Dignos V Court of Appeals

Facts: The Dignos spouses were owners of a parcel of land. The land was sold to Jabil for the
sum of 28,000 to be paid in two installments, with an as-sumption of indebtedness with the First
Insular Bank of Cebu for 12000, which was paid and acknowledged by the vendor. The next
installment should be made on Sept 15 1965. On Nov 25 1965, the spouses sold the same lot to
spouses Cabigas (who were then US citizens) for the price of 35000. A deed of absolute sale
was executed and it was registered in the Office of the Registered Deeds. When Dignos
spouses refused to accept payment from Jabil, he subsequently discovered the second sale
and filed the complaint against them.
Court of First Instance declared the deed of sale (Spouses Cabigas) null and void ab initio. Jabil
was ordered to pay 16000 to Spouses Cabigas. CA af-firmed the decision except the order of
Jabil to reimburse the Spouses Cabi-gas.

Issue: WON the subject contract is a deed of absolute sale or a contract to sell.
Held:1. The subject contract was a deed of absolute sale. It has been held that a deed of sale is
absolute in nature although denominated as a "Deed of Conditional Sale" where nowhere in the
contract in question is a proviso or stipulation to the effect that the title to the property sold is
reserved in the vendor until full payment of the purchase price, nor is there a stipulation giv-ing
the vendor the right to unilaterally rescind the contract the moment the vendee fails to pay within
a fixed period. Also, all the valid elements of a valid contract of sale under 1458 are present.
Further, Article 1477 provides that the ownership of the thing sold shall be transferred to the
vendee upon actual or constructive delivery. The spouses delivered the lot as early as March 27
1965. The CA in its resolution found the acts of the spouses clearly show that an aboslute deed
of sae was intended by the parties and not a contract to sell.

Tan v. Benolirao
Facts: The spouses Taningco and spouses Benolirao co-owned a parcel of land, which they
decided to alienate in favor of Mr. Delfin Tan in considera-tion of the sum of 1,1178,000.00 with
a down-payment of 200,000php in a document denominated as a “Conditional Contract of Sale”.
It was stipulated that Tan had 150 days to pay the balance, with an extendable period of 60
days on the condition of interest. They agreed that should Mr. Tan fail to comply with the
conditions, the sellers shall have the right to forfeit the down payment and rescind that
conditional sale. The sellers undertook that once the Tan complied with the terms, they shall
execute and deliver to him the appropriate Deed of Absolute Sale. Tan paid the down payment,
but upon the death of Lamberto Benolirao (one of the sps. Benolirao) an encumbrance was
annotated in the title to the lot excluding others from the enjoyment of the same for a period of
two years. Tan, unable to comply with the condi-tions, argued that the period of his payment
should be extended due to the sudden encumbrance on the property. The sellers, on the other
hand, sold the property in question to a Mr. de Guzman.

Issue: WON Mr. Tan has a right to purchase the property.

Held: NO. A reading of the terms and conditions of the contract would show that notwithstanding
the fact that it was denominated as a “Conditional Con-tract of Sale”, it is actually a mere
Contract to Sell. The sellers undertook to deliver the Absolute Deed of Sale only upon the
fulfillment of all the terms and conditions of the contract, hence being an effective reservation of
own-ership. The failure to pay the price agreed upon is not a mere breach, casual or serious,
but a situation that prevents the obligation of the vendor to con-vey title from acquiring
obligatory force. As the sellers remained owners of the land as the condition had not been
complied with, they were within their right to sell the property to a third person. However, the
Court did find it im-proper for the sellers to garnish upon the down payment of Mr. Tan as the
encumbrance which discouraged him from complying with the contract was not his fault.
 ARTATES AND POJAS VS URBI ET AL.
Facts: On September 1952, a homestead was granted and registered under the names of
spouses Artates and Pojas. On Oct. 1955 however, the court ordered the execution sale of the
said homestead in favor of Daniel Urbi for the satisfaction of Artates’ indebtedness for the
physical injuries that he in-flicted upon Urbi. Urbi subsequently sold the homestead to a Crisanto
Soliv-en, a minor, hence, the spouses Artates and Pojas sought annulment of the execution of
the homestead and its subsequent sale on the ground that it violated the Public Land Law
exempting said property from execution for any debt contracted within 5 years from the
issuance of the patent and that the contract of sale between Urbi and Soliven is null and void.

