G.R. No.

L-11491 August 23, 1918

ANDRES QUIROGA, plaintiff-appellant, vs.
PARSONS HARDWARE CO., defendant-appellee.
FACTS:
Quiroga and Parsons Hardware entered into a contract where the forer granted the latter e!clusive rights to sell Quiroga "eds in
#isa$as under the %g conditions:
&nder A'T (
(. Quiroga will furnish )eds to Parsons at a discount of *+,
*. Parsons )inds hiself to pa$ Quiroga for )eds within -. da$s fro date of shipent
/. Transportation and shipent e!penses shall )e )orne )$ Quiroga
0. 1f there is dela$ in pa$ent, there is deduction of *, fro invoice aount should Quiroga re2uest pa$ent
+. Quiroga to give Parsons (+ da$s notice in case of alteration of prices, and for Parsons to en3o$ the alteration if prices were lower
in case there is pending order
-. Parsons to )ind hiself to sell onl$ Quiroga )eds
A'T * Quiroga assues the o)ligation to offer and give the preference to 4r. Parsons in case an$one should appl$ for the
e!clusive agenc$ for an$ island not coprised with the #isa$an group.
A'T. /. 4r. Parsons a$ sell, or esta)lish )ranches of his agenc$ for the sale of 5Quiroga5 )eds in all the towns of the Archipelago
where there are no e!clusive agents, and shall iediatel$ report such action to 4r. Quiroga for his approval.
A'T. 0. This contract is ade for an unliited period, and a$ )e terinated )$ either of the contracting parties on a previous
notice of ninet$ da$s to the other part$.
Quiroga alleged that Parsons )reached the %g:
a. not to sell the )eds at higher prices than those of the invoices6
). to have an open esta)lishent in 1loilo6
c. itself to conduct the agenc$6
d. to 7eep the )eds on pu)lic e!hi)ition,
e. and to pa$ for the advertiseent e!penses for the sae6 and to order the )eds )$ the do8en and in no other anner.
Quiroga argued that since there was a contract of agenc$ )etween the, such o)ligations were necessaril$ iplied.
1SS&9: :;< it is contract of agenc$, not sale
'&=1<>: Contract of Sale.
A. El!"ts o# Co"t$%&t o# S%l
1n the contract in 2uestion, what was essential, as constituting its cause and su)3ect atter, is that the plaintiff was:
a. to furnish the defendant with the )eds which the latter ight order, at the price stipulated, and that the defendant was to pa$
the price in the anner stipulated.
). The price agreed upon was the one deterined )$ the plaintiff for the sale of these )eds in 4anila, with a discount of fro *.
to *+ per cent, according to their class.
c. Pa$ent was to )e ade at the end of si!t$ da$s, or )efore, at the plaintiff?s re2uest, or in cash, if the defendant so preferred,
and in these last two cases an additional discount was to )e allowed for propt pa$ent.
These are precisel$ the essential features of a contract of purchase and sale.
'. ()$ *%s t) o+l,g%t,o" o" t) -%$t o# t) -l%,"t,## to su--l. t) +/s, %"/, o" t) -%$t o# t) /#"/%"t, to -%.
t),$ -$,&.
1n a contract of agenc$ @or order to sellA, the agent does not pa$ its price $et, and sells the products, reitting to the
principal its proceeds. &nsold products ust also )e returned to the principal. The provisions on coission and the use of the
word Bagenc$C in the contract as well as the testionies in court do not a%ect its nature. Contracts are what the law deDnes it to
)e, not what the parties call it.
1t was not ade on )asis of coission on sales.
<ot a single one of these clauses necessaril$ conve$s the idea of an agenc$.
The words commission on sales used in clause @AA of article ( ean nothing else, as stated in the contract itself, than a
ere discount on the invoice price and the reason for appl$ing this )enefit to the )eds sold directl$ )$ the plaintiff to persons in
1loilo was )ecause, as the defendant o)ligated itself in the contract to incur the e!penses of advertiseent of the plaintiff?s )eds,
such sales were to )e considered as a result of that advertiseent.
The word agency, also used in articles * and /, onl$ e!presses that the defendant was the onl$ one that could sell the
plaintiff?s )eds in the #isa$an 1slands.
G.R. No. L-40138 2u" 23, 1941
GON4ALO PU5A( 6 SONS, INC., petitioner, vs.
ARCO A7USE7EN( CO7PAN5 8#o$!$l. 9"o*" %s (%t$o A$&o:, respondent.
FACTS:
Arco Auseent Copan$. C. S. engaged in the )usiness of operating cineatographs.

>on8alo Pu$at E Sons, 1nc., was acting as e!clusive agents in the Philippines for the Starr Piano Copan$ of 'ichond, 1ndiana,
&.S. A.
Arco Auseent Copan$ desiring to e2uipt its cineatograph with sound reproducing devices, approached >on8alo Pu$at E
Sons, 1nc.,
After soe negotiations, it was agreed )etween the parties, that >on8alo Pu$at E Sons would order sound reproducing e2uipent
fro the Starr Piano Copan$ and that Arco would pa$ the >PS, in addition to the price of the e2uipent, a (. per cent
coission, plus all e!penses, such as, freight, insurance, )an7ing charges, ca)les, etc.
FIRST TRANSACTION:
At the e!pense of Arco Auseent, >PS sent a ca)le to the Starr Piano Copan$, in2uiring a)out the e2uipent desired and
a7ing the said copan$ to 2uote its price without discount. A repl$ was received )$ >on8alo Pu$at E Sons, 1nc., with the price,
evidentl$ the list price of F(,G.. f.o.). factor$ 'ichond, 1ndiana.
>PS infored Arco Auseent of the price of F(,G00.
"eing agreea)le to this price, Arco Auseent, which is a letter signed )$ C. S. Salon dated <ove)er (H, (H*H, forall$
authori8ed the order. The e2uipent arrived a)out the end of the $ear (H*H, and upon deliver$ of the sae to Arco Auseent
and the presentation of necessar$ papers, the price of F(.G.., plus the (. per cent coission agreed upon and plus all the
e!penses and charges, was dul$ paid )$ the Arco Auseent to >PS.
SECOND TRANSACTION: At same terms as frst at $1600 l!s 10" an# all ot$er e%enses
The following $ear, another order for sound reproducing e2uipent was placed )$ the Arco Auseent Copan$ with >PS, on
the sae ters as the first order.
This agreeent or order was conDred )$ Arco Auseent )$ its letter, without date, that is to sa$, that the Arco Auseent
would pa$ for the e2uipent the aount of F(,-00, which was supposed to )e the price 2uoted )$ the Starr Piano Copan$, plus
(. per cent coission, plus all e!penses incurred. The e2uipent under the second order arrived in due tie, and the >PS was
dul$ paid the price and all e!penses and charges.
