they resell to local

purchasers6 It as apparently to &uar! a&ainst an ehorbitant a!!itional price that the respon!ent

sou&ht to limit it to .5 per cent" an! the respon!ent is estoppe! from Euestionin& that a!!itional price6 If

the respon!ent later on !isco)ers itself at the short en! of a ba! bar&ain" it alone must bear the blame"



an! it cannot rescin! the contract" much less compel a reimbursement of the ecess price" on that

&roun! alone6 The respon!ent coul! not secure eEuipment an! machinery manufacture! by the Starr

2iano #ompany ecept from the petitioner alone= it illin&ly pai! the price Euote!= it recei)e! the

eEuipment an! machinery as represente!= an! that as the en! of the matter as far as the respon!ent

as concerne!6 The fact that the petitioner obtaine! more or less prot than the respon!ent calculate!

before enterin& into the contract or re!ucin& the price a&ree! upon beteen the petitioner an! the

respon!ent6 Not e)ery concealment is frau!= an! short of frau!" it ere better that" ithin certain limits"

business acumen permit of the loosenin& of the slee)es an! of the sharpenin& of the intellect of men

an! omen in the business orl!6

The rit ofcertiorarishoul! be" as it is hereby" &rante!6 The !ecision of the appellate court is

accor!in&ly re)erse! an! the petitioner is absol)e! from the respon!entPs complaint in C6 R6 No6 .53>"

entitle! *rco *musement #ompany (formerly ;non as Teatro *rco'" plainti:8appellant" )s6 Con,alo

2uyat Sons" Inc6" !efen!ants8appellee" ithout pronouncement re&ar!in& costs6 So or!ere!6

Avanceña, C.J., Diaz, Moran and Horrilleno, JJ.,concur6

.36

G.R. No. L/1191 AD%t =3, 191

ANRE! ?UIROGA, plainti:8appellant"

)s6

AR!ON! 2AR<ARE CO., !efen!ant8appellee6

Alfredo Chicote, Jose Arnaiz and Pascual B. Azanza for appellant.

Crossfield & O'Brien for appellee.

A>ANCEA,J.4

On -anuary 34" ./.." in this city of manila" a contract in the folloin& tenor as entere! into by an!

beteen the plainti:" as party of the rst part" an! -6 2arsons (to hose ri&hts an! obli&ations the

present !efen!ant later subro&ate! itself'" as party of the secon! part7

#ONTR*#T 99#?T9D $ *ND $9T99N *NDR9S +?IROC* *ND -6 2*RSONS"

$OTH %9R#H*NTS 9ST*$LISH9D IN %*NIL*" <OR TH9 9#L?SIV9 S*L9 O<

+?IROC* $9DS IN TH9 VIS**N ISL*NDS6



*RTI#L9 .6 Don *n!res +uiro&a &rants the eclusi)e ri&ht to sell his be!s in the Visayan Islan!s

to -6 2arsons un!er the folloin& con!itions7

(*' %r6 +uiro&a shall furnish be!s of his manufacture to %r6 2arsons for the latterPs

establishment in Iloilo" an! shall in)oice them at the same price he has e! for sales" in %anila"

an!" in the in)oices" shall ma;e an! alloance of a !iscount of 31 per cent of the in)oice! prices"

as commission on the sale= an! %r6 2arsons shall or!er the be!s by the !o,en" hether of the

same or of !i:erent styles6

($' %r6 2arsons bin!s himself to pay %r6 +uiro&a for the be!s recei)e!" ithin a perio! of sity

!ays from the !ate of their shipment6

(#' The epenses for transportation an! shipment shall be borne by %6 +uiro&a" an! the frei&ht"

insurance" an! cost of unloa!in& from the )essel at the point here the be!s are recei)e!" shall

be pai! by %r6 2arsons6

(D' If" before an in)oice falls !ue" %r6 +uiro&a shoul! reEuest its payment" sai! payment hen

ma!e shall be consi!ere! as a prompt payment" an! as such a !e!uction of 3 per cent shall be

ma!e from the amount of the in)oice6

The same !iscount shall be ma!e on the amount of any in)oice hich %r6 2arsons may !eem

con)enient to pay in cash6

(9' %r6 +uiro&a bin!s himself to &i)e notice at least fteen !ays before han! of any alteration in

price hich he may plan to ma;e in respect to his be!s" an! a&rees that if on the !ate hen such

alteration ta;es e:ect he shoul! ha)e any or!er pen!in& to be ser)e! to %r6 2arsons" such or!er

shall en@oy the a!)anta&e of the alteration if the price thereby be loere!" but shall not bea:ecte! by sai! alteration if the price thereby be increase!" for" in this latter case" %r6 +uiro&a

assume! the obli&ation to in)oice the be!s at the price at hich the or!er as &i)en6

(<' %r6 2arsons bin!s himself not to sell any other ;in! ecept the +uiro&a be!s6

*RT6 36 In compensation for the epenses of a!)ertisement hich" for the benet of both

contractin& parties" %r6 2arsons may n! himself obli&e! to ma;e" %r6 +uiro&a assumes the

obli&ation to o:er an! &i)e the preference to %r6 2arsons in case anyone shoul! apply for the

eclusi)e a&ency for any islan! not comprise! ith the Visayan &roup6

*RT6 >6 %r6 2arsons may sell" or establish branches of his a&ency for the sale of +uiro&a be!s

in all the tons of the *rchipela&o here there are no eclusi)e a&ents" an! shall imme!iately

report such action to %r6 +uiro&a for his appro)al6

*RT6 46 This contract is ma!e for an unlimite! perio!" an! may be terminate! by either of the

contractin& parties on a pre)ious notice of ninety !ays to the other party6



Of the three causes of action alle&e! by the plainti: in his complaint" only to of them constitute the

sub@ect matter of this appeal an! both substantially amount to the a)erment that the !efen!ant )iolate!

the folloin& obli&ations7 not to sell the be!s at hi&her prices than those of the in)oices= to ha)e an open

establishment in Iloilo= itself to con!uct the a&ency= to ;eep the be!s on public ehibition" an! to pay for

the a!)ertisement epenses for the same= an! to or!er the be!s by the !o,en an! in no other manner6

*s may be seen" ith the eception of the obli&ation on the part of the !efen!ant to or!er the be!s by

the !o,en an! in no other manner" none of the obli&ations impute! to the !efen!ant in the to causes of

action are epressly set forth in the contract6 $ut the plainti: alle&e! that the !efen!ant as his a&ent

for the sale of his be!s in Iloilo" an! that sai! obli&ations are implie! in a contract of commercial a&ency6

The hole Euestion" therefore" re!uce! itself to a !etermination as to hether the !efen!ant" by reason

of the contract hereinbefore transcribe!" as a purchaser or an a&ent of the plainti: for the sale of his

be!s6

In or!er to classify a contract" !ue re&ar! must be &i)en to its essential clauses6 In the contract in

Euestion" hat as essential" as constitutin& its cause an! sub@ect matter" is that the plainti: as to

furnish the !efen!ant ith the be!s hich the latter mi&ht or!er" at the price stipulate!" an! that the

!efen!ant as to pay the price in the manner stipulate!6 The price a&ree! upon as the one!etermine! by the plainti: for the sale of these be!s in %anila" ith a !iscount of from 35 to 31 per cent"

accor!in& to their class6 2ayment as to be ma!e at the en! of sity !ays" or before" at the plainti:Ps

reEuest" or in cash" if the !efen!ant so preferre!" an! in these last to cases an a!!itional !iscount as

to be alloe! for prompt payment6 These are precisely the essential features of a contract of purchase

an! sale6 There as the obli&ation on the part of the plainti: to supply the be!s" an!" on the part of the

!efen!ant" to pay their price6 These features eclu!e the le&al conception of an a&ency or or!er to sell

hereby the man!atory or a&ent recei)e! the thin& to sell it" an! !oes not pay its price" but !eli)ers to

the principal the price he obtains from the sale of the thin& to a thir! person" an! if he !oes not succee!

in sellin& it" he returns it6 $y )irtue of the contract beteen the plainti: an! the !efen!ant" the latter" onrecei)in& the be!s" as necessarily obli&e! to pay their price ithin the term e!" ithout any other

consi!eration an! re&ar!less as to hether he ha! or ha! not sol! the be!s6

It oul! be enou&h to hol!" as e !o" that the contract by an! beteen the !efen!ant an! the plainti: is

one of purchase an! sale" in or!er to sho that it as not one ma!e on the basis of a commission on

sales" as the plainti: claims it as" for these contracts are incompatible ith each other6 $ut" besi!es"

eaminin& the clauses of this contract" none of them is foun! that substantially supports the plainti:Ps

contention6 Not a sin&le one of these clauses necessarily con)eys the i!ea of an a&ency6 The

or!scommission on salesuse! in clause (*' of article . mean nothin& else" as state! in the contract

itself" than a mere !iscount on the in)oice price6 The or! agency" also use! in articles 3 an! >" only

epresses that the !efen!ant as the only one that coul! sell the plainti:Ps be!s in the Visayan Islan!s6

ith re&ar! to the remainin& clauses" the least that can be sai! is that they are not incompatible ith the

contract of purchase an! sale6

The plainti: calls attention to the testimony of 9rnesto Vi!al" a former )ice8presi!ent of the !efen!ant

corporation an! ho establishe! an! mana&e! the latterPs business in Iloilo6 It appears that this itness

prior to the time of his testimony" ha! serious trouble ith the !efen!ant" ha! maintaine! a ci)il suit

a&ainst it" an! ha! e)en accuse! one of its partners" Cuillermo 2arsons" of falsication6 He testie! that



it as he ho !rafte! the contract 9hibit *" an!" hen Euestione! as to hat as his purpose in

contractin& ith the plainti:" replie! that it asto be an agent for his beds and to collect a commission

on sales6 Hoe)er" accor!in& to the !efen!antPs e)i!ence" it as %ariano Lope, Santos" a !irector of

the corporation" ho prepare! 9hibit *6 $ut" e)en supposin& that 9rnesto Vi!al has state! the truth" his

statement as to hat as his i!ea in contractin& ith the plainti: is of no importance" inasmuch as the

a&reements containe! in 9hibit * hich he claims to ha)e !rafte!" constitute" as e ha)e sai!" a

contract of purchase an! sale" an! not one of commercial a&ency6 This only means that 9rnesto Vi!al

as mista;en in his classication of the contract6 $ut it must be un!erstoo! that a contract is hat the

la !enes it to be" an! not hat it is calle! by the contractin& parties6

The plainti: also en!ea)ore! to pro)e that the !efen!ant ha! returne! be!s that it coul! not sell= that"

ithout pre)ious notice" it forar!e! to the !efen!ant the be!s that it ante!= an! that the !efen!ant

recei)e! its commission for the be!s sol! by the plainti: !irectly to persons in Iloilo6 $ut all this" at the

most only shos that" on the part of both of them" there as mutual tolerance in the performance of the

contract in !isre&ar! of its terms= an! it &i)es no ri&ht to ha)e the contract consi!ere!" not as the parties

stipulate! it" but as they performe! it6 Only the acts of the contractin& parties" subseEuent to" an! in

connection ith" the eecution of the contract" must be consi!ere! for the purpose of interpretin& thecontract" hen such interpretation is necessary" but not hen" as in the instant case" its essential

a&reements are clearly set forth an! plainly sho that the contract belon&s to a certain ;in! an! not to

another6 <urthermore" the return ma!e as of certain brass be!s" an! as not e:ecte! in echan&e for

the price pai! for them" but as for other be!s of another ;in!= an! for the letter 9hibit L8." reEueste!

the plainti:Ps prior consent ith respect to sai! be!s" hich shos that it as not consi!ere! that the

!efen!ant ha! a ri&ht" by )irtue of the contract" to ma;e this return6 *s re&ar!s the shipment of be!s

ithout pre)ious notice" it is insinuate! in the recor! that these brass be!s ere precisely the ones so

shippe!" an! that" for this )ery reason" the plainti: a&ree! to their return6 *n! ith respect to the so8

calle! commissions" e ha)e sai! that they merely constitute! a !iscount on the in)oice price" an! thereason for applyin& this benet to the be!s sol! !irectly by the plainti: to persons in Iloilo as because"

as the !efen!ant obli&ate! itself in the contract to incur the epenses of a!)ertisement of the plainti:Ps

be!s" such sales ere to be consi!ere! as a result of that a!)ertisement6

In respect to the !efen!antPs obli&ation to or!er by the !o,en" the only one epressly impose! by the

contract" the e:ect of its breach oul! only entitle the plainti: to !isre&ar! the or!ers hich the

!efen!ant mi&ht place un!er other con!itions= but if the plainti: consents to ll them" he ai)es his ri&ht

an! cannot complain for ha)in& acte! thus at his on free ill6

<or the fore&oin& reasons" e are of opinion that the contract by an! beteen the plainti: an! the

!efen!ant as one of purchase an! sale" an! that the obli&ations the breach of hich is alle&e! as a

cause of action are not impose! upon the !efen!ant" either by a&reement or by la6

The @u!&ment appeale! from is aFrme!" ith costs a&ainst the appellant6 So or!ere!6

Arellano, C.J., Torres, Johnson, Street and Malcolm, JJ.,concur6

Sales - First Set of Cases

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