Romero vs.

Court of Appeals, 250 SCRA 223 , November 23, 1995

Case Title : VIRGILIO R. ROMERO, petitioner, vs. HON. COURT OF APPEALS and ENRIQUETA CHUA
VDA. DE ONGSIONG, respondents. Case Nature : PETITION for review on certiorari of a decision of
the Court of Appeals.
Syllabi Class : Civil Law|Sales|Rescission
Syllabi:
1. Civil Law; Sales; A perfected contract of sale may either be absolute or conditional.Aperfected contract of sale may either be absolute or conditional depending on whether the
agreement is devoid of, or subject to, any condition imposed on the passing of title of the thing to be
conveyed or on the obligation of a party thereto. When ownership is retained until the fulfillment of a
positive condition the breach of the condition will simply prevent the duty to convey title from
acquiring an obligatory force. If the condition is imposed on an obligationof a party which is not
complied with, the other party may either refuse to proceed or waive said condition (Art. 1545, Civil
Code). Where, of course, the condition is imposed upon the perfection of the contract itself, the failure
of such condition would prevent the juridical relation itself from coming into existence.
2. Civil Law; Sales; In determining the real character of the contract, the title given to it by the
parties is not as much significant as its substance.In determining the real character of the contract, the title given to it by the parties is not as much
significant as its substance. For example, a deed of sale, although denominated as a deed of
conditional sale, may be treated as absolute in nature, if title to the property sold is not reserved in
the vendor or if the vendor is not granted the right to unilaterally rescind the contract predicated on
the fulfillment or nonfulfillment, as the case may be, of the prescribed condition.
3. Civil Law; Sales; The term condition in the context of a perfected contract of sale pertains in
reality to the compliance by one party of an undertaking the fulfillment of which would beckon in turn
the demandability of the reciprocal prestation of the other party.The term condition in the context of a perfected contract of sale pertains, in reality, to the
compliance by one party of an undertaking the fulfillment of which would beckon, in turn, the
demandability of the reciprocal prestation of the other party. The reciprocal obligations referred to
would normally be, in the case of vendee, the payment of the agreed purchase price and, in the case
of the vendor, the fulfillment of certain express warranties (which, in the case at bench is the timely
eviction of the squatters on the property).
4. Civil Law; Sales; A sale is at once perfected when a person obligates himself for a price certain to
deliver and to transfer ownership of a specified thing or right to another over which the latter agrees.It would be futile to challenge the agreement here in question as not being a duly perfected contract.
A sale is at once perfected when a person (the seller) obligates himself, for a price certain, to deliver
and to transfer ownership of a specified thing or right to another (the buyer) over which the latter
agrees.
5. Civil Law; Sales; From the moment the contract is perfected, the parties are bound not only to
the fulfillment of what has been expressly stipulated but also to all the consequences which according
to their nature may be in keeping with good faith, usage and law.From the moment the contract is perfected, the parties are bound not only to the fulfillment of what
has been expressly stipulated but also to all the consequences which, according to their nature, may
be in keeping with good faith, usage and law. Under the agreement, private respondent is obligated to

evict the squatters on the property. The ejectment of the squatters is a condition the operative act of
which sets into motion the period of compliance by petitioner of his own obligation, i.e., to pay the
balance of the purchase price. Private respondents failure to remove the squatters from the
property within the stipulated period gives petitioner the right to either refuse to proceed with the
agreement or waive that condition in consonance with Article 1545 of the Civil Code. This option
clearly belongs to petitioner and not to private respondent.
6. Civil Law; Sales; Where the so-called potestative condition is imposed not on the birth of the
obligation but on its fulfillment, only the condition is avoided leaving unaffected the obligation itself.We share the opinion of the appellate court that the undertaking required of private respondent does
not constitute a potestative condition dependent solely on his will that might, otherwise, be void in
accordance with Article 1182 of the Civil Code but a mixed condition dependent not on the will of
the vendor alone but also of third persons like the squatters and government agencies and personnel
concerned. We must hasten to add, however, that where the so-called potestative condition is
imposed not on the birth of the obligation but on its fulfillment, only the condition is avoided, leaving
unaffected the obligation itself.
7. Civil Law; Sales; Rescission; The right of rescission of a party to an obligation under Article 1191
of the Civil Code is predicated on a breach of faith by the other party that violates the reciprocity
between them.In any case, private respondents action for rescission is not warranted. She is not the injured party.
The right of resolution of a party to an obligation under Article 1191 of the Civil Code is predicated on
a breach of faith by the other party that violates the reciprocity between them. It is private
respondent who has failed in her obligation under the contract. Petitioner did not breach the
agreement. He has agreed, in fact, to shoulder the expenses of the execution of the judgment in the
ejectment case and to make arrangements with the sheriff to effect such execution.
Division: THIRD DIVISION
Docket Number: G.R. No. 107207
Counsel: Antonio C. Cabreras, Jr. & Peter M. Porras Law Offices and Yap, Apostol, Gumaru & Balgua,
Joaquin Yuseco
Ponente: VITUG
Dispositive Portion:
WHEREFORE, the questioned decision of the Court of Appeals is hereby REVERSED AND SET ASIDE,
and another is entered ordering petitioner to pay private respondent the balance of the purchase price
and the latter to execute the deed of absolute sale in favor of petitioner. No costs.