Issue: Whether or not there is a perfected contract of sale between Urbi and Soliven.
Held: No, there was no perfected contract of sale for the reason that the sale is null and void
being in violation of Sec. 118 of the Public Land Law. Under said provision, for a period of 5
years from the date of the government grant, lands acquired by free or homestead patent shall
not only be incapable of being encumbered or alienated except in favor of the government itself
or any of its institutions, but also, they shall not be liable to the satisfaction of any debt
contracted within the said period. This provision is mandatory and intended to preserve and
keep for the homesteader or his family, the land given to him gratuitously by the State, so that
being a property owner, he may become and remain a contented and useful member of our
society. In the case at bar, the land in question was issued on Sept. 1952 to Artates spouses
and was sold at public auction on March 1956 which in no doubt, is within the 5 year prohibition
period. Furthermore, the sale is simulated and is only intended to place the property beyond the
reach of the judgment debtor. The execution sale being null and void, the contract of sale never
perfected and the possession of the land should be returned to the owners without prejudice to
their continuing obligation to pay the judgment debt and ex-penses connected therewith.

Facts: Petitioners were homestead patentees of a parcel of land in the municipality of

Del Pilar, Roxas, Palawan covered by an Original Certificate Title issued pursuant to
Homestead Patent No. V-59501 dated September 6, 1955. A civil case claiming
damages was filed by said petitioners against respondent Nin Bay Mining Corp. claiming
that the latter has removed silica sand from their land destroying the plants and other
improvements thereon. A Compromise Agreement was then entered into by the parties
on October 29, 1959 with petitioners duly assisted by their counsel containing, among
other things, that a rental of P 20 per hectare be paid to petitioners as full payment and
indemnity for all damages to the property; that they bind themselves to sell, transfer, and
convey the property and that the respondent agrees to purchase and pay for the
same; and that petitioners irrevocably appoint respondent as their attorney-in-fact with
full power and authority to sell, transfer and convey the same on September 10, 1960 or
anytime thereafter. Thereafter, respondent Corporation, as attorney-in-fact, sold the
property to Preysler with a corresponding Transfer Certificate Title issued with the
approval of the Scretary of Agriculture and Natural Resources. Ten years after the trial
court’s decision based on the Compromise Agreement and nine years after the sale to
Preysler, petitioners filed for the annulment of the aforementioned sale and recovery of
the property with damages alleging that they were unschooled and that there was
fraud, deceit, and manipulation employed by their lawyer and respondent Corporation.
The lower court ruled in favor of petitioners but the appellate court reversed after finding
that the alleged fraud and misrepresentation in the Compromise Agreement has not
been substantiated by evidence. Hence, this petition.
Issue: WON the Compromise Agreement and the subsequent Deed of Sale are valid?

Held: The general rule is that whoever alleges fraud or mistake must substantiate his
allegation, since the presumption is that a person takes ordinary care of his concerns
and that private transactions have been fair and regular. The rule admits of an
exception in Article 1332 of the Civil Code, which provides: “When one of the parties is
unable to read, or if the contract is in a language not understood by him, and mistake or
fraud is alleged, the person enforcing the contract must show that the terms thereof
have been fully explained to the former.”

For the proper application of said provision, it has first to be established convincingly that
the illiterate or the party at a disadvantage could not read or understand the language
in which the contract was written. The burden of proof, therefore, shifted to the
Corporation to show that the compromise agreement had been fully explained to the
plaintiffs.

However, the Court is not convinced that indeed appellees were victims of a fraudulent
scheme employed upon them by their former counsel by reason of their alleged
illiteracy and ignorance. The evidence discloses that appellees, although unschooled,
are intelligent, well-informed and intelligent people. They could not have been misled by
their former counsel into signing the compromise agreement, taking into account as well
the acts of the appellees and their children subsequent to the execution of the
compromise agreement. Although the petitioners were not misled into signing the
Compromise Agreement, the Court held that there has been violation of the Public Land
Act. The sale of a homestead lot within the five-year prohibitory period is illegal and void.
The law does not distinguish between executory and consummated sales.