A)out three $ears later, in connection with a civil case in #igan, filed )$ one Fidel 'e$es against the >on8alo Pu$at E Sons, 1nc.,
the officials of the Arco Auseent Copan$ discovered the %g:
(. the price 2uoted to the )$ the >PS with regard to their tw o orde rs en ti o ned w as not the n et price )ut ra ther t he l ist price,
and
*. that the >PS had o)tained a discount fro the Starr Piano Copan$.
4oreover, )$ reading reviews and literature on prices of achiner$ and cineatograph e2uipent, said officials of the Arco
Auseent were convinced that the prices charged the )$ the Arco Auseent Copan$ were uch too high including the
charges for out-of-poc7et e!pense.
For these reasons, the$ sought to o)tain a reduction fro the Arco Auseent Copan$ or rather a rei)urseent, and failing
in this the$ )rought the present action.
1SS&9: :;< >on8alo Pu$at E Sons should )e rei)ursed. :as it a valid contract of sale or agenc$I
Held:
The tr i a l court held that the contract )etween the parties was one of outright purchase and sale, and a)solved that petitioner fro
the coplaint.
The a pp e l la te cour t, however, held that the relation )etween petitioner and respondent was that of agent and principal, the
petitioner acting as agent of the respondent in the purchase of the e2uipent in 2uestion, and sentenced the petitioner to pa$ the
respondent alleged overpa$ents in the total su of F(,//+.+* or P*,-G(..0, together with legal interest thereon fro the date of
the filing of the coplaint until said aount is full$ paid, as well as to pa$ the costs of the suit in )oth instances. The appellate
court further argued that even if the contract )etween the petitioner and the respondent was one of purchase and sale, the
petitioner was guilt$ of fraud in concealing the true price and hence would still )e lia)le to rei)urse the respondent for the
overpa$ents ade )$ the latter
SC : 1t was a valid contract of sale and not of agenc$.
CON(RAC( SHOULD INCLUDE ALL (ER7S AGREED UPON AND (A;EN ON <ACE =ALUE
1n the Drst place, the contract is the law )etween the parties and should include all the things the$ are supposed to have )een
agreed upon. :hat does not appear on the face of the contract should )e regarded erel$ as 5dealer?s5 or 5trader?s tal75, which
can not )ind either part$.
The letters, )$ which the respondent accepted the prices of F(,G00 and F(,-00, respectivel$, for the sound reproducing e2uipent
su)3ect of its contract with the petitioner, are clear in their ters and adit no other interpretation that the respondent in
2uestion at the prices indicated which are fi!ed and deterinate.
CON(RAC( O< SALE > AGENC5?
A. IN (ER7S O< LIA'ILI(5
GPS ,s st,ll l,%+l %t %g$/ t$! "o !%tt$ *)%t u"#o$s" &)%"gs ," @-"ss %"/ -$,&s ," % &o"t$%&t o#
s%l. I" % &o"t$%&t o# Ag"&., t) %g"t ,s @!-t #$o! %ll l,%+,l,t. %s t). %$ o"l. /,s&)%$g,"g %&t,o"s
,"st$u&t/ +. t) -$,"&,-%l.
:e agree with the trial 3udge that 5whatever unforseen events ight have ta7en place unfavora)le to the >PS, such as change in
prices, ista7e in their 2uotation, loss of the goods not covered )$ insurance or failure of the Starr Piano Copan$ to properl$ Dll
the orders as per specifications,Arco Auseent ight still legall$ hold the >PS to the prices D!ed of F(,G.. and F(,-00.5
This is incopati)le with the pretended relation of agenc$ )etween the petitioner and the respondent, )ecause in agenc$, the
agent is e!epted fro all lia)ilit$ in the discharge of his coission provided he acts in accordance with the instructions
received fro his principal @section *+0, Code of CoerceA, and the principal ust indenif$ the agent for all daages which
the latter a$ incur in carr$ing out the agenc$ without fault or iprudence on his
part @article (G*H, Civil CodeA.
'. CO77ISSION DOES NO( NECESSARIL5 7EAN CON(RAC( O< AGENC5
St,-ul%t,o" to $&,> &o!!,ss,o" ,s "ot ,"&o!-%t,+l *,t) t) &o"t$%&t o# s%l.
:hile the letters, state that the petitioner was to receive ten per cent @(.,A coission, this does not necessaril$ a7e the
petitioner an agent of the respondent, as this provision is onl$ an additional price which the respondent )ound itself to pa$, and
which stipulation is not incopati)le with the contract of purchase and sale.
C. R,g)ts %"/ Rs-o"s,+,l,t. o# GPS %s >"/o$ to A$&o A!us!"t
It ,s GPS t)%t ,s @&lus,> %g"t o# St%$$ P,%"o %"/ "ot A$&o. It ,s out o# t) o$/,"%$. to + %g"t o# +ot) sll$ %"/
+u.$. As -$ t) #%&ts %"/ &,$&u!st%"&s, A$&o "t$/ ,"to % &o"t$%&t o# s%l *,t) GPS *)o ,s t) @&lus,> %g"t
o# St%$$ P,%"o.
1n the second place, to hold the petitioner an agent of the respondent in the purchase of e2uipent and achiner$ fro the Starr
Piano Copan$ of 'ichond, 1ndiana, is incopati)le with the aditted fact that the petitioner is the e!clusive agent of the sae
copan$ in the Philippines. 1t is out of the ordinar$ for one to )e the agent of )oth the vendor and the purchaser.
GPS %s >"/o$ ,s "ot +ou"/ to $,!+u$s A$&o %!us!"t %s >"/ #o$ %". /,##$"& +t*" t) &ost -$,& %"/
t) s%ls -$,& *),&) $-$s"ts t) -$o#,t $%l,A/ +. t) >"/o$ out o# t) t$%"s%&t,o".
The respondents contends that it erel$ agreed to pa$ the cost price as distinguished fro the list price, plus ten per cent @(.,A
coission and all out-of-poc7et e!penses incurred )$ the petitioner.
1t is to )e o)served that the twent$-Dve per cent @*+,A discount granted )$ the Starr piano Copan$ to>PS is availa)le onl$ to
the latter as the forer?s e!clusive agent in the Philippines.
<o reason is advanced )$ the respondent wh$ the petitioner should waive the *+ per cent discount granted it )$ the Starr Piano
Copan$ in e!change for the (. percent coission offered )$ the respondent.
GPS ,s "ot +ou"/ to $>%l -$,>%t %$$%"g!"t ,t )%/ *,t) St%$$ P,%"o to A$&o A!us!"t.
Arco Auseent was not even aware of such an arrangeent. Arco Auseent, therefore, could not have offered to pa$ a (. per
cent coission to >PS provided it was given the )eneDt of the *+ per cent discount en3o$ed )$ the petitioner.
1t is well 7nown that local dealers acting as agents of foreign anufacturers, aside fro o)taining a discount fro the hoe
office, soeties add to the list price when the$ resell to local purchasers.