Velarde vs. Court of Appeals, 361 SCRA 56 , July 11, 2001

Case Title : Spouses MARIANO Z. VELARDE and AVELINA D. VELARDE, petitioners, vs. COURT OF
APPEALS, DAVID A. RAYMUNDO and GEORGE RAYMUNDO, respondents. Case Nature : PETITION for
review on certiorari of a decision of the Court of Appeals.
Syllabi Class : Civil Law|Contracts|Sale|Rescission
Syllabi:
1. Civil Law; Contracts; Sale; In a contract of sale, the seller obligates itself to transfer the
ownership of and deliver a determinate thing, and the buyer to pay therefor a price certain in money
or its equivalent.In a contract of sale, the seller obligates itself to transfer the ownership of and deliver a determinate
thing, and the buyer to pay therefor a price certain in money or its equivalent. Private respondents
had already performed their obligation through the execution of the Deed of Sale, which effectively
transferred ownership of the property to petitioner through constructive delivery. Prior physical
delivery or possession is not legally required, and the execution of the Deed of Sale is deemed
equivalent to delivery. Petitioners, on the other hand, did not perform their correlative obligation of
paying the contract price in the manner agreed upon. Worse, they wanted private respondents to
perform obligations beyond those stipulated in the contract before fulfilling their own obligation to pay
the full purchase price.
2. Civil Law; Contracts; Sale; Rescission; Rescission of a party to an obligation under Article 1191
of the Civil Code is predicated on a breach of faith by the other party who violates the reciprocity
between them.The right of rescission of a party to an obligation under Article 1191 of the Civil Code is predicated on
a breach of faith by the other party who violates the reciprocity between them. The breach
contemplated in the said provision is the obligors failure to comply with an existing obligation. When
the obligor cannot comply with what is incumbent upon it, the obligee may seek rescission and, in the
absence of any just cause for the court to determine the period of compliance, the court shall decree
the rescission.
3. Civil Law; Contracts; Sale; Rescission; Rescission can be carried out only when the one who
demands it can return whatever he may be obliged to restore.Rescission creates the obligation to return the object of the contract. It can be carried out only when
the one who demands rescission can return whatever he may be obliged to restore. To rescind is to
declare a contract void at its inception and to put an end to it as though it never was. It is not merely
to terminate it and release the parties from further obligations to each other, but to abrogate it from
the beginning and restore the parties to their relative positions as if no contract has been made.
Division: THIRD DIVISION
Docket Number: G.R. No. 108346
Counsel: Marciano J. Cagatan and Mariano R. Logarta, M.B. Tomacruz Law Office
Ponente: PANGANIBAN
Dispositive Portion:

WHEREFORE, the assailed Decision is hereby AFFIRMED with the MODIFICATION that private
respondents are ordered to return to petitioners the amount of P874,150, which the latter paid as a
consequence of the rescinded contract, with legal interest thereon from January 8, 1987, the date of
rescission. No pronouncement as to costs.

1.
Acap vs. Court of Appeals, 251 SCRA 30 , December 07, 1995
Case Title : TEODORO ACAP, petitioner, vs. COURT OF APPEALS and EDY DE LOS REYES,
respondents. Case Nature : PETITION for review on certiorari of a decision of the Court of Appeals.
Syllabi Class : Property|Ownership|Sales|Succession|Land Titles|Adverse Claims|Words and Phrases
Syllabi:
1. Property; Ownership; An asserted right or claim to ownership or a real right over a thing arising
from a juridical act, however justified, is not per se sufficient to give rise to ownership over the res
that right or title must be completed by fulfilling certain conditions imposed by law; While title is the
juridical justification, mode is the actual process of acquisition or transfer of ownership over a thing in
question.In the first place, an asserted right or claim to ownership or a real right over a thing arising from a
juridical act, however justified, is not per se sufficient to give rise to ownership over the res. That
right or title must be completed by fulfilling certain conditions imposed by law. Hence, ownership and
real rights are acquired only pursuant to a legal mode or process. While title is the juridical
justification, mode is the actual process of acquisition or transfer of ownership over a thing in
question.
2. Property; Ownership; Under Article 712 of the Civil Code, the modes of acquiring ownership are
generally classified into two (2) classes, namely, the original mode and the derivative mode.Under Article 712 of the Civil Code, the modes of acquiring ownership are generally classified into two
(2) classes, namely, the original mode (i.e., through occupation, acquisitive prescription, law or
intellectual creation) and the derivative mode (i.e., through succession mortis causa or tradition as a
result of certain contracts, such as sale, barter, donation, assignment or mutuum).
3. Property; Ownership; Sales; Succession; Contract of Sale and Declara-tion of Heirship and
Waiver of Rights, Distinguished.In the case at bench, the trial court was obviously confused as to the nature and effect of the
Declaration of Heirship and Waiver of Rights, equating the same with a contract (deed) of sale. They
are not the same. In a Contract of Sale, one of the contracting parties obligates himself to transfer the
ownership of and to deliver a determinate thing, and the other party to pay a price certain in money
or its equivalent. Upon the other hand, a declaration of heirship and waiver of rights operates as a
public instrument when filed with the Registry of Deeds whereby the intestate heirs adjudicate and
divide the estate left by the decedent among themselves as they see fit. It is in effect an extrajudicial
settlement between the heirs under Rule 74 of the Rules of Court.
4. Property; Ownership; Sales; Succession; There is a marked difference between a sale of
hereditary rights and a waiver of hereditary rights; A stranger to succession cannot conclusively claim