The bilateral promise to buy and sell, and the agency to sell, entered into within five
years from the date of the homestead patent, was in violation of section 118 of the
Public Land Law, although the executed sale was deferred until after the expiration of
the five-year prohibitory period. As the contract is void from the beginning, for being
expressly prohibited by law, the action for the declaration of its inexistence does not
prescribe. Being absolutely void, it is entitled to no authority or respect, the sale may be
impeached in a collateral proceeding by any one with whose rights and interest it
conflicts. There is no presumption of its validity. The approval of the sale by the Secretary
of Agriculture and Natural Resources after the lapse of five years from the date of the
patent would neither legalize the sale. Decision reversed.

QUIROGA V PARSONS HARDWARE

Facts: A contract was entered into by herein plaintiff Quiroga and defendant J. Parsons
wherein the former granted the latter with the exclusive right to sale Quiroga beds in the
Visayan Islands subject to conditions. A complaint was filed by plaintiff averring that
defendant violated the ff. obligations: not to sell the beds at higher prices than those of
the invoices; to have an open establishment in Iloilo; itself to conduct the agency; to
keep the beds on public exhibition, and to pay for the advertisement expenses for the
same; and to order the beds by the dozen and in no other manner. With the exception
of the obligation on the part of the defendant to order the beds by the dozen and in no
other manner, none of the obligations imputed to the defendant in the are expressly set
forth in the contract. Plaintiff alleged that the defendant was his agent for the sale of his
beds in Iloilo, and that said obligations are implied in a contract of commercial agency.

Issue: WON the defendant, by reason of the contract, was a purchaser or an agent of
the plaintiff for the sale of his beds.

Held: The contract contains the essential features of a contract of purchase and sale.
There was the obligation on the part of the plaintiff to supply the beds, and, on the part
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. I By
virtue of the contract between the plaintiff and the defendant, the latter, on receiving
the beds, was necessarily obliged to pay their price within the term fixed, without any
other consideration and regardless as to whether he had or had not sold the beds.

Not a single one of these clauses necessarily conveys the idea of an agency. The
words commission on sales used in clause (A) of article 1 mean nothing else, as stated in
the contract itself, than a mere discount on the invoice price. The word agency, also
used in articles 2 and 3, only expresses that the defendant was the only one that could
sell the plaintiff’s beds in the Visayan Islands. It must be understood that a contract is
what the law defines it to be, and not what it is called by the contracting parties.

Only the acts of the contracting parties, subsequent to, and in connection with, the
execution of the contract, must be considered for the purpose of interpreting the
contract, when such interpretation is necessary, but not when, as in the instant case, its
essential agreements are clearly set forth and plainly show that the contract belongs to
a certain kind and not to another.

Concrete Aggregates vs. CTA and CIR

185 SCRA 416
May 1990

FACTS:

Petitioner, a domestic corporation duly existing under the laws of the Philippines, has an aggregate
plant at Montalban, Rizal which processes rock aggregates mined by it from private lands, and
maintains and operates a plant at Longos, Quezon City for the production of ready-mixed concrete and
plant-mixed hot asphalt. Sometime in 1968, the agents of respondent Commission on Internal Revenue
(CIR) conducted an investigation of petitioner's tax liabilities, and assessed and demanded payment
from petitioner the amount of P244,002.76 as sales and ad valorem taxes for the first semester of
1968, inclusive of surcharges.

Instead of paying, the petitioner appealed to respondent CTA. The said Court concluded that petitioner
is a manufacturer subject to the 7% sales tax under the Section Section 186 of the 1968 National
Internal Revenue Code, and ordered it to pay what the respondent CIR demands, plus interest at the
rate of 14% per centum from January 1, 1973 up to the date of full payment thereof pursuant to
Section 183 (now 193) of the same Code. Petitioner contends, however, that it is a contractor within
the meaning of Section 191 under the same Code, that its business falls under "other construction work
contractors" or "other independent contractors", and that it produced asphalt and concrete mix only
upon previous orders.

ISSUE:

Is the petitioner a contractor subject to the 3% contractor's tax under Section 191 or a manufacturer
subject to the 7% sales tax under Section 186?

COURT RULING:

The Supreme Court affirmed respondent CTA’s decision and declared that petitioner is a manufacturer
as defined by Section 194(x), now Section 187(x), of the Tax Code. It reiterated the respondent CTA’s
finding that petitioner was formed and organized primarily as a manufacturer; that it has an aggregate
plant at Montalban, Rizal, which processes rock aggregates mined by it from private lands; it operates
a concrete batching plant at Longos, Quezon City where the specified aggregates from its plant at
Montalban are mixed with sand and cement, after which water is added and the concrete mixture is
sold and delivered to customers; and at its plant site at Longos, Quezon City, petitioner has also an
asphalt mixing machinery where bituminous asphalt mix is manufactured.

PEOPLE HOMESITE VS COURT OF APPEALS

Facts: On Feb. 1960, People Homesite and Housing Corporation (PHHC) passed Resolution
No. 513 which grants Lot 4 of its Consolidated Subdivi-sion Plan (CSP) to Mendoza spouses
with a condition that it is subject to the approval of the Quezon City Council and the PHHC
Valuation Committee. The Quezon City Council initially disapproved the CSP on 1961 and such
disapproval was communicated to Mendoza spouses through registered mail. On 1964
however, the City Council approved a revised plan reducing the area of lot 4. The Mendoza
spouses failed to pay for the 20% initial de-posit or down payment for the lot so it was recalled
by the PHHC and was granted instead to Sto. Domingo, et al. The awardees made the initial de-
posit hence, the corresponding deeds of sale were executed in their favor. Mendoza spouses
filed a complaint in the court for specific performance and damages and prayed for the
cancellation of the deeds of sale.

Issue: Whether or not there was a perfected contract of sale of Lot 4 with the reduced area to
Mendoza spouses which they can enforce against the PHHC by an action for specific
performance.

Held: There was no perfected contract of sale with regard to Mendoza spouses. The award of
Lot 4 to them was conditional and was initially disap-proved by the City Council. The Mendozas
were sufficiently informed of such disapproval. However on 1964, when the lot area was
reduced and ap-proved by the City Council, the Mendozas should have manifested in writing
their acceptance of the award just to show that they were still interested in the purchase. They
did not do so. Art. 1475, NCC states that “The contract of sale is perfected at the moment there
is a meeting of minds upon the thing which is the object of the contract and upon the price.
From that moment, the parties may reciprocally demand performance, subject to the law
governing the form of contracts.” Art. 1181, NCC further states that “In conditional obligations,
the acquisition of the rights, as well as the extinguishment or loss of those already acquired,
shall depend upon the happening of the event which constitutes the condition.” In the case at
bar, there having been no concurrence as to the offer and acceptance between PHHC and the
Mendoza spouses, the contract of sale never perfected, hence, the re-awarding and subsequent
sale of the lot to Sto. Domingo, et. al is valid

TOYOTA SHAW, INC. vs. CA

Facts: Luna L. Sosa wanted to purchase a Toyota Lite Ace. It was difficult to find a dealer with
an available unit for sale, but upon contacting Toyota Shaw, he was told that there was an
available unit. Sosa, and his son, Gilbert went to the Toyota office at Shaw Boulevard, Pasig,
Metro Manila and met Popong Bernardo, who was a sales representative of Toyota. Sosa in-
formed Bernardo that the needed the Lite Ace not later than June 17, 1989 because it is to be
used by his family, and a balikbayan guest, in going to Marinduque where he would be
celebrating his birthday on the 19th of June. He also told Bernardo that if he won’t be arriving in
his hometown with a new car, he will become a “laughing stock.” Bernardo assured Sosa that a
unit will already be available for pick up on June 17, 1989, at 10:00 AM. Bernardo then signed a
document which had the heading “Agreements Between Mr. Sosa and Popong Bernardo of
Toyota Shaw, Inc.” Sosa and his son deliv-ered the down payment of P100,000 the next day,
and Bernardo accom-plished a printed Vehicle Sales Proposal No. 928 on which Gilbert signed.
Bernardo, on June 17, called Gilbert to inform him that the vehicle was not available for pick up
at 10:00 AM, but instead, it will be ready by 2:00 PM. Sosa and Gilbert met Bernardo, and was
informed that the Lite Ace was be-ing readied for delivery. Subsequently, Sosa was also
informed that B.A. Fi-nance Corp. denied to finance his credit financing application. Sosa, upon
it being clear that the Lite Ace was not going to be delivered to him, demanded for the refund of
his down payment. Toyota refused to accede to Sosa’s de-mand, and further alleged that they
did not enter into a contract of sale with Sosa.