1f the respondent later on discovers itself at the short end of a )ad )argain, it alone ust )ear the )lae, and it cannot rescind
the contract, uch less copel a rei)urseent of the e!cess price, on that ground alone.
The respondent could not secure e2uipent and achiner$ anufactured )$ the Starr Piano Copan$ e!cept fro the petitioner
alone6 it willingl$ paid the price 2uoted6 it received the e2uipent and achiner$ as represented6 and that was the end of the
atter as far as the respondent was concerned..
G.R. No. 12B444 D&!+$ 4, 1998
Qui3ada v. CA
<AC(S?
S&44A'J: Heirs of the late Trinidad Qui3ada, filed a coplaint against private respondents for 2uieting of title, recover$ of
possession and ownership of parcels of land
Trinidad was one of the heirs of the late Pedro Corvera and inherited fro the latter the two-hectare parcel of land su)3ect of the
case, situated in the )arrio of San Agustin, Talacogon, Agusan del Sur.
;n April +, (H+-, Trinidad Qui3ada together with her sisters =eonila Corvera #da. de Se2ueKa and Pa8 Corvera Ca)iltes and )rother
9papiadito Corvera e!ecuted a conditional deed of donation of the two-hectare parcel of land in favor of the 4unicipalit$ of
Talacogon, the condition )eing that the parcel of land shall )e used solel$ and e!clusivel$ as part of the capus of the proposed
provincial high school inTalacogon.
Apparentl$, Trinidad reained in possession of the parcel of land despite the donation.
;n Lul$ *H, (H-*, Trinidad sold one @(A hectare of the su)3ect parcel of land to 'egalado 4onde3ar.
Trinidad ver)all$ sold the reaining one @(A hectare to 'egalado 4onde3ar without the )eneDt of a written deed of sale and
evidenced solel$ )$ receipts of pa$ent.
1n (HM., the heirs of Trinidad, who at that tie was alread$ dead, Dled a coplaint for forci)le entr$ against 'egalado 4onde3ar,
however, disissed for failure to prosecute.
1n (HMG, the proposed provincial high school having failed to ateriali8e, the Sangguniang "a$an of the unicipalit$ of Talacogon
enacted a resolution reverting the two @*A hectares of land donated )ac7 to the donors.
1n the eantie, 'egalado 4onde3ar sold portions of the land to Fernando "autista, 'odolfo >oloran, 9fren >uden and 9rnesto
>oloran.
;n Lul$ +, (HMM, heirs of Trinidad Dled a coplant alleging the %g:.
a. that their deceased other never sold, conve$ed the propert$ in 2uestion to an$ person or entit$, save the donation ade to
the 4unicipalit$ of Talacogon in (H+-6
). that at the tie of the alleged sale to 'egalado 4onde3ar )$ Trinidad Qui3ada, the land still )elongs to the 4unicipalit$ of
Talacogon, hence, the supposed sale is null and void.
'egalado 4onde3ar on the other hand alleges that:
a. that the land in dispute was sold to 'egalado 4onde3ar, the one @(A hectare on Lul$ *H,
(H-*, and the reaining opod faone @(A hectare on installent )asis until full$ paid.
). that heirs of TrinidadNs action is )arred )$ laches or has prescri)ed.
ISSUE?
:;< the sale was validI
Rul,"g? 5ES
Court a &!o rendered 3udgent in favor of heirs of Trinidad
a. Trinidad Qui3ada had no legal title or right to sell the land to 4onde3ar in (H-*, (H--, (H-G and (H-M, the sae not )eing hers
to dispose of )ecause ownership )elongs to the 4unicipalit$ of Talacogon
). That the deed of sale e!ecuted )$ Trinidad Qui3ada in favor of 4onde3ar did not carr$ with it the conforit$ and ac2uiescence
of her children, ore so that she was alread$ -/ $ears old at the tie, and a widow
Court of Appeals reversed ruled that the sale ade )$ Trinidad Qui3ada to respondent 4onde3ar was valid as the forer retained
an inchoate interest on the lots )$ virtue of the autoatic reversion clause in the deed of donation.
SC aOred decision of CA.
Although donation is valid )$ a7ing 7nown to the donor the acceptance of the 4unicipalit$ and that the
;:<9'SH1P AT T149 ;F P9'F9CT1;< 1S <;T A< 9=949<T ;F A C;<T'ACT.
;wnership )$ the seller on the thing sold at the tie of the perfection of the contract of sale is not an eleent for its perfection.
:hat the law re2uires is that the seller has the right to transfer ownership at the tie the thing sold is delivered. Perfection er
sedoes not transfer ownership which occurs upon the actual or constructive deliver$ of the thing sold.
A perfected contract of sale cannot )e challenged on the ground of non-ownership on the part of the seller at the tie of its
perfection6 hence, the sale is still valid.
C;<S&44AT1;< ;F P9'F9CT9P C;<T'ACT 1S TH';&>H P9=1#9'J
The consuation occurs upon the constructive or actual deliver$ of the su)3ect atter to the )u$er when the seller or her
successors- in-interest su)se2uentl$ ac2uires ownership thereof. Such circustance happened in this case when petitioners Q
who are Trinidad Qui3ada?s heirs and successors-in-interest Q )ecae the owners of the su)3ect propert$ upon the reversion of the
ownership of the land to the.
Conse2uentl$, ownership is transferred to respondent 4onde3ar and those who clai their right fro hi. Article
(0/0 of the <ew Civil Code supports the ruling that the seller?s 5title passes )$ operation of law to the )u$er.5
'RO'ERTIES OF ()NICI'A*ITIES ARE NOT O)TSIDE CO((ERCE OF (EN+
There is also no erit in petitioners? contention that since the lots were owned )$ the unicipalit$ at the tie of the sale, the$
were outside the coerce of en under Article (0.H @0A of the <CC6 thus, the contract involving the sae is ine!istent and void
fro the )eginning. However, nowhere in Article (0.H @0A is it provided that the properties of a unicipalit$, whether it )e those
for pu)lic use or its patrionial propert$

are outside the coerce of en. "esides, the lots in this case were conditionall$
owned )$ the unicipalit$. To rule that the donated properties are outside the coerce of en would render nugator$ the
unchallenged reasona)leness and 3ustness of the condition which the donor has the right to ipose as owner thereof. 4oreover,
the o)3ects referred to as outsides the coerce of an are those which cannot )e appropriated, such as the open seas and the
heavenl$ )odies.
G.R. No. L-813B August 31, 191B
CELES(INO CO 6 CO7PAN5, petitioner, vs.
COLLEC(OR O< IN(ERNAL RE=ENUE, respondent.
FACTS:
Celestino Co E Copan$ is a dul$ registered general copartnership doing )usiness under the trade nae of 5;riental Sash
Factor$5.
Fro (H0- to (H+( it paid percentage ta!es of G per cent on the gross receipts of its sash, door and window factor$, in accordance
with section (M- of the <ational 'evenue Code iposing ta!es on sale of anufactured articles.
