CASE 35: OBLIGATIONS (ARTICLE 1197)

LOURDES VALERIO LIM vs.PEOPLE OF THE PHILIPPINES

G.R. No. L-34338 November 21, 1984

FACTS: Petitioner Lourdes Valerio Lim, a businesswoman, went to the house of Maria
Ayroso and proposed to sell Ayroso’s tobacco. Ayroso agreed to the proposition of the
appellant to sell her tobacco consisting of 615 kilos at P1.30 a kilo. The appellant was to
receive the overprice for which she could sell the tobacco. The proceed in the amount of
P799.50 will be given to Ayroso as soon as it was sold.
However, of the total value of P799.50, the appellant had paid to Ayroso only P240.00
which was paid on three different times. Ayroso and her sister Salud Bantug demanded
for the payment of the balance of the value of tobacco but Lourdes eluded payment.
Because of this, Ayroso filed against petitioner a complaint for estafa to which the lower
court charged her guilty. The Court of appeals affirmed the decision but reduced its
penalty. Hence, this petition.

ISSUES: (1)Whether or not Article 1197 of the New Civil Code applies.
(2) Whether the agreement was a contract of agency to sell.
RULING:
(1) No. It is clear in the agreement that the proceeds of the sale of the tobacco should
be turned over to the complainant as soon as the same was sold, or, that the obligation
was immediately demandable as soon as the same was disposed of. Hence, Article
1197 of the New Civil Code, which provides that the courts may fix the duration of the
obligation if it does not fix a period, does not apply.

(2) Yes. The fact that appellant received the tobacco to be sold at P1.30 per kilo and the
proceeds to be given to complainant as soon as it was sold, strongly negates transfer of
ownership of the goods to the petitioner. The agreement constituted her as an agent
with the obligation to return the tobacco if the same was not sold. Therefore, There is
no contract of sale, but mere agency to sell, where agreement was to pay over to
tobacco owner the proceeds thereof as soon it was sold.