Rodolfo Esling Bollozos

J.R. Blanco, as the administrator of the estate of Mary Ruth Elizalde vs.
William H. Quasha, et. Al.,
.R. !o. "##"$% !ovem&er "', "(((
)!ARE*+*A!,-A., J./

0acts/ Mary Ruth Elizalde 1as an American an national 1ho o1ned a house
and lot in 0o&es 2ar3, Ma3ati. .n May 44, "('5, she, through her attorney in
fact, 6on Manuel E7izalde, entered into a deed of sale over said 8ro8erty to
2ARE9 Realty :or8oration in consideration of 2;45,<<<.<< 8aya&le in t1enty+
=ve e>ual annual installments of 245,<<.<<. *u&se>uently in that same day,
2ARE9 Realty :or8oration e?ecuted a contract of lease 1ith Ms. Elizalde
1here&y same 8ro8erty 1as leased to the latter for a term of t1enty+=ve
years and 1as agreed that rental 8ayments shall &e credited to and a88lied
in reduction of the ageed yearly installments of the 8urchase 8rice of the
8ro8erty.
-ssue/ -s the sale valid considering there 1as no 8ayment of money@
Held. )es. Article "$5% says that &y the contract of sale one of the
contracting 8arties o&ligates himself to transfer the o1nershi8 and to deliver
a determinate thing, and the other to 8ay therefor a 8rice certain in money
or its e>uivalent. -n the case at &ar the 8etitioner cannot correctly claim that
there 1as no consideration for the contracts of sale and lease, only &ecause
the amount of the annual installments of the 8urchase 8rice dovetails 1ith
the rate of rentals sti8ulated in the lease contract. 2etitioner argues that
Mary Ruth Elizalde did not receive money in the sale of her 8ro8erty. While
that may &e true, her continued occu8ancy of the 8remises even after she
sold it to 2are? constitutes valua&le consideration 1hich she received as
com8ensation for the sale.



:elestino :o A :om8any vs :ollector of -nternal Revenue
.R. !o. 7+%5<; August #", "(5;
BE!B.!, J./

0acts/ :elestino :o A :om8any doing &usiness under the trade name of
C.riental *ash 0actory.D 0rom "($; E "(5" it 8aid 8ercentage ta?es of '
8ercent on the gross recei8ts of its sash, door and 1indo1 factory in
accordance on !ational Revenue :ode im8osing ta?es on manufactured
articles. -n "(54 it &egan to claim lia&ility only to the contractorFs three
8ercent ta? in accordance 1ith the same la1. 2etitioner claims that it does
not manufacture ready+made articles for the 8u&lic and it ma3es these
articles only u8on s8ecial order.