However in (H+* it )egan to clai lia)ilit$ onl$ to the contractor?s / per cent ta! @instead of G per centA iposa)le upon contracts
for piece of wor7Qas opposed to the G, ta! on salesQclaiing that the$ do not anufacture read$-ade doors for the pu)lic )ut
onl$ upon special order of the custoers.
under section (H( of the sae Code6 and having failed to convince the "ureau of 1nternal 'evenue, it )rought the atter to the
Court of Ta! Appeals, where it also failed.
The conclusion that counsel would li7e the court to deduce fro these few e!hi)its is that the ;riental Sash Factor$ does not
anufacture read$-ade doors, sash and windows for the pu)lic )ut onl$ upon special order of its select custoers. Petitioner
clais that it does not anufacture read$-ade sash, doors and windows for the pu)lic and that it a7es these articles onl$
special order of its Custoers.
Appellant invo7es Article (0-G of the <ew Civil Code to )olster its contention that in Dling orders for windows and doors according
to speciDcations, it did not sell, )ut erel$ contracted for particular pieces of wor7 or 5erel$ sold its services5.
Said article reads as follows:
A contract for the deliver$ at a certain price of an article which the vendor in the ordinar$ course of his )usiness anufactures or
procures for the general ar7et, whether the sae is on hand at the tie or not, is a contract of sale, )ut if the goods are to )e
anufactured speciall$ for the custoer and upon his special order, and not for the general ar7et, it is contract for a piece of
wor7.
1ssue: :;< Celestion E Co is a contractor. :;< the )usiness of anufacturing sash, doors and windows upon special order of
custoers fall under the categor$ enuerated in the 'evenue Code. :;< petitioner could )e ta!ed with lesser strain and ore
accurac$ as seller of its anufactured articles.
Ta! iposed: :;< (H( or (M- of the revenue code.
'uling: 9ven if we were to )elieve petitioner?s clai that it does not anufacture read$-ade sash, doors and windows for the
pu)lic and that it a7es these articles onl$ special order of its custoers, that does not a7e it a contractor within the purview of
section (H( of the national 1nternal 'evenue Code.
1. N%!
However the court did not )elieve that petitioner copan$ would ta7e, as in fact it has ta7en, all the trou)le and e!pense of
registering a special trade nae for its sash )usiness and then orders copan$ stationer$ carr$ing the )old print ,Oriental Sas$
Factory @Celestino Co E Copan$, Prop.A H*- 'aon St. Quiapo, 4anila, Tel. <o. //.G-, (an!-act!rers o- all .in#s o- #oors/
0in#o0s/ sas$es/ -!rnit!re/ etc+ !se# season1 #rie# an# .iln-#rie# l!m2er/ o- t$e 2est &!ality 0or.mans$is, solel$ for the purpose
of suppl$ing the needs for doors, windows and sash of its special and liited custoers.
As a general rule, sash factories receive orders for doors and windows of special design onl$ in particular cases )ut the )ul7 of
their sales is derived fro a read$-ade doors and windows of standard si8es for the average hoe.
2. I"&o!
4oreover, as shown fro the investigation of petitioner?s )oo7 of accounts, during the period fro Lanuar$ (, (H+* to Septe)er
/.,
(H+*, it sold sash, doors and windows worth P(MM,G+0.-H.The court found it difDcult to )elieve that this aount which runs to si!
figures was derived )$ petitioner entirel$ fro its few custoers who ade special orders for these ites.
3. U"/$ t) $>"u Co/, ,t /os "ot Ct ,"to t) &%tgo$. s-&,C/
There are no less than fift$ occupations enuerated in the aforesaid section of the national 1nternal 'evenue Code su)3ect to
percentage ta! and after reading carefull$ each and ever$ one of the, the court cannot find under which the )usiness of
anufacturing sash, doors and windows upon special order of custoers fall under the categor$ of 5road, )uilding, navigation,
artesian well, water wor7ers and other construction wor7 contractors5 are those who alter or repair )uildings, structures, streets,
highwa$s, sewers, street railwa$s railroads logging roads, electric lines or power lines, and includes an$ other wor7 for the
construction, altering or repairing for which achiner$ driven )$ echanical power is used.
The percentage ta! iposed in section (H( of our Ta! Code is generall$ a ta! on the sales of services, in contradiction with the
ta! iposed in section (M- of the sae Code which is a
ta! on the original sales of articles )$ the anufacturer, producer or iporter.
The fact that the articles sold are anufactured )$ the seller does not e!change the contract fro the purview of section (M- of
the <ational 1nternal 'evenue Code as a sale of articles.
4. () O$,"t%l S%s) <%&to$. /os "ot),"g !o$ t)%" sll t) goo/s t)%t ,t !%ss--$o/u&s o$ )%+,tu%ll. !%9sD
s%s), -%"ls, !oul/,"gs, #$%!s, &utt,"g t)! to su&) s,As %"/ &o!+,","g t)! ," su&) #o$!s %s ,ts &usto!$s
!%. /s,$.
The Factor$ accepts a 3o) that re2uires the use of e!traordinar$ or additional e2uipent, or involves services not generall$
perfored )$ it-it there)$ contracts for a iece o- 0or. Q filing special orders within the eaning of Article (0-G. The orders
herein e!hi)ited were not shown to )e special. The$ were erel$ orders for wor7 Q nothing is shown to call the special
re2uiring e!traordinar$ service of the factor$.

The fact that the sash products are ade onl$ upon the order of the custoers does <;T change the nature of the esta)lishent.
Tiing is not the controlling factor )ut the nature of the wor7 done. The$ ha)ituall$ a7e sash products and can easil$ duplicate
and ass-produce the sae. The )ul7 of their sales coe fro standard read$-ade productsQspecial orders are the e!ception
and coe onl$ occasionall$. 1f the goods are anufactured speciDcall$ upon special order of the custoer and re2uires
e!traordinar$ service, then that would )e the tie when it can )e classiDed as piece of wor7. "ut such is not the case here.
;riental Sash is clearl$ a
G.R. No. 118114 D&!+$ 0, 1991
(EODORO ACAP, petitioner, vs. COUR( O< APPEALS %"/ ED5 DE LOS RE5ES, respondents.
<AC(S?
The title to a lot in <egros ;ccidental was issued and is registered in the nae of spouses Santiago #as2ue8 and
=oren8a ;rua. After )oth spouses died, their onl$ son Feli!)erto inherited the lot. 1n (HG+, Feli!)erto e!ecuted a dul$
notari8ed docuent entitled 5Peclaration of Heirship and Peed of A)solute Sale5 in favor of Cose Pido. Since (H-.,
petitioner Teodoro Acap had )een the tenant of a portion of the said land. :hen ownership was transferred in (HG+ )$
Feli!)erto to Cose Pido, Acap continued to )e the registered tenant thereof and religiousl$ paid his leasehold rentals
to Pido and thereafter, upon Pido?s death, to his widow =aurenciana.
