Dino v CA

FACTS:

Spouses Dino, doing business under the trade name "Candy Claire Fashion Garment" are engaged in the business of
manufacturing and selling shirts. Sio is part owner and general manager of a manufacturing corporation doing business
under the trade name "Universal Toy Master Manufacturing."

Spouses Dino and respondent Sio entered into a contract whereby the latter would manufacture for the former 20,000
pieces of vinyl frogs and 20,000 pieces of vinyl mooseheads at P7.00 per piece in accordance with the sample approved
by the petitioners.

Sio delivered in several installments the 40,000 pieces of frogs and mooseheads. The last delivery was made on
September 28, 1988. After full payment, Dino returned the 29,772 pieces of products for failing to comply with the
approved sample, and demanded from Sio a refund of the purchase price of the returned goods. As respondent Sio
refused to pay, Dino filed an action for collection of a sum of money in the RTC on July 24, 1989.

RTC ruled in favor of Dino. CA reversed RTC's decision and dismissed Dino's Complaint for having been filed beyond the
prescriptive period.

ISSUE:

Whether the contract entered into by the parties is a contract of sale or a contract of piece of work.

HELD:

The contract between the petitioners and respondent stipulated that respondent would manufacture upon order of the
petitioners 20,000 pieces of vinyl frogs and 20,000 pieces of vinyl mooseheads according to the samples specified and
approved by the petitioners. Respondent Sio did not ordinarily manufacture these products, but only upon order of the
petitioners and at the price agreed upon. Clearly, the contract executed by and between the petitioners and the
respondent was a contract for a piece of work.

Petitioners having filed the action three months after the six-month period for filing actions for breach of warranty
against hidden defects stated in Art. 1571, SC affirmed CA's decision.

Engineering & Machinery Corporation vs. Court of Appeals

G.R. No. 52267, January 24, 1996

DOCTRINES:

• A contract for a piece of work, labor and materials may be distinguished from a contract of sale by the inquiry as to
whether the thing transferred is one not in existence and which would never have existed but for the order of the
person desiring it. In such case, the contract is one for a piece of work, not a sale. On the other hand, if the thing subject
of the contract would have existed and been the subject of a sale to some other person even if the order had not been
given, then the contract is one of sale.

• If the parties intended that at some future date an object has to be delivered, without considering the work or labor of
the party bound to deliver, the contract is one of sale. But if one of the parties accepts the undertaking on the basis of
some plan, taking into account the work he will employ personally or through another, there is a contract for a piece of
work

FACTS:

Engineering & Machinery Corporation (EMC) undertook to fabricate, furnish and install the air-conditioning system in
Ponciano Almeda's building in Makati in consideration of P210,000.00. The system was completed in 1963 and accepted
by private respondent, who paid in full the contract price.

In 1971, Almeda learned about the defects of the air-conditioning system of the building. This was confirmed by an
engineer who was hired by Almeda.

On May 8, 1971, Almeda filed an action for damages against petitioner with the then CFI. The complaint alleged that the
air-conditioning system installed by petitioner did not comply with the agreed plans and specifications. EMC moved to
dismiss the complaint, alleging that the prescriptive period of six months had set in pursuant to Articles 1566 and 1567,
in relation to Article 1571 of the Civil Code, regarding the responsibility of a vendor for any hidden faults or defects in
the thing sold. Almeda countered that the contract between the parties was not a contract for sale but a contract for a
piece of work. Thus, in accordance with Article 1144 of the same Code, the complaint was timely brought within the ten-
year prescriptive period.
ISSUE:

Was the contract between the parties a contract of sale, or a contract of piece of work?

HELD:

Clearly, the contract in question is one for a piece of work. It is not petitioner’s line of business to manufacture air-
conditioning systems to be sold “off-the-shelf.” Its business and particular field of expertise is the fabrication and
installation of such systems as ordered by customers and in accordance with the particular plans and specifications
provided by the customers.

Article 1713 of the Civil Code defines a contract for a piece of work thus:

By the contract for a piece of work the contractor binds himself to execute a piece of work for the employer, in
consideration of a certain price or compensation. The contractor may either employ only his labor or skill, or also furnish
the material.

Raymundo S. De Leon vs. Benita T. Ong

G.R. No. 170405, February 2, 2010

DOCTRINES:

• In a contract of sale, the seller conveys ownership of the property to the buyer upon the perfection of the contract.
Should the buyer default in the payment of the purchase price, the seller may either sue for the collection thereof or
have the contract judicially resolved and set aside. The non-payment of the price is therefore a negative resolutory
condition. On the other hand, a contract to sell is subject to a positive suspensive condition. The buyer does not acquire
ownership of the property until he fully pays the purchase price. For this reason, if the buyer defaults in the payment
thereof, the seller can only sue for damages.

• A purchaser in good faith is one who buys the property of another without notice that some other person has a right
to, or an interest in, such property and pays a full and fair price for the same at the time of such purchase, or before he
has notice of some other person’s claim or interest in the property. The law requires, on the part of the buyer, lack of
notice of a defect in the title of the seller and payment in full of the fair price at the time of the sale or prior to having
notice of any defect in the seller’s title.

FACTS:

Raymundo De Leon sold three parcels of land with improvements situated in Antipolo, Rizal to respondent Benita T. Ong
for P1.1 million.

These properties were mortgaged to Real Savings and Loan Association, Incorporated (RSLAI). The contract between De
Leon and Ong states that De Leon sells, transfers, conveys in a manner absolute and irrevocable, unto Ong the said
properties under the terms and conditions that (1) upon full payment of Ong of the amount P415,000, De Leon shall
execute and sign a deed of assumption of mortgage in favor of Ong without any further cost whatsoever; and that Ong
shall assume payment of the outstanding loan of P684,500 with REAL SAVINGS AND LOAN.

Ong partially paid De Leon the P415,500. De Leon, on the other hand, handed the keys to the properties. Thereafter,
Ong undertook repairs and made improvements on the properties.

Subsequently, Ong learned that petitioner again sold the same properties to one Leona Viloria. Ong filed a Complaint
against De Leon and Viloria in the RTC. Ong claimed that since De Leon had previously sold the properties to her, he no
longer had the right to sell the same to Viloria. And that they entered into a contract of sale. De Leon, on the other hand,
insisted that he entered into a contract to sell since the validity of the transaction was subject to a suspensive condition,
that is, the approval by RSLAI of Ong’s assumption of mortgage.

RTC ruled in favor of De Leon. CA reversed and declared the second sale void.

ISSUES:

(1) Was the contract between De Leon and Ong a contract of sale, or a contract to sell? (2) Was the subsequent sale to
Viloria valid?

HELD:

(1)Clearly, it was a contract of sale the parties entered into. The deed executed by the parties stated that petitioner sold
the properties to respondent "in a manner absolute and irrevocable" for a sum of P1.1 million. Nothing in said
instrument implied that petitioner reserved ownership of the properties until the full payment of the purchase price.
Petitioner executed a notarized deed of absolute sale, which is equivalent to the delivery of a thing sold (Art. 1498 CC),
in favor of respondent. The totality of petitioner’s acts clearly indicates that he had unqualifiedly delivered and
transferred ownership of the properties to respondent.

(2)This case involves a double sale as the disputed properties were sold validly on two separate occasions by the same
seller to the two different buyers in good faith.

Article 1544 of the Civil Code provides:

“Article 1544. If the same thing should have been sold to different vendees, the ownership shall be transferred to the
person who may have first taken possession thereof in good faith, if it should be movable property.

Should it be immovable property, the ownership shall belong to the person acquiring it who in good faith first recorded
it in the Registry of Property.

Should there be no inscription, the ownership shall pertain to the person who in good faith was first in the possession;
and, in the absence thereof, to the person who presents the oldest title, provided there is good faith.”

In this instance, petitioner delivered the properties to respondent when he executed the notarized deed and handed
over to respondent the keys to the properties. For this reason, respondent took actual possession and exercised control
thereof by making repairs and improvements thereon. Clearly, the sale was perfected and consummated on March 10,
1993. Thus, respondent became the lawful owner of the properties.

Iglesia Filipina Independiente vs. Heirs of Taeza

G.R. No. 179597, February 3, 2014

FACTS:

Iglesia Filipina Independiente (IFI), a religious corporation owned a parcel of land which was transferred by Rev. Macario
Ga in his capacity as the Supreme Bishop of IFI to Bernardino Taeza under a deed of sale with mortgage on February 5,
1976. The officers of the Laymen’s Committee of the Parish Council filed a complaint for annulment of said deed of sale
but the complaint was dismissed by the trial court.

Rev. Ga’s term as Supreme Bishop of the IFI terminated on May 8, 1981. Meanwhile Bernardino Taeza registered the
subject parcels of land and Transfer Certificate of Sale was issued to him.

