SOURCES OF LAW ON SALES

-the Philippine law on sales is an admixture of civil law and cannon law principles
-according to the Code Commission, majority of the provisions of the Uniform Sales Law have been
adapted in the Civil Code with modification to suit principles of Phil. Laws.

ARTICLE 1458
Sale
-a contract where one party (seller/vendor) obligates himself to transfer the ownership of and deliver a
determinate thing, while the other party (buyer/vendee) obligates himself to pay for said thing a price
certain in money of its equivalent
-may be absolute or conditional

Elements of the contract of sale

a. Essential elements
–those without which there can be no valid sale

1. Consent or meeting of the minds

2. Determine subject matter
-generally, there is no sale of generic thing
3. Price certain in money or its equivalent
-cause or consideration
- price need not to be in money
b. Natural elements
-those which are inherent to the contract and which in the absence of any contrary provisions, are
deemed to exist in the contract
1. Warranty against eviction
-deprivation of the property bought
2. Warranty of against hidden defects
c. Accidental elements
-those which may be present or absent in the stipulation, such as the place of time of payment or
the presence of candidates.

SALE VS OTHER CONTRACTS

By the contract of barter or exchange, one of the parties binds

himself to give one thing in consideration of the other’s promise
to give another thing.
On the other hand, in a contract
of sale, the vendor gives a thing in consideration for a price
in money.
By the contract of agency, a person binds himself to render some
service or to do something in representation or on behalf of another,
with the consent or authority of the latter.
1. In a sale, the buyer receives the goods as owner; in an
agency to sell, the agent receives the goods as the goods of the
principal who retains his ownership over them and has the right
to fix the price and the terms of the sale and receive the proceeds
less the agent’s commission upon the sales made;

2. In a sale, the buyer has to pay the price; in an agency to

sell, the agent has simply to account for the proceeds of the sale
he may make on the principal’s behalf;

3. In a sale, the buyer, as a general rule, cannot return the

object sold; in an agency to sell, the agent can return the object in
case he is unable to sell the same to a third person;

4. In a sale, the seller warrants the thing sold; in an agency to sell, the agent makes no warranty
for which he assumes personal liability as long as he acts within
his authority and in the name of the seller; and

5. In a sale, the buyer can deal with the thing sold as he

pleases being the owner; in an agency to sell, the agent in dealing
with the thing received, must act and is bound according to the
instructions of his principal.
By the contract for a piece of work the contractor binds himself
to execute a piece of work for the employer, in consideration of a
certain price or compensation. The contractor may either employ
his labor or skill, or also furnish the material.

The distinction between a contract of sale and one for work,

labor or materials or for a piece of work 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 been the
subject of sale to some other person, even if the order had not been
given.
ANTONIO MEDINA
VS.
COLLECTOR OF INTERNAL REVENUE AND THE COURT OF TAX APPEALS
FACTS:
About May 20, 1944, petitioning taxpayer Antonio Medina married Antonia Rodriguez. Both spouses had
neither property nor business of their own. Antonio later acquired forest concessions in Isabela. From
1946 to 1948, the logs cut and removed from his concessions were sold in Manila through his agent,
Mariano Osorio. In 1949, Antonia, the petitioner’s wife, engaged in lumber business, and on 1952
petitioner sold to her almost all the logs produced. Antonia, in turn, sold the logs in Manila through the
same agent. Upon assessment of their taxes, the Collector of Internal Revenue considered the sale from
Antonio to Antonia as null and void, thus, an additional tax of P4,533.54 was assessed. The spouses
protested the assessment claiming that they had a prenuptial agreement of complete separation of
properties.

ISSUE:
WONthe sales made by the petitioner to his wife could be considered as his original taxable sales

HELD:

NO.