:hen Pido died intestate, his surviving heirs e!ecuted a notari8ed docuent denoinated as 5Peclaration of Heirship
and :aiver of 'ightsC wherein the$ waived all t$eir rig$ts/ interests an# articiation o3er t$e sai# arcel o- lan# in
favor of 9d$ Pe =os 'e$es. The docuent was signed )$ all of Pido?s heirs )ut was not signed )$ 9d$ de los 'e$es.
At the tie of Cose Pido?s death, title to the propert$ continued to )e registered in the nae of the #as2ue8 spouses.
&pon o)taining the Peclaration of Heirship with :aiver of 'ights in his favor, 9d$ de los 'e$es Dled the sae with the
'egistr$ of Peeds as part of a notice o- an a#3erse claim against the original certiDcate of title.
Thereafter, he sought for petitioner @AcapA to personall$ infor hi that he @9d$A had )ecoe the new owner of the
land and that the lease rentals thereon should )e paid to hi. Private respondent further alleged that he and petitioner
entered into an oral lease agreeent wherein petitioner agreed to pa$ ten @(.A cavans of pala$ er ann!m as lease
rental. 1n (HM*, petitioner allegedl$ coplied with said o)ligation. 1n (HM/, however, petitioner refused to pa$ an$
further lease rentals on the land.
;n *M April (HMM, after the lapse of four @0A $ears, private respondent Dled a coplaint for recover$ of possession and
daages against petitioner. Puring the trial, petitioner reiterated that he continues to recogni8e Cose Pido as the
owner of the said land, and having )een a registered tenant therein since (H-., he never reneged on his rental
o)ligations. :hen Pido died, he continued to pa$ rentals to Pido?s widow. :hen the latter left for a)road, she instructed
hi to sta$ in the landholding and to pa$ the acc!m!late# rentals upon her deand or return fro a)road. Petitioner
further claied )efore the trial court that he had no 7nowledge a)out an$ transfer or sale of the lot to private
respondent in (HM( and even the following $ear after =aurenciana?s departure for a)road. He denied having entered into
a ver)al lease tenanc$ contract with private respondent and that assuing that the said lot was indeed sold to private
respondent without his 7nowledge, '.A. /M00, as aended, grants hi the right to redee the sae at a reasona)le
price.
The lower court ruled in favor of private respondent.
ISSUES?
@(A :hether the BPeclaration of Heirship and :aiver of 'ightsC is a recogni8ed ode of ac2uiring ownership )$ private
respondent
@*A :hether the said docuent can )e considered a deed of sale in favor of private respondent
RULING?
An asserted right or clai to ownership or a real right over a thing arising fro a 3uridical act, however 3ustiDed, is not
per se suOcient to give rise to ownership over the res. That right or title ust )e copleted )$ fulDlling certain
conditions iposed )$ law. Hence, ownership and real rights are ac2uired onl$ pursuant to a legal ode or process.
:hile title is the 3uridical 3ustiDcation, ode is the actual process of ac2uisition or transfer of ownership over a thing in
2uestion.
1n a Contract of Sale, one of the contracting parties o)ligates hiself to transfer the ownership of and to deliver a
deterinate thing, and the other part$ to pa$ a price certain in one$ or its e2uivalent. &pon the other hand, a
declaration of heirship and waiver of rights operates as a pu)lic instruent when Dled with the 'egistr$ of Peeds
where)$ the intestate heirs ad3udicate and divide the estate left )$ the decedent aong theselves as the$ see Dt. 1t is
in e%ect an e!tra3udicial settleent )etween the heirs under 'ule G0 of the 'ules of Court.
Hence, there is a ar7ed di%erence )etween a sale of hereditar$ rights and a waiver of hereditar$ rights. The Drst
presues the e!istence of a contract or deed of sale )etween the parties. The second is, technicall$ spea7ing, a ode
of e!tinction of ownership where there is an a)dication or intentional relin2uishent of a 7nown right with 7nowledge of
its e!istence and intention to relin2uish it, in favor of other persons who are co-heirs in the succession. Private
respondent, )eing then a stranger to the succession of Cose Pido, cannot conclusivel$ clai ownership over the
su)3ect lot on the sole )asis of the waiver docuent which neither recites the eleents of either a sale, or a donation,
or an$ other derivative ode of ac2uiring ownership.
A notice of adverse clai, )$ its nature, does not prove private respondent?s ownership over the tenanted lot. A notice
of adverse clai is nothing )ut a notice of a clai adverse to the registered owner, the validit$ of which is $et to )e
esta)lished in court at soe future date, and is no )etter than a notice of lis pendens which is a notice of a case alread$
pending in court.
1t is to )e noted that while the e!istence of said adverse clai was dul$ proven, there is no evidence whatsoever that a
deed of sale was e!ecuted )etween Cose Pido?s heirs and private respondent transferring the rights of Pido?s heirs to
the land in favor of private respondent. Private respondent?s right or interest therefore in the tenanted lot reains an
adverse clai which cannot )$ itself )e suOcient to cancel the ;CT to the land and title the sae in private
respondent?s nae.
Conse2uentl$, while the transaction )etween Pido?s heirs and private respondent a$ )e )inding on )oth parties, the
right of petitioner as a registered tenant to the land cannot )e perfunctoril$ forfeited on a ere allegation of private
respondent?s ownership without the corresponding proof thereof.
G.R. No. 133100 O&to+$ 0, 199B
RO7ULO A. CORONEL, ALARICO A. CORONEL, ANNE((E A. CORONEL, ANNA'ELLE C. GON4ALES 8#o$ )$sl#
%"/ o" +)%l# o# <lo$,/% C. (u--$, %s %tto$".E,"E#%&t:, CIELI(O A. CORONEL, <LORAIDA A. AL7ON(E, %"/
CA(ALINA 'ALAIS 7A'ANAG, petitioners, vs. (HE COUR( O< APPEALS, CONCEPCION D. ALCARA4, %"/ RA7ONA
PA(RICIA ALCARA4, %ss,st/ +. GLORIA <. NOEL %s %tto$".E,"E#%&t, respondents.
<%&ts?
A coplaint for speciDc perforance was Dled against petitioners to consuate the sale of a parcel of land in Que8on
Cit$.
;n Lanuar$ (H, (HM+, petitioners Coronel e!ecuted a B'eceipt of Pown Pa$entC of P+.,... in favor of respondent
'aona Alcara8, )inding theselves to transfer the ownership of the land in their nae fro their deceased father
iediatel$ upon receipt of the down pa$ent. &pon the transfer in their nae of the su)3ect propert$, the petitioners
will e!ecute the deed of a)solute sale in favor of respondent and the latter will pa$ )alance of P(,(H.,.... ;n the sae
date, other of respondent paid the down pa$ent.