-ssue/ -s the nature of the com8anyFs &usiness is sales@

Held/ )es. Article "$;' sti8ulates that contract for the delivery at a certain
8rice of an article 1hich the vendor in the ordinary course of his &usiness
manufactures or 8rocures for the general mar3et, 1hether the same is on
hand at the time or not, is a contract of sale, &ut if the goods are to &e
manufactured s8ecially for the customer and u8on his s8ecial order, and not
for the general mar3et, it is a contract for a 8iece of 1or3. ,he im8ortant
thing to remem&er is that :elestino :o A :om8any ha&itually ma3es sash,
1indo1s and doors, as it has re8resented in its stationery and
advertisements to the 8u&lic. ,hat it GmanufacturesG the same is 8ractically
admitted &y a88ellant itself. ,he fact that 1indo1s and doors are made &y it
only 1hen customers 8lace their orders, does not alter the nature of the
esta&lishment, for it is o&vious that it only acce8ted such orders as called for
the em8loyment of such material+moulding, frames, 8anels+as it ordinarily
manufactured or 1as in a 8osition ha&itually to manufacture. ,he test
according to the *u8reme :ourt 1hen this 0actory acce8ts a Ho& that re>uires
the use of e?traordinary or additional e>ui8ment, or involves services not
generally 8erformed &y it+it there&y contracts for a 8iece of 1or3 I =ling
s8ecial orders 1ithin the meaning of Article "$;'. ,he orders herein
e?hi&ited 1ere not sho1n to &e s8ecial. ,hey 1ere merely orders for 1or3 I
nothing is sho1n to call them s8ecial re>uiring e?traordinary service of the
factory.
,he thought occurs to us that if, as alleged+all the 1or3 of a88ellant is only to
=ll orders 8reviously made, such orders should not &e called s8ecial 1or3,
&ut regular 1or3. Would a factory do &usiness 8erforming only s8ecial,
e?traordinary or 8eculiar merchandise@
Heirs of 6r. Mario -ntact and Angelina Mendoza+-ntact vs :ourt of A88eals
and s8ouses Marcelo Roy, Jr. and Jose=na mendoza+Roy and s8ouses
6ominador 7ozada and Martina Mendoza+7ozada
.R. !o. "'#4"" .cto&er "", 4<"4
Mendoza, J./
0acts/ -reneo Mendoza, married to *alvacion 0ermin, 1as the o1ner of the
su&Hect 8ro8erty situated at Quezon :ity 1hich he 8urchased in "(5$. -reneo
had t1o children, herein res8ondents and also too3 care of his niece,
Angelina, since she 1as three years old until she got married. -reneo 1ith the
consent of *alavacion, e?ecuted a deed of a&solute sale of the 8ro8erty in
favor of Angelina and her hus&and, Mario. 6es8ite the sale, -reneo and his
family, including the res8ondents, continued staying in the 8remises and
8aying the realty ta?es. After -reneo died intestate in "(%4, his 1ido1 and
the res8ondents remained in the 8remises. Res8ondents further alleged that
sometime in "((#, after the death of *alvacion, rumors s8read in the
neigh&orhood that the su&Hect 8ro8erty had &een registered in the name of
s8ouses -ntac. Marietto, a 1itness to the e?ecution of the su&Hect a&solute
deed of sale testi=ed that, -reneo 8ersonally told him that he 1as going to
e?ecute a document of sale &ecause s8ouses -ntac needed to &orro1 the title
to the 8ro8erty and use it as collateral for their loan a88lication.
-ssue/ -s the sale e?ecuted &y -reneo and Angelina a simulated one@
Held/ )es. Article "#$5 says that simulation of contract may &e a&solute or
relative. ,he former ta3es 8lace 1hen the 8arties do not intend to &e &ound
at allJ the latter, 1hen the 8arties conceal their true agreement. ,he main
characteristic of an a&solute simulation is that the a88arent contract is really
desired or intended to 8roduce legal eKect or in any 1ay alter the situation
of the 8arties. As a result, an a&solutely simulated or =ctitious contract is
void and the 8arties may recover from each other 1hat they may have given
under the contract. ,he court agrees 1ith the courts &elo1 that the
>uestioned contract of sale 1as only for the 8ur8ose of lending the title of
the 8ro8erty to s8ouses -ntac to ena&le them to secure a loan. ,heir
arrangement 1as only tem8orary and could not give rise to a valid sale.
,here 1as sim8ly no consideration and no intent to sell it.
:ritical is the testimony of Marietto, a 1itness to the e?ecution of the su&Hect
a&solute deed of sale. He testi=ed that -reneo 8ersonally told him that he
1as going to e?ecute a document of sale &ecause *8ouses -ntac needed to
&orro1 the title to the 8ro8erty and use it as collateral for their loan
a88lication. -reneo and *alvacion never intended to sell or 8ermanently
transfer the full o1nershi8 of the su&Hect 8ro8erty to *8ouses -ntac. Marietto
1as characterized &y the R,: as a credi&le 1itness.
Aside from their 8lain denial, 8etitioners failed to 8resent any concrete
evidence to dis8rove MariettoFs testimony. ,hey claimed that they actually
8aid 2"5<,<<<.<< for the su&Hect 8ro8erty. ,hey, ho1ever, failed to adduce
8roof, even &y circumstantial evidence, that they did, in fact, 8ay it. Even for
the consideration of 2;<,<<<.<< as stated in the contract, 8etitioners could
not sho1 any tangi&le evidence of any 8ayment therefor. ,heir failure to
8rove their 8ayment only strengthened MariettoFs story that there 1as no
8ayment made &ecause -reneo had no intention to sell the su&Hect 8ro8erty.








". What is a sales contract@
-t is 1here one of the contracting 8arties o&ligates himself to transfer the
o1nershi8 and to deliver a determinate thing, and the other to 8ay therefor a
8rice certain in money or its e>uivalent.
4. What are the essential o&ligations of a seller@
,he follo1ing are the essential o&ligations of a seller/ transfer of o1nershi8J
deliver the 8ossession of the su&Hect matter

# What are the essential o&ligations of a &uyer@
,he follo1ing are the essential o&ligations of a &uyer/ to 8ay the 8riceJ to
acce8t the delivery of the su&Hect matterJ not to refuse to 8ay the 8rice on
the day agreed u8on

$. What are the essential elements of a contract of sales@
,he follo1ing are the essential elements of a contract of sale/
:onsent E consent on the 8art of the seller to transfer and deliver and on the
8art of the &uyer to 8ay
*u&Hect matter E refers to the determinate thing 1hich is the o&Hect of the
contract
2rice E refers to 8rice certain in money or its e>uivalent

5. What are the characteristics of a contract of sale@
,he follo1ing are the characteristics of a contract of sale/

!ominateI-t has a s8eci=c name given &y la1.
BilateralI&oth 8arties are o&liged to ful=ll reci8rocal o&ligations to one
another.
:onsensualI-t is 8erfected &y mere consent
:ommutativeI,he thing sold is e>uivalent of the 8rice 8aid
.nerousI,he thing sold is conveyed in consideration of the 8urchase 8rice
and the 8urchase 8rice is 8aid in consideration of the conveyance of the
thing.
2rinci8alI-ts e?istence does not de8end u8on the e?istence and validity of
another contract
,itle+ creates the o&ligation on the 8art of the seller to transfer o1nershi8
and deliver 8ossession to the &uyer

;. What is the essential re>uisite of a seller@
According to Article "$5( :ivil :ode the seller must have a right to transfer
the o1nershi8 thereof at the time it is delivered.
'. What are the stages of a contract of sale@
,he follo1ing are the stages of a contract of sale/
2olitacion E is the 8re8aration, conce8tion or generation stage, 1hich is
8eriod of negotiation and &argaining, ending at the moment of 8erfection
2erfection E is the &irth of the contract, 1hich is the 8oint in time 1hen the
8arties come to agree on the terms of the sale
:onsummation E is the death of the contract, 1hich is the 8rocess of
ful=llment or 8erformance of the terms agreed u8on in the contract
%. What is 8olitacion@
An acce8ted unilateral 8romise to &uy or to sell a determinate thing for a
8rice certain is &inding u8on the 8romissor if the 8romise is su88orted &y a
consideration distinct from the 8rice.
Advertisement E merely an invitation to ma3e an oKer
.8tion contracts E a 8rivilege e?isting in one 8erson for 1hich he had 8aid a
consideration and 1hich gives him right to &uy certain s8eci=ed 8ro8erty
from another 8erson at any time 1ithin the agreed 8eriod at a =?ed 8rice
Right of =rst refusal E 8romise on the 8art of the o1ner that if he decides to
sell the 8ro8erty in the future, he 1ould =rst negotiate its sale to the 8romise

