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- An examination of the receipt reveals that the same can neither be regarded as a contract
of sale or a promise to sell. There was merely an acknowledgment of the sum of One Thousand
Pesos (P1,000.00). There was no agreement as to the total purchase price of the land nor to the
monthly installment to be paid by the petitioner. In here , there is an absence of the essential
requisites of a contract of sale. (Jovan Land vs CA, 1997)
(3) What is the evidentiary value of an acknowledgement receipt?
- A receipt is defined as: A written and signed acknowledgment that money has been paid
or goods have been delivered. A receipt is merely presumptive evidence and is not conclusive. A
written acknowledgment that money or a thing of value has been received. Since a receipt is a
mere acknowledgement of payment, it may be subject to explanation or contradiction. A receipt
may be used as evidence against one just as any other declaration or admission. A simple receipt
not under seal is presumptive evidence only and may be rebutted or explained by other evidence
of mistake in giving it, or of non-payment or of the circumstances under which it was given.
(PNB vs CA)
constructed thereon. Had the agreement been a contract of sale, the special power of attorney
would have been entirely unnecessary as petitioners would have had the right to compel the
Salvadors to transfer ownership to them. The special power of attorney does not contain
the essential elements of the purported contract and, does not even refer to any agreement for the
sale of the property. In any case, it was rendered virtually inoperable as a consequence of the
Salvadors adamant refusal to part with their title to the property. Petition denied.
Discussion Questions
(1) Give the distinction between contract of sale and contract to sell.
- in a contract of sale, title passes to the buyer upon delivery of the thing sold, while in a
contract to sell, ownership is reserved in the seller and is not to pass until the full payment of the
purchase price is made.
(2) In the instant case, was there a valid contract of sale? Explain.
- NO. The agreement is a contract to sell. Contract of sale- title passes to the buyer upon
delivery of the thing sold; Non-payment of the price is a negative resolutory condition. Contract
to sell- ownership is reserved in the seller and is not to pass until the full payment of the
purchase price is made; Full payment is a positive suspensive condition.
The agreement imposed upon petitioners the obligation to fully pay the agreed purchase price for
the property; that ownership shall not pass to petitioners until they have fully paid the price is
implicit in the agreement. Salvadors did not execute a deed of sale in favor of Torcuator, but a
special power of attorney authorizing the Bernabes to sell the property on their behalf, in order to
afford the latter a measure of protection that would guarantee full payment of the purchase price
before any deed of sale in favor of Torcuator was executed. Ayala Corporation retained title to
the property and the Salvador spouses were precluded from selling a residence had been
constructed thereon.
(3) What is the evidentiary value of the Special Power of Attorney executed in favor of the
petitioners by the Salvadors?
- In the instant case, petitioners present as written evidence of the agreement the special
power of attorney executed in their favor by the Salvadors and the summary of
agreement[24]allegedly initialed by respondent Remigio Bernabe. These documents do not
suffice as notes or memoranda as contemplated by Article 1403 of the Civil Code. The special
power of attorney does not contain the essential elements of the purported contract and, more
tellingly, does not even refer to any agreement for the sale of the property. In any case, it was
rendered virtually inoperable as a consequence of the Salvadors adamant refusal to part with
their title to the property.
These products were for sale to the general public and not for special orders. Hence, being a
manufacturer, Arnoldus is entitled to tax exemption under Sec 202 (d) and Sec 167 (d) & (e) of
the Tax Code.
Discussion Questions
(1) Distinguish contract for a piece of work and a contract of sale.
- Art. 1467. A contract for the delivery at a certain price of an article which the vendor in
the ordinary course of his business manufactures or procures for the general market, whether the
same is on hand at the time or not, is a contract of sale, but if the goods are to be manufactured
specially for the customer and upon his special order, and not for the general market, it is a
contract for a piece of work.
(2) The true test of whether or not the contract is a piece of work or a contract of sale is the mere
existence of the product at the time of the perfection of the contract such that if the thing already
exists, the contract is of sale, if not, it is work. Agree or Disagree? Expound and cite the legal
provisions in the Civil Code to support your answer.
- DISAGREE. When the vendor enters into a contract for the delivery of an article which
in the ordinary course of his business he manufactures or procures for the general market at a
price certain (Art. 1458) such contract is one of sale even if at the time of contracting he may not
have such article on hand. Such articles fall within the meaning of "future goods" mentioned in
Art. 1462, par. 1.
incorporated form by organizing Delpher Trades Corporation to take control of their properties
and at the same time save on inheritance taxes.
(3) Describe the nature of stock subscription?
- After incorporation, one becomes a stockholder of a corporation by subscription or by
purchasing stock directly from the corporation or from individual owners thereof. In the case at
bar, in exchange for their properties, the Pachecos acquired 2,500 original unissued no par value
shares of stocks of the Delpher Trades Corporation. Consequently, the Pachecos became
stockholders of the corporation by subscription "The essence of the stock subscription is an
agreement to take and pay for original unissued shares of a corporation, formed or to be formed."
It is significant that the Pachecos took no par value shares in exchange for their properties.
(4) Do you agree with the decision? Why?
- YES. Art. 1459. The thing must be licit and the vendor must have a right to transfer the
ownership thereof at the time it is delivered. In the exchange for their properties whereby A and
B acquired 2,500 original unissued no par value shares of stocks of Delpher, the former became
stockholders of the latter by subscription, and by their ownership of the 2,500 shares, A and B
acquired control of the corporation. In effect, Delpher is a business conduit of A and B. What
they did was to invest their properties and change the nature of their ownership from
unincorporated to incorporated form by organizing Delpher to take control of their properties and
at the same time save on inheritance taxes. The deed of exchange of property between A and B
and Delpher cannot be considered a contract of sale. There was no transfer of actual ownership
interests by A and B to a third party. A and B merely changed their ownership from one form to
another. The ownership remained in the same hands. Hence, Hydro has no basis for its claim of a
right of first refusal.
PHILIPPINE LAWIN BUS, CO., MASTER TOURS & TRAVEL CORP., MARCIANO
TAN, ISIDRO TAN, ESTEBAN TAN and HENRY TAN vs. COURT OF APPEALS and
ADVANCE CAPITAL CORPORATION
FACTS:
Lawin initially loaned from Advance Capital Corp. (ACC) Php 8M payable w/in 1 yr and
guaranteed by a chattel mortgage of Lawins 9 buses. Lawin was in default in its payments and
was able to pay only Php 1.8M. Lawin obtained its second loan of 2M payable in one month
under a promissory note. Lawin was in default again hence it asked ACC for a restructuring of
the loan despite this Lawin was still not able to pay. The buses for foreclosed and it was sold for
2M. ACC sent Lawin demand letters to settle its indebtedness amounting to hp 16,484,992.42
then subsequently filed a suit for sum of money against Lawin. Lawin in its defense said that
there was already an arrangement to settle the obligation
o A. Sale of 9 buses and its proceeds will cover for the full payment; OR
o B. ACC will shoulder the rehabilitation of the buses and the earnings of the
operation will be then applied to the loan
HELD:
Dacion en Pago is a special mode of payment, the debtor offers another thing to the creditor who
accepts it as equivalent of payment of the outstanding obligation. It partakes the nature of a sale
whose essential elements are a) consent b)object certain and c) cause and the contract is
perfected at the moment of the meeting of the minds of the parties. In this case there was no
meeting of the minds between Lawin and ACC that the obligation would be extinguished by
dacion en pago. The receipts shows that the delivery of the 2 buses to ACC didnt transfer the
ownership of the bus to ACC rather they were deemed to be only as Lawins agent in the sale of
the bus whereby the proceeds are then to be applied as payment for the loan.
Discussion Questions
(1) What is dacion en pago? Describe its nature and purpose?
- Dacion en Pago is a special mode of payment, the debtor offers another thing to the
creditor who accepts it as equivalent of payment of the outstanding obligation.
- It partakes the nature of a sale whose essential elements are a) consent b)object certain
and c) cause and the contract is perfected at the moment of the meeting of the minds of the
parties.
- Its purpose is to extinguish the obligation.
(2) Distinguish dacion en pago from contract of sale.
SALE
DACION EN PAGO
1. There is no pre-existing credit.
1. There is a pre-existing credit.
2. Gives rise to obligations.
2. Extinguishes obligations.
3. The cause or consideration here is the price, 3. The cause or consideration here, from the
(3) Were the receipts executed by respondents representative as proof of an agreement of the
parties to deliver the buses to private respondent, sufficient proof of a contract of sale? Explain.
- YES. The receipts executed by respondents representative as proof of an agreement of
the parties that delivery of the buses to private respondent would result in extinguishing
petitioners obligation do not in any way reflect the intention of the parties that ownership thereof
by respondent would be complete and absolute. The receipts show that the two buses were
delivered to respondent in order that it would take custody for the purpose of selling the
same. The receipts themselves in fact show that petitioners deemed respondent as their agent in
the sale of the two vehicles whereby the proceeds thereof would be applied in payment of
petitioners indebtedness to respondent.
- It is true that under Article 1324 of the new Civil Code, the general rule regarding offer
and acceptance is that, when the offerer gives to the offeree a certain period to accept, "the offer
may be withdrawn at any time before acceptance" except when the option is founded upon
consideration, but this general rule must be interpreted as modified by the provision of Article
1479 above referred to, which applies to "a promise to buy and sell" specifically. As already
stated, this rule requires that a promise to sell to be valid must be supported by a consideration
distinct from the price.
(3) What are the stages of a contract of sale? Discuss briefly each stage. At what stage do you
think is the instant case?
(a) generation or negotiation - covers the period from the time the prospective contracting
parties indicate interest in the contract to the time the contract is concluded
(b) perfection meeting of the minds, which is the moment when the parties come to agree
on the terms of the contract
(c) consummation when the object is delivered and the price is paid; fulfillment or
performance of the terms agreed upon in the contract
- Joseph Sy and Conrado Quesada had not passed the negotiation stage relating to the
intended sale by the defendant corporation of the property in question. x x x As the court finds,
there is nothing in the record to point that a contract was ever perfected. In fact, there is nothing
in writing which is indispensably necessary in order that the perfected contract could be enforced
under the Statute of Frauds.
Discussion Questions
(1) Can parents validly sell their properties to their children? Explain.
- YES. That a property be sold for a valid consideration, and that the children actually
paid the purchase price stipulated in their respective Deeds of Sale. Actual payment of the
purchase price by the buyer to the seller will be a factual finding.
(2) Discuss the effects of non-payment of the price and lack of consideration in relation to a
contract of sale.
- It is not the act of payment of price that determines the validity of a contract of
sale. Payment of the price has nothing to do with the perfection of the contract. Payment of the
price goes into the performance of the contract. Failure to pay the consideration is different from
lack of consideration. The former results in a right to demand the fulfillment or cancellation of
the obligation under an existing valid contract while the latter prevents the existence of a valid
contract.
(3) Discuss the effects of gross inadequacy of price in a contract of sale.
- Art. 1355. Except in cases specified by law, lesion or inadequacy of cause shall not
invalidate a contract, unless there has been fraud, mistake or undue influence. Article 1470 of the
Civil Code further provides: Art. 1470. Gross inadequacy of price does not affect a contract of
sale, except as may indicate a defect in the consent, or that the parties really intended a donation
or some other act or contract. Petitioners failed to prove any of the instances mentioned in
Articles 1355 and 1470 of the Civil Code which would invalidate, or even affect, the Deeds of
Sale. Indeed, there is no requirement that the price be equal to the exact value of the subject
matter of sale. All the respondents believed that they received the commutative value of what
they gave in the consent, or that the parties really intended a donation or some other act or
contract.