DIGNOS VS.

COURT OF APPEALS
G.R. No. L-59266
February 29, 1988

Facts:
The Dignos spouses were owners of a parcel of land. They sold said parcel of land to Atilano Jabil
for the sum of P28,000.00, which is payable in two installments. The Dignos spouses later on sold the same
land in favor of spouses Luciano Cabigas and Jovita Cabigas – who were U.S. citizens – for the price of
P35,000.00. A Deed of Absolute sale was executed by the Dignos spouses in favor the Cabigas spouses.
The Deed was registered in the Office of the Register of Deeds. The Cabigas spouses refused to accept the
balance of the purchase price of the land from Jabil. Jabil discovered the second sale made by the Dignos
spouses and filed a case with the CFI of Cebu. The Dignos spouses contend that the transaction is a mere
contract to sell and not an absolute sale. That the same was subject to two positive suspensive conditions.
Furthermore, in said contract, title or ownership over the property was expressly reserved in the vendor until
the suspensive condition of full payment of the balance has been met.
The CFI of Cebu declared the second sale null and void and ordered Jabil to pay the sum of the
balance of the purchase price.
The Court of Appeals affirmed the lower court’s decision.

Issue:
Was there an absolute sale of the property or a contract of promise to sell?

Decision:
A careful examination of the contract shows that there is no such stipulation reserving the title of
the property on the vendors nor does it give them the right to unilaterally rescind the contract upon non-
payment of the balance thereof within a fixed period.
On the contrary, all the elements of a valid contract of sale under Article 1458 of the Civil Code, are
present, such as: (1) consent or meeting of the minds; (2) determinate subject matter; and (3) price certain
in money or its equivalent. In addition, Article 1477 of the same Code provides that "The ownership of the
thing sold shall be transferred to the vendee upon actual or constructive delivery thereof."
While it may be conceded that there was no constructive delivery of the land sold in the case at
bar, as subject Deed of Sale is a private instrument, it is beyond question that there was actual delivery
thereof. As found by the trial court, the Dignos spouses delivered the possession of the land in question to
Jabil
Be that as it may, it is evident that when petitioners sold said land to the Cabigas spouses, they
were no longer owners of the same and the sale is null and void.

HEIRS OF ZAMBALES VS. COURT OF APPEALS

G.R. No. L-54070
February 28, 1983

Facts:
The Zamabales spouses were the homestead patentees of a parcel of land. Petitioners claim that
the Nin Bay Mining Corporation removed silica from their land and destroyed the plants and other
improvements thereon. Petitioners filed a case with the CFI of Palawan. Nin Bay Mining Corporation denied
having caused any damage and claimed that it has excavated and extracted silica sand only from its own
mining claims. The two parties entered into a Compromise Agreement whereby petitioners agreed to sell a
portion of the land to the Corporation. Sometime later, the Corporation – acting as an attorney-in-fact for the
Zambales spouses – sold the property to Joaquin Preysler. A Transfer Certificate of Title was issued in
favor of Preysler.
Ten years later after the Trial Court rendered its decision based on the Compromise Agreement
and nine years after the sale to Preysler, the Zambaleses filed a case with the CFI of Palawan to annul the
Deed of Sale. Their contention was that it was their lawyer who prevailed upon them to sign the
Compromise Agreement and that they were unschooled and did not understand the contents thereof.
The CFI of Palawan rendered its judgment in favor of the Zambaleses.
On appeal, the Court of Appeals reversed the decision of the trial court.

Issue:
Was there a contract of sale?

Decision:
 However, although we find that the Zambaleses were not misled into signing the Compromise
Agreement, we hold that there has been violation of the Public Land Act. The evidence on record shows that
the land in question was awarded to the Zambaleses as a homestead. Before us, the Zambaleses now
argue that the Compromise Agreement executed on October 29, 1959 is in violation of the Public Land Act,
which prohibits alienation and encumbrance of a homestead lot within five years from the issuance of the
patent.
The sale of a homestead lot within the five-year prohibitory period is illegal and void. The law does
not distinguish between executory and consummated sales.
Clearly, the bilateral promise to buy and sell the homestead lot at a price certain, which was
reciprocally demandable, was entered into within the five-year prohibitory period and is therefore, illegal and
void. Further, the agency to sell the homestead lot to a third party was coupled with an interest inasmuch as
a bilateral contract was dependent on it and was not revocable at will by any of the parties. To all intents and
purposes, therefore, there was an actual executory sale perfected during the period of prohibition except
that it was reciprocally demandable thereafter and the agency to sell to any third party was deferred until
after the expiration of the prohibitory period. That "rentals" were ostensibly to be paid during the five-year
prohibitory period, and the agency to sell made effective only after the lapse of the said period, was merely a
devise to circumvent the prohibition.

QUIROGA VS. PARSONS HARDWARE CO.

G.R. No. L-11491
August 23, 1918

Facts:
A contract was entered into by and between Andres Quiroga and Parsons Hardware Co. for the
exclusive sale of Quiroga Beds in the Visayan Islands subject to certain conditions: (1) Parsons cannot sell
the beds at a higher price than those of invoices (2) To have an establishment in Iloilo (3) To order the beds
by the dozen (4) To keep the beds on public exhibition. Apparently, some of the conditions were not met by
Parsons Hardware. Petitioner alleged that defendant was his agent for the sale of his beds.

Issue:
Was there a contract of sale or an agency?