(. What is the eKect on sales contract &ased on/
(." ,ransfer of o1nershi8@
Where the o&ligation of either 8arty to a contract of sale is su&Hect to any
condition 1hich is not 8erformed, such 8arty may refuse to 8roceed 1ith the
contract or he may 1aive 8erformance of the condition.
Lalid only as an e?ecutory contract to &e ful=lled &y the ac>uisition and
delivery of goods s8eici=ed
.1nershi8 1ill &e transferred u8on the ha88ening of the resolutory condition
,here is a reservation of o1nershi8 from the seller

(.4 ,he nature of the o&Hect of the sale@
-f the o&Hect of the sale is illicit, the contract is void and cannot &e rati=ed
-f the o&Hect of contract is 8ersonal services, it is void
Where the thing is entirely lost at the time of 8erfection, the contract is
ine?istent and void &ecause there is no o&Hect. ,here &eing no contract,
there is no necessity to &ring an action for annulment.
Where the thing is only 8artially lost, the vendee may elect &et1een
1ithdra1ing from the contract and demanding the remaining 8art, 8aying its
8ro8ortionate 8rice.
,he thing is lost 1hen it 8erishes or goes out of commerce or disa88ears in
such a 1ay that its e?istence is un3no1n or it cannot &e recovered.

(.# ,he volume or >uantity of the o&Hect of the sale@
-f the seller delivers a smaller >uantity as full 8erformance of his o&ligation,
the &uyer may reHect the good so delivered
-f the seller delivers a >uantity larger than that contracted for, the &uyer may
acce8t the >uantity contracted for and reHect the e?cess of the goods

(.$ ,he volume or >uantity of the o&Hect of the sale@
,he sale may &e rescinded if the &ul3 of the goods delivered do not
corres8ond 1ith the descri8tion or the sam8le
,he sale may &e rescinded if the &ul3 of goods corres8onding 1ith sam8le if
they do not also corres8ond 1ith the descri8tion

(.5 When the goods o&Hect of a sale are delivered on sale or return@
When goods are delivered to the &uyer Gon sale or returnG to give the &uyer
an o8tion to return the goods instead of 8aying the 8rice, the o1nershi8
8asses to the &uyer of delivery, &ut he may revest the o1nershi8 in the seller
&y returning or tendering the goods 1ithin the time =?ed in the contract, or,
if no time has &een =?ed, 1ithin a reasona&le time.
(.; When the goods o&Hect of a sale are delivered Con trial or on
satisfaction@D
-s su&Hect to a sus8ensive condition
.1nershi8 remains in the seller until the &uyer signi=es his a88roval to the
seller
,he ris3 of loss or inHury remains 1ith the seller
(.' Auction sale@
*ales of se8arate lots &y auction are se8arate contract of sales in regard to
each lot
*ales are 8erfected &y the fall of the hammer
,he seller or his agent may &id in an auction sale, 8rovided/
*uch right 1as reserved
!otice 1as given that the sale is su&Hect to a right to &id on &ehalf of the
seller
Right to &id &y the seller is not 8rohi&ited &y la1 or sti8ulation
(.% ,he deterioration or im8rovement of the o&Hect of the sale@
-f the thing is lost &efore the 8erfection, the seller &ears the ris3
-f the thing is lost at the time of 8erfection, the contract is void
-f the thing is lost after 8erfection &ut &efore its delivery, the ris3 is shifted to
the &uyer
-f the thing is lost after delivery, the &uyer &ears the ris3 of loss
-f the is lost 1ithout the fault of the de&torMseller, the o&ligation shall &e
e?tinguished
-f the thing is lost through the fault of the de&torMseller, he shall &e o&liged to
8ay the damages
-f the thing deteriorates 1ithout the fault of the de&torMseller, the im8airment
is &orne &y the creditorMseller
-f the thing deteriorates through the fault of the de&torMseller, the
creditorM&uyer may choose &et1een the rescission of the contract, 1ith
indemnity for damages
-f the thing is im8roved &y its nature, or &y time, the im8rovement shall inure
to the &ene=t of the creditorMseller
-f the thing is im8roved at the e?8ense of the de&tor, he shall no other right
than that granted to the usufructuary

(.( ,he consideration &eing 8aya&le on installment@
,he o1nershi8 of the thing sold shall &e transferred to the &uyer u8on the
actual or constructive delivery thereofJ ho1ever, the 8arties may sti8ulate
that o1nershi8 in the thing shall not 8ass to the &uyer until he has fully 8aid
the 8rice
E?act ful=llment of the o&ligation, should the vendee fail to 8ayJ
:ancel the sale, should the vendeeNs failure to 8ay cover t1o or more
installmentsJ
0oreclose the chattel mortgage on the thing sold, if one has &een
constituted, should the vendeeNs failure to 8ay cover t1o or more
installments. -n this case, he shall have no further action against the
8urchaser to recover any un8aid &alance of the 8rice. Any agreement to the
contrary shall &e void.
Engineering A Machinery :or8oration vs :ourt of A88eals and 2onciano
A7meda
. R. !o. 544;', January 4$, "((;
2angani&an, JJ