ownership over a lot on the sole basis of a waiver document which does not recite the elements of
either a sale, or a donation, or any other derivative mode of acquiring ownership.Hence, there is a marked difference between a sale of hereditary rights and a waiver of hereditary
rights. The first presumes the existence of a contract or deed of sale between the parties. The second
is, technically speaking, a mode of extinction of ownership where there is an abdication or intentional
relinquishment of a known right with knowledge of its existence and intention to relinquish it, in favor
of other persons who are co-heirs in the succession. Private respondent, being then a stranger to the
succession of Cosme Pido, cannot conclusively claim ownership over the subject lot on the sole basis
of the waiver document which neither recites the elements of either a sale, or a donation, or any other
derivative mode of acquiring ownership.
5. Property; Ownership; Land Titles; Adverse Claims; Words and Phrases; A notice of adverse
claim is nothing but a notice of a claim adverse to the registered owner, the validity of which is yet to
be established in court at some future date.A notice of adverse claim, by its nature, does not however prove private respondents ownership over
the tenanted lot. A notice of adverse claim is nothing but a notice of a claim adverse to the registered
owner, the validity of which is yet to be established in court at some future date, and is no better than
a notice of lis pendens which is a notice of a case already pending in court.
6. Property; Ownership; Land Titles; Adverse Claims; Where a persons right or interest in a lot
in question remains an adverse claim, the same cannot by itself be sufficient to cancel the OCT to the
land.It is to be noted that while the existence of said adverse claim was duly proven, there is no evidence
whatsoever that a deed of sale was executed between Cosme Pidos heirs and private respondent
transferring the rights of Pidos heirs to the land in favor of private respondent. Private respondents
right or interest therefore in the tenanted lot remains an adverse claim which cannot by itself be
sufficient to cancel the OCT to the land and title the same in private respondents name.
Division: FIRST DIVISION
Docket Number: G.R. No. 118114
Counsel: Francisco B. Cruz, Cerewarlito V. Quebrar
Ponente: PADILLA
Dispositive Portion:
WHEREFORE, premises considered, the Court hereby GRANTS the petition and the decision of the
Court of Appeals dated 1 May 1994 which affirmed the decision of the RTC of Himamaylan, Negros
Occidental dated 20 August 1991 is hereby SET ASIDE. The private respondents complaint for
recovery of possession and damages against petitioner Acap is hereby DISMISSED for failure to
properly state a cause of action, without prejudice to private respondent taking the proper legal steps
to establish the legal mode by which he claims to have acquired ownership of the land in question.

Fule vs. Court of Appeals, 286 SCRA 698 , March 02, 1998
Case Title : GREGORIO FULE, petitioner, vs. COURT OF APPEALS, NINEVETCH CRUZ and JUAN
BELARMINO, respondents. Case Nature : PETITION for review on certiorari of a decision of the Court
of Appeals.
Syllabi Class : Remedial Law|Civil Law|Appeals|Judgments|Contracts|Sale|Damages
Syllabi:
1. Remedial Law; Appeals; Court accords, as a general rule, conclusiveness to a lower courts
findings of fact, exception.As to the first allegation, the Court observes that petitioner is essentially raising a factual issue as it
invites us to examine and weigh anew the facts regarding the genuineness of the earrings bartered in
exchange for the Tanay property. This, of course, we cannot do without unduly transcending the limits
of our review power in petitions of this nature which are confined merely to pure questions of law. We
accord, as a general rule, conclusiveness to a lower courts findings of fact unless it is shown, inter
alia, that: (1) the conclusion is a finding grounded on speculations, surmises or conjectures; (2) the
inference is manifestly mistaken, absurd and impossible; (3) when there is a grave abuse of
discretion; (4) when the judgment is based on a misapprehension of facts; (5) when the findings of
fact are conflicting; and (6) when the Court of Appeals, in making its findings, went beyond the issues
of the case and the same is contrary to the admission of both parties. We find nothing, however, that
warrants the application of any of these exceptions.
2. Remedial Law; Appeals; The Courts jurisdiction is only limited to reviewing errors of law in the
absence of any showing that the findings complained of are totally devoid of support in the record or
that they are glaringly erroneous as to constitute serious abuse of discretion.Consequently, this Court upholds the appellate courts findings of fact especially because these concur
with those of the trial court which, upon a thorough scrutiny of the records, are firmly grounded on
evidence presented at the trial. To reiterate, this Courts jurisdiction is only limited to reviewing errors
of law in the absence of any showing that the findings complained of are totally devoid of support in
the record or that they are glaringly erroneous as to constitute serious abuse of discretion.
3. Remedial Law; Judgments; The acts of a judge which pertain to his judicial functions are not
subject to disciplinary power unless they are committed with fraud, dishonesty, corruption or bad
faith.In fact, this Court does not see anything wrong in the practice of writing a decision days before the
scheduled promulgation of judgment and leaving the dispositive portion for typing at a time close to
the date of promulgation, provided that no malice or any wrongful conduct attends its adoption. The
practice serves the dual purposes of safeguarding the confidentiality of draft decisions and rendering
decisions with promptness. Neither can Judge Jaramillo be made administratively answerable for the
immediate rendition of the decision. The acts of a judge which pertain to his judicial functions are not
subject to disciplinary power unless they are committed with fraud, dishonesty, corruption or bad
faith. Hence, in the absence of sufficient proof to the contrary, Judge Jaramillo is presumed to have
performed his job in accordance with law and should instead be commended for his close attention to
duty.

4. Civil Law; Contracts; Sale; A contract of sale is perfected at the moment there is a meeting of
the minds upon the thing which is the object of the contract and upon the price.The Civil Code provides that contracts are perfected by mere consent. From this moment, the parties
are bound not only to the fulfillment of what has been expressly stipulated but also to all the
consequences which, according to their nature, may be in keeping with good faith, usage and law. A
contract of sale is perfected at the moment there is a meeting of the minds upon the thing which is
the object of the contract and upon the price. Being consensual, a contract of sale has the force of law
between the contracting parties and they are expected to abide in good faith by their respective
contractual commitments. Article 1358 of the Civil Code which requires the embodiment of certain
contracts in a public instrument, is only for convenience, and registration of the instrument only
adversely affects third parties. Formal requirements are, therefore, for the benefit of third parties.
Non-compliance therewith does not adversely affect the validity of the contract nor the contractual
rights and obligations of the parties thereunder.
5. Civil Law; Contracts; Sale; Voidable or Annullable Contracts.Contracts that are voidable or annullable, even though there may have been no damage to the
contracting parties are: (1) those where one of the parties is incapable of giving consent to a
contract; and (2) those where the consent is vitiated by mistake, violence, intimidation, undue
influence or fraud.
6. Civil Law; Contracts; Sale; There is fraud when, through the insidious words or machinations of
one of the contracting parties, the other is induced to enter into a contract which, without them, he
would not have agreed to.There is fraud when, through the insidious words or machinations of one of the contracting parties,
the other is induced to enter into a contract which, without them, he would not have agreed to. The
records, however, are bare of any evidence manifesting that private respondents employed such
insidious words or machinations to entice petitioner into entering the contract of barter. Neither is
there any evidence showing that Dr. Cruz induced petitioner to sell his Tanay property or that she
cajoled him to take the earrings in exchange for said property. On the contrary, Dr. Cruz did not
initially accede to petitioners proposal to buy the said jewelry. Rather, it appears that it was
petitioner, through his agents, who led Dr. Cruz to believe that the Tanay property was worth
exchanging for her jewelry as he represented that its value was P400,000.00 or more than double
that of the jewelry which was valued only at P160,000.00. If indeed petitioners property was truly
worth that much, it was certainly contrary to the nature of a businessman-banker like him to have
parted with his real estate for half its price. In short, it was in fact petitioner who resorted to
machinations to convince Dr. Cruz to exchange her jewelry for the Tanay property.
7. Civil Law; Contracts; Sale; To invalidate a contract, mistake must refer to the substance of the
thing that is the object of the contract, or to those conditions which have principally moved one or
both parties to enter into the contract.Moreover, petitioner did not clearly allege mistake as a ground for nullification of the contract of sale.
Even assuming that he did, petitioner cannot successfully invoke the same. To invalidate a contract,
mistake must refer to the substance of the thing that is the object of the contract, or to those
conditions which have principally moved one or both parties to enter into the contract. An example of
mistake as to the object of the contract is the substitution of a specific thing contemplated by the
parties with another.

8. Civil Law; Damages; Moral and exemplary damages may be awarded without proof of pecuniary
loss.Moral and exemplary damages may be awarded without proof of pecuniary loss. In awarding such
damages, the court shall take into account the circumstances obtaining in the case and assess
damages according to its discretion. To warrant the award of damages, it must be shown that the
person to whom these are awarded has sustained injury. He must likewise establish sufficient data
upon which the court can properly base its estimate of the amount of damages. Statements of facts
should establish such data rather than mere conclusions or opinions of witnesses.
Division: THIRD DIVISION
Docket Number: G.R. No. 112212
Counsel: F.M. Poonin & Associates, Byron V. Belarmino, Victorino F. Javier, Jr.
Ponente: ROMERO
Dispositive Portion:
WHEREFORE, the decision of the Court of Appeals dated October 20, 1992 is hereby AFFIRMED in toto.
Dr. Cruz, however, is ordered to pay petitioner the balance of the purchase price of P40,000.00 within
ten (10) days from the finality of this decision. Costs against petitioner.

Polytechnic University of the Philippines vs. Court of Appeals, 368 SCRA 691 , November 14,
2001
Case Title : POLYTECHNIC UNIVERSITY OF THE PHILIPPINES, petitioner, vs. COURT OF APPEALS and
FIRESTONE CERAMICS, INC., respondents., NATIONAL DEVELOPMENT CORPORATION, petitioner, vs.
FIRESTONE CERAMICS, INC., respondents. Case Nature : PETITION for review on certiorari of a
decision of the Court of Appeals.
Syllabi Class : Obligations and Contracts|Courts|Right of First Refusal|Education|Sales|Words and
Phrases|Government-Owned and Controlled Corporations|Lease|Prejudicial Publicity
Syllabi:
1. Obligations and Contracts; Right of First Refusal; It is elementary that a party to a contract
cannot unilaterally withdraw a right of first refusal that stands upon valuable consideration.We do not see it the way PUP and NDC did. It is elementary that a party to a contract cannot
unilaterally withdraw a right of first refusal that stands upon valuable consideration. That principle was
clearly upheld by the Court of Appeals when it denied on 6 June 2000 the twin motions for
reconsideration filed by PUP and NDC on the ground that the appellants failed to advance new
arguments substantial enough to warrant a reversal of the Decision sought to be reconsidered.
2. Obligations and Contracts; Education; Our paramount interest in education does not license us,
or any party for that matter, to destroy the sanctity of binding obligationseducation may be

prioritized for legislative or budgetary purposes, but we doubt if such importance can be used to
confiscate private property such as the right of first refusal.Petitioner posited that if we were to place our imprimatur on the decisions of the courts a quo, public
welfare or specifically the constitutional priority accorded to education would greatly be prejudiced.
Paradoxically, our paramount interest in education does not license us, or any party for that matter,
to destroy the sanctity of binding obligations. Education may be prioritized for legislative or budgetary
purposes, but we doubt if such importance can be used to confiscate private property such as
FIRESTONEs right of first refusal.
3. Obligations and Contracts; Education; Sales; Words and Phrases; A contract of sale, as
defined in the Civil Code, is a contract where one of the parties obligates himself to transfer the
ownership of and to deliver a determinate thing to the other or others who shall pay therefore a sum
certain in money or its equivalent; The Civil Code provision on sale is, in effect, a catch-all provision
which effectively brings within its grasp a whole gamut of transfers whereby ownership of a thing is
ceded for a consideration.A contract of sale, as defined in the Civil Code, is a contract where one of the parties obligates himself
to transfer the ownership of and to deliver a determinate thing to the other or others who shall pay
therefore a sum certain in money or its equivalent. It is therefore a general requisite for the existence
of a valid and enforceable contract of sale that it be mutually obligatory, i.e., there should be a
concurrence of the promise of the vendor to sell a determinate thing and the promise of the vendee to
receive and pay for the property so delivered and transferred. The Civil Code provision is, in effect, a
catchall provision which effectively brings within its grasp a whole gamut of transfers whereby
ownership of a thing is ceded for a consideration.
4. Obligations and Contracts; Education; Sales; Government-Owned and Controlled
Corporations; The National Development Corporation and the Polytechnic University of the
Philippines have their respective charters and therefore each possesses a separate and distinct
individual personality; Beyond cavil, a government owned and controlled corporation has a personality
of its own distinct and separate from that of the government.Contrary to what petitioners PUP and NDC propose, there is not just one party involved in the
questioned transaction. Petitioners NDC and PUP have their respective charters and therefore each
possesses a separate and distinct individual personality. The inherent weakness of NDCs proposition
that there was no sale as it was only the government which was involved in the transaction thus
reveals itself. Tersely put, it is not necessary to write an extended dissertation on government owned
and controlled corporations and their legal personalities. Beyond cavil, a government owned and
controlled corporation has a personality of its own, distinct and separate from that of the government.
The intervention in the transaction of the Office of the President through the Executive Secretary did
not change the independent existence of these entities. The involvement of the Office of the President
was limited to brokering the consequent relationship between NDC and PUP. But the withdrawal of the
appeal by the Executive Secretary is considered significant as he knew, after a review of the records,
that the transaction was subject to existing liens and encumbrances, particularly the priority to
purchase the leased premises in favor of FIRESTONE.
5. Obligations and Contracts; Education; Since the conduct of the parties to a contract may be
sufficient to establish the existence of an agreement and the terms thereof, it becomes necessary for

the courts to examine the contemporaneous behavior of the parties in establishing the existence of
their contract.True that there may be instances when a particular deed does not disclose the real intentions of the
parties, but their action may nevertheless indicate that a binding obligation has been undertaken.
Since the conduct of the parties to a contract may be sufficient to establish the existence of an
agreement and the terms thereof, it becomes necessary for the courts to examine the
contemporaneous behavior of the parties in establishing the existence of their contract.
6. Obligations and Contracts; Education; Lease; Where the stipulation for a right of first refusal is
part and parcel of the contract of lease, the consideration for the lease is the same as that for the
option.In the instant case, the right of first refusal is an integral and indivisible part of the contract of lease
and is inseparable from the whole contract. The consideration for the right is built into the reciprocal
obligations of the parties. Thus, it is not correct for petitioners to insist that there was no
consideration paid by FIRESTONE to entitle it to the exercise of the right, inasmuch as the stipulation
is part and parcel of the contract of lease making the consideration for the lease the same as that for
the option.
7. Obligations and Contracts; Education; Lease; When a lease contract contains a right of first
refusal, the lessor is under a legal duty to the lessee not to sell to anybody at any price until after he
has made an offer to sell to the latter at a certain price and the lessee has failed to accept it.It is a settled principle in civil law that when a lease contract contains a right of first refusal, the lessor
is under a legal duty to the lessee not to sell to anybody at any price until after he has made an offer
to sell to the latter at a certain price and the lessee has failed to accept it. The lessee has a right that
the lessors first offer shall be in his favor.
8. Obligations and Contracts; Education; Sales; In contracts of sale, the basis of the right of first
refusal must be the current offer of the seller to sell or the offer to purchase of the prospective
buyer.It now becomes apropos to ask whether the courts a quo were correct in fixing the proper
consideration of the sale at P1,500.00 per square meter. In contracts of sale, the basis of the right of
first refusal must be the current offer of the seller to sell or the offer to purchase of the prospective
buyer. Only after the lessee-grantee fails to exercise its right under the same terms and within the
period contemplated can the owner validly offer to sell the property to a third person, again, under
the same terms as offered to the grantee. It appearing that the whole NDC compound was sold to PUP
for P554.74 per square meter, it would have been more proper for the courts below to have ordered
the sale of the property also at the same price. However, since FIRESTONE never raised this as an
issue, while on the other hand it admitted that the value of the property stood at P1,500.00 per
square meter, then we see no compelling reason to modify the holdings of the courts a quo that the
leased premises be sold at that price.
9. Obligations and Contracts; Education; Sales; A right of first refusal is neither amorphous nor
merely preparatory and can be enforced and executed according to its terms.The contention has no merit. At the heels of Ang Yu came Equatorial Realty Development, Inc, v.
Mayfair Theater, Inc., where after much deliberation we declared, and so we hold, that a right of first
refusal is neither amorphous nor merely preparatory and can be enforced and executed according to
its terms. Thus, in Equatorial we ordered the rescission of the sale which was made in violation of the

lessees right of first refusal and further ordered the sale of the leased property in favor of Mayfair
Theater, as grantee of the right. Emphatically, we held that (a right of first priority) should be
enforced according to the law on contracts instead of the panoramic and indefinite rule on human
relations. We then concluded that the execution of the right of first refusal consists in directing the
grantor to comply with his obligation according to the terms at which he should have offered the
property in favor of the grantee and at that price when the offer should have been made.
10. Courts; Prejudicial Publicity; Petitioner PUP should be cautioned against bidding for public
sympathy by bewailing the dismissal of its petition before the presssuch advocacy is not likely to
elicit the compassion of this Court or of any court for that matter.One final word. Petitioner PUP should be cautioned against bidding for public sympathy by bewailing
the dismissal of its petition before the press. Such advocacy is not likely to elicit the compassion of
this Court or of any court for that matter. An entreaty for a favorable disposition of a case not made
directly through pleadings and oral arguments before the courts do not persuade us, for as judges, we
are ruled only by our forsworn duty to give justice where justice is due.
Division: SECOND DIVISION
Docket Number: G.R. No. 143513, G.R. No. 143590
Counsel: Francisco SB. Acejas III, Government Corporate Counsel, Arturo S. Santos
Ponente: BELLOSILLO
Dispositive Portion:
WHEREFORE, the petitions in G.R. No. 143513 and G.R. No. 143590 are DENIED. Inasmuch as the
first contract of lease fixed the area of the leased premises at 2.90118 hectares while the second
contract placed it at 2.60 hectares, let a ground survey of the leased premises be immediately
conducted by a duly licensed, registered surveyor at the expense of private respondent FIRESTONE
CERAMICS, INC., within two (2) months from finality of the judgment in this case. Thereafter, private
respondent FIRESTONE CERAMICS, INC., shall have six (6) months from receipt of the approved
survey within which to exercise its right to purchase the leased property at P1,500.00 per square
meter, and petitioner Polytechnic University of the Philippines is ordered to reconvey the property to
FIRESTONE CERAMICS, INC., in the exercise of its right of first refusal upon payment of the purchase
price thereof.

Commissioner of Internal Revenue vs. Court of Appeals, 271 SCRA 605 , April 18, 1997
Case Title : COMMISSIONER OF INTERNAL REVENUE, petitioner, vs. THE COURT OF APPEALS, THE
COURT OF TAX APPEALS and ATENEO DE MANILA UNIVERSITY, respondents. Case Nature : PETITION
for review of a decision of the Court of Appeals.

Syllabi Class : Taxation|Administrative Law|Statutory Construction|Schools and Universities|

Contractors Tax|Sales|Contract for a Piece of Work|Court of Tax Appeals
Syllabi:
1. Taxation; Statutory Construction; It is error to apply the principles of tax exemption without
first applying the well-settled doctrine of strict interpretation in the imposition of taxesit is obviously
both illogical and impractical to determine who are exempted without first determining who are
covered by a provision of the National Internal Revenue Code.Petitioner Commissioner of Internal Revenue erred in applying the principles of tax exemption without
first applying the well-settled doctrine of strict interpretation in the imposition of taxes. It is obviously
both illogical and impractical to determine who are exempted without first determining who are
covered by the aforesaid provision. The Commissioner should have determined first if private
respondent was covered by Section 205, applying the rule of strict interpretation of laws imposing
taxes and other burdens on the populace, before asking Ateneo to prove its exemption therefrom. The
Court takes this occasion to reiterate the hornbook doctrine in the interpretation of tax laws that (a)
statute will not be construed as imposing a tax unless it does so clearly, expressly, and
unambiguously. x x x (A) tax cannot be imposed without clear and express words for that purpose.
Accordingly, the general rule of requiring adherence to the letter in construing statutes applies with
peculiar strictness to tax laws and the provisions of a taxing act are not to be extended by
implication. Parenthetically, in answering the question of who is subject to tax statutes, it is basic
that in case of doubt, such statutes are to be construed most strongly against the government and in
favor of the sub- jects or citizens because burdens are not to be imposed nor presumed to be imposed
beyond what statutes expressly and clearly import.
2. Taxation; Statutory Construction; Schools and Universities; Contractors Tax; To impose
the three percent contractors tax on Ateneos Institute of Philippine Culture, it should be sufficiently
proven that it is indeed selling its services for a fee in pursuit of an independent business.To fall under its coverage, Section 205 of the National Internal Revenue Code requires that the
independent contractor be engaged in the business of selling its services. Hence, to impose the three
percent contractors tax on Ateneos Institute of Philippine Culture, it should be sufficiently proven that
the private respondent is indeed selling its services for a fee in pursuit of an independent business.
And it is only after private respondent has been found clearly to be subject to the provisions of Sec.
205 that the question of exemption therefrom would arise. Only after such coverage is shown does
the rule of constructionthat tax exemptions are to be strictly construed against the taxpayercome
into play, contrary to petitioners position. This is the main line of reasoning of the Court of Tax
Appeals in its decision, which was affirmed by the CA.
3. Taxation; Statutory Construction; Schools and Universities; Contractors Tax; There is no
evidence that Ateneos Institute of Philippine Culture ever sold its services for a fee to anyone or was
ever engaged in business apart from and independently of the aca-demic purposes of the university.After reviewing the records of this case, we find no evidence that Ateneos Institute of Philippine
Culture ever sold its services for a fee to anyone or was ever engaged in a business apart from and
independently of the academic purposes of the university. Stressing that it is not the Ateneo de
Manila University per se which is being taxed, Petitioner Commissioner of Internal Revenue contends
that the tax is due on its activity of conducting researches for a fee. The tax is due on the gross
receipts made in favor of IPC pursuant to the contracts the latter entered to conduct researches for

the benefit primarily of its clients. The tax is imposed on the exercise of a taxable activity. x x x [T]he
sale of services of private respondent is made under a contract and the various contractors entered
into between private respondent and its clients are almost of the same terms, showing, among others,
the compensation and terms of payment. (Italics supplied.) In theory, the Commissioner of Internal
Revenue may be correct. However, the records do not show that Ateneos IPC in fact contracted to sell
its research services for a fee. Clearly then, as found by the Court of Appeals and the Court of Tax
Appeals, petitioners theory is inapplicable to the established factual milieu obtaining in the instant
case.
4. Taxation; Statutory Construction; Schools and Universities; Sales; Transfer of title or an
agreement to transfer it for a price paid or promised to be paid is the essence of sale.It is also well to stress that the questioned transactions of Ateneos Institute of Philippine Culture
cannot be deemed either as a contract of sale or a contract for a piece of work. By the contract of
sale, one of the contracting parties obligates himself to transfer the ownership of and to deliver a
determinate thing, and the other to pay therefor a price certain in money or its equivalent. By its
very nature, a contract of sale requires a transfer of ownership. Thus, Article 1458 of the Civil Code
expressly makes the obligation to transfer ownership as an essential element of the contract of sale,
following modern codes, such as the German and the Swiss. Even in the absence of this express
requirement, however, most writers, including Sanchez Roman, Gayoso, Valverde, Ruggiero, Colin and
Capitant, have considered such transfer of ownership as the primary purpose of sale. Perez and Alguer
follow the same view, stating that the delivery of the thing does not mean a mere physical transfer,
but is a means of transmitting ownership. Transfer of title or an agreement to transfer it for a price
paid or promised to be paid is the essence of sale.
5. Taxation; Statutory Construction; Schools and Universities; Contract for a Piece of Work;
In a 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.In the case of a 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. x x x If the contractor agrees to
produce the work from materials furnished by him, he shall deliver the thing produced to the
employer and transfer dominion over the thing. x x x. Ineludably, whether the contract be one of
sale or one for a piece of work, a transfer of ownership is involved and a party necessarily walks away
with an object. In the case at bench, it is clear from the evidence on record that there was no sale
either of objects or services because, as adverted to earlier, there was no transfer of ownership over
the research data obtained or the results of research projects undertaken by the Institute of Philippine
Culture.
6. Taxation; Statutory Construction; Schools and Universities; The research activity of the
Institute of Philippine Culture is done in pursuance of maintaining Ateneos university status and not in
the course of an independent business of selling such research with profit in mind.Furthermore, it is clear that the research activity of the Institute of Philippine Culture is done in
pursuance of maintaining Ateneos university status and not in the course of an independent business
of selling such research with profit in mind. This is clear from a reading of the regulations governing
universities.
7. Administrative Law; Court of Tax Appeals; As a matter of principle, the Supreme Court will not
set aside the conclusion reached by the Court of Tax Appeals which is, by the very nature of its

function, dedicated exclusively to the study and consideration of tax problems and has necessarily
developed an expertise on the subject unless there has been an abuse or improvident exercise of
authority.In addition, we reiterate that the Court of Tax Appeals is a highly specialized body specifically created
for the purpose of reviewing tax cases. Through its expertise, it is undeniably competent to determine
the issue of whether Ateneo de Manila University may be deemed a subject of the three percent
contractors tax through the evidence presented before it. Consequently, as a matter of principle,
this Court will not set aside the conclusion reached by x x x the Court of Tax Appeals which is, by the
very nature of its function, dedicated exclusively to the study and consideration of tax problems and
has necessarily developed an expertise on the subject unless there has been an abuse or improvident
exercise of authority x x x. This point becomes more evident in the case before us where the findings
and conclusions of both the Court of Tax Appeals and the Court of Appeals appear untainted by any
abuse of authority, much less grave abuse of discretion. Thus, we find the decision of the latter
affirming that of the former free from any palpable error.
Division: THIRD DIVISION
Docket Number: G.R. No. 115349
Counsel: The Solicitor General, Bengzon, Zarraga, Narciso, Cudala, Pecson and Bengson
Ponente: PANGANIBAN
Dispositive Portion:
WHEREFORE, premises considered, the petition is DENIED and the assailed Decision of the Court of
Appeals is hereby AFFIRMED in full.

Inchausti & Co. vs. Cromwell., 20 Phil. 345 , October 16, 1911
Case Title : INCHAUSTI & Co., plaintiff and appellant, vs. ELLIS CROMWELL, Collector of Internal
Revenue, defendant and appellee. Case Nature : APPEAL from a judgment of the Court of First
Instance of Manila. Yusay, J.
Syllabi Class : TAXATION|SALE OF HEMP
Syllabi:
1. TAXATION; SALE OF HEMP; TAXABLE VALUE.Where it is admitted by the parties that it is customary to sell hemp in the market baled and not
loose, it will be presumed that the price at which hemp is quoted in the market is the price of baled
hemp; and that prices stipulated in contracts for the purchase and sale of hemp include the cost and
expense of baling where the contracts are silent upon that subject.
2. TAXATION; SALE OF HEMP; BALING EXPENSE PART OF PRICE.-

Under such conditions the cost and expense of baling the hemp is a part of the purchase price and
subject to a tax imposed by law on the gross amount of sales of the dealers, and is not a sum paid for
work, labor, and materials performed and furnished by the vendor for the vendee.
3. TAXATION; SALE OF HEMP; "PRICE" DEFINED.The word "price" signifies the sum stipulated as the equivalent of the thing sold and also every
incident taken into consideration f or the fixing of the price put to the debit of the vendee and agreed
to by him.
4. TAXATION; SALE OF HEMP; DISTINCTION BETWEEN SALE AND CONTRACT FOR LABOR AND
MATERIALS.The distinction between a contract of sale and one for work, labor, and materials, is tested by the
inquiry whether the thing transferred is one not in existence and which would never have existed but
for the order of the party desiring to acquire it, or a thing which would have existed and been the
subject of sale to some other person, even if the order had not been given.
5. TAXATION; SALE OF HEMP; FUTURE SALES.When a person stipulates for the future sale of articles which he is habitually making, and which at the
time are not made or finished, it is essentially a contract of sale and not a contract for labor. It is
otherwise where the article would not have been made but for the agreement; and where the article
ordered by the purchase is exactly such as the vendor makes and keeps on hand for sale to anyone,
and no change or modification of it is made at the vendee's request, it is a contract of sale even
though it be entirely made after and in consequence of the vendee's order for it.
6. TAXATION; SALE OF HEMP; BALING FOR GENERAL MARKET.In this case the baling was done for the general market and was not something done by the plaintiff
as a result of the particular contract between him and his vendee.
Docket Number: No. 6584
Counsel: Haussermann, Cohn & Fisher, Acting Attorney-General Harvey
Ponente: MORELAND
Dispositive Portion:
We are of the opinion that the judgment appealed from must be affirmed, without special finding as to
costs, and it is so ordered.

Puyat & Sons, Inc. vs. Arco Amusement Co., 72 Phil. 402 , June 20, 1941
Case Title : GONZALO PUYAT & SONS, INC., petitioner, vs. ARCO AMUSEMENT COMPANY (formerly
known as Teatro Arco), respondent. Case Nature : PETITION for review on certiorari.
Syllabi Class : CONTRACTS|PURCHASE AND SALE
Syllabi:
1. CONTRACTS; PURCHASE AND SALE; INTERPRETATION.-

The contract is the law between the parties and should include all the things they are supposed to
have been agreed upon. What does not appear on the face of the contract should be regarded merely
as "dealer's" or "trader's talk", which can not bind either party. (Nolbrook v. Conner, 56 So., 576; 11
Am. Rep., 212; Bank v. Brosscell, 120 111., 161; Bank v. Palmer, 47 111., 92; Hosser v. Copper, 8
Allen, 334; Doles v. Merrill, 173 Mass., 411.) The letters, Exhbits 1 and 2, by which the respondent
accepted the prices of $1,700 and $1,600, respectively, for the sound reproducing equipment subject
of its contract with the petitioner, are clear in their terms and admit of no other interpretation than
that the respondent agreed to purchase from the petitioner the equipment in question at the prices
indicated which are fixed and determinate. The respondent admitted in its complaint filed with the
Court of First Instance of Manila that the petitioner agreed to sell to it the first sound reproducing
equipment and machinery.
Docket Number: No. 47538
Counsel: Feria & La O, J. W. Ferrier, Daniel Me. Gomez
Ponente: LAUREL
Dispositive Portion:
The writ of certiorari should be, as it is hereby, granted. The decision of the appellate court is
accordingly reversed and the petitioner is absolved from the respondent's complaint in

Philippine Lawin Bus, Co. vs. Court of Appeals, 374 SCRA 332 , January 23, 2002
Case Title : PHILIPPINE LAWIN BUS, CO., MASTER TOURS & TRAVEL CORP., MARCIANO TAN, ISIDRO
TAN, ESTEBAN TAN and HENRY TAN, petitioners, vs. COURT OF APPEALS and ADVANCE CAPITAL
CORPORATION, respondents. Case Nature : PETITION for review on certiorari of a decision of the
Court of Appeals.
Syllabi Class : Remedial Law|Civil Law|Certiorari|Obligations|Dacion en Pago
Syllabi:
1. Remedial Law; Certiorari; When supported by substantial evidence, the findings of fact of the
Court of Appeals are conclusive and binding on the parties and are not reviewable by the Court; The
Supreme Court is not a trier of facts.The issue raised is factual. In an appeal via certiorari, we may not review the factual findings of the
Court of Appeals. When supported by substantial evidence, the findings of fact of the Court of Appeals
are conclusive and binding on the parties and are not reviewable by this Court, unless the case falls
under any of the recognized exceptions to the rule. Petitioner failed to prove that the case falls within
the exceptions. The Supreme Court is not a trier of facts. It is not our function to review, examine and
evaluate or weigh the probative value of the evidence presented. A question of fact would arise in
such event.

2. Civil Law; Obligations; Dacion en Pago; Dacion en pago is the delivery and transmission of
ownership of a thing by the debtor to the creditor as an accepted equivalent of the performance of the
obligation.In dacion en pago, property is alienated to the creditor in satisfaction of a debt in money. It is the
delivery and transmission of ownership of a thing by the debtor to the creditor as an accepted
equivalent of the performance of the obligation. It extinguishes the obligation to the extent of the
value of the thing delivered, either as agreed upon by the parties or as may be proved, unless the
parties by agreement, express or implied, or by their silence, consider the thing as equivalent to the
obligation, in which case the obligation is totally extinguished.
Division: FIRST DIVISION
Docket Number: G.R. No. 130972
Counsel: Don P. Porciuncula, Ricardo A. Remulla
Ponente: PARDO
Dispositive Portion:
IN VIEW WHEREOF, the Court DENIES the petition and AFFIRMS the decision of the Court of
AppealsWHEREFORE, the appealed decision is hereby REVERSED and SET ASIDE. In lieu thereof,
judgment is hereby rendered ordering defendants-appellees to pay, jointly and severally, plaintiffappellant Advance Capital Corp. the following amounts: