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Manila Metal Container Corporation vs Philippine National

[GR No. 166862, Decemer 2!, 2!!6"
Petitioner was the owner of 8,015 square meters of parcel of
land located in Mandaluyong City, Metro Manila. To secure a
P00,000.00 loan it had o!tained from respondent Philippine
"ational #an$, petitioner e%ecuted a real estate mortgage o&er
the lot. 'espondent P"# later granted petitioner a new credit
accommodation. (n )ugust 5, 18*, respondent P"# filed a
petition for e%tra+udicial foreclosure of the real estate mortgage
and sought to ha&e the property sold at pu!lic auction. )fter due
notice and pu!lication, the property was sold at pu!lic action
where respondent P"# was declared the winning !idder.
Petitioner sent a letter to P"#, requesting it to !e granted an
e%tension of time to redeem,repurchase the property. -ome P"#
personnel informed that as a matter of policy, the !an$ does not
accept .partial redemption/. -ince petitioner failed to redeem
the property, the 'egister of 0eeds cancelled TCT "o. 1*08
and issued a new title in fa&or of P"#.
Meanwhile, the -pecial )sset Management 0epartment
2-)M03 had prepared a statement of account of petitioner4s
o!ligation. 5t also recommended the management of P"# to
allow petitioner to repurchase the property for P1,567,580.oo.
P"# re+ected the offer and recommendation of -)M0. 5t
instead suggested to petitioner to purchase the property for
P*,880,000.00, in its minimum mar$et &alue. Petitioner declared
that it had already agreed to -)M04s offer to purchase for
P1,567,580.76 and deposited a P6*5,000.00.
9hether or not petitioner and respondent P"# had entered into a
perfected contract for petitioner to repurchase the property for
The -C affirmed the ruling of the appellate court that there was no
perfected contact of sale !etween the parties.
) contract is meeting of minds !etween two persons where!y one
!inds himself, with respect to the other, to gi&e something or to
render some ser&ice. :nder 1818 of the Ci&il Code, there is no
contract unless the following requisites concur;
1. Consent of the contracting parties<
*. (!+ection certain which is the su!+ect matter of the contract<
1. Cause of the o!ligation which is esta!lished.
Contract is perfected !y mere consent which is manifested !y the
meeting of the offer and the acceptance upon the thing and causes
which are to constitute the contract. (nce perfected, the !ind
!etween other contracting parties and the o!ligations arising
therefrom ha&e the form of law !etween the parties and should !e
complied in good faith. The a!sence of any essential element will
negate the e%istence of a perfected contract of sale.
The court ruled in #oston #an$ of the Philippines &s Manalo;
.) definite agreement as to the price is an essential element of a
!inding agreement to sell personal or real property !ecause it
seriously affects the rights and o!ligations of the parties. Price is
an essential element in the formation of a !inding and enforcea!le
contract of sale. The fi%ing of the price can ne&er !e left to the
decision of one of the contracting parties. #ut a price fi%ed !y one
of the contracting parties, if accepted !y the other, gi&es rise to a
perfected sale./
5n the case at !ar, the parties to the contract is !etween Manila
Metal Container Corporation and Philippine "ational #an$ and
not to -pecial )sset Management 0epartment. -ince the price
offered !y P"# was not accepted, there is no contract. =ence it
cannot ser&e as a !inding +uridical relation !etween the parties.
()*)(+ ,-+. %NC /, C+
200 ,CR+ 12!, G.R. No. 2311664! Ma5 21,1664
Pri&ate respondent >una >. -osa wanted to purchase a Toyota
>ite )ce. 9ith his his son, ?il!ert, he went to the Toyota office
at -haw #oule&ard, Pasig and met Popong #ernardo, a sales
representati&e of Toyota. -osa emphasi@ed to #ernardo that he
needed the >ite )ce not later than 16 Aune 18. #ernardo
assured him that a unit would !e ready for pic$ up at 10;00 a.m.
on that date. They contracted an agreement on the deli&ery of the
unit and that the !alance of the purchase price would !e paid !y
credit financing through #.). Binance. The ne%t day, -osa and
?il!ert deli&ered the downpayment and met #ernardo who then
accomplished a printed Cehicle -ales Proposal 2C-P3 in which
the amount was filledDup !ut the spaces pro&ided for .0eli&ery
Terms/ were not filledDup. =owe&er, on 16 Aune 18, at ;10
am, #ernardo called ?il!ert to inform him that the car could not
!e deli&ered !ecause .nasulot ang unit ng i!ang mala$as./
Toyota contends, on the other hand, that the >ite )ce was not
deli&ered to -osa !ecause of the disappro&al !y #.). Binance of
the credit financing application of -osa. Toyota then ga&e -osa
the option to purchase the unit !y paying the full purchase price
in cash !ut -osa refused. -osa as$ed that his down payment !e
refunded. Toyota did so on the &ery same day !y issuing a Bar
East #an$ chec$ for the full amount, which -osa signed with the
reser&ation, .without pre+udice to our future claims for
damages./ Thereafter, -osa sent two letters to Toyota. 5n the first
letter, he demanded the refund of the down payment plus interest
from the time he paid it. The second, he demanded one million
pesos representing interest and damages, !oth with a warning
that legal action would !e ta$en if payment not paid. Toyota4s
refused to accede to the demands of -osa. The latter filed with
'TC a complaint against Toyota for damages under )rticles 1
and *1 of the Ci&il Code. 5n its answer to the complaint, Toyota
alleged that no sale was entered into !etween it and -osa, that
#ernardo had no authority to sign for and in its !ehalf. 5t alleged
that the C-P did not state the date of deli&ery.