0acts/ .n *e8tem&er "<, "(;4, 8etitioner entered into a contract 1ith
2onciano Almeda, 1here the former undertoo3 to fa&ricate, furnish, A install
the air conditioning system in the latterFs &uilding in consideration of
24"<,<<<.<<. 2etitioner 1as to furnish the materials, la&or, tools and all
services re>uired in order to so fa&ricate and install said system, and said
underta3ing 1as com8leted in "(;#. *u&se>uently, sometime in "('", after
Mr. Almeda re+ac>uired 8ossession of the &uilding from !-6:, he learned
from some of !-6: em8loyees if the defects of air conditioning system of the
&uilding. Acting on this information, 8rivate res8ondent commissioned
Engineer 6avid R. *a8ico to render a technical evaluation of the system in
relation to the contract 1ith 8etitioner. -n his re8ort, *a8ico enumerated the
defects of the system and concluded that it 1as Gnot ca8a&le of maintaining
the desired room tem8erature. ,his 8rom8ted him to =le an action for
damages against the 8etitioner, in 1hich the latter o88osed alleging the
8rescri8tive 8eriod of si?+month regarding the res8onsi&ility of a vendor for
any hidden defects in a contract of sale and not a 8iece of 1or3 as averred
&y Mr. Almeda.
-ssue/ -s the nature of the contract one of sale@

Held/ !o. Article "$;' sti8ulates that a contract for the delivery at a certain
8rice of an article 1hich the vendor in the ordinary course of his &usiness
manufactures or 8rocures for the general mar3et, 1hether the same is on
hand at the time or not, is a contract of sale, &ut if the goods are to &e
manufactured s8ecially for the customer and u8on his s8ecial order, and not
for the general mar3et, it is a contract for a 8iece of 1or3. OnPA contract for a
8iece of 1or3, la&or and materials may &e distinguished from a contract of
sale &y the in>uiry as to 1hether the thing transferred is one not in e?istence
and 1hich 1ould never have e?isted &ut for the order, of the 8erson desiring
it. -n such case, the contract is one for a 8iece of 1or3, not a sale. .n the
other hand, if the thing su&Hect of the contract 1ould have e?isted and &een
the su&Hect of a sale to some other 8erson even if the order had not &een
given, then the contract is one of sale. :learly, the contract in >uestion is
one for a 8iece of 1or3. -t is not 8etitionerNs line of &usiness to manufacture
air+conditioning systems to &e sold GoK+the+shelf.G -ts &usiness and 8articular
=eld of e?8ertise is the fa&rication and installation of such systems as
ordered &y customers and in accordance 1ith the 8articular 8lans and
s8eci=cations 8rovided &y the customers. !aturally, the 8rice or
com8ensation for the system manufactured and installed 1ill de8end greatly
on the 8articular 8lans and s8eci=cations agreed u8on 1ith the customers.


:armina Bro3mann vs 2eo8le of the 2hili88ines
.R. !o. "(("5<, 0e&ruary ;, 4<"4
BR-.!, J./

0acts/ 2etitioner averred that she and Ms. 6e 6ios had &een engaged in the
&uying and selling of He1elries for "5 years and admitted receiving the
su&Hect He1elry on a consignment &asis and said that not all He1elry 1ere
sold. Ms. Bro3man entered into a Memorandum of agreement 1ith Ms. Anne
de 6ios 1here/ the 8etitioner ac3no1ledged and recei8t on various dates of
He1elry from the latter amounting to 2 ",%;",<<<.<<J the 8etitioner failed to
remit the 8roceeds of the sale of the su&Hect He1elryJ the 8rivate com8lainant
=les the estafa case against the 8etitioner for the non remittance of the
8roceeds of the sale.

-ssue/ -s the nature of the relationshi8 &et1een the t1o a contract of sale@

Held/ !o. Article "$5% says that the contract of sale one of the contracting
8arties o&ligates himself to transfer the o1nershi8 and to deliver a
determinate thing, and the other to 8ay therefor a 8rice certain in money or
its e>uivalent. .n the other end Article "$;; says a contract of agency to sell
is one that essentially esta&lishes a re8resentative ca8acity in the 8erson of
agent on &ehalf of the 8rinci8al. Bro3mann agreed to hold in trust the said
8ieces of He1elry for the 8ur8ose of selling them to the customers and 1ith
the o&ligation to remit the 8roceeds of those sold and return the items
unsold. What 1as created 1as an agency for the sale of He1elry, in 1hich
Bro3mann as an agent has the duty to return the He1elry u8on demand of its
o1ner, herein a88ellee.


,HE R.)A7 *H-R, 0A:,.R), -!:. vs. :. B.! ,-:
.R. !o. 7+;#"# May "$, "(5$
M.!,EMA).R, J./

0acts/ A document from 8laintiK 8ertaining to their agreement 1ith :o Bin ,ic
sti8ulated that defendant could either consider the sale as one on
consignment, sell as many shoes as he could at any 8rice, 8ay for them at 2%
a 8air and at the end of nine days return the shoes unsold to the 8laintiK, or,
consider the sale of the #5< shoes as a&solute at 2' a 8air. 6efendant did
not sign the document &ut on 8laintiK invoice of the said items, defendant
noted do1n in his o1n hand1riting the diKerent 8artial 8ayments of 25<<,
254% and lastly of the controversial 2$4< &y chec3. -t 1ill also &e noticed that
the defendant in ma3ing said notations of 8ayment considered the full
8urchase 8rice of the #5< 8airs of shoes at 2'.<< or 24,$5<, and it 1as
against said total that he had &een ma3ing the 8ayments, 8utting do1n the
&alance after each 8ayment.

