DIGEST: Leabres vs CA (G.R. No.
L-41847)
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Leabres vs. CA
GR No. L-41847
Subject: Sales
Doctrine: 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 vs CIR
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Celestino Co vs CIR (G.R. No. L-8506)
Subject: Sales
Doctrine: Contract for Piece-of-work
Facts: 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 Carpentry Shop
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CIR vs Arnoldus Carpentry Shop
GR No. 71122
Subject: Sales
Doctrine: Contract of Sale vs Contract for a Piece of Work
Facts: 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 COMPANY
June 20, 1941
Keywords: 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