On January 1990, a complaint for annulment of sale was again filed by IFI through the newly-appointed Supreme Bishop.
The trial court rendered a decision in favor of petitioner declaring that the deed of sale was null and void. On appeal, the
appellate court reversed the RTC’s decision ruling that IFI, being a corporation sole validly transferred ownership over
the land through it Supreme Bishop who was the administrator of all properties and the official representative of the
church.

ISSUE:

Is then Supreme Bishop Rev. Ga authorized to enter into a contract disposing a property in behalf of IFI?

RULING:

No. Section 113 (now Section 111) provides that in cases where the rules, regulations, and discipline of the religious
denomination, sect or church, religious society, or order concerned represented by such corporation sole regulate the
method of acquiring, holding, selling, and mortgaging real estate and personal property, such rules, regulations and
discipline shall govern. Article IV (a) of their Canons provides that “All real properties of the Church located or situated in
such parish can be disposed of only with the approval and conformity of the laymen’s committee, the parish priest, the
Diocesan Bishop, with sanction of the Supreme Council, and finally with the approval of the Supreme Bishop, as
administrator of all the temporalities of the Church.”

The Laymen’s Committee made its objection to the sale known to the Supreme Bishop. Since the Canons require that all
the church entities listed in Article IV (a) of the Canons should give its approval to the transaction, in executing the sale,
Supreme Bishop Rev. Ga had acted beyond his powers making the contract of sale with mortgage unenforceable.

NOTES:

Unenforceable Contracts

This case clearly falls under the category of unenforceable contracts mentioned in Article 1403, paragraph (1) of the Civil
Code, which provides, thus:

Art. 1403. The following contracts are unenforceable, unless they are ratified:
(1) Those entered into in the name of another person by one who has been given no authority or legal representation,
or who has acted beyond his powers;

In Mercado v. Allied Banking Corporation, the Court explained that:

x x x Unenforceable contracts are those which cannot be enforced by a proper action in court, unless they are ratified,
because either they are entered into without or in excess of authority or they do not comply with the statute of frauds
or both of the contracting parties do not possess the required legal capacity. x x x.

Closely analogous cases of unenforceable contracts are those where a person signs a deed of extrajudicial partition in
behalf of co-heirs without the latter’s authority; where a mother as judicial guardian of her minor children, executes a
deed of extrajudicial partition wherein she favors one child by giving him more than his share of the estate to the
prejudice of her other children; and where a person, holding a special power of attorney, sells a property of his principal
that is not included in said special power of attorney.

In the present case, however, respondents’ predecessor-in-interest, Bernardino Taeza, had already obtained a transfer
certificate of title in his name over the property in question. Since the person supposedly transferring ownership was not
authorized to do so, the property had evidently been acquired by mistake. In Vda. de Esconde v. Court of Appeals, the
Court affirmed the trial court’s ruling that the applicable provision of law in such cases is Article 1456 of the Civil Code
which states that “[i]f property is acquired through mistake or fraud, the person obtaining it is, by force of law,
considered a trustee of an implied trust for the benefit of the person from whom the property comes.”

Trusts

A constructive trust having been constituted by law between respondents as trustees and petitioner as beneficiary of
the subject property, may respondents acquire ownership over the said property? The Court held in the same case of
Aznar, that unlike in express trusts and resulting implied trusts where a trustee cannot acquire by prescription any
property entrusted to him unless he repudiates the trust, in constructive implied trusts, the trustee may acquire the
property through prescription even if he does not repudiate the relationship. It is then incumbent upon the beneficiary
to bring an action for reconveyance before prescription bars the same.

Prescription; Reconveyance

In Aznar, the Court explained the basis for the prescriptive period, to wit:

x x x under the present Civil Code, we find that just as an implied or constructive trust is an offspring of the law (Art.
1456, Civil Code), so is the corresponding obligation to reconvey the property and the title thereto in favor of the true
owner. In this context, and vis-á-vis prescription, Article 1144 of the Civil Code is applicable.

Article 1144. The following actions must be brought within ten years from the time the right of action accrues:

(1) Upon a written contract;

(2) Upon an obligation created by law;

(3) Upon a judgment.

xxx xxx xxx

An action for reconveyance based on an implied or constructive trust must perforce prescribe in ten years and not
otherwise. A long line of decisions of this Court, and of very recent vintage at that, illustrates this rule. Undoubtedly, it is
now well-settled that an action for reconveyance based on an implied or constructive trust prescribes in ten years from
the issuance of the Torrens title over the property.

It has also been ruled that the ten-year prescriptive period begins to run from the date of registration of the deed or the
date of the issuance of the certificate of title over the property, x x x.