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Quiroga vs Parsons

G.R. No. L-11491

Subject: Sales

Doctrine: Contract of Agency to Sell vs Contract of Sale

Facts: On Jan 24, 1911, plaintiff and the respondent entered into a contract making the latter an agent
of the former. The contract stipulates that Don Andres Quiroga, here in petitioner, grants exclusive rights
to sell his beds in the Visayan region to J. Parsons. The contract only stipulates that J.Parsons should pay
Quiroga within 6 months upon the delivery of beds.

Quiroga files a case against Parsons for allegedly violating the following stipulations: not to sell the beds
at higher prices than those of the invoices; to have an open establishment in Iloilo; itself to conduct the
agency; to keep the beds on public exhibition, and to pay for the advertisement expenses for the same;
and to order the beds by the dozen and in no other manner. With the exception of the obligation on the
part of the defendant to order the beds by the dozen and in no other manner, none of the obligations
imputed to the defendant in the two causes of action are expressly set forth in the contract. But the
plaintiff alleged that the defendant was his agent for the sale of his beds in Iloilo, and that said
obligations are implied in a contract of commercial agency. The whole question, therefore, reduced itself
to a determination as to whether the defendant, by reason of the contract hereinbefore transcribed, was
a purchaser or an agent of the plaintiff for the sale of his beds.

Issue: Whether the contract is a contract of agency or of sale.

Held: In order to classify a contract, due attention 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. Payment was to be made at the end of sixty
days, or before, at the plaintiffs 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.
In respect to the defendants obligation to order by the dozen, the only one expressly imposed by the
contract, the effect of its breach would only entitle the plaintiff to disregard the orders which the
defendant might place under other conditions; but if the plaintiff consents to fill them, he waives his
right and cannot complain for having acted thus at his own free will.

For the foregoing reasons, we are of opinion that the contract by and between the plaintiff and the
defendant was one of purchase and sale, and that the obligations the breach of which is alleged as a
cause of action are not imposed upon the defendant, either by agreement or by law.

Dagupan Trading vs. Macam

14 SCRA 99

May 1965

FACTS:

Sammy Maron and his seven brothers and sisters were pro-indiviso owners of a parcel of unregistered
land located in barrio Parayao, Binmaley, Pangasinan. In 1955, while their application for registration of
said land under Act No. 496 was pending, they executed, on June 19 and on September 21, two deeds of
sale conveying the property to herein respondent Rustico Macam who thereafter took possession of the
property and made substantial improvements upon it. On October 14, 1955, OCT No. 6942 covering the
land was issued in the name of the Marons, free from all liens and encumbrances.

On August 4, 1956, however, by virtue of a final judgment of the Municipal Court of Manila in a civil case
in favor of Manila Trading and Supply Co. (Manila Trading) against Sammy Maron, levy was made upon
whatever interest he had in the subject property. Thereafter, said interest was sold at public auction to
the judgment creditor Manila Trading. The corresponding notice of levy, certificate of sale and the
sheriff's certificate of final sale in favor of Manila Trading - because nobody exercised the right of
redemption - were duly registered, and on March 1, 1958, the latter sold all its rights and title in the
property to herein petitioner Dagupan Trading Company (Dagupan Trading).

On September 4, 1958, Dagupan Trading filed an action against Macam, praying that it be declared
owner of one-eighth portion of the subject property. The CFI of Pangasinan dismissed the said
complaint, and the Court of Appeals affirmed its decision.

ISSUE:
Who has the superior right over the one-eight portion of the subject property?

COURT RULING:

The Supreme Court likewise affirmed both decisions of the lower courts. At the time of the levy, Sammy
Maron already had no interest on the one-eight portion of the property he and his siblings have
inherited because for a considerable time prior to the levy, said interest had already been conveyed
upon Macam "fully and irretrievably" - as the Court of Appeals held. Consequently, the subsequent levy
made on the property for the purpose of satisfying the judgment rendered against Sammy Maron in
favor of the Manila Trading Company was void and of no effect.

The unregistered sale and the consequent conveyance of title and ownership in favor Macam could not
have been cancelled and rendered of no effect upon the subsequent issuance of the Torrens title over
the entire parcel of land. Moreover, upon the execution of the deed of sale in his favor by Sammy Maron,
Macam had immediately taken possession of the land conveyed as its new owner and introduced
considerable improvements upon it himself. To deprive him, therefore, of the same by sheer force of
technicality would be against both justice and equity.

Carbonell Vs. CA

Facts:

Respondent Jose Poncio was the owner of the parcel of land located in Rizal. (Area more or less 195 sq.
m.)

The said lot was subject to mortgage in favor of the Republic Savings Bank for the sum of P1,500.00.

Carbonell and respondent Emma Infante offered to buy the said lot from Poncio.

Poncio offered to sell his lot to Carbonell excluding the house on which he and his family stayed.
Carbonell accepted the offer and proposed the price of P9.50/sq. m..

Poncio accepted the price on the condition that from the purchase price would come the money to be
paid to the bank.

January 27, 1995: The parties executed a document in the Batanes dialect which is translated as:
CONTRACT FOR ONE HALF LOT WHICH I (Poncio) BOUGHT FROM.

Carbonell asked a lawyer to prepare the deed of sale and delivered the document, together with the
balance of P400, to Jose Poncio. (Note: Carbonell already paid P200 for the mortgage debt of Poncio +
obligated herself to pay the remaining installments.)
However, when she went to Poncio, the latter informed her that he could no longer proceed with the
sale as the lot was already sold to Emma Infante and that he could not withdraw with the sale.

Poncio admitted that on January 30, 1995, Mrs. Infante improved her offer and he agreed to sell the land
and its improvements to her for P3,535.00.

In a private memorandum agreement, Poncio bound to sell to Infante the lot for the sum of P2,357.52,
with Infante still assuming the mortgage debt of P1,177.48. (Note: The full amount of mortgage debt was
already paid by the Infantes)

February 2, 1995: A deed of sale was executed between Poncio and Infante.

February 8, 1995: Knowing that the sale to Infante has not been registered, Carbonell filed an adverse
claim.

February 12, 1995: The deed of sale was registered but it has an annotation of the adverse claim of
Carbonell.

Thereafter, Emma Infante took possession of the lot, built a house and introduced some improvements.

In June 1995, Carbonell filed a complaint praying that she be declared the lawful owner of the land, that
the subsequent sale to spouses Infante be declared null and void, and that Jose Poncio be ordered to
execute the corresponding deed of conveyance of said land in her favor

RTC ruled that the sale to spouses Infante was null and void. After re-trial, it reversed its ruling. CA ruled
in favor of Carbonell but after a MfR, it reversed its ruling and ruled in favor of the Infantes.

Issue: WON Carbonell has a superior right over Emma Infante. YES

Held:

Article 1544 provides that for double sale of an immovable property, the ownership shall belong to the
person who first acquired it in good faith and recorded it in the Registry of Property

Article 1544, New Civil Code, which is decisive of this case, recites:

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 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.

The buyer must act in good faith in registering the deed of sale

It is essential that the buyer of realty must act in good faith in registering his deed of sale to merit the
protection of the second paragraph of said Article 1544.

Unlike the first and third paragraphs of said Article 1544, which accord preference to the one who first
takes possession in good faith of personal or real property, the second paragraph directs that ownership
of immovable property should be recognized in favor of one "who in good faith first recorded" his right.
Under the first and third paragraph, good faith must characterize the act of anterior registration.

Rule when there is inscription or not

If there is no inscription, what is decisive is prior possession in good faith. If there is inscription, as in the
case at bar, prior registration in good faith is a pre-condition to superior title.

Carbonell was in good faith when she bought the lot

When Carbonell bought the lot from Poncio on January 27, 1955, she was the only buyer thereof and the
title of Poncio was still in his name solely encumbered by bank mortgage duly annotated thereon.
Carbonell was not aware and she could not have been aware of any sale of Infante as there was no
such sale to Infante then.

Hence, Carbonell's prior purchase of the land was made in good faith. Her good faith subsisted and
continued to exist when she recorded her adverse claim four (4) days prior to the registration of
Infantes's deed of sale.

Carbonells good faith did not cease when she was informed by Poncio about the sale to Emma Infante

After learning about the second sale, Carbonell tried to talk to the Infantes but the latter refused.

(Exact words of the SC: With an aristocratic disdain unworthy of the good breeding of a good Christian
and good neighbor, Infante snubbed Carbonell like a leper and refused to see her.)

So Carbonell did the next best thing to protect her right she registered her adversed claim on
February 8, 1955. Under the circumstances, this recording of her adverse claim should be deemed to
have been done in good faith and should emphasize Infante's bad faith when she registered her deed of
sale four (4) days later on February 12, 1955.

The Infantes were in bad faith (5 indications of bad faith listed below)

Bad faith arising from previous knowledge by Infante of the prior sale to Carbonell is shown by the
following facts:

1. Mrs. Infante refused to see Carbonell.

Her refusal to talk to Carbonell could only mean that she did not want to listen to Carbonell's story that
she (Carbonell) had previously bought the lot from Poncio.

2. Carbonell was already in possession of mortgage passbook and copy of the mortgage contract. (Not
Poncios saving deposit passbook.)

Infante naturally must have demanded from Poncio the delivery to her of his mortgage passbook and
mortgage contract so that the fact of full payment of his bank mortgage will be entered therein; and
Poncio, as well as the bank, must have inevitably informed her that said mortgage passbook could not be
given to her because it was already delivered to Carbonell.

3. Emma Infante did not inquire why Poncio was no longer in possession of the mortgage passbook and
why it was in Carbonells possession.

The fact that Poncio was no longer in possession of his mortgage passbook and that the said mortgage
passbook was already in possession of Carbonell, should have compelled Infante to inquire from Poncio
why he was no longer in possession of the mortgage passbook and from Carbonell why she was in
possession of the same.

4. Emma Infante registered the sale under her name after Carbonell filed an adverse claim 4 days earlier.

Here she was again on notice of the prior sale to Carbonell. Such registration of adverse claim is valid and
effective.

5. Infante failed to inquire to Poncio WON he had already sold the property to Carbonell especially that it
can be shown that he was aware of the offer made by Carbonell.

Poncio alleged in his answer that Mrs. Infante and Mrs. Carbonell offered to buy the lot at P15/sq. m.
which offers he rejected as he believed that his lot is worth at least P20.00/sq. m. It is therefore logical to
presume that Infante was told by Poncio and consequently knew of the offer of Carbonell which fact
likewise should have put her on her guard and should have compelled her to inquire from Poncio
whether or not he had already sold the property to Carbonell

The existence of prior sale to Carbonell was duly established

From the terms of the memorandum, it tends to show that the sale of the property in favor of Carbonell
is already an accomplished act. As found by the trial court, to repeat the said memorandum states "that
Poncio is allowed to stay in the property which he had sold to the plaintiff ..., it tends to show that the
sale of the property in favor of the plaintiff is already an accomplished act..."

There was an adequate consideration or price for the sale in favor of Carbonell

Poncio agreed to sell the same to Carbonell at P9.50 per square meter, on condition that Carbonell:

1. should pay (a) the amount of P400.00 to Poncio and the arrears in the amount of P247.26 to the bank

2. should assume his mortgage indebtedness.

The bank president agreed to the said sale with assumption of mortgage in favor of Carbonell an
Carbonell accordingly paid the arrears of P247.26.

It is evident therefore that there was ample consideration, and not merely the sum of P200.00, for the
sale of Poncio to Carbonell of the lot in question.

The subject property was identified and described

The court has arrived at the conclusion that there is sufficient description of the lot referred to in Exh. As
none other than the parcel of lot occupied by the defendant Poncio and where he has his improvements
erected. The Identity of the parcel of land involved herein is sufficiently established by the contents of
the note Exh. 'A'

FIRST OPTIMA REALTY CORPORATION, Petitioner, vs. SECURITRON SECURITY

SERVICES, INC., Respondent. G.R. No. 199648 January 28, 2015

SECOND DIVISION

DEL CASTILLO, J.:

Earnest money

Facts:

The petitioner looking to expand business and add to its existing offices, respondent

through its General Manager, Antonio Eleazar (Eleazar) sent a letter to the petitoner

offering to purchase the subject property at P6,000.00 per square meter. A series of

telephone calls ensued, but only between Eleazar and Youngs secretary; Eleazar likewise

personally negotiated with a certain Maria Remoso (Remoso), who was an employee of

petitioner. At this point, Eleazar was unable to personally negotiate with Young or the
petitioners board of directors.

Sometime thereafter, Eleazar personally went to petitioners office offering to pay for the

subject property in cash, which he already brought with him. However, Young declined to

accept payment, saying that she still needed to secure her sisters advice on the matter.

10She likewise informed Eleazar that prior approval of petitioners Board of Directors

was required for the transaction, to which remark Eleazar replied that respondent shall

instead await such approval.11

On February 4, 2005, respondent sent a Letter of even date to petitioner. It was

accompanied by Philippine National Bank Check No. 24677, issued for P100,000.00 and

made payable to petitioner. The check was eventually deposited with and credited to

petitioners bank account Thereafter, respondent through counsel demanded in writing

that petitioner proceed with the sale of the property

Issue: Whether there is a contract of sale when the respondent accepted the supposed

earnest money.

Held No.

In the present case, the parties never got past the negotiation stage. Nothing shows that

the parties had agreed on any final arrangement containing the essential elements of a

contract of sale, namely, (1) consent or the meeting of the minds of the parties; (2) object

or subject matter of the contract; and (3) price or consideration of the sale.34

Respondents subsequent sending of the February 4, 2005 letter and check to petitioner

without awaiting the approval of petitioners board of directors and Youngs decision, or

without making a new offer constitutes a mere reiteration of its original offer which was

already rejected previously; thus, petitioner was under no obligation to reply to the

February 4, 2005 letter. It would be absurd to require a party to reject the very same offer

each and every time it is made; otherwise, a perfected contract of sale could simply arise

from the failure to reject the same offer made for the hundredth time.1wphi1 Thus, said

letter cannot be considered as evidence of a perfected sale, which does not exist in the

first place; no binding obligation on the part of the petitioner to sell its property arose as a

consequence. The letter made no new offer replacing the first which was rejected.
WOODHOUSE vs. HALILI

No. L-4811 | July 31, 1953 | Labrador | Appeal

Plaintiff-appellant: Charles Woodhouse

Defendant-appellant: Fortunato Halili

Quick Summary:

Facts: Woodhouse represented to Halili that he is the grantee of an exclusive franchise to bottle and
distribute Mission Dry products in the Philippines, when in truth, he was only granted a 30-day option.
After negotiations between them, they entered into a partnership agreement where it was agreed upon
that Woodhouse is entitled to 30% of the profits. When Halili found out after their US trip that
Woodhouse is not such grantee, Halili did not execute the agreement they had. Thus, Woodhouse filed a
complaint for accounting of profits and execution of the contract.

Held: The false representations of Woodhouse do not amount to the invalidity of the contract they
entered into. In order that fraud may vitiate consent, it must be the causal (dolo causante), not merely
the incidental (dolo incidente), inducement to the making of the contract. The supposed ownership of an
exclusive franchise was actually the consideration or price Woodhouse gave in exchange for the share of
30% granted him in the net profits of the partnership business. This only amounts to dolo icnidente since
it only involves getting Halilis consent to a big slice in the profits, which is only an incidental matter in
the agreement.

Facts:

Charles Woodhouse informed Mission Dry Corp. of Los Angeles that he has an interested
financier, who is willing to invest $500,000 in the bottling and distribution of Mission Dry
beverages.

Woodhouse requested that the right to bottle and distribute be granted him for a limited time under the
condition that it will finally be transferred to the corporation so that he can close the deal.

Mission Dry gave Woodhouse a 30-day option on exclusive bottling and distribution rights for the
Philippines.

Formal negotiations ensued between Woodhouse and Halