5.

QUIROGA v PARSONS
FACTS:
Quiroga and Parsons Hardware entered into a contract where the former granted the latter
the exclusive right to sell Quiroga Beds in the Visayas. It provided for a discount of 25% as
commission for the sales, among other conditions.
Quiroga alleged that Parsons breached its contractual obligations by selling the beds at a
higher price, not having an open establishment in Iloilo, not maintaining a public exhibition,
and for not ordering beds by the dozen. Only the last imputation was provided for by the
contract, the others were never stipulated.
Quiroga argued that since there was a contract of agency between them, such obligations were
necessarily implied.
ISSUE: W/N the contract between them was one of agency, not sale
HELD: NO. The agreement between Quiroga and Parsons was that of a simple purchase and sale
not an agency.
Quiroga supplied beds, while Parsons had the obligation to pay their purchase price. These are
characteristics of
a purchase and sale. In a contract of agency (or order to sell), the agent does not pay its price
yet, and sells the
products, remitting to the principal its proceeds. Unsold products must also be returned to the
principal.

The provisions on commission and the use of the word agency in the contract as well as the
testimonies in
court do not affect its nature. Contracts are what the law defines it to be, not what the parties
call it.
Dao Heng Bank Inc. (now BDO0 vs Spouses Laigo; Gr. No. 173856. Nov. 20, 2008.
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 dacion en pago (dation in payment).
In August 2000, Dao Heng, thru a letter informed the Laigos that there total obligation amounts to 10.8 million.
the Laigos took no action so their property was foreclosed. They now contend that the foreclosure was illegal
since there was a verbal agreement for dacion en pago.
Dao Heng however contends that the dacion en pago falls under the statute of fraud therefore it is not
enforceable. The Laigos counter this by stating that the dacion is an exception since it is no longer executory
but had undergone partial performance when the titles to the property were delivered to Dao Heng.
Issue: 1. Is the dacion en pago covered by the Statues of Fraud? YES
2. Is the foreclosure valid? YES
Held: 1. 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 performance as stipulated. The power to decide whether to foreclose on the mortgage is the
sole prerogative of the mortgagee
FILINVEST CREDIT CORPORATION, petitioner,
vs.
THE COURT OF APPEALS, JOSE SY BANG and ILUMINADA TAN SY BANG,*respondents

FACTS:
Herein private respondents spouses Jose 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. They applied for financial assistance
from herein petitioner Filinvest Credit Corporation, who agreed to extend financial aid on the certain
conditions.
A contract of lease of machinery (with option to purchase) was 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,
payable as follows: P10,000.00 first 3 months, P23,000.00 next 6 months, P24,800.00 next 15 months. It
was likewise stipulated that at the end of the two-year period, the machine would be owned by the private
respondents. Thus the private respondent issued in favor of the petitioner a check for P150,550.00, as initial
rental (or guaranty deposit), and 24 postdated checks corresponding to the 24 monthly rentals. In addition, to
guarantee their compliance with the lease contract, the private respondent executed a real estate mortgage over
two parcels of land in favor of the petitioner. The rock crusher was delivered to the spouses.

However, 3 months later, the souses stopped payment when petitioner had not acted on the complaints of the
spouses about the machine. As a consequence, petitioner extra-judicially foreclosed the real estate mortgage.
The spouses filed a complaint before the RTC. The RTC rendered a decision in favor of private respondent. The
petitioner elevated the case to CA which affirmed the decision in toto. Hence, this petition.

ISSUES:
1. Whether or not the nature of the contract is one of a contract of sale.\
2. Whether or not the remedies of the seller provided for in Article 1484 are cumulative.

HELD:
1. Yes. 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.
Sellers desirous of making conditional sales of their goods, but who do not wish openly to make a bargain in
that form, for one reason or another, have frequently restored to the device of making contracts in the form of
leases either with options to the buyer to purchase for a small consideration at the end of term, provided the so-
called rent has been duly paid, or with stipulations that if the rent throughout the term is paid, title shall
thereupon vest in the lessee. It is obvious that such transactions are leases only in name. The so-called rent must
necessarily be regarded as payment of the price in installments since the due payment of the agreed amount
results, by the terms of bargain, in the transfer of title to the lessee.

2. No, it is alternative. The seller of movable in installments, in case the buyer fails to pay 2 or more
installments, may elect to pursue either of the following remedies: (1) exact fulfillment by the purchaser of the
obligation; (2) cancel the sale; or (3) foreclose the mortgage on the purchased property if one was constituted
thereon. It is now settled that the said remedies are alternative and not cumulative, and therefore, the exercise of
one bars the exercise of the others. Indubitably, the device contract of lease with option to buy is at times
resorted to as a means to circumvent Article 1484, particularly paragraph (3) thereof. Through the set-up, the
vendor, by retaining ownership over the property in the guise of being the lessor, retains, likewise the right to
repossess the same, without going through the process of foreclosure, in the event the vendee-lessee defaults in
the payment of the installments. There arises therefore no need to constitute a chattel mortgage over the
movable sold. More important, the vendor, after repossessing the property and, in effect, canceling the contract
of sale, gets to keep all the installments-cum-rentals already paid.