DIGEST: Leabres vs CA (G.R. No.L-41847)BynutshellgirlPosted inDigest: Sales,Lawschool Taggeddigest,law school,sales Leave a commentLeabres vs. CAGR No. L-41847Subject: SalesDoctrine:A receipt is not a valid basis for a contract of sale. Essential requisites of a contract of sale.Facts:Clara Tambunting de Legarda died testate on April 22, 1950. Among the properties left by the deceased is the Legarda Tambunting Subdivision located on Rizal Avenue Extension, City of Manila. Shortly after the death of said deceased, plaintiff Catalino Leabres bought, on a partial payment of Pl,000.00 a portion (No. VIII, Lot No. 1) of the Subdivision from surviving husband Vicente J. Legarda who acted as special administrator, the deed or receipt of said sale appearing to be dated May 2, 1950. On August 28, 1950, the Probate Court of Manila appointed Vicente Legarda as an administrator together with Pacifica Price and Augusto Tambunting over the testate estate of said Clara Tambunting and authorized through its order of November 21, 1951 the sale of the property.Vicente L. Legarda was relieved as a regular Administrator and the Philippine Trust Co. which took over as such administrator advertised the sale of the subdivision which includes the lot subject matter herein in various issues of the Manila Times and Daily Mirror. No adverse claim or interest over the subdivision or any portion thereof was ever presented by any person, and in the sale that followed, the Manotok Realty, Inc. emerged the successful bidder. By order of the Probate Court, the Philippine Trust Co. executed the Deed of Absolute Sale of the subdivision in favor of the Manotok Realty, Inc. which deed was judicially approved on March 20, 1959, and recorded immediately in the proper Register of Deeds which issued the corresponding Certificates of Title to the Manotok Realty, Inc., the defendant appellee herein.A complaint dated February 8, 1966, was filed by herein plaintiff, which seeks, among other things, for the quieting of title over the lot subject matter herein, for continuing possession thereof, and for damages.Leabres anchors his claim on the receipt dated May 2, 1950, which he claims as evidence of the sale of said lot in his favor.However, Catalino Leabres has not registered his supposed interest over the lot in the records of the Register of Deeds, nor did he present his claim for probate in the testate proceedings over the estate of the owner of said subdivision, in spite of the notices advertised in the papers. Both the RTC and CA dismissed the petitioners claim.Issue:Whether or not a receipt is a valid basis for a contract of sale.Held:An examination of the receipt reveals that the same can neither be regarded as a contract of sale or a promise to sell. There was merely an acknowledgment of the sum of One Thousand Pesos (P1,000.00). There was no agreement as to the total purchase price of the land nor to the monthly installment to be paid by the petitioner.The requisites of a valid Contract of Sale namely 1) consent or meeting of the minds of the parties; 2) determinate subject matter; 3) price certain in money or its equivalent-are lacking in said receipt and therefore the sale is not valid nor enforceable. Furthermore, it is a fact that Dona Clara Tambunting died on April 22, 1950. Her estate was thereafter under custodia legis of the Probate Court which appointed Don Vicente Legarda as Special Administrator on August 28, 1950. Don Vicente Legarda entered into said sale in his own personal-capacity and without court approval, consequently, said sale cannot bind the estate of Clara Tambunting. Petitioner should have submitted the receipt of alleged sale to the Probate Court for its approval of the transactions. Anent his possession of the land, petitioner cannot be deemed a possessor in good faith in view of the registration of the ownership of the land. To consider petitioner in good faith would be to put a premium on his own gross negligence. The Court resolved to DENY the petition for lack of merit and to AFFIRM the assailed judgment.