It appears that at the time of the marriage between petitioner and his wife, they neither had any
property nor business of their own, as to have really urged them to enter into the supposed property
agreement. Secondly, the testimony that the separation of property agreement was recorded in the
Registry of Property three months before the marriage, is patently absurd, since such a prenuptial
agreement could not be effective before marriage is celebrated, and would automatically be cancelled if
the union was called off. In the third place, despite their insistence on the existence of the ante nuptial
contract, the couple, strangely enough, did not act in accordance with its alleged covenants. It was not
until July of 1954 that he alleged, for the first time, the existence of the supposed property separation
agreement. Finally, the Day Book of the Register of Deeds on which the agreement would have been
entered, had it really been registered as petitioner insists, and which book was among those saved from
the ravages of the war, did not show that the document in question was among those recorded therein.

The wife is authorized to engage in business and for the incidents that flow therefrom when she so
engages therein. But the transactions permitted are those entered into with strangers, and do not
constitute exceptions to the prohibitory provisions of Article 1490 against sales between spouses.

Contracts violative of the provisions of Article 1490 of the Civil Code are null and void. Being void
transactions, the sales made by the petitioner to his wife were correctly disregarded by the Collector in
his tax assessments that considered as the taxable sales those made by the wife through the spouses'
common agent, Mariano Osorio. In upholding that stand, the Court below committed no error.

RECIO
VS.
HEIRS OF SPS AGUEDO AND MARIA ALTAMARINO
FACTS:

In 1950, Nena Recio, mother of Renan Necio leased from the respondents Altamarinos a parcel of land
in Lipa City, Batangas.

The Altamarinos inherited the subj pect land from their deceased parents.

On 1988, petitioners claimed that the respondent offered to sell the subject property to Nena Recio in
which the latter accepted. However,it did not materialize. Nonetheless, petitioners continued to occupy
the property with the consent of the respondent.

On 1994, petitioner (Reman Recio) renewed Nena’s option to buy and conducted series of negotiations
with respondent Alejandro Altamarino (one of the heirs). Thereafter, they entered into an oral contract
of sale. In view of the sale, petitoners made partial payments to the Altamarino and were received and
as well as acknowledged by Alejandro Altamarino until the petitioner offered in many instances to pay
the remaining balance of the agreed purchase price but Alejandro kept avoiding the petitioner.

Because of that, petitioner demanded for the Altamarinos, the execution of a Deed of Absolute Sale in
exchange for the full payment of the agreed price. It was then dicpscovered that the subject land has
been subsequently sold to Sps Lajarca.

RTC ruled in favor of the plaintiff.

CA affirmed the lower Courts decision but modified such and found out that Alejandro did not have the
authority to represent his co-heirs.

ISSUE:

Can the contract of sale between Alejandro (representing the share of his co-owners) and Recio be held
valid pursuant to Apparent Authority of an Agent based on Estoppel?

HELD:

NO.

Apparent authority of an agent arises only from acts or conducts on the part of the principal and such
act or conduct of the principal must have been known and relied upon in good faith and as a result of
the exercise of a reasonable prudence by a third person as claimant and such must have produced a
change of position to its detriment. In this case, there was no evidence on record of specific acts which
the Altamiranos made before the sale to the petitioner, indicating that they fully knew of the
representation of Alejandro. All that the petitioner relied upon were acts that happened after the sale to
him. Absent the consent of Alejandro’s co-owners, the Court held that the sale between the other
Altamarinos and the petitioner was null and void.
SPS HERRERA
VS.
CAGUIAT

FACTS:
Spouses Onnie and Amparo Herrera are the registered owners of a lot located in Las Pinas. On May
1990, Godofredo Caguiat offered to buy the lot, Sps Herrera agreed to sell it at 1, 500 per square meter.
Caguiat gave the 100, 000 as partial payment, both husband and wife signed the receipt stating that
Caguiat promised to pay the balance of the purchase price on or before March 23, 1990. On March 28,
1990, Caguiatwrote to Sps Herrera informing them of his readiness to pay the balance but they
cancelled. Caguiat then filed a complaint.