9hether or not there was a perfected contract of sale.
There was no perfected contract of sale.
9hat is clear from the agreement signed !y -osa and ?il!ert is
not a contract of sale. "o o!ligation on the part of Toyota to
transfer ownership of a determinate thing to -osa and no
correlati&e o!ligation on the part of the latter to pay therefore a
price certain appears therein. The pro&ision on the down payment
of P5((,(((.(( made no specific reference to a sale of a
&ehicle. 5f it was intended for a contract of sale, it could only refer
to a sale on installment !asis, as the C-P e%ecuted the following
day con finned. "othing was mentioned a!out the full purchase
price and the manner the installments were to !e paid. ) definite
agreement on the manner of payment of the price is an essential
element in the formation of a !inding and enforcea!le contract of
sale. This is so !ecause the agreement as to the manner of
payment goes, into the price such that a disagreement on the
manner of payment is tantamount to a failure to agree on the price.
0efiniteness as to the price is an essential element of a !inding
agreement to sell personal property.
9&iro'a vs Parsons
G.R. No. 2311061
,&:ect$ -ales
Doctrine; Contract of )gency to -ell &s Contract of -ale
#acts$ (n Aan *7, 111, plaintiff and the respondent entered into a
contract ma$ing the latter an .agent/ of the former. The contract
stipulates that 0on )ndres Fuiroga, here in petitioner, grants
e%clusi&e rights to sell his !eds in the Cisayan region to A.
Parsons. The contract only stipulates that A.Parsons should pay
Fuiroga within 8 months upon the deli&ery of !eds.
Fuiroga files a case against Parsons for allegedly &iolating the
following stipulations; not to sell the !eds at higher prices than
those of the in&oices< to ha&e an open esta!lishment in 5loilo<
itself to conduct the agency< to $eep the !eds on pu!lic
e%hi!ition, and to pay for the ad&ertisement e%penses for the
same< and to order the !eds !y the do@en and in no other manner.
9ith the e%ception of the o!ligation on the part of the defendant
to order the !eds !y the do@en and in no other manner, none of
the o!ligations imputed to the defendant in the two causes of
action are e%pressly set forth in the contract. #ut the plaintiff
alleged that the defendant was his agent for the sale of his !eds
in 5loilo, and that said o!ligations are implied in a contract of
commercial agency. The whole question, therefore, reduced
itself to a determination as to whether the defendant, !y reason
of the contract herein!efore transcri!ed, was a purchaser or an
agent of the plaintiff for the sale of his !eds.
%ss&e$ 9hether the contract is a contract of agency or of sale.
-el;$ 5n order to classify a contract, due attention must !e gi&en
to its essential clauses. 5n the contract in question, what was
essential, as constituting its cause and su!+ect matter, is that the
plaintiff was to furnish the defendant with the !eds which the
latter might order, at the price stipulated, and that the defendant
was to pay the price in the manner stipulated. Payment was to !e
made at the end of si%ty days, or !efore, at the plaintiff4s
request, or in cash, if the defendant so preferred, and in these last
two cases an additional discount was to !e allowed for prompt
payment. These are precisely the essential features of a contract
of purchase and sale. There was the o!ligation on the part of the
plaintiff to supply the !eds, and, on the part of the defendant, to
pay their price. These features e%clude the legal conception of an
agency or order to sell where!y the mandatory or agent recei&ed
the thing to sell it, and does not pay its price, !ut deli&ers to the
principal the price he o!tains from the sale of the thing to a third
person, and if he does not succeed in selling it, he returns it. #y
&irtue of the contract !etween the plaintiff and the defendant, the
latter, on recei&ing the !eds, was necessarily o!liged to pay their
price within the term fi%ed, without any other consideration and
regardless as to whether he had or had not sold the !eds.
5n respect to the defendant4s o!ligation to order !y the do@en, the
only one e%pressly imposed !y the contract, the effect of its
!reach would only entitle the plaintiff to disregard the orders
which the defendant might place under other conditions< !ut if the
plaintiff consents to fill them, he wai&es his right and cannot
complain for ha&ing acted thus at his own free will.
Bor the foregoing reasons, we are of opinion that the contract !y
and !etween the plaintiff and the defendant was one of purchase
and sale, and that the o!ligations the !reach of which is alleged as
a cause of action are not imposed upon the defendant, either !y
agreement or !y law.
C%R vs 8n'ineerin' 8<&ipment an; ,&ppl5 Co
Engineering Equipment and -upply Company is engaged in the
design and installation of central type air conditioning system,
pumping plants and steel fa!rications. :pon a letter from a certain
Auan dela Cru@ denouncing the company for ta% e&asion and fraud
in o!taining its dollar allocations, #5', C# and "#5 conducted a
raid and confiscated &oluminous 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 su!+ect to the 10G ad&ance sales ta%
prescri!ed !y -ection 1852m3 of the Ta% Code, in relation to
-ection 17 of the same. Engineering claims that it is not a
manufacturer and setter of airDconditioning units and spare parts or
accessories thereof su!+ect to ta% under -ection 1852m3 of the
Ta% Code, !ut a contractor engaged in the design, supply and
installation of the central type of airDconditioning system su!+ect
to the 1G ta% imposed !y -ection 11 of the same Code, which
is essentially a ta% on the sale of ser&ices or la!or of a contractor
rather than on the sale of articles su!+ect to the ta% referred to in
-ections 187, 185 and 188 of the Code.
9hether or not Engineering is a manufacturer of air
conditioning units under -ection 1852m3, supra, in relation to
-ections 1812!3 and 17 of the Code, or a contractor under
-ection 11 of the same Code
The distinction !etween a contract of sale and one for wor$,
la!or and materials is tested !y the inquiry whether the thing
transferred is one not in e%istence and which ne&er would ha&e
e%isted !ut for the order of the party desiring to acquire it, or a
thing which would ha&e e%isted and has !een the su!+ect of sale
to some other persons e&en if the order had not !een gi&en. 5f the
article ordered !y the purchaser is e%actly such as the plaintiff
ma$es and $eeps on hand for sale to anyone, and no change or
modification of it is made at defendantHs request, it is a contract
of sale, e&en though it may !e entirely made after, and in
consequence of, the defendants order for it.
The word IcontractorI has come to !e used with special
reference to a person who, in the pursuit of the independent
!usiness, underta$es to do a specific +o! or piece of wor$ for
other persons, using his own means and methods without
su!mitting himself to control as to the petty details. The true test
of a contractor would seem to !e that he renders ser&ice in the
course of an independent occupation, representing the will of his
employer only as to the result of his wor$, and not as to the means
!y which it is accomplished.
Engineering, in a nutshell, fa!ricates, assem!les, supplies and
installs in the !uildings of its &arious customers the central type
air conditioning system< prepares the plans and specifications
therefor which are distinct and different from each other< the air
conditioning units and spare parts or accessories thereof used !y
petitioner are not the window type of air conditioner which are
manufactured, assem!led and produced locally for sale to the
general mar$et< and the imported air conditioning units and spare
parts or accessories thereof are supplied and installed !y petitioner
upon pre&ious orders of its customers conforma!ly with their
needs and requirements. The facts and circumstances aforequoted
support the theory that Engineering is a contractor rather than a
872)G%) /, +P828,
GR. 16==880
The nature of an option contract was thoroughly e%plained
in Eulogio v. Apeles,J58K to wit;
)n option is a contract !y which the owner
of the property agrees with another person that the
latter shall ha&e the right to !uy the formerHs
property at a fi%ed price within a certain time. 5t is
a condition offered or contract !y which the owner
stipulates with another that the latter shall ha&e the
right to !uy the property at a fi%ed price within a
certain time, or under, or in compliance with
certain terms and conditions< or which gi&es to the
owner of the property the right to sell or demand a
sale. )n option is not of itself a purchase, !ut
merely secures the pri&ilege to !uy. 5t is not a sale
of property !ut a sale of the right to purchase. 5t is
simply a contract !y which the owner of the
property agrees with another person that he shall
ha&e the right to !uy his property at a fi%ed price
within a certain time. =e does not sell his land< he
does not then agree to sell it< !ut he does sell
something, i.e., the right or pri&ilege to !uy at the
election or option of the other party. 5ts
distinguishing characteristic is that it imposes no
!inding o!ligation on the person holding the
option, aside from the consideration for the offer.
+NG *7 /. C+ >Decemer !2, 1660?
Petitioner )ng Lu )suncion and Meh Tiong leased a property of respondents #o!!y Cu :n+ieng, 'ose Cu :n+ieng and Aose Tan in #inondo
'espondents informed plaintiffs that they are offering to sell the premises and are gi&ing them priority to acquire the same.
'espondents 8M for the property !ut petitioners offered 5M. 'espondents acceted and as$ed petitioners to put in writing the terms and
conditions !ut the latter ne&er pro&ided such.
9hen defendants were a!out to sell the property, plaintiffs were compelled to file the complaint to compel defendants to sell the property to
them. Court recogni@es the right of first refusal of the petitioner. "otwithstanding the court4s decision, respondent sold the property to #uen
'ealty and 0e&elopment Corporation.
9(" petitioners can demand specific performance to the respondents to sell to them the property.
The petitioners ne&er accepted the offer when they refused to ma$e the terms and condition of the sale. )s such, respondents has the right to
sell the property to other parties.
E&en if petitioners are aggrie&ed !y the failure of pri&ate respondents to honor the right of first refusal, the remedy is not a writ of e%ecution
on the +udgment, since there is none to e%ecute, !ut an action for damages in a proper forum for the purpose