DIGEST: Celestino Co vsCIRBynutshellgirlPosted inDigest: Sales,Lawschool Taggeddigest,law school,sales Leave a commentCelestino Co vs CIR (G.R. No. L-8506)Subject:SalesDoctrine:Contract for Piece-of-workFacts:Celestino Co & Company is a duly registered general co-partnership doing business under the trade name of Oriental Sash Factory. From 1946 to 1951 it paid percentage taxes of 7% on the gross receipts of its sash, door and window factory, in accordance with sec. 186 of the National Internal Revenue Code which is a tax on the original sales of articles by manufacturer, producer or importer. However, in 1952 it began to claim only 3% tax under Sec. 191, which is a tax on sales of services. Petitioner claims that it does not manufacture ready-made doors, sash and windows for the public, but only upon special orders from the customers, hence, it is not engaged in manufacturing under sec 186, but only in sales of services covered by sec 191. Having failed to convince BIR, petitioner went to the Court of Tax Appeal where it also failed. CTA, in its decision, holds that the petitioner has chosen for its tradename and has offered itself to the public as a Factory, which means it is out to do business, in its chosen lines on a big scale. As a general rule, sash factories receive orders for doors and windows of special design only in particular cases but the bulk of their sales is derived from a ready-made doors and windows of standard sizes for the average home.. Even if we were to believe petitioners claim that it does not manufacture ready-made sash, doors and windows for the public and that it makes these articles only special order of its customers, that does not make it a contractor within the purview of section 191 of the national Internal Revenue Code there are no less than fifty occupations enumerated in the aforesaid sectionand after reading carefully each and every one of them, we cannot find under which the business of manufacturing sash, doors and windows upon special order of customers fall under the category mentioned under Sec 191.Issue:Whether the petitioner company provides special services or is engaged in manufacturing.Held:The important thing to remember is that Celestino Co & Company habitually makes sash, windows and doors, as it has represented in its stationery and advertisements to the public. That it manufactures the same is practically admitted by appellant itself. The fact that windows and doors are made by it only when customers place their orders, does not alter the nature of the establishment, for it is obvious that it only accepted such orders as called for the employment of such material-moulding, frames, panels-as it ordinarily manufactured or was in a position habitually to manufacture. The Oriental Sash Factory does nothing more than sell the goods that it mass-produces or habitually makes; sash, panels, mouldings, frames, cutting them to such sizes and combining them in such forms as its customers may desire.Appellant invokes Article 1467 of the New Civil Code to bolster its contention that in filing orders for windows and doors according to specifications, it did not sell, but merely contracted for particular pieces of work or merely sold its services. In our opinion when this Factory accepts a job that requires the use of extraordinary or additional equipment, or involves services not generally performed by it-it thereby contracts for a piece of work filing special orders within the meaning of Article 1467. The orders herein exhibited were not shown to be special. They were merely orders for work nothing is shown to call them special requiring extraordinary service of the factory. The thought occurs to us that if, as alleged-all the work of appellant is only to fill orders previously made, such orders should not be called special work, but regular work. The Supreme Court affirms the assailed decision by the CTA.