;n Fe)ruar$ -, (HM+, the propert$ originall$ registered in their fathersN nae was transferred to petitioners. ;n
Fe)ruar$ (M, (HM+, petitioners sold the propert$ to 4a)anag. For this reason, Coronels canceled and rescinded the
contract with the respondent )$ depositing the down pa$ent in the )an7 in trust for 'aona Patricia Alcara8.
Thus, the respondents Dled an action for speciDc perforance against the petitioners.
Issu?
:hether the contract )etween petitioners and respondent was that of a conditional sale or a ere contract to sell
Hl/?
Sale, )$ its ver$ nature, is a consensual contract )ecause it is perfected )$ ere consent. The essential eleents of a
contract of sale are the following: aA Consent or eeting of the inds, that is, consent to transfer ownership in
e!change for the price6 )A Peterinate su)3ect atter6 and cA Price certain in one$ or its e2uivalent.
&nder this deDnition, a Contract to Sell a$ not )e considered as a Contract of Sale )ecause the Drst essential eleent
is lac7ing. 1n a contract to sell, the prospective seller e!plicit$ reserves the transfer of title to the prospective )u$er,
eaning, the prospective seller does not as $et agree or consent to transfer ownership of the propert$ su)3ect of the
contract to sell until the happening of an event, which for present purposes we shall ta7e as the full pa$ent of the
purchase price. :hat the seller agrees or o)liges hiself to do is to fulDll his proise to sell the su)3ect propert$ when
the entire aount of the purchase price is delivered to hi. 1n other words the full pa$ent of the purchase price
parta7es of a suspensive condition, the non-fulDllent of which prevents the o)ligation to sell fro arising and thus,
ownership is retained )$ the prospective seller without further reedies )$ the prospective )u$er.
A contract to sell a$ thus )e deDned as a )ilateral contract where)$ the prospective seller, while e!pressl$ reserving
the ownership of the su)3ect propert$ despite deliver$ thereof to the prospective )u$er, )inds hiself to sell the said
propert$ e!clusivel$ to the prospective )u$er upon fulDllent of the condition agreed upon, that is, full pa$ent of the
purchase price.
A contract to sell a$ not even )e considered as a conditional contract of sale where the seller a$ li7ewise reserve
title to the propert$ su)3ect of the sale until the fulDllent of a suspensive condition, )ecause in a conditional contract
of sale, the Drst eleent of consent is present, although it is conditioned upon the happening of a contingent event
which a$ or a$ not occur. 1f the suspensive condition is not fulDlled, the perfection of the contract of sale is
copletel$ a)ated. However, if the suspensive condition is fulDlled, the contract of sale is there)$ perfected, such that
if there had alread$ )een previous deliver$ of the propert$ su)3ect of the sale to the )u$er, ownership thereto
autoaticall$ transfers to the )u$er )$ operation of law without an$ further act having to )e perfored )$ the seller.
1n a contract to sell, upon the fulDllent of the suspensive condition which is the full pa$ent of the purchase price,
ownership will not autoaticall$ transfer to the )u$er although the propert$ a$ have )een previousl$ delivered to hi.
The prospective seller still has to conve$ title to the prospective )u$er )$ entering into a contract of a)solute sale.
1t is essential to distinguish )etween a contract to sell and a conditional contract of sale speciall$ in cases where the
su)3ect propert$ is sold )$ the owner not to the part$ the seller contracted with, )ut to a third person, as in the case at
)ench. 1n a contract to sell, there )eing no previous sale of the propert$, a third person )u$ing such propert$ despite
the fulDllent of the suspensive condition such as the full pa$ent of the purchase price, for instance, cannot )e
deeed a )u$er in )ad faith and the prospective )u$er cannot see7 the relief of reconve$ance of the propert$. There is
no dou)le sale in such case. Title to the propert$ will transfer to the )u$er after registration )ecause there is no defect
in the owner-seller?s title per se, )ut the latter, of course, a$ )e used for daages )$ the intending )u$er.
1n a conditional contract of sale, however, upon the fulDllent of the suspensive condition, the sale )ecoes a)solute
and this will deDnitel$ a%ect the seller?s title thereto. 1n fact, if there had )een previous deliver$ of the su)3ect
propert$, the seller?s ownership or title to the propert$ is autoaticall$ transferred to the )u$er such that, the seller will
no longer have an$ title to transfer to an$ third person. Such second )u$er of the propert$ who a$ have had actual or
constructive 7nowledge of such defect in the seller?s title, or at least was charged with the o)ligation to discover such
defect, cannot )e a registrant in good faith. Such second )u$er cannot defeat the Drst )u$er?s title. 1n case a title is
issued to the second )u$er, the Drst )u$er a$ see7 reconve$ance of the propert$ su)3ect of the sale.
The agreeent could not have )een a contract to sell )ecause the sellers herein ade no e!press reservation of
ownership or title to the su)3ect parcel of land. Furtherore, the circustance which prevented the parties fro
entering into an a)solute contract of sale pertained to the sellers theselves @the certiDcate of title was not in their
naesA and not the full pa$ent of the purchase price. &nder the esta)lished facts and circustances of the case, the
Court a$ safel$ presue that, had the certiDcate of title )een in the naes of petitioners-sellers at that tie, there
would have )een no reason wh$ an a)solute contract of sale could not have )een e!ecuted and consuated right
there and then. 4oreover, unli7e in a contract to sell, petitioners in the case at )ar did not erel$ proise to sell the
properl$ to private respondent upon the fulDllent of the suspensive condition. ;n the contrar$, having alread$ agreed
to sell the su)3ect propert$, the$ undertoo7 to have the certiDcate of title changed to their naes and iediatel$
thereafter, to e!ecute the written deed of a)solute sale.
:hat is clearl$ esta)lished )$ the plain language of the su)3ect docuent is that when the said 5'eceipt of Pown
Pa$ent5 was prepared and signed )$ petitioners 'oeo A. Coronel, et al., the parties had agreed to a conditional
contract of sale, consuation of which is su)3ect onl$ to the successful transfer of the certiDcate of title fro the
nae of petitioners? father, Constancio P. Coronel, to their naes.
The provision on dou)le sale presues title or ownership to pass to the Drst )u$er, the e!ceptions )eing: @aA when the
second )u$er, in good faith, registers the sale ahead of the Drst )u$er, and @)A should there )e no inscription )$ either
of the two )u$ers, when the second )u$er, in good faith, ac2uires possession of the propert$ ahead of the Drst )u$er.
&nless the second )u$er satisDes these re2uireents, title or ownership will not transfer to hi to the pre3udice of the
Drst )u$er. 1n a case of dou)le sale, what Dnds relevance and aterialit$ is not whether or not the second )u$er was a
)u$er in good faith )ut whether or not said second )u$er registers such second sale in good faith, that is, without
7nowledge of an$ defect in the title of the propert$ sold. 1f a vendee in a dou)le sale registers that sale after he has
ac2uired 7nowledge that there was a previous sale of the sae propert$ to a third part$ or that another person clais
said propert$ in a previous sale, the registration will constitute a registration in )ad faith and will not confer upon hi
an$ right.