ISSUE:
WON the document entitled “Receipt for Partial Payment” is a contract to sell or a contract of sale-
CONTRACT TO SELL

HELD:
The transaction was a contract to sell.
A contract to sell is akin to a conditional sale where the efficacy or obligatory force of the
vendor’s obligation to transfer title is subordinated to the happening of a future and
uncertain event, so that if the suspensive condition does not take place, the parties
would stand as if the conditional obligation had never existed. The suspensive condition is
commonly full payment of the purchase price. “In this case, the “Receipt for Partial
Payment” shows that the true agreement between the parties is a contract to sell.
“
First, ownership over the property was retained by petitioners and was not to pass to
respondent until full payment of the purchase price. Second, the agreement
between the parties was not embodied in a deed of sale. The absence of a formal deed of
conveyance is a strong indication that the parties did not intend immediate transfer of
ownership, but only a transfer after full payment of the purchase price.
Third, petitioners retained possession of the certificate of title of the lot. “It is true that
Article 1482 provides that whenever earnest money is given in a contract of sale, it shall be
considered as part of the price and proof of the perfection of the contract. However, this
article speaks of earnest money given in a contract of sale. In this case, the earnest
money was given in a contract to sell. The earnest money forms part of the
consideration only if the sale is consummated upon full payment of the purchase price. “Clearly,
respondent cannot compel petitioners to transfer ownership of the property to him.”

REYES
VS.
TUPARAN

FACTS:
Mila A. Reyes (petitioner) filed a complaint for Rescission of Contract with Damages against Victoria T.
Tuparan (respondent) before the RTC. Petitioner then decided to sell her real properties so she could
liquidate her bank loan and finance her businesses. As a gesture of friendship, respondent verbally offered
to conditionally buy petitioner’s real properties.
Respondent, however, defaulted in the payment of her obligations on their due dates. Instead of paying
the amounts due in lump sum on their respective maturity dates, respondent paid petitioner in small
amounts from time to time.

ISSUE:
Whether the agreement is a contract to sell and not a contract of sale.

HELD:
The Court agrees with the ruling of the courts below that the subject Deed of Conditional Sale with
Assumption of Mortgage entered into by and among the two parties and FSL Bank on November 26,
1990 is a contract to sell and not a contract of sale.

The title and ownership of the subject properties remains with the petitioner until the respondent fully
pays the balance of the purchase price and the assumed mortgage obligation. Thereafter, FSL Bank shall
then issue the corresponding deed of cancellation of mortgage and the petitioner shall execute the
corresponding deed of absolute sale in favor of the respondent.

Accordingly, the petitioner's obligation to sell the subject properties becomes demandable only upon the
happening of the positive suspensive condition, which is the respondent's full payment of the purchase
price. Thus, the Court fully agrees with the CA when it resolved: "Considering, however, that the Deed of
Conditional Sale was not cancelled by Vendor Reyes (petitioner) and that out of the total purchase price
of the subject property in the amount of ?4,200,000.00, the remaining unpaid balance of Tuparan
(respondent) is only ?805,000.00, a substantial amount of the purchase price has already been paid.It is
only right and just to allow Tuparan to pay the said unpaid balance of the purchase price to Reyes."

Granting that a rescission can be permitted under Article 1191, the Court still cannot allow it for the
reason that, considering the circumstances, there was only a slight or casual breach in the fulfillment of
the obligation.

SPS EMMA H. VER REYES AND RAMON REYES

VS.
DOMINADOR SALVADOR

FACTS:
A parcel of unregistered land located the Province of Rizal, now a part of Metro Manila, with an area of
19, 545 square meters is the core of the controversy in the Petitions at bar. After the settlement, the
subject property, Lot 1 was adjudicated to Nicomedes; while Lot 2 was given to the heirs of Pablo.
Nicomedes then declared the subject property in his name in 1965 under Tax Declaration No. 2050.
On 23 June 1965, Nicomedes executed a deed of Conditional Sale over the subject property in favour of
Emma Ver Reyes, which stated that the Vendor [Nicomedes] is the true and lawful owner of a parcel of
land. Emma was only able to pay the instalment of the total purchase price agreed upon by the parties.