Issue: Whether or not the executed VSP, which was signed by the Toyota’s sales
representative, a perfected contract of sale binding upon the parties.
Held: No. It is not a contract of sale. The provision on the down payment of P100,000 made no
specific reference to a sale of a vehicle. If it was intended for a contract of sale, it could only
refer to a sale on installment basis as the VSP confirmed. But, nothing was mentioned about the
full purchase price and the manner the installments are to be paid. A definite agreement on the
manner of payment of the price is an essential element in the formation of a binding and
enforceable contract of sale. Moreover, there was an absence of the meeting of the minds
between Sosa and Toyota, and Sosa did not even sign it. Futhermore, Sosa was not dealing
with Toyota but with Bernardo and that the latter did not misrepresent that he had the authority
to sell a Toyota Vehicle. The VSP was a mere proposal and it created no demandable right in
favor of Sosa for the delivery of the vehicle to him.

SAMPAGUITA V JALWINDOR

Facts: Plaintiff-appellant Sampaguita Pictures, Inc. leased the roofdeck of their

Sampaguita Pictures Building to Capitol 300 Inc. and agreed that the premises shall be
used for social purposes exclusively for the club’s members and guests; that all
permanent improvements made by lessee on the premises shall belong to the lessor
without any obligation to reimburse; that these be considered as part of the
consideration of the monthly rental; and any remodeling, alteration and or addition be
at the expense of lessee. Glass and wooden jalousies were then purchased by Capitol
from defendant-appellee Jalwindor Manufacturers Inc. which were delivered and
installed in the premises. Capitol failed to pay the purchases prompting defendant-
appellee to file an action for the collection of a sum of money with petition for
preliminary attachment. The parties submitted a Compromise Agreement to the trial
court wherein Capitol acknowledged its indebtedness and pending liquidation, the
materials purchased will be considered as security. Thereafter, Capitol not only failed to
comply with the Compromise Agreement but also failed to pay rentals to plaintiff-
appellant, causing their ejectment with damages paid to the latter. When the Sheriff of
Quezon City levied upon the materials, plaintiff-appelant filed a third-party claim
alleging that it is the owner of the same however, defendant-appellee filed an
indemnity bond in favor of the Sheriff and the public auction pushed through with the
latter as the highest bidder. Plaintiff-appellant sought to nullify the sale in an action filed
with the Court of First Instance and for the issuance of a writ of preliminary injuction
against defendant-appellee from detaching the materials. Based on the Stipulation of
Facts submitted, the lower court dismissed the complaint. The subsequent motion for
reconsideration was likewise denied hence the instant petition.

Issue: WON the lower court erred in holding that there was no legal transfer of ownership
of the glass and wooden jalousies from Capitol 300 Inc. to plaintiff-appellant?

Held: Court held in the affirmative. When the glass and wooden jalousies in question
were delivered and installed in the leased premises, Capitol became the owner thereof.
Ownership is not transferred by perfection of the contract but by delivery, either actual
or constructive. This is true even if the purchase has been made on credit, as in the case
at bar. Payment of the purchase price is not essential to the transfer of ownership as long
as the property sold has been delivered. Ownership is acquired from the moment the
thing sold was delivered to vendee, as when it is placed in his control and possession.

Capitol entered into a lease contract with Sampaguita in 1964, and the latter became
the owner of the items in question by virtue of the agreement in said contract. When
levy or said items was made on July 31, 1965, Capitol, the judgment debtor, was no
longer the owner thereof.

The items in question were illegally levied upon since they do not belong to the
judgment debtor. The power of the Court in execution of judgment extends only to
properties unquestionably belonging to the judgment debtor. Execution sales affect the
rights of judgment debtor only, and the purchaser in the auction sale acquires only the
right as the debtor has at the time of sale. Since the items already belong to
Sampaguita and not to Capitol, the judgment debtor, the levy and auction sale are,
accordingly, null and void. Decision reversed