Thus, the sale of the su)3ect parcel of land )etween petitioners and respondent, perfected on Fe)ruar$ -, (HM+, prior to
that )etween petitioners and Catalina ". 4a)anag on Fe)ruar$ (M, (HM+, was correctl$ upheld )$ )oth the courts )elow.
G.R. No. 112212 7%$&) 2, 1998
GREGORIO <ULE, -t,t,o"$, >s. COUR( O< APPEALS, NINE=E(CH CRU4 %"/ 2UAN 'ELAR7INO, $s-o"/"ts.
<AC(S
Petitioner >regorio Fule, a )an7er and a 3eweler, o%ered to sell a parcel of land in e!change for a pair of eerald-cut
diaond earrings owned )$ Pr. Cru8.
1n the afternoon of ;cto)er */, (HM0, Att$. "elarino accordingl$ caused the preparation of a deed of a)solute sale
while petitioner and Pr. Cru8 attended to the safe7eeping of the 3ewelr$. The following da$, petitioner, together with
Pichoso and 4endo8a, arrived at the residence of Att$. "elarino to Dnall$ e!ecute a deed of a)solute sale.

As pre-arranged, petitioner left Att$. "elarino?s residence with Pichoso and 4endo8a and headed for the )an7, arriving
there at past +:.. p.. Pr. Cru8 also arrived shortl$ thereafter, )ut the cashier who 7ept the other 7e$ to the deposit
)o! had alread$ left the )an7. Pr. Cru8 and Pichoso, therefore, loo7ed for said cashier and found hi having a haircut.
As soon as his haircut was Dnished, the cashier returned to the )an7 and arrived there at +:0M p.., ahead of Pr. Cru8
and Pichoso who arrived at +:++ p.. Pr. Cru8 and the cashier then opened the safet$ deposit )o!, the forer retrieving
a transparent plastic or cellophane )ag with the 3ewelr$ inside and handing over the sae to petitioner. The latter too7
the 3ewelr$ fro the )ag, went near the electric light at the )an7?s lo))$, held the 3ewelr$ against the light and
e!ained it for ten to Dfteen inutes. After a while, Pr. Cru8 as7ed, 5O.ay na 2a iyan45 Petitioner e!pressed his
satisfaction )$ nodding his head.
For services rendered, petitioner paid the agents, Pichoso and 4endo8a, the aount of &SF/..... and soe pieces of
3ewelr$. He did not, however, give the half of the pair of earrings in 2uestion which he had earlier proised.
=ater, at a)out M in the evening of the sae da$, petitioner arrived at the residence of Att$. "elarino coplaining that
the 3ewelr$ given to hi was fa7e. He then used a tester to prove the alleged fa7er$. Petitioner then accused Pichoso
and 4endo8a of deceiving hi which the$, however, denied. The$ countered that petitioner could not have )een fooled
)ecause he had vast e!perience regarding 3ewelr$. Petitioner nonetheless too7 )ac7 the &SF/.. and 3ewelr$ he had
given the.
;n ;cto)er *-, (HM0, petitioner Dled a coplaint )efore the 'egional Trial Court of San Pa)lo Cit$ against private
respondents pra$ing, aong other things, that the contract of sale over the Tana$ propert$ )e declared null and void on
the ground of fraud and deceit.
ISSUE? :hether the sale should )e nulliDed on the ground of fraud
RULING
The Civil Code provides that contracts are perfected )$ ere consent. Fro this oent, the parties are )ound not onl$
to the fulDllent of what has )een e!pressl$ stipulated )ut also to all the conse2uences which, according to their
nature, a$ )e in 7eeping with good faith, usage and law. A contract of sale is perfected at the oent there is a
eeting of the inds upon the thing which is the o)3ect of the contract and upon the price. "eing consensual, a
contract of sale has the force of law )etween the contracting parties and the$ are e!pected to a)ide in good faith )$
their respective contractual coitents. Article (/+M of the Civil Code which re2uires the e)odient of certain
contracts in a pu)lic instruent, is onl$ for convenience, and registration of the instruent onl$ adversel$ a%ects third
parties. Foral re2uireents are, therefore, for the )eneDt of third parties. <on-copliance therewith does not
adversel$ a%ect the validit$ of the contract nor the contractual rights and o)ligations of the parties thereunder.
1t is evident fro the facts of the case that there was a eeting of the inds )etween petitioner and Pr. Cru8. As such,
the$ are )ound )$ the contract unless there are reasons or circustances that warrant its nulliDcation.
Contracts that are voida)le or annulla)le, even though there a$ have )een no daage to the contracting parties are:
@(A those where one of the parties is incapa)le of giving consent to a contract6 and @*A those where the consent is
vitiated )$ ista7e, violence, intiidation, undue inRuence or fraud. There is fraud when, through the insidious words or
achinations of one of the contracting parties, the other is induced to enter into a contract which, without the, he
would not have agreed to. The records, however, are )are of an$ evidence anifesting that private respondents
eplo$ed such insidious words or achinations to entice petitioner into entering the contract of )arter. 1t was in fact
petitioner who resorted to achinations to convince Pr. Cru8 to e!change her 3ewelr$ for the Tana$ propert$.
4oreover, petitioner did not clearl$ allege ista7e as a ground for nulliDcation of the contract of sale. 9ven assuing
that he did, petitioner cannot successfull$ invo7e the sae. To invalidate a contract, ista7e ust 5refer to the
su)stance of the thing that is the o)3ect of the contract, or to those conditions which have principall$ oved one or
)oth parties to enter into the contract.5 ;n account of his wor7 as a )an7er-3eweler, it can )e rightfull$ assued that he
was an e!pert on atters regarding ges. He had the intellectual capacit$ and the )usiness acuen as a )an7er to
ta7e precautionar$ easures to avert such a ista7e, considering the value of )oth the 3ewelr$ and his land. The fact
that he had seen the 3ewelr$ )efore ;cto)er *0, (HM0 should not have precluded hi fro having its genuineness
tested in the presence of Pr. Cru8. Had he done so, he could have avoided the present situation that he hiself )rought
a)out.
Furtherore, petitioner was a%orded the reasona)le opportunit$ re2uired in Article (+M0 of the Civil Code within which
to e!aine the 3ewelr$ as he in fact accepted the when as7ed )$ Pr. Cru8 if he was satisDed with the sae. "$ ta7ing
the 3ewelr$ outside the )an7, petitioner e!ecuted an act which was ore consistent with his e!ercise of ownership over
it. This gains credence when it is )orne in ind that he hiself had earlier delivered the Tana$ propert$ to Pr. Cru8 )$
aO!ing his signature to the contract of sale. That after two hours he later claied that the 3ewelr$ was not the one he
intended in e!change for his Tana$ propert$, could not sever the 3uridical tie that now )ound hi and Pr. Cru8. The
nature and value of the thing he had ta7en preclude its return after that supervening period within which an$thing could
have happened, not e!cluding the alteration of the 3ewelr$ or its )eing switched with an inferior 7ind.
;wnership over the parcel of land and the pair of eerald-cut diaond earrings had )een transferred to Pr. Cru8 and
petitioner, respectivel$, upon the actual and constructive deliver$ thereof. Said contract of sale )eing a)solute in
nature, title passed to the vendee upon deliver$ of the thing sold since there was no stipulation in the contract that title
to the propert$ sold has )een reserved in the seller until full pa$ent of the price or that the vendor has the right to
unilaterall$ resolve the contract the oent the )u$er fails to pa$ within a D!ed period.
>.'. <o. =-((M*G Lul$ /(, (H-(
F9'<A<P; A. >A1T9, plainti%-appellee, vs. 1SA"9=; F;<AC19', >9;'>9 S'AS;:9', =A'AP 41<9S E S49=T1<> C;.,
1<C., S9>&<P1<A #1#AS, F'<AC1SC; PA<T9, PAC1F1C; 9SCA<P;' and F9'<A<P; TJ, defendants-appellants.
FACTS
"$ a Peed of Assignent dated Septe)er *H, (H+*, Fonacier appointed >aite as his true and lawful attorne$-in-fact to
enter into a contract with an$ individual or 3uridical person for the e!ploration and developent of ining clais. ;n
4arch (H, (H+0, >aite e!ecuted a deed of assignent conve$ing the developent and e!ploitation of said ining
clais into =arap 1ron 4ines, a single proprietorship owned )$ hi.
For soe reason or another, Fonacier decided to revo7e the authorit$ he granted to >aite, which was assented thereto
)$ >aite, su)3ect to certain conditions, i.e., for a consideration of PG+,..., P(.,... of which has alread$ )een paid upon
signing of the agreeent and the )alance to )e paid fro the Drst letter of credit for the Drst local sale of the iron ores.
To secure pa$ent, Fonacier delivered a suret$ )ond with hiself as principal and =arap 4ines and soe of its
stoc7holders as sureties. A second )ond was also e!ecuted with Far 9astern 1nsurance as additional suret$, )ut it
provided that the lia)ilit$ of the suret$ copan$ would attach onl$ when there had )een an actual sale of iron ore )$
the =arap 4ines E Selting Co. for an aount of not less then P-+,..., and that, furtherore, the lia)ilit$ of said
suret$ copan$ would autoaticall$ e!pire on Pece)er M, (H++.
&p to Pece)er M, (H++, when the second )ond, no sale of iron ore had )een ade )$ the =arap 4ines E Selting Co.,
1nc., nor had the P-+,...... )alance of the price of said ore )een paid to >aite )$ Fonacier and his sureties pa$ent of
said aount, on the theor$ that the$ had lost right to a7e use of the period given the when the second )ond
autoaticall$ e!pired. And when Fonacier and his sureties failed to pa$ as deanded )$ >aite, the latter Dled the
present coplaint against the in the Court of First 1nstance of 4anila for the pa$ent of the P-+,...... )alance of the
price of the ore, conse2uential daages, and attorne$?s fees.
Pefendants contended that up to the tie of the Dling of the coplaint, no sale of the iron ore had )een ade, hence
the condition had not $et )een fulDlled6 and that conse2uentl$, the o)ligation was not $et due and deanda)le.
1SS&9S:
@(A :hether the sale is conditional or one with a period
@*A :hether appellants, Fonacier and his sureties, still have the right to insist that >aite should wait for the sale or
shipent of the ore )efore receiving pa$ent
'&=1<>
@(A The shipent or local sale of the iron ore is not a condition precedent @or suspensiveA to the pa$ent of the
)alance of P-+,......, )ut was onl$ a suspensive period or ter. :hat characteri8es a conditional o)ligation is the fact
that its eOcac$ or o)ligator$ force @as distinguished fro its deanda)ilit$A is su)ordinated to the happening of a
future and uncertain event6 so that if the suspensive condition does not ta7e place, the parties would stand as if the
conditional o)ligation had never e!isted.
A contract of sale is norall$ coutative and onerous: not onl$ does each one of the parties assue a correlative
o)ligation @the seller to deliver and transfer ownership of the thing sold and the )u$er to pa$ the priceA, )ut each part$
anticipates perforance )$ the other fro the ver$ start. :hile in a sale the o)ligation of one part$ can )e lawfull$
su)ordinated to an uncertain event, so that the other understands that he assues the ris7 of receiving nothing for
what he gives @as in the case of a sale of hopes or e!pectations,eptio speiA, it is not in the usual course of )usiness to
do so6 hence, the contingent character of the o)ligation ust clearl$ appear. <othing is found in the record to evidence
that >aite desired or assued to run the ris7 of losing his right over the ore without getting paid for it, or that Fonacier
understood that >aite assued an$ such ris7. This is proved )$ the fact that >aite insisted on a )ond a to guarantee
pa$ent of the P-+,......, an not onl$ upon a )ond )$ Fonacier, the =arap 4ines E Selting Co., and the copan$?s
stoc7holders, )ut also on one )$ a suret$ copan$6 and the fact that appellants did put up such )onds indicates that
the$ aditted the deDnite e!istence of their o)ligation to pa$ the )alance of P-+,.......
To su)ordinate the o)ligation to pa$ the reaining P-+,... to the sale or shipent of the ore as a condition precedent,
would )e tantaount to leaving the pa$ent at the discretion of the de)tor, for the sale or shipent could not )e ade
unless the appellants too7 steps to sell the ore. Appellants would thus )e a)le to postpone pa$ent indeDnitel$.
The Civil Code of the Philippines provides that if the contract is onerous, the dou)t shall )e settled in favor of the
greatest reciprocit$ of interests. There can )e no 2uestion that greater reciprocit$ o)tains if the )u$er? o)ligation is
deeed to )e actuall$ e!isting, with onl$ its aturit$ @due dateA postponed or deferred, that if such o)ligation were
viewed as non-e!istent or not )inding until the ore was sold.
@*A The appellants have forfeited the right to copel >aite to wait for the sale of the ore )efore receiving pa$ent
of the )alance of P-+,..., )ecause of their failure to renew the )ond of the Far 9astern Suret$ Copan$ or else replace
it with an e2uivalent guarantee. The e!piration of the )onding copan$?s underta7ing on Pece)er M, (H++
su)stantiall$ reduced the securit$ of the vendor?s rights as creditor for the unpaid P-+,..., a securit$ that >aite
considered essential and upon which he had insisted when he e!ecuted the deed of sale of the ore to Fonacier.
Appellants? failure to renew or e!tend the suret$ copan$?s )ond upon its e!piration plainl$ ipaired the securities
given to the creditor @appellee >aiteA, unless iediatel$ renewed or replaced.