ISSUE:
Which party acquired and registrable title to the same.

HELD:
After a conscientious review of the arguments and evidence presented by the parties, the Court finds tat
the Deed of Conditional Sale between Nicomedes and Emma and the Agreement of Purchase and Sale
between Nicomedes and Rosario were both mere contracts to sell and did not transfer ownership or title to
either of the buyers in light of their failure to fully pay for the purchase price of the subject property.
A Contract to sell may not be considered as a Contract of Sale because the first essential element is
lacking. In a contract to sell, the prospective
Seller implicitly reserves the transfer of title to the prospective buyer, meaning, the perspective seller does
not yet agree or consent to transfer ownership of the property subject of the contract to sell until the
happening of an event, which for presents purposes we shall take as the full payment of the purchase
price.

LIM
VS.
COURT OF APPEALS

FACTS:
Lim, who arrived from Cebu, received from Suarez 2 pieces of jewelry: a diamond ring and a bracelet to
be sold on commission basis. Lim returned the bracelet to Suarez, but failed to return the diamond ring or
to turn over the proceeds thereof if sold. Suarez wrote a demand letter asking for the return of the ring or
the proceeds of the sale thereof. Lim, however, alleges that she had returned both the ring and the
bracelet, hence she no longer has any liability.

Lim has a different version of the facts. She denies the transaction was for her to sell the 2 pieces of
jewelry on commission basis. She told Suarez that she would consider buying the pieces of jewelry for
her own use. Lim took the pieces of jewelry and asked Suarez to prepare the necessary papers for her to
sign because she was not yet prepared to buy it. The document was prepared, and Lim signed it, but she
claims that she didn’t agree to the terms of the receipt regarding the sale on commission basis. Her ‘proof’
is that she signed the document on the upper portion and not at the bottom where a space is provided for
the signature of the persons receiving the jewelry.

ISSUE:
Was the real transaction between Lim & Suarez a real contract of agency to sell on commission basis as
set out in the receipt or a sale on credit?

HELD:
The transaction between them was a contract of agency to sell on commission basis. Lim’s signature
indeed appears on the upper portion of the receipt below, but this fact doesn’t have the effect of altering
the terms of the transaction form a contract of agency to sell on commission basis to a contract of sale.
The moment she affixed her signature thereon, Lim became bound by all the terms stipulated in the
receipt.

Contracts shall be obligatory in whatever form they may have been entered into, provided all the essential
requisites for their validity are present. However there are some provisions in law w/c require certain
formalities for particular contracts. The 1 st is when the form is required for the validity of the contract; the
2nd is when it is required to make the contract effective as against 3 rd parties; and the 3rd is for the purpose
of proving the existence of the contract, e.g. those included in the Statute of Frauds. A contract of agency
to sell on commission basis doesn’t belong to any of these 3 categories, hence it is valid and enforceable
in whatever form they may be entered into.

There is only 1 type of legal instrument where the law strictly prescribes the location of the signature of
the parties thereto. This is in case of notarial wills. But in the case at bar, the parties didn’t execute a
notarial will but a simple contract of agency to sell on commission basis, thus making the position of
Lim’s signature immaterial.
PINGOL
VS.
COURT OF APPEALS

FACTS:
In 1969, Pingol, the owner of a lot in Caloocan City, executed a Deed of Absolute Sale of One-Half Of
An Undivided Portion of Parcel Of Land in favour of Donasco (private respondent), payable in 6 years.
In 1984, Donasco was died and was only able to pay P8, 369 plus P2,000 down payment, leaving a
balance of P10, 161. The heirs of Donasco remained in possession of such lot and offered to settle the
balance with Pingol. However, Pingol refused to accept the offer and demanded a larger amount.

ISSUE:
WON the action filed by the heirs of Donasco has prescribed.

HELD:
NO.
The distinction between the two is important for in a contract of sale, the title passes to the vendee
upon the delivery of the thing sold, whereas in a contract to sell, by agreement, ownership is reserved in
the vendor and is not to pass until the full payment of the price.