-ssue/ -s the agreement &et1een the 8arties a sale on consignment@

Held/ !o. He o&viously acce8ted the straight sale to him on credit of the
1hole #5< 8airs of shoes for 24,$5< and made 8artial 8ayments on account
thereof. -n ma3ing said 8artial 8ayments, he made no mention 1hatsoever of
the num&er of shoes sold &y him and the num&er of shoes remaining unsold,
1hich he should have done had the sale &een on the consignment &asis.
0urthermore, if the sale had &een on consignment, a sti8ulation as to the
8eriod of time for the return of the unsold shoes should have &een madeJ &ut
evidently that had not &een done and defendant 3e8t the shoes unsold more
or less inde=nitely.



A-7E!, ,E:H!.7.-E* *-!A2.RE O2,EP 7,6. vs. -!,ERA,E6 *-7-:.!
,E:H!.7.) 2H-7-22-!E* :.R2.RA,-.!, ,E.H Q-A! H.!, ,E.H Q-A!
*E!, A!,H.!) :H.., J.A!!E QA,E M. 6E7A :RRB, JEA! QA) M. 6E7A
:RRB and R.7A!6. ,. !A:-77A
.R. !o. "5$;"% A8ril "$, 4<<$
)!ARE*+*A!,-A., J./
0acts/ 2etitioner is a foreign cor8oration, 1hich, &y its o1n admission, is not
licensed to do &usiness in the 2hili88ines and res8ondent -ntegrated *ilicon
,echnology 2hili88ines :or8oration a 8rivate domestic cor8oration, "<<S
foreign o1ned, 1hich is engaged in the &usiness of manufacturing and
assem&ling electronics com8onents. Res8ondents ,eoh Qiang Hong, ,eoh
Qiang *eng and Anthony :hoo, Malaysian nationals, are current mem&ers of
-ntegrated *iliconFs &oard of directors, 1hile Joanne Qate M. dela :ruz, Jean
Qay M. dela :ruz, and Rolando ,. !acilla are its former mem&ers. ,he 8arties
entered into a 5+ year Lalue Added Assem&ly *ervices Agreement entered
into on A8ril 4, "((; &et1een -ntegrated *ilicon and the He1lett+2ac3ard
*inga8ore 7td., *inga8ore :om8onents .8eration. Rnder the terms of the
agreement, -ntegrated *ilicon manufacture and assem&le =&er o8tics locally
for e?8ort of H2 *inga8ore. ,he latter on the other end, 1as to consign ra1
materials to -ntegrated *iliconJ trans8ort machinery to the 8lant of
-ntegrated *iliconJ and 8ay -ntegrated *ilicon the 8urchase 8rice of the
=nished 8roducts. .n *e8tem&er "(, "(((, 1ith the consent of -ntegrated
*ilicon,' H2+*inga8ore assigned all its rights and o&ligations in the LAA*A to
Agilent. .n July 4, 4<<", Agilent =led a se8arate com8laint against -ntegrated
*ilicon. Res8ondents =led a motion to dismiss on the grounds of lac3 of
Agilents legal ca8acity to sue for not &eing licensed to do &usiness in the
2hili88ines. Ho1ever, according to Re8u&lic Act !o. %"'(, as a foreign
cor8oration not doing &usiness in the 2hili88ines, it needed no license &efore
it can sue &efore our courts.

-ssue/ -s the nature of the relationshi8 &et1een the 8arties of sale@

Held/ !o. *ection " of the -m8lementing Rules and Regulations of the 0-A Oas
amended &y Re8u&lic Act !o. %"'(P 8rovides that the follo1ing shall not &e
deemed Gdoing &usinessG/ 2aragra8h O;P :onsignment &y a foreign entity of
e>ui8ment 1ith a local com8any to &e used in the 8rocessing of 8roducts for
e?8ortJ

By the clear terms of the LAA*A, AgilentFs activities in the 2hili88ines 1ere
con=ned to O"P maintaining a stoc3 of goods in the 2hili88ines solely for the
8ur8ose of having the same 8rocessed &y -ntegrated *iliconJ and O4P
consignment of e>ui8ment 1ith -ntegrated *ilicon to &e used in the
8rocessing of 8roducts for e?8ort. As such, 1e hold that, &ased on the
evidence 8resented thus far, Agilent cannot &e deemed to &e Gdoing
&usinessG in the 2hili88ines. Res8ondentsF contention that Agilent lac3s the
legal ca8acity to =le suit is therefore devoid of merit.

