11

Fule v. CA
Romero, J.

DOCTRINE OF THE LAW: 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.

FACTS: This petition for review on certiorari questions the affirmance by the Court of
Appeals. 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: W/N the sale is null and void on the ground of fraud and deceit.

RULING: NO. Decision affirmed. The NCC provides that the Contract of Sale is
consensual, and is perfected when the minds met. Contract may be rendered void if (1)
party has no capacity to give consent, and (2) if consent was gained because of VIMFU
(Violence, Intimidation, Mistake, Fraud, and Undue Influence). Furthermore, petitioner
was afforded the reasonable opportunity required in Article 1584 of the Civil Code within
which to examine the jewelry as he in fact accepted them when asked by Dr. Cruz if he
was satisfied with the same. By taking the jewelry outside the bank, petitioner executed
an act which was more consistent with his exercise of ownership over it.
 12
Celestino Co & Co. v. Collector of Internal Revenue
Bengzon, J.

DOCTRINE OF THE LAW: The essence of a contract of a piece-of-work is the sale of

service unlike in a sale where the essence is the disposition of an object. Factory
accepts a job that requires the use of extraordinary or additional equipment, or involves
services not generally performed by it-it thereby contracts for a piece of work — filing
special orders within the meaning of Article 1467.

FACTS: This is an appeal of the decision of Court of Tax Appeals. Celestino Co is doing
business under the name of “Oriental Sash Factory”. From 1956-1951 it paid
percentage tax of 7% (National Revenue Code sec. 186) on the gross receipts of its
sash, door, and window factory. However on 1952 it began to claim liability only to
contractor’s 3% tax (Instead of 7%) under sec. 191. Celestino claims that they do not
manufacture ready made doors, sah, and windows for the public. He claims hat they
only do special orders for customers, thus, contending they are not manufacturers. CTA
said that their tradename gives an impression they do engage in manufacturing and
their records suggest that their huge earnings (P188, 754.69) cannot be from special
orders from ther few customers, but because it was from ready made products. They
also offered themselves as a “factory” to the public.

ISSUE: W/N Celestino Co is in engaged in manufacturing.

RULING: YES. The orders herein exhibited were not shown to be special. They were
merely orders for work — nothing is shown to call them special requiring extraordinary
service of the factory. The company habitualy makes Sash, windows, and doors as it
has been represented to the public. The fact that the windows and doors are made only
when customers place their orders, does not alter the nature of the establishment, for it
is obvious that they accept special orders other than making ready made products. The
factory does nothing more than sell the goods that it mass produces or habitually
makes.
 13
Commissioner of Internal Revenue v. Engineering Equipment and
Company
Esguerra, J.

DOCTRINE OF THE LAW: What distinguishes a contract for a piece of work and a
contract of sale is their subject matter. If the thing transferred is being produced in the
ordinary course of one’s business, it is a contract of sale. If the thing transferred
wouldn’t have existed but for the special order of a customer, it is one for a piece of
work.

FACTS: This is a petition for review on certiorari of the decision of the Court of Appeals.
Engineering Equipment iis engaged in the design and installation of central type air
conditioning system, pumping plants and steel fabrications. Upon a letter from a certain
Juan dela Cruz denouncing the company for tax evasion and fraud in obtaining its dollar
allocations, BIR, CB and NBI conducted a raid and confiscated voluminous documents
from the firm. The Commissioner contends that Engineering is a manufacturer and
seller of air conditioning units and parts or accessories thereof and, therefore, it is
subject to the 30% advance sales tax prescribed by Section 185(m) of the Tax Code, in
relation to Section 194 of the same. Engineering claims that it is not a manufacturer and
setter of air-conditioning units and spare parts or accessories thereof but a contractor
engaged in the design, supply and installation of the central type of air-conditioning
system subject to the 3% tax imposed by Section 191 of the same Code, which is
essentially a tax on the sale of services or labor of a contractor rather than on the sale
of articles subject to the tax referred to in Sections 184, 185 and 186 of the Code.

ISSUE: W/N Engineering is a contractor engaged in a contract of piece-of-work.

RULING: YES. Decision affirmed with modification. Engineering, in a nutshell,

fabricates, assembles, supplies and installs in the buildings of its various customers the
central type air conditioning system; prepares the plans and specifications therefor
which are distinct and different from each other; the air conditioning units and spare
parts or accessories thereof used by petitioner are not the window type of air
conditioner which are manufactured, assembled and produced locally for sale to the
general market; and the imported air conditioning units and spare parts or accessories
thereof are supplied and installed by petitioner upon previous orders of its customers
conformably with their needs and requirements. The facts and circumstances
aforequoted support the theory that Engineering is a contractor rather than a
manufacturer.
 14
Acap v. CA, G.R. No. 118114, December 7, 1995
Padilla, J.

DOCTRINE OF THE LAW: In a contract of sale, one of the contracting parties obligates
himself to transfer the ownership of and to deliver a determinate thing, and the other
party to pay a price certain in money or its equivalent.

FACTS: This is a petition for review on certiorari of the decision of the Court of Apeeals.
Acap was a tenant of the lot owned by Cosme Pido. Upon Pido's death, Acap paid the
monthly rental dues to the widow Lauranciana Pido. He died intestate. The widow and
her 3 sons afterward executed a notarized document denominated as "Declaration of
Heirship and waiver of rights" in favor of private respondant De los Reyes. Acap did not
recognize De los Reyes claim of ownership over the land as he contended that the land
still belongs to the heirs of Cosme Pido, and won't pay the rent demanded by De los
Reyes.

ISSUE: W/N the said document can be considered as deed od sale in favor of Delos
Reyes of the lot in question.

RULING: NO. Petition granted. A notice of adverse claim was filed with the Registry of
Deeds which contained the Declaration of Heirship with Waiver of rights by its nature,
does not however prove private respondent's ownership over the tenanted lot. There is
a marked difference between a sale of hereditary rights and a waiver of hereditary
rights. The first presumes the existence of a contract or deed of sale between the
parties. The second is a mode of extinction of an ownership where there is an
abdication or intentional relinquishment of a known right with knowledge of its existence
in favor of other persons who are co-heirs in the succession. De los Reyes, being then a
stranger to the succession of Cosme Pido, cannot conclusively claim ownership over
the subject lot on the sole basis of the waiver of document which neither recites the
elements of either a sale or donation or any other derivative modes of acquiring
ownership.
 15
Quiroga v Parsons Hardware Co.
Avanceña, J.

DOCTRINE OF THE LAW: 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.

FACTS: This is a petition for review on certiorari of the decision of the Court of Apeeals.
A contract was entered into by herein plaintiff Quiroga and defendant J. Parsons
wherein the former granted the latter with the exclusive right to sale Quiroga beds in the
Visayan Islands subject to conditions. A complaint was filed by Quiroga averring that
Parsons violated the ff. obligations: not to sell the beds at higher prices than those of
the invoices; to have an open establishment in Iloilo; itself to conduct the agency; to
keep the beds on public exhibition, and to pay for the advertisement expenses for the
same; and to order the beds by the dozen and in no other manner. With the exception
of the obligation on the part of the defendant to order the beds by the dozen and in no
other manner, none of the obligations imputed to the defendant in the are expressly set
forth in the contract. Quiroga alleged that the Parsons was his agent for the sale of his
beds in Iloilo, and that said obligations are implied in a contract of commercial agency.

ISSUE: W/N the contract executed was a contract of agency.

RULING: NO. Decision affirmed. 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.