The contract here being one of absolute sale, the ownership of the subject lot was transferred to the
buyer upon the actual and constructive delivery thereof.

The delivery of the object of the contract divested the vendor of the ownership over the same and he
cannot recover the title unless the contract is resolved or rescinded pursuant to Article 1592 of the NCC.

Although the private respondents' complaint before the trial court was denominated as one for specific
performance, it is in effect an action to quiet title.
WHEREFORE, except as above modified, the Decision appealed from is hereby AFFIRMED.

ACE FOODS, INC.

VS.
MICRO PACIFIC TECHNOLOGIES CO., LTD.,

FACTS:
ACE Foods is a domestic corporation engaged in the trading and distribution of consumer goods while
MTCL is one engaged in the supply of computer hardware and equipment. MTCL sent a letter- proposal
for the delivery and sale of the subject products to be installed at various offices of ACE foods, while the
other hand accepted MTCL’s proposal. After delivery, the subject products were then installed and
configured in ACE food’s premises. MTCL’s demands against ACE foods to pay the purchase price,
however, remained unheeded. ACE foods lodged a complaint against MTCL before the RTC.

ISSUE:
Whether ACE foods should pay MTCL the purchase price for the subject products.

HELD:
Yes. a contract of sale is classified as a consensual contract, which means that the sale
is perfected by mere consent. No particular form is required for its validity even if
parties haven’t a#xed their signatures to written form.
Yes. a contract of sale is classified as a consensual contract, which means that the sale
is perfected by mere consent. No particular form is required for its validity even if
parties haven’t a#xed their signatures to written form.
Parties agreed to a contract of sale. A contract of sale had been perfected at the precise moment ACE
Foods accepted the latter’s proposal to sell the subject products in consideration of the purchase price of
P646, 464. 00. From the point in time, the reciprocal obligations of the parties already arose and
consequently may be demanded.
At this juncture, the Court must dispel the notion that the stipulation anent MTCL’s reservation of
ownership of the subjects products as reflected in the Invoice Receipt, the title reservation stipulation,
changed the complexion of the transaction form a contract of sale into contract to sell.

DAO HENG BANK Inc.

VS.
SPOUSES LAIGO

FACTS:
Spouses Laigo obtained a loan from Dao Heng Bank Inc. As a security 3 real estate mortgages were
executed. As of 2000, the Laigos failed to pay on time so as a remedy, they verbally agreed to cede one of
the mortgaged property to Dao Heng by way of dation of payment. Dao heng, thru a letter informed the
Laigos that there total obligation amountys to 1. 08 million, the laigos took no action so their property
was foreclosed.

ISSUE:
WON the dacion en pago covered by the Statues of Fraud or the foreclosed valid.
HELD:
No. There is no showing that the dacion en pago has been accepted by both parties. Since there is no
mutual consent, there is no dacion Dacion en pago as a mode of extinguishing an existing obligation
partakes of the nature of sale whereby property is alienated to the creditor in satisfaction of a debt in
money. It is an objective novation of the obligation, hence, common consent of the parties is required in
order to extinguish the obligation. Being likened to that of a contract of sale, dacion en pago is governed
by the law on sales. The partial execution of a contract of sale takes the transaction out of the provisions
of the Statute of Frauds so long as the essential requisites of consent of the contracting parties, object and
cause of the obligation concur and are clearly established to be present. In the case at bar, the titles to the
property were delivered as a security for the mortgage. (2) The foreclosure is valid. It is the proper
remedy for securing payment for a mortgage. The law clearly provides that the debtor of a thing cannot
compel the creditor to receive a different one, although the latter may be of the same value, or more
valuable than that which is due (Article 1244, New Civil Code). The obligee is entitled to demand
fulfillment of the obligation or per formance as stipulated. The power to decide whether to foreclose on
the mortgage is the sole prerogative of the mortgagee.