Decision:
In order to classify a contract, due regard must be given to its essential clauses. In the contract in
question, what was essential, as constituting its cause and subject matter, is that the plaintiff was to furnish
the defendant with the beds which the latter might order, at the price stipulated, and that the defendant was
to pay the price in the manner stipulated. The price agreed upon was the one determined by the plaintiff for
the sale of these beds in Manila, with a discount of from 20 to 25 per cent, according to their class. Payment
was to be made at the end of sixty days, or before, at the plaintiff's request, or in cash, if the defendant so
preferred, and in these last two cases an additional discount was to be allowed for prompt payment. These
are precisely 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. 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.
It would be enough to hold, as we do, that the contract by and between the defendant and the
plaintiff is one of purchase and sale, in order to show that it was not one made on the basis of a commission
on sales, as the plaintiff claims it was, for these contracts are incompatible with each other. But, besides,
examining the clauses of this contract, none of them is found that substantially supports the plaintiff's
contention. 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. With regard to the
remaining clauses, the least that can be said is that they are not incompatible with the contract of purchase
and sale.

CONCRETE AGGREGATES VS. COURT OF TAX APPEALS

G.R. No. 55793
May 18, 1990

Facts:
Petitioner is a domestic corporation, duly organized under the laws of the Philippines. It produced
ready-mixed concrete and plant-mixed hot asphalt. The Court of Tax Appeals conducted an investigation of
petitioner’s tax liabilities. As a consequence thereof, the court demanded payment from the petitioner of the
amount of P244,002.00 as sales and ad valorem taxes. Petitioner sent a letter disputing the portion
pertaining to the ad valorem tax. Instead of paying, petitioner appealed to the court but was denied. On
review, petitioner disclaims liability on the ground that it is a contractor within the meaning of Section 191 of
the 1968 Tax Code. Petitioner contends that its business falls under “other construction work contractors” or
“other independent contractors” and as such it was a holder of a license under the “Contractors Licensing
Law.” It further contends that it produces asphalt and concrete mix only upon previous orders, which may be
proved by its system of requiring the filling of job orders. Thus, it adopted the view that if the article subject
of the sale is one which is not ready for delivery, the seller therefore is a contractor.

Issue:
Is the petitioner a contractor and therefore subject to ad valorem tax?

Decision:
It is still good law that a contract to make is a contract of sale if the article is already substantially in
existence at the time of the order and merely requires some alteration, modification or adaptation to the
buyer's wishes or purposes. A contract for the sale 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 for the sale of goods.
Petitioner insists that it would produce asphalt or concrete mix only upon previous job orders
otherwise it would not do so. It does not and will not carry in stock cement and asphalt mix. But the reason is
obvious. What practically prevents the petitioner from mass production and storage is the nature of its
products, that is, they easily harden due to temperature change and water and cement reaction. Stated
differently by respondent court, "it is self-evident that it is due to the highly perishable nature of asphalt and
concrete mix, as petitioner itself argues, that makes impossible for them to be carried in stock because they
cool and harden with time, and once hardened, they become useless.
We also reject petitioner's theory that, with the amendment of Section 191 of the Tax Code, it can
be considered as a "specialty contractor." As observed by respondent, a specialty contractor is one whose
operations pertain to construction work requiring special skill and involves the use of specialized building
trades or crafts. The manufacture of concrete and cement mix do not involve the foregoing requirements as
to put it within such special category.

TOYOTA SHAW, INC. VS. COURT OF APPEALS

G.R. No. L-116650
May 23, 1995

Facts:
Luna Sosa and his son Gilbert Sosa wanted to purchase a Toyota Lite Ace. They had trouble
finding a dealer with an available unit for sale. When they contacted Toyota Shaw, Inc., he was told that
there was an available unit. The Sosas went to the Toyota Office where they met Popong Bernardo – who
was a sales representative of Toyota. Sosa emphasized that he needed the Lite Ace not later than June 17,
1989 because he and his family would use it for his birthday. Bernardo guaranteed that a unit would be
ready for pick up on June 17, 1989 at 10:00 am. It was agreed upon by the parties that the balance of the
purchase price would be paid by credit financing, through B.A. Finance. Gilber signed the documents for his
father. The next day, the Sosas went to Toyota to deliver the downpayment. Bernardo accomplished a
printed Vehicle Sales Proposal. Rodrigo Quirante, who was the Sales Supervisor checked and approved the
VSP.
On the day of the supposed pick up, Bernardo informed the Sosas that the unit was no longer
available. Toyota contends that the Lite Ace was not delivered to Sosa because of B.A. Finance’s
disapproval of Sosa’s credit financing application. Toyota gave Sosa the option to purchase the unit by
paying the full purchase price in cash but Sosa refused. Sosa asked for a refund plus payment of damages.
Toyota refused. Sosa filed with the RTC of Marinduque.
Toyota contends that there was no sale. Bernardo had no authority and that the VSP did not state
the delivery date. Furthermore, Sosa had not completed the documents required by the Financing
Company.
Issue:
Was there a contract of sale?

Decision:
The Court finds merit in the petition. Neither logic nor recourse to one’s imagination can lead to the
conclusion that the VSP is a perfected contract of sale.
Article 1458 of the Civil Code defines a contract of sale and Article 1475 provides when it is
deemed perfected.
It is not a contract of sale. No obligation on the part of Toyota to transfer ownership of a
determinate thing to Sosa and no correlative obligation on the part of the latter to pay therefore a price
certain appears therein. The provision on the down payment made no specific reference to a sale of a
vehicle. If it was intended for a contract of sale, it could only refer to a sale on installment basis, as the VSP
executed the following day confirmed. Nothing was mentioned about the full purchase price and the manner
the installments were to be paid.
The Court had already ruled that a definite agreement on the manner of payment of the price is an
essential element in the formation of a binding and enforceable contract of sale. This is so because the
agreement as to the manner of payment goes into the price such that a disagreement on the manner of
payment is tantamount to a failure to agree on the price. Definiteness as to the price is an essential element
of a binding agreement to sell personal property.