MER:E6E* :A7-M7-M+ :A!R77A* vs H.!. W-77E7M. 0.R,R!, Judge, :ourt
of 0irst instance of 2angasinan, Branch -, and :.RAB.! 6AR-!E*,
.R. !o. 7+5'$(( June 44, "(%$
ME7E!:-.+HERRERA, J./
0acts/ .n 6ecem&er "(, "(;4 Mercedes :alimlim+:anullas and 0ernando
:anullas 1ere married and they &egot =ve children. ,hey lived in a small
house on the residential land in >uestion 1ith an area of a88ro?imately %("
s>uare meters in 1hich 0ernando inherited from his deceased father. .n
"('%, 0ernando a&andoned his family and 1as living 1ith 8rivate res8ondent
:orazon 6aguines. .n A8ril "5, "(%<, 0ernando sold the su&Hect 8ro8erty
1ith the house thereon to 6aguines for the sum of 24,<<<.<<. Rna&le to ta3e
8ossession of the lot and house, 6aguines initiated a com8laint on June "(,
"(%< for >uieting of title and damages against Mercedes.
-ssue/ -s the sale &et1een 0ernando and 6aguines living as hus&and and 1ife
1ithout the &ene=t of marriage a valid one@
Held/ !o. ,he la1 em8hatically 8rohi&its the s8ouses from selling 8ro8erty to
each other su&Hect to certain e?ce8tions. *imilarly, donations &et1een
s8ouses during marriage are 8rohi&ited. And this is so &ecause if transfers or
conveyances &et1een s8ouses 1ere allo1ed during marriage, that 1ould
destroy the system of conHugal 8artnershi8, a &asic 8olicy in civil la1. -t 1as
also designed to 8revent the e?ercise of undue inTuence &y one s8ouse over
the other, as 1ell as to 8rotect the institution of marriage, 1hich is the
cornerstone of family la1. ,he 8rohi&itions a88ly to a cou8le living as
hus&and and 1ife 1ithout &ene=t of marriage, other1ise, Gthe condition of
those 1ho incurred guilt 1ould turn out to &e &etter than those in legal
union.G ,hose 8rovisions are dictated &y 8u&lic interest and their criterion
must &e im8osed u8on the 1ig of the 8art
AR-0-!A AQR-!,E) vs *2.R*E* 0E7-:-6A6 A!6 R-:. ,-B.!
.R. !o. ";;'<$ 6ecem&er 4<, 4<<;
:A77EJ., *R., J./

0A:,*/ Agri=na alleged that 0elicidad secured loans from her on several
occasions at monthly interest rates of ;S to 'S. 6es8ite demands, s8ouses
,i&ong failed to 8ay their outstanding loans of 2''#,<<<,<< e?clusive of
interests. Ho1ever, s8ouses ,iong alleged that they had e?ecuted deeds of
assignment in favor of Agri=na amounting to 25$;,$5( and that their de&tors
had e?ecuted 8romissory notes in favor of Agri=na. *8ouses insisted that &y
virtue of these documents, Agri=na &ecame the ne1 collector of their de&ts.
Agri=na 1as a&le to collect the total amount of 2#<",<<< from 0elicdadFs
de&tors. *he tried to collect the &alance of 0elicidad and 1hen the latter
reneged on her 8romise, Agri=na =led a com8laint in the oUce of the
&arangay for the collection of 2''#,<<<.<<. ,here 1as no settlement. R,:
favored Agri=na. :ourt of A88eals aUrmed the decision 1ith modi=cation
ordering defendant to 8ay the &alance of total inde&tedness in the amount of
25",#$",<< 8lus ;S 8er month.

-**RE/ -s the assignment of credits to the 8etitioner from the res8ondents
1ould a&solve the loans@

Held/ )es. We =nd in this case that the :A correctly found that res8ondentsN
o&ligation to 8ay the &alance of their account 1ith 8etitioner 1as
e?tinguished, 8ro tanto, &y the deeds of assignment of credit e?ecuted &y
res8ondent 0elicidad in favor of 8etitioner.
An assignment of credit is an agreement &y virtue of 1hich the o1ner of a
credit, 3no1n as the assignor, &y a legal cause, such as sale, dation in
8ayment, e?change or donation, and 1ithout the consent of the de&tor,
transfers his credit and accessory rights to another, 3no1n as the assignee,
1ho ac>uires the 8o1er to enforce it to the same e?tent as the assignor
could enforce it against the de&tor. -t may &e in the form of sale, &ut at times
it may constitute a dation in 8ayment, such as 1hen a de&tor, in order to
o&tain a release from his de&t, assigns to his creditor a credit he has against
a third 8erson.
,he re>uisites for dacion en 8ago are/ O"P there must &e a 8erformance of
the 8restation in lieu of 8ayment Oanimo solvendiP 1hich may consist in the
delivery of a cor8oreal thing or a real right or a credit against the third
8ersonJ O4P there must &e some diKerence &et1een the 8restation due and
that 1hich is given in su&stitution Oaliud 8ro alioPJ and O#P there must &e an
agreement &et1een the creditor and de&tor that the o&ligation is
immediately e?tinguished &y reason of the 8erformance of a 8restation
diKerent from that due.
All the re>uisites for a valid dation in 8ayment are 8resent in this case. As
gleaned from the deeds, res8ondent 0elicidad assigned to 8etitioner her
credits Gto ma3e goodG the &alance of her o&ligation. 0elicidad testi=ed that
she e?ecuted the deeds to ena&le her to ma3e 8artial 8ayments of her
account, since she could not com8ly 1ith 8etitionerNs frenetic demands to
8ay the account in cash. 2etitioner and res8ondent 0elicidad agreed to
relieve the latter of her o&ligation to 8ay the &alance of her account, and for
8etitioner to collect the same from res8ondentNs de&tors.
R.BER,. 6. ,RAB.! vs. 7.RR6E* Q. 6E7 R.*AR-.+*RAREB, :A,A7-!A R.
*RAREB+6E 7E.!, W-70RE6. 6E 7E.!, M-RE7 7R-* *. 6E 7E.!, R.MME7
7EE *. 6E 7E.!, and R-77ERMA 7. *A!6-:.+*-7LA
.R. !o. ";%#45 6ecem&er %, 4<"<
6E7 :A*,-77., J./
0acts/ .n June 4$, "(($, Ro&erto ,uazon and 7ourdes 6el Rosario+*uarez,
1ho o1ned a 8arcel of land in Quezon :ity, e?ecuted a contract of lease over
the said land for a 8eriod of three years. ,he lease commenced in March
"(($ and ended in 0e&ruary "(('. 6uring the eKectivity of the lease,
7ourdes sent a letter dated January 4, "((5 to Ro&erto 1here she oKered to
sell to the latter su&Hect 8arcel of land at the 8rice of 2#',5$",<<<.<< and
gave him t1o years from January 4, "((5. Ro&erto did acce8t the oKer
stating that the 8rice is high and even negotiated to 7ourdes to sell the
8ro8erty at a lo1er 8rice, 1hich the latter did not heed. .n June "((',
7ourdes sold the land to her only child :atalina to her family for only
24,'5<,<<<.<<. ,he ne1 o1ners through their attorney+in+fact noti=ed
Ro&erto to vacate the 8remises &ut the latter refused contending 7ourdes
violated his right to &uy su&Hect 8ro8erty under the 8rinci8le of Cright of =rst
refusalD &y not giving him notice and the o88ortunity to &uy the 8ro8erty
under the same terms at a lo1er 8rice 8aid &y her child.
-ssue/ -s the letter sent to Ro&erto on January "((5 constitutes a right of =rst
refusal@