Digest: CIR vs Arnoldus CarpentryShopBynutshellgirlPosted inDigest: Sales,Lawschool Taggeddigest,law school,sales 1 CommentCIR vs Arnoldus Carpentry ShopGR No. 71122Subject:SalesDoctrine:Contract of Sale vs Contract for a Piece of WorkFacts:Arnoldus Carpentry Shop, Inc. is a domestic corporation which has been in existence since 1960 which has for its purpose the preparing, processing, buying, selling, exporting, importing, manufacturing, trading and dealing in cabinet shop products, wood and metal home and office furniture, cabinets, doors, windows, etc., including their component parts and materials, of any and all nature and description. The company kept samples or models of its woodwork on display from where its customers may refer to when placing their orders.On March 1979, the examiners from BIR who conducted an investigation on the companys tax liabilities reported that subject corporation should be considered a contractor and not a manufacturer since the corporation renders service in the course of an independent occupation representing the will of his employer only as to the result of his work, and not as to the means by which it is accomplished. Hence, in the computation of the percentage tax, the 3% contractors tax should be imposed instead of the 7% manufacturers tax. However, responded company holds that the carpentry shop is a manufacturer and therefore entitled to tax exemption on its gross export sales under Section 202 (e) of the National Internal Revenue Code. CIR rendered its decision classifying the respondent as contractor which was in turn reversed by the CTA. Hence, this appeal.Issue: Whether or not the Court of Tax Appeals erred in holding that private respondent is a manufacturer and not a contractor.Held:The Supreme Court holds that the private respondent is a manufacturer as defined in the Tax Code and not a contractor under Section 205(e) of the Tax Code.Petitioner CIR wants to impress upon this Court that under Article 1467, the true test of whether or not the contract is a piece of work (and thus classifying private respondent as a contractor) or a contract of sale (which would classify private respondent as a manufacturer) is the mere existence of the product at the time of the perfection of the contract such that if the thing already exists, the contract is of sale, if not, it is work. This is not the test followed in this jurisdiction. Based on Art. 1467, what determines whether the contract is one of work or of sale is whether the thing has been manufactured specially for the customer and upon his special order. Thus, if the thing is specially done at the order of another, this is a contract for a piece of work. If, on the other hand, the thing is manufactured or procured for the general market in the ordinary course of ones business, it is a contract of sale. The distinction between a contract of sale and one for work, labor and materials is tested by the inquiry whether the thing transferred is one not in existence and which never would have existed but for the order of the party desiring to acquire it, or a thing which would have existed and has been the subject of sale to some other persons even if the order had not been given. The one who has ready for the sale to the general public finished furniture is a manufacturer, and the mere fact that he did not have on hand a particular piece or pieces of furniture ordered does not make him a contractor only.A contract for the delivery at a certain price of an article which the vendor in the ordinary course of his business manufactures or procures for the general market, whether the same is on hand at the time or not, is a contract of sale, but if the goods are to be manufactured specially for the customer and upon his special order, and not for the general market, it is a contract for a piece of work. The facts show that the company had a ready stock of its shop products for sale to its foreign and local buyers. As a matter of fact, the purchase orders from its foreign buyers showed that they ordered by referring to the models designated by petitioner. Even purchases by local buyers for television cabinets were by orders for existing models except only for some adjustments in sizes and accessories utilized.The Court finds itself in agreement with CTA and as the CTA did not err in holding that private respondent is a manufacturer, then private respondent is entitled to the tax exemption under See. 202 (d) and (e) now Sec. 167 (d) and (e)] of the Tax Code.

Quiroga vs. Parsons Hardware 38 Phil 501 August 1918

FACTS:

On January 24, 1911, plaintiff Andres Quiroga and J. Parsons (to whose rights and obligations the present defendant Parsons Hardware Co. later subrogated itself) entered into a contract, where it was stated among others that Quiroga grants in favor of Parsons the exclusive rights to sell his beds in the Visayan Islands under some conditions. One of the said conditions provided that Mr. Parsons may sell, or establish branches of his agency for the sale of "Quiroga" beds in all the towns of the Archipelago where there are no exclusive agents, and shall immediately report such action to Mr. Quiroga for his approval while another one passed on to Parsons the obligation to order by the dozen and in no other manner the beds from Quiroga.

Alleging that the Parsons was his agent for the sale of his beds in Iloilo, Quiroga filed a complaint against the former for violating the following obligations implied in what he contended to be a contract of commercial agency: not to sell the beds at higher prices than those of the invoices; to have an open establishment in Iloilo; itself to conduct the agency; to keep the beds on public exhibition, and to pay for the advertisement expenses for the same; and to order the beds by the dozen and in no other manner.

ISSUE:

Is the defendant, by reason of the contract, a purchaser or an agent of the plaintiff for the sale of the latters beds in Iloilo?

COURT RULING:

The Supreme Court declared that the contract by and between the plaintiff and the defendant was one of purchase and sale, and that the obligations the breach of which is alleged as a cause of action are not imposed upon the defendant, either by agreement or by law.

In order to classify a contract, due regard must be given to its essential clauses. In the contract in question, what was essential, as constituting its cause and subject matter, is that the plaintiff was to furnish the defendant with the beds which the latter might order, at the price stipulated, and that the defendant was to pay the price in the manner stipulated. There was the obligation on the part of the plaintiff to supply the beds, and, on the part of the defendant, to pay their price. These features exclude the legal conception of an agency or order to sell whereby the mandatory or agent received the thing to sell it, and does not pay its price, but delivers to the principal the price he obtains from the sale of the thing to a third person, and if he does not succeed in selling it, he returns it.

GONZALO PUYAT & SONS VS. ARCO AMUSEMENT COMPANYJune 20, 1941Keywords: discounted price of sound reproducing equipment not disclosed; Arco Amusement seeks reimbursement.

Facts: In 1929, Arco Amusement Company (formerly known as Teatro Arco) was engaged in the business of operating cinematographs. Around 1930, Arco Amusement approached Gonzalo Puyat & Sons, Inc., the exclusive agents in the Phils of the Starr Piano Company (of Richmond, Indiana, USA) to negotiate with them their intent to buy sound reproducing equipment from Starr Piano through Gonzalo Puyat & Sons. After some negotiations, the parties agreed that Gonzalo Puyat & Sons would order the equipment from Starr Piano and Arco Amusement would pay Gonzalo Puyat, in addition to the price of the equipment, a 10% commission, plus expenses, such as freight, insurance, banking charges, cables etc. In ordering the equipment, Gonzalo Puyat & Sons was able to get a discounted price from Starr Piano. However, Gonzalo Puyat did not inform Arco Amusement of the discounted price, and still billed them the list price of $ 1,700 plus the 10% commission and the expenses incurred in ordering the equipment. Arco Amusement paid the bills and then placed another order for a second sound reproducing equipment, which was quoted at $1,600 plus commission and other expenses. Arco paid the amount assessed by Gonzalo Puyat. 3 years later, Arco Amusement discovered that the price quoted to them by Gonzalo Puyat was not the net price but was rather the list price and that Gonzalo Puyat obtained a discount from Starr Piano. They sought for reimbursement of what they have paid Gonzalo Puyat by filing a case for reimbursement. CFI of Manila held that the contract between the petitioner and the respondent was one of outright purchase and sale, and absolved Gonzalo Puyat from the complaint. CA reversed the decision of the CFI, holding that the relation between Gonzalo Puyat and Arco Amusement was that of an agent and a principal, and sentenced Gonzalo Puyat to reimburse Arco Amusement of all the alleged overpayments in the total sum of $1,335.52 or Php 2,671.04

Issue: WON the contract between Gonzalo Puyat and Arco Amusement is an Agency to merit Arco Amusement a reimbursement or is an Outright Purchase and Sale Contract that would absolve Gonzalo Puyat of the case.

Held: The contract between Gonzalo Puyat and Arco Amusement is an Outright Purchase and Sale Contract

Ratio: The contract is the law between the parties and should include all the things they are supposed to have agreed upon. The letters, by which Arco accepted the prices of $1,700 and S1,600 plus the commission and other expenses for the sound reproducing equipment are clear in their terms and admit of no other interpretation than that Arco agreed to purchase from Gonzalo Puyat the equipment in question at the prices indicated which are fixed and determinate. Arco admitted in its complaint filed with the CFI that Gonzalo Puyat agreed to sell to it the first sound reproducing equipment and machinery. Whatever unforeseen events might have taken place unfavorable to Arco, such as change in prices, mistake in their quotation, or failure of Starr Piano to properly fill the orders as per specifications, Gonzalo Puyat might still legally hold Arco to the prices fixed. This is incompatible with the pretended relation of agency between the petitioner and the respondent, because in agency, the agent is exempted from all liability in the discharge of his commission provided that he acts in accordance with the instructions received from his principal and the principal must indemnify the agent for all damages which the latter may incur in carrying out the agency without fault or imprudence on his part.

To hold the petitioner an agent of the respondent in the purchase of the equipment from Starr Piano is incompatible with the fact that the petitioner is the exclusive agent of the same company in the Phils. It is out of the ordinary for one to be the agent of both the vendor and the vendee.It follows that Gonzalo Puyat as a vendor is not bound to reimburse Arco as vendee for any difference between the cost price and the sales price which represents the profit realized by the vendor out of the transaction. This is the very essence of commerce without which merchants or middlemen would not exist