FILINVEST CREDIT CORP

VS.
COURT OF APPEALS

FACTS:
Private respondent’s spouses Josy Sy Bang and Iluminada Tan were engaged in the sale of gravel
produced from crushed rocks and used for construction purposes. They intended to buy rock crusher from
Rizal Consolidated Corporation which carried a cash price tag of P550,000.00. A contract of lease of
machinerywas entered into by the parties whereby the private respondents agreed to lease from the
petitioner the rock crusher for two years starting from July 5, 1981.
However, 3 months later, the sources stopped payment when petitioner had not acted on the complaints of
the spouses about the machine.

ISSUE:
WON the real transaction was lease or sale? SALE ON INSTALLMENTS
HELD:
The real intention of the parties should prevail. The nomenclature of the agreement cannot change its true
essence, i.e., a sale on installments. It is basic that a contract is what the law defines it and the parties
intend it to be, not what it is called by the parties. It is apparent here that the intent of the parties to the
subject contract is for the so-called rentals to be the installment payments. Upon the completion of the
payments, then the rock crusher, subject matter of the contract, would become the property of the private
respondents. This form of agreement has been criticized as a lease only in name.

Even if there was a contract of sale, Filinvest is still not liable because Sy Bang is presumed to be more
knowledgeable, if not experts, on the machinery subject of the contract, they should not therefore be
heard now to complain of any alleged deficiency of the said machinery. It was Sy Bang who was
negligent, not Filinvest. Further, Sy Bang is precluded to complain because he signed a Waiver of
Warranty.

PCI LEASING AND FINANCE, INC.,

VS.
GIRAFFE-X CREATIVE IMAGING, INV.,

FACTS:
On December 04, 1996, the petitioner PCI LEASING and the respondent GIRAFFE entered into a Lease
Agreement, whereby the former leased out for the latter two equipment with accessories. Forming parts of
the basic lease agreement were separate documents described that GIRAFFE as the “borrower” who
acknowledged that it must pay monthly for thirty- six (36) months agreement. But then, the respondent
defaulted in its monthly rental-payment obligations. Following a three- month default, PCI LEASING
addressed a pay-or-surrender- equipment demand letter to GIRAFFE.
In its opposition, PCI LEASING maintains that its contract with GIRAFFE is a straight lease without an
option to buy.

ISSUE:
WON the underlying Lease Agreement, Lease Schedules and the Disclosure Statements that embody the
financial leasing arrangement between the parties are covered by and subject to the consequences of
Articles 1484 and 1485 of the New Civil Code
HELD:
The recourse is without merit.

R.A. No. 5980, in its original shape and as amended, partakes of a supervisory or regulatory legislation,
merely providing a regulatory framework for the organization, registration, and regulation of the
operations of financing companies. As couched, it does not specifically define the rights and obligations
of parties to a financial leasing arrangement. In fact, it does not go beyond defining commercial or
transactional financial leasing and other financial leasing concepts.

A financing arrangement has a purpose which is at once practical and salutary. R.A. No. 8556 was, in
fact, precisely enacted to regulate financing companies’ operations with the end in view of strengthening
their critical role in providing credit and services to small and medium enterprises and to curtail acts and
practices prejudicial to the public interest, in general, and to their clienteles, in particular. As a regulated
activity, financing arrangements are not meant to quench only the thirst for profit. They serve a higher
purpose, and R.A. No. 8556 has made that abundantly clear.

On the whole, then, as did the trial court, that the PCI LEASING- GIRAFFE lease agreement is in reality
a lease with an option to purchase the equipment. This has been made manifest by the actions of the
petitioner itself, foremost of which is the declarations made in its demand letter to the respondent. There
could be no other explanation than that if the respondent paid the balance, then it could keep the
equipment for its own; if not, then it should return them. This is clearly an option to purchase given to the
respondent. Being so, Article 1485 of the Civil Code should apply.

QUIROGA

VS.
PARSONS HARDWARE

FACTS:
Quiroga grants exclusive right to sell his beds in the Visayan Islands to J. Parsons defendant violated the
following obligations. With the exception of the obligation on the part of the defendant to order the beds
by the dozens and in no other manner, none of the obligations imputed to the defendant in the two causes
of action are expressly set forth in the contract and plaintiff alleged that the defendant was his agent for
the sale of his beds in Iloilo.

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.

ENGINEERING AND MACHINERY CORP

VS.
COURT OF APPEALS

FACTS:
Engineering is engaged in the fabrication and installation of central aircon. It installed the aircon in the
building of Paciano Almeda in 1961. After 9 years. It instituted a case against Engineering claiming that it
did not comply with the agreed plans and specifications.

ISSUE:
Is the installation a contract of sale or a contract for a piece of work?

HELD:
A contract for a piece of work, labor and materials may be distinguished from a contract of sale by the
inquiry as to whether the thing transferred is one not in existence and which would never have existed
but for the order, of the person desiring it. In such case, the contract is one for a piece of work, not a
sale. On the other hand, if the thing subject of the contract would have existed and been the subject of a
sale to some other person even if the order had not been given, then the contract is one of sale. The
distinction between the two contracts depends on the intention of the parties. Thus, if the parties
intended that at some future date an object has to be delivered, without considering the work or labor
of the party bound to deliver, the contract is one of sale. But if one of the parties accepts the
undertaking on the basis of some plan, taking into account the work he will employ personally or
through another, there is a contract for a piece of work.

While it is true that Article 1571 of the Civil Code provides for a prescriptive period of six months for a
redhibitory action, a cursory reading of the ten preceding articles to which it refers will reveal that said
rule may be applied only in case of implied warranties; and where there is an express warranty in the
contract, as in the case at bench, the prescriptive period is the one specified in the express warranty,
and in the absence of such period, "the general rule on rescission of contract, which is four years shall
apply".

GREGORIO FULE
VS.
COURT OF APPEALS

FACTS:
Gregorio Fule, a banker and a jeweller, offered to sell his parcel of land to Dr. Cruz in exchange for
P40,000 and a diamond earring owned by the latter. A deed of absolute sale was prepared by Atty.
Belarmino, and on the same day Fule went to the bank with Dichoso and Mendoza, and Dr. Cruz arrived
shortly thereafter. Dr. Cruz got the earrings from her safety deposit box and handed it to Fule who,
when asked if those were alright, nodded and took the earrings. Two hours after, Fule complained that
the earrings were fake. He files a complaint to declare the sale null and void on the ground of fraud and
deceit.
ISSUE:

Whether the sale should be nullified on the ground of fraud

HELD:

A contract of sale is perfected at the moment there is a meeting of the minds upon the thing which is
the object of the contract and upon the price. Being consensual, a contract of sale has the force of law
between the contracting parties and they are expected to abide in good faith by their respective
contractual commitments. It is evident from the facts of the case that there was a meeting of the minds
between petitioner and Dr. Cruz. As such, they are bound by the contract unless there are reasons or
circumstances that warrant its nullification.

Contracts that are voidable or annullable, even though there may have been no damage to the
contracting parties are: (1) those where one of the parties is incapable of giving consent to a contract;
and (2) those where the consent is vitiated by mistake, violence, intimidation, undue influence or fraud.
The records, however, are bare of any evidence manifesting that private respondents employed such
insidious words or machinations to entice petitioner into entering the contract of barter. It was in fact
petitioner who resorted to machinations to convince Dr. Cruz to exchange her jewelry for the Tanay
property.

Ownership over the parcel of land and the pair of emerald-cut diamond earrings had been transferred to
Dr. Cruz and petitioner, respectively, upon the actual and constructive delivery thereof. Said contract of
sale being absolute in nature, title passed to the vendee upon delivery of the thing sold since there was
no stipulation in the contract that title to the property sold has been reserved in the seller until full
payment of the price or that the vendor has the right to unilaterally resolve the contract the moment
the buyer fails to pay within a fixed period.