Held/ !o. Right of =rst refusal is an agreement in 1riting to give a 8erson the
Vo8tionF to 8urchase lands 1ithin a given time at a named 8rice is neither a
sale nor an agreement to sell. -t is sim8ly a contract &y 1hich the o1ner of
8ro8erty agrees 1ith another 8erson that he shall have the right to &uy his
8ro8erty at a =?ed 8rice 1ithin a certain time. He does not sell his landJ he
does not then agree to sell itJ &ut he does sell somethingJ that is, the right or
8rivilege to &uy at the election or o8tion of the other 8arty. -n a right of =rst
refusal, 1hile the o&Hect might &e made determinate, the e?ercise of the
right, ho1ever, 1ould &e de8endent not only on the grantorNs eventual
intention to enter into a &inding Huridical relation 1ith another &ut also on
terms, including the 8rice, that o&viously are yet to &e later =rmed u8.
0rom the foregoing, it is thus clear that an o8tion contract is entirely diKerent
and distinct from a right of =rst refusal in that in the former, the o8tion
granted to the oKeree is for a =?ed 8eriod and at a determined 8rice. 7ac3ing
these t1o essential re>uisites, 1hat is involved is only a right of =rst refusal.
Ro&ertoFs reliance in E>uatorial is mis8laced. 6es8ite his claims, the facts in
E>uatorial radically diKer from the facts of this case. Ro&erto overloo3ed the
fact that in E>uatorial, there 1as an e?8ress 8rovision in the :ontract of
7ease that E
OiPf the 7E**.R should desire to sell the leased 8ro8erties, the 7E**EE shall
&e given #<+days e?clusive o8tion to 8urchase the same.
,here is no such similar 8rovision in the :ontract of 7ease &et1een Ro&erto
and 7ourdes. What is involved here is a se8arate and distinct oKer made &y
7ourdes through a letter dated January 4, "((5 1herein she is selling the
leased 8ro8erty to Ro&erto for a de=nite 8rice and 1hich gave the latter a
de=nite 8eriod for acce8tance. Ro&erto 1as not given a right of =rst refusal.
,he letter+oKer of 7ourdes did not form 8art of the 7ease :ontract &ecause it
1as made more than si? months after the commencement of the lease. -t is
clear that the a&ove letter em&odies an o8tion contract as it grants Ro&erto
a =?ed 8eriod of only t1o years to &uy the su&Hect 8ro8erty at a 8rice certain.
JERR) ,. M.7E*,vs.-!,ERME6-A,E A22E77A,E :.RR, and MAR-A!. M.
6-.7.*A
0acts/ .n his second visit to the 6iolosa 2u&lishing House, 8etitioner together
1ith Rogelio )usay, a letter 8ress machine o8erator, decided to &uy the
linoty8e machine, Model "$. ,he transaction 1as &asically ver&al in nature
&ut to facilitate the loan a88lication 1ith the 6B2, a 8ro forma invoice, dated
A8ril 4#, "('' and reTecting the amount of 25<,<<<.<< as the consideration
of the sale, 1as signed &y 8etitioner 1ith an addendum that 8ayment had
not yet &een made &ut that he 8romised to 8ay the full amount u8on the
release of his loan from the aforementioned &an3 on or &efore the end of the
month. 5 Although the agreed selling 8rice 1as only 2$<,<<<.<<, the amount
on the invoice 1as increased &y 2"<,<<<.<<, said increase &eing intended for
the 8urchase of ne1 matrices for said machine.
*ometime &et1een A8ril and May, "('', the machine 1as delivered to
8etitionerNs 8u&lishing house at ,angu&, Bacolod :ity 1here it 1as installed
&y one :ris8ino Escurido, an em8loyee of res8ondent 6iolosa. Another
em8loyee of the 6iolosa 2u&lishing House, ,omas 2londaya, stayed at
8etitioners house for almost a month to train the latterNs cousin in o8erating
the machine. ;
Rnder date of August 4(, "('', 8rivate res8ondent issued a certi=cation
1herein he 1arranted that the machine sold 1as in A+" condition, together
1ith other e?8ress 1arranties.
-ssue/ is there an e?8ress 1arranty@
Held/ )es. ,o re8eat, in the case &efore Rs, a certi=cation to the eKect that
the linoty8e machine &ought &y 8etitioner 1as in A+" condition 1as issued &y
8rivate res8ondent in favor of the former. ,his cannot &ut &e considered as
an e?8ress 1arranty. Ho1ever, it is 8rivate res8ondentNs su&mission, that the
same is not &inding on him, not &eing a 8art of the contract of sale &et1een
them. ,his contention is &ereft of su&stance.
-t must &e remem&ered that the certi=cation 1as a condition sine >ua non
for the release of 8etitionerNs loan 1hich 1as to &e used as 8ayment for the
8urchase 8rice of the machine. 2rivate res8ondent failed to refute this
material fact. !either does he e?8lain 1hy he made that e?8ress 1arranty on
the condition of the machine if he had not intended to &e &ound &y it. -n fact,
the res8ondent court, in declaring that 8etitioner should have availed of the
remedy of re>uiring re8airs as 8rovided for in said certi=cation, there&y
considered the same as 8art and 8arcel of the ver&al contract &et1een the
8arties.
.n the &asis of the foregoing circumstances, the inesca8a&le conclusion is
that 8rivate res8ondent is indeed &ound &y the e?8ress 1arranty he
e?ecuted in favor of herein 8etitioner.
We disagree 1ith res8ondent court that 8rivate res8ondents e?8ress
1arranty as to the A+" condition of the machine 1as merely dealerNs tal3.
2rivate res8ondent 1as not a dealer of 8rinting or linoty8e machines to
1hom could &e ascri&ed the su88osed resort to the usual e?aggerations of
trade in said items. His certi=cation as to the condition of the machine 1as
not made to induce 8etitioner to 8urchase it &ut to con=rm in 1riting for
8ur8oses of the =nancing as8ect of the transaction his re8resentations
thereon. .rdinarily, 1hat does not a88ear on the face of the 1ritten
instrument should &e regarded as dealerNs or traderNs tal3J 45 conversely,
1hat is s8eci=cally re8resented as true in said document, as in the instant
case, cannot &e considered as mere dealerNs tal3.
JE*R* ,ERA!, 8laintiK+a88ellee, vs.0RA!:-*:A L-77A!RELA, L-R6A 6E
R-.*A, E, A7.
0acts/ .n .cto&er ;, "(4%, the 8arties in this case e?ecuted the deed of sale
E?hi&it A, 1here&y the defendants sold to the 8laintiK for 2$,<<< the 8arcel
of land therein descri&ed as containing an area of #$ hectares, 54 ares, and
$# centares.
,he 8laintiK &rought this action for rescission of the contract, 1ith damages,
u8on discovering that the 8arcel of land contained only a&out then hectares.
,he trial court found no evidence of &ad faith on the 8art of the defendants,
and 1e agree 1ith this =nding. ,his land, 1ith the same area stated in the
contract, 1as inherited &y the defendants from their late father, Mariano
LillanuevaJ and the same area a88ears in the ta? declaration given to the
8laintiK &y an agent of the defendants, named Rafael Lillanueva. ,he latter,
accom8anied &y the 8laintiK, ins8ected the land. Lillanueva 8ointed out
some of the &oundaries, as they did not go over all of them. Without further
investigating the area of the land, the 8laintiK agreed to 8urchase it for the
sum of four thousand 8esos, 8aying the amount and ta3ing 8ossession
thereof. ,he 8laintiK alleges that after the "(4% harvest he discovered that
the &oundaries 8ointed out to him &y Rafael Lillanueva 1ere not the real
ones, and, in order to ascertain the e?act area of the land, he 1ent to the
cadastral oUce in Malinao and got a s3etch of the 8ro8erty OE?h. BP, 1hich
sho1s that the land in >uestion contains only ten hectares, and not thirty+
four, as a88ears in the deed of sale.
-ssue/ is there a 1arranty on the said case@
Held/ !o. ,he la1 allo1s considera&le latitude to sellerNs statements, or
dealerNs tal3J and e?8erience teaches that it is e?ceedingly ris3y to acce8t it
at its face value. . . .
Assertions concerning the 8ro8erty 1hich is the su&Hect of a contract of sale,
or in regard to its >ualities and characteristics, are the usual and ordinary
means used &y sellers to o&tain a high 8rice and are al1ays understood as
aKording to &uyers no ground for omitting to ma3e in>uiries. A man 1ho
relies u8on such an aUrmation made &y a 8erson 1hose interest might so
readily 8rom8ted him to e?aggerate the value of his 8ro8erty does so at his
8eril, and must ta3e the conse>uences of his o1n im8rudence.
,he 8laintiK had am8le o88ortunity to investigate the conditions of the land
he 1as 8urchasing, 1ithout the defendantNs doing anything to 8revent him
from ma3ing as many in>uiries as he deemed e?8edient, for 1hich reason he
cannot no1 allege that the vendors made false re8resentations. O!ational
:ash Register :o. vs. ,o1nsend, "#' !. :., 5"5.P ,he same doctrine is u8held
&y the courts of the Rnited *tates, in the follo1ing case among others/
GMisre8resentation &y a vendor of real 8ro8erty 1ith reference to its area are
not actiona&le, 1here a correct descri8tion of the 8ro8erty 1as given in the
deed and recorded chain of title, 1hich the 8urchaserNs agent undertoo3 to
investigate and re8ort u8on, and the vendor made no eKort to 8revent a full
investigation.G O*ha88irio vs. old&erg, $% 7a1. ed., $"(.P