Velarde vs. Court of Appeals (361 SCRA 57)FACTS:The private respodet e!e"uted a #eed of Sale $ith Assu%ptio of &ort'a'e( $ith a )ala"e of *1.+ %illio( i favor of the petitioers. *ursuat to said a'ree%ets( plaitiffs paid the )a, (-*.) for three (3) %oths util the/ $ere advised that the Appli"atio for Assu%ptio of &ort'a'e $as deied. This pro%pted the plaitiffs ot to%a,e a/ further pa/%et. *rivate respodet $rote the petitioers ifor%i' the o0fulfill%et of the o)li'atios. *etitioers( thru "ousel respoded that the/ are $illi' to pa/ i "ash the )ala"e su)1e"t to several "oditios. *rivate respodets set a otarial oti"e of "a"ellatio2res"issio of the #eed of Sale. *etitioers filed a "o%plait $hi"h $as "ose3uetl/ dis%issed )/ a out'oi' 1ud'e )ut $as reversed )/ the assu%i' 1ud'e i their &otio for Re"osideratio. The Court of Appeals reistated the de"isio to dis%iss..SS45:6hether or ot there is a su)statial )rea"h of "otra"t that $ould etitle its res"issio.R47.89::5S. Arti"le 11;1 of the 8e$ Civil Code applies. The )rea"h "o%%itted did ot %erel/ "osist of a sli'ht dela/ i pa/%et or a irre'ularit/< su"h )rea"h $ould ot or%all/ defeat the itetio of the parties to the "otra"t. =ere( petitioers ot ol/ failed to pa/ the *1.+ %illio )ala"e( )ut the/ also i%posed upo private respodets e$ o)li'atios as pre"oditios to the perfor%a"e of their o$ o)li'atio. . effe"t( the 3ualified offer to pa/ $as a repudiatio of a e!isti' o)li'atio( $hi"h $as le'all/ due ad de%ada)le uder the "otra"t of sale. =e"e( private respodets $ere left $ith the le'al optio of see,i' res"issio to prote"t their o$ iterest.9.R. 8o. 70;;35 Fe)ruar/ 1( 1;15:4 T5> ad C?.( plaitiff0appellat( vs.-AS.7.? 9?8@A75S( defedat0appellat.-eau%ot( Tee/ ad Ferrier for plaitiff. -ue"a%io ad 7oto, for defedat.TR58T( A.:The )asis of this a"tio is a $ritte "otra"t( 5!hi)it A( the pertiet para'raphs of $hi"h follo$:1. That &r. -asilio 9oBaleB here)/ a",o$led'es re"eipt of the su% of *3(CCC *hilippie "urre"/ fro% &essrs. :u Te, ad Co.( ad that i "osideratio of said su% )e o)li'ates hi%self to deliver to the said :u Te, ad Co.( 6CC pi"uls of su'ar of the firstad se"od 'rade( a""ordi' to the result of the polariBatio( $ithi the period of three%oths( )e'ii' o the 1st da/ of Aauar/( 1;1D( ad edi' o the 31st da/ of &ar"h of the sa%e /ear( 1;1D.D. That the said &r. -asilio 9oBales o)li'ates hi%self to deliver to the said &essrs. :u Te, ad Co.( of this "it/ the said 6CC pi"uls of su'ar at a/ pla"e $ithi the said %ui"ipalit/ of Sata Rosa $hi"h the said &essrs. :u Te, ad Co.( or a represetative ofthe sa%e %a/ desi'ate.3. That i "ase the said &r. -asilio 9oBales does ot deliver to &essrs. :u Te, ad Co. the 6CC pi"uls of su'ar $ithi the period of three %oths( referred to i the se"od para'raph of this do"u%et( this "otra"t $ill )e res"ided ad the said &r. -asilio 9oBales $ill the )e o)li'ated to retur to &essrs. :u Te, ad Co. the *3(CCC re"eived ad also the su% of *1(DCC )/ $a/ of ide%it/ for loss ad da%a'es.*laitiff proved that o su'ar had )ee delivered to it uder this "otra"t or had it )ee a)le to re"over the *3(CCC. *laitiff pra/ed for 1ud'%et for the *3(CCC ad( i additio( for *1(DCC uder para'raph E( supra. Aud'%et $as redered for *3(CCC ol/(ad fro% this 1ud'%et )oth parties appealed.The poits raised )/ the defedat $ill )e "osidered first. =e alle'es that the "ourt erred i refusi' to per%it parol evide"e sho$i' that the parties iteded that the su'ar $as to )e se"ured fro% the "rop $hi"h the defedat raised o his platatio( ad that he $as ua)le to fulfill the "otra"t )/ reaso of the al%ost total failure of his "rop. This "ase appears to )e oe to $hi"h the rule $hi"h e!"ludes parol evide"e to add to or var/ the ter%s of a $ritte "otra"t is de"idedl/ appli"a)le. There is ot the sli'htest iti%atio i the "otra"t that the su'ar $as to )e raised )/ the defedat. *arties are presu%ed to have redu"ed to $riti' all the essetial "oditios of their "otra"t. 6hile parol evide"e is ad%issi)le i a variet/ of $a/s to e!plai the %eai'of $ritte "otra"ts( it "aot serve the purpose of i"orporati' ito the "otra"t additioal "ote%poraeous "oditios $hi"h are ot %etioed at all i the $riti'( uless there has )ee fraud or %ista,e. . a earl/ "ase this "ourt de"lied to allo$ parol evide"e sho$i' that a part/ to a $ritte "otra"t $as to )e"o%e a parter i a fir% istead of a "reditor of the fir%. (*astor vs. 9aspar( D *hil. Rep.( 5;D.) A'ai( i 5velad vs. 5aster &ii' Co. (1E *hil. Rep.( 5C;) a "otra"t of e%plo/%et provided that the plaitiff should re"eive fro% the defedat a stipulated salar/ ad e!peses. The defedat sou'ht to iterpose as a defese to re"over/ that the pa/%et of the salar/ $as "oti'et upo the plaitiffFs e%plo/%et redoudi' to the )eefit of thedefedat "o%pa/. The "otra"t "otaied o su"h "oditio ad the "ourt de"lied to re"eive parol evide"e thereof.. the "ase at )ar( it is sou'ht to sho$ that the su'ar $as to )e o)taied e!"lusivel/ fro% the "rop raised )/ the defedat. There is o "lause i the $ritte "otra"t $hi"h eve re%otel/ su''ests su"h a "oditio. The defedat udertoo, to deliver a spe"ified 3uatit/ of su'ar $ithi a spe"ified ti%e. The "otra"t pla"ed o restri"tio upo the defedat i the %atter of o)taii' the su'ar. =e $as e3uall/ at li)ert/ to pur"hase it o the %ar,et or raise it hi%self. .t %a/ )e true that defedat o$ed a platatio ad e!pe"ted to raise the su'ar hi%self( )ut he did ot li%it his o)li'atio tohis o$ "rop of su'ar. ?ur "o"lusio is that the "oditio $hi"h the defedat see,s to add to the "otra"t )/ parol evide"e "aot )e "osidered. The ri'hts of the parties%ust )e deter%ied )/ the $riti' itself.The se"od "otetio of the defedat arises fro% the first. =e assu%es that the "otra"t $as li%ited to the su'ar he %i'ht raise upo his o$ platatio< that the "otra"t represeted a perfe"ted sale< ad that )/ failure of his "rop he $as relieved fro% "o%pl/i' $ith his uderta,i' )/ loss of the thi' due. (Arts. 1E5D( 1C;6( ad 11+D( Civil Code.) This ar'u%et is fault/ i assu%i' that there $as a perfe"ted sale. Arti"le 1E5C defies a perfe"ted sale as follo$s:The sale shall )e perfe"ted )et$ee vedor ad vedee ad shall )e )idi' o )oth of the%( if the/ have a'reed upo the thi' $hi"h is the o)1e"t of the "otra"t ad upo the pri"e( eve $he either has )ee delivered.Arti"le 1E5D reads: GThe i1ur/ to or the profit of the thi' sold shall( after the "otra"t has )ee perfe"ted( )e 'overed )/ the provisios of arti"les 1C;6 ad 11+D.GThis "ourt has "osistetl/ held that there is a perfe"ted sale $ith re'ard to the Gthi'G $heever the arti"le of sale has )ee ph/si"all/ se're'ated fro% all other arti"les Thus(a parti"ular to)a""o fa"tor/ $ith its "otets $as held sold uder a "otra"t $hi"h did ot provide for either deliver/ of the pri"e or of the thi' util a future ti%e. &"Cullou'h vs. Aelle ad Co. (3 *hil. Rep.( D;5). Huite si%ilar $as the re"et "ase of -arretto vs. Sata &aria (D6 *hil. Rep.( DCC) $here spe"ified shares of sto", i a to)a""o fa"tor/ $ere held sold )/ a "otra"t $hi"h deferred deliver/ of )oth the pri"e ad the sto", util the latter had )ee appraised )/ a ivetor/ of the etire assets ofthe "o%pa/. . -orro%eo vs. Fra"o (5 *hil. Rep.( E;) a sale of a spe"ifi" house $as held perfe"ted )et$ee the vedor ad vedee( althou'h the deliver/ of the pri"e $as $ithheld util the e"essar/ do"u%ets of o$ership $ere prepared )/ the vedee. . Ta 7eo"o vs. 9o .3ui (+ *hil. Rep.( 531) the plaitiff had delivered a 3uatit/ of he%p ito the $arehouse of the defedat. The defedat dre$ a )ill of e!"ha'e i the su% of *+CC( represeti' the pri"e $hi"h had )ee a'reed upo for the he%p thus delivered. *rior to the presetatio of the )ill for pa/%et( the he%p $as destro/ed. 6hereupo( the defedat suspeded pa/%et of the )ill. .t $as held that the he%p havi' )ee alread/ delivered( the title had passed ad the loss $as the vedeeFs. .t is our purpose to disti'uish the "ase at )ar fro% all these "ases.. the "ase at )ar the uderta,i' of the defedat $as to sell to the plaitiff 6CC pi"uls of su'ar of the first ad se"od "lasses. 6as this a a'ree%et upo the Gthi'G $hi"h $as the o)1e"t of the "otra"t $ithi the %eai' of arti"le 1E5C( supraI Su'ar isoe of the staple "o%%odities of this "outr/. For the purpose of sale its )ul, is $ei'hed( the "usto%ar/ uit of $ei'ht )ei' deo%iated a Gpi"ul.G There $as o deliver/ uder the "otra"t. 8o$( if "alled upo to desi'ate the arti"le sold( it is "lear that the defedat "ould ol/ sa/ that it $as Gsu'ar.G =e "ould ol/ use this 'eeri" a%e for the thi' sold. There $as o GappropriatioG of a/ parti"ular lot of su'ar. 8either part/ "ould poit to a/ spe"ifi" 3uatit/ of su'ar ad sa/: GThis is the arti"le $hi"h $as the su)1e"t of our "otra"t.G =o$ differet is this fro% the "otra"ts dis"ussed i the "ases referred to a)oveJ . the &"Cullou'h "ase( for ista"e( the to)a""o fa"tor/ $hi"h the parties dealt $ith $as spe"ifi"all/ poited out ad disti'uished fro% all other to)a""o fa"tories. So( i the -arretto "ase( the parti"ular shares of sto", $hi"h the parties desired to trasfer $ere "apa)le of desi'atio. . the Ta 7eo"o "ase( $here a 3uatit/ of he%p $as the su)1e"t of the "otra"t( it $as sho$ that that 3uatit/ had )ee deposited i a spe"ifi" $arehouse( ad thus set apart ad disti'uished fro% all other he%p.A u%)er of "ases have )ee de"ided i the State of 7ouisiaa( $here the "ivil la$ prevails( $hi"h "ofir% our positio. *erhaps the latest is 6itt Shoe Co. vs. See'ars adCo. (1DD 7a.( 1E5< E7 Sou.( EEE). . this "ase a "otra"t $as etered ito )/ a traveli' sales%a for a 3uatit/ of shoes( the sales havi' )ee %ade )/ sa%ple. The "ourt said of this "otra"t:-ut it is $holl/ i%%aterial( for the purpose of the %ai 3uestio( $hether &it"hell $as authoriBed to %a,e a defiite "otra"t of sale or ot( si"e the ol/ "otra"t that he $as i a positio to %a,e $as a a'ree%et to sell or a e!e"utor/ "otra"t of sale. =esa/s that plaitiff seds out 375 sa%ples of shoes( ad as he $as offeri' to sell )/ sa%ple shoes( part of $hi"h had ot )ee %aufa"tured ad the rest of $hi"h $ere i"orporated i plaitiffFs sto", i 7/"h)ur'( Va.( it $as i%possi)le that he ad See'ars ad Co. should at that ti%e have a'reed upo the spe"ifi" o)1e"ts( the title to $hi"h $as to pass( ad he"e there "ould have )ee o sale. =e ad See'ars ad Co. %i'ht have a'reed( ad did (i effe"t ) a'ree( that the idetifi"atio of the o)1e"ts ad their appropriatio to the "otra"t e"essar/ to %a,e a sale should thereafter )e %ade)/ the plaitiff( a"ti' for itself ad for See'ars ad Co.( ad the le'ed prited i red i, o plaitiffFs )illheads (G?ur resposi)ilit/ "eases $he $e ta,e trasportatio CoFs. re"eipt K. 'ood orderFG idi"ates plaitiffFs idea of the %o%et at $hi"h su"h idetifi"atio ad appropriatio $ould )e"o%e effe"tive. The 3uestio preseted $as "arefull/ "osidered i the "ase of State vs. Shields( et al. (11C 7a.( 5E7( 3E Sou.( 673) (i$hi"h it $as a)solutel/ e"essar/ that it should )e de"ided)( ad it $as there held that i re"eivi' a order for a 3uatit/ of 'oods( of a ,id ad at a pri"e a'reed o( to )e supplied fro% a 'eeral sto",( $arehoused at aother pla"e( the a'et re"eivi' the order %erel/ eters ito a e!e"utor/ "otra"t for the sale of the 'oods( $hi"h does ot divest or trasfer the title of a/ deter%iate o)1e"t( ad $hi"h )e"o%es effe"tive for that purpose ol/ $he spe"ifi" 'oods are thereafter appropriated to the "otra"t< ad( i the a)se"e of a %ore spe"ifi" a'ree%et o the su)1e"t( that su"h appropriated ta,es pla"e ol/ $he the 'oods as ordered are delivered to the pu)li" "arriers at the pla"e fro% $hi"h the/ are to )e shipped( "osi'ed to the perso )/ $ho% the order is 'ive( at $hi"h ti%e ad pla"e( therefore( the sale is perfe"ted ad the title passes.This "ase ad State vs. Shields( referred to i the a)ove 3uotatio are a%pl/ illustrative of the positio ta,e )/ the 7ouisiaa "ourt o the 3uestio )efore us. -ut $e "aot refrai fro% referri' to the "ase of 7arue ad *revost vs. Ru'el/( -lair ad Co. (1C 7a. A.( DED) $hi"h is su%%ariBed )/ the "ourt itself i the Shields "ase as follo$s:. . . .t appears that the defedats had %ade a "otra"t for the sale( )/ $ei'ht( of a lot of "otto( had re"eived L3(CCC o a""out of the pri"e( ad had 'ive a order for its deliver/( $hi"h had )ee preseted to the pur"haser( ad re"o'iBed )/ the press i $hi"h the "otto $as stored( )ut that the "otto had )ee destro/ed )/ fire )efore it $as $ei'hed. .t $as held that it $as still at the ris, of the seller( ad that the )u/er $asetitled to re"over the L3(CCC paid o a""out of the pri"e.6e "o"lude that the "otra"t i the "ase at )ar $as %erel/ a e!e"utor/ a'ree%et< apro%ise of sale ad ot a sale. At there $as o perfe"ted sale( it is "lear that arti"les 1E5D( 1C;6( ad 11+D are ot appli"a)le. The defedat havi' defaulted i his e'a'e%et( the plaitiff is etitled to re"over the *3(CCC $hi"h it adva"ed to the defedat( ad this portio of the 1ud'%et appealed fro% %ust therefore )e affir%ed.The plaitiff has appealed fro% the 1ud'%et of the trial "ourt o the 'roud that it is etitled to re"over the additioal su% of *1(DCC uder para'raph E of the "otra"t. The"ourt )elo$ held that this para'raph $as si%pl/ a li%itatio upo the a%out of da%a'es $hi"h "ould )e re"overed ad ot li3uidated da%a'es as "ote%plated )/ the la$. G.t also appears(G said the lo$er "ourt( Gthat i a/ evet the defedat $as preveted fro% fulfilli' the "otra"t )/ the deliver/ of the su'ar )/ "oditio over $hi"h he had o "otrol( )ut these "oditios $ere ot suffi"iet to a)solve hi% fro% the o)li'atio of returi' the %oe/ $hi"h he re"eived.GThe a)ove 3uoted portio of the trial "ourtFs opiio appears to )e )ased upo the propositio that the su'ar $hi"h $as to )e delivered )/ the defedat $as that $hi"h he e!pe"ted to o)tai fro% his o$ ha"ieda ad( as the dr/ $eather destro/ed his 'ro$i' "ae( he "ould ot "o%pl/ $ith his part of the "otra"t. As $e have idi"ated( this vie$ is erroeous( as( uder the "otra"t( the defedat $as ot li%ited to his 'ro$th "rop i order to %a,e the deliver/. =e a'reed to deliver the su'ar ad othi' is said i the "otra"t a)out $here he $as to 'et it.6e thi, is a "lear "ase of li3uidated da%a'es. The "otra"t plail/ states that if the defedat fails to deliver the 6CC pi"uls of su'ar $ithi the ti%e a'reed o( the "otra"t $ill )e res"ided ad he $ill )e o)li'ed to retur the *3(CCC ad pa/ the su% of *1(DCC )/ $a/ of ide%it/ for loss ad da%a'es. There "aot )e the sli'htest dou)t a)out the %eai' of this la'ua'e or the itetio of the parties. There is o roo% for either iterpretatio or "ostru"tio. 4der the provisios of arti"le 1D55 of the Civil Code "otra"ti' parties are free to e!e"ute the "otra"ts that the/ %a/ "osider suita)le( provided the/ are ot i "otravetio of la$( %orals( or pu)li" order. . our opiio there is othi' i the "otra"t uder "osideratio $hi"h is opposed to a/ of these pri"iples.For the fore'oi' reasos the 1ud'%et appealed fro% is %odified )/ allo$i' the re"over/ of *1(DCC uder para'raph E of the "otra"t. As thus %odified( the 1ud'%et appealed fro% is affir%ed( $ithout "osts i this ista"e.Arellao( C.A.( Torres( KATIPUNAN VS. KATIPUNAN, JR.G.R. No. 132415, January 30, 2002FactsR!s"on#!nt $rau%&o Kat&"unan Jr. &s t'! r!(&st!r!# o)n!r o* a %ot an# a *&+!,#oor a"art-!nt construct!# t'!r!on, )'&c' )!r! occu"&!# .y %!ss!!s. R!s"on#!nt ass&st!# .y '&s .rot'!r "!t&t&on!r /&(u!% !nt!r!# &nto a 0!!# o* A.so%ut! Sa%! )&t' .rot'!rs 1#ar#o $a%(u-a an# 2!o"o%#o $a%(u-a, Jr. 3 co,"!t&t&on!rs4, r!"r!s!nt!# .y t'!&r %a)y!r,*at'!r &n+o%+&n( t'! su.5!ct "ro"!rty *or a cons!rat&on o* P167,000.00. So, t'! t&t%! )as r!(&st!r!# &n t'! na-!s o* t'! $a%(u-a .rot'!rs an# t'!y start!# co%%!ct&n( r!nta%s t'!r!on.2at!r, $rau%&o *&%!# a co-"%a&nt *or annu%-!nt o* t'! 0!!# o* A.so%ut! Sa%!, cont!n#&n( t'at '&s .rot'!r /&(u!%, Atty. $a%(u-a an# Inoc!nc&o Va%#!8 3 on! o* t'! "!t&t&on!rs4 con+&nc!# '&- to )or9 a.roa#. T'rou(' &ns&ous )or#s an# -ac'&nat&ons, t'!y -a#! '&- s&(n a #ocu-!nt "ur"ort!#%y a contract o* !-"%oy-!nt, )'&c' #ocu-!nt turn!# out to .! a 0!!# o* A.so%ut! Sa%!. :! *urt'!r a%%!(!# t'at '! # not r!c!&+! t'! cons!rat&on stat!# &n t'! contract. :! c%a&-!# t'at t'!r! )as !+!nt .a# *a&t' an# cons"&racy &n ta9&n( a#+anta(! o* '&s &(noranc!, '! .!&n( on%y a t'&r# (ra#!r.T'! RT; #&s-&ss!# t'! co-"%a&nt .!caus! $rau%&o *a&%!# to "ro+! '&s caus! o* act&on s&nc! '! a#-&tt!# t'at '! o.ta&n!# %oans *ro- t'! $a%(u-as, '! s&(n!# t'! 0!!# o* A.so%ut! Sa%!, an# '! ac9no)%!#(!# s!%%&n( t'! "ro"!rty an# sto""!# co%%!ct&n( t'! r!nta%s. $ut )'!n t'! cas! )as !%!+at!#, t'! #!c&s&on o* RT; )as r!+!rs!# an# &t )as '!%# t'at $rau%&o )as &nco-"!t!nt, 'as +!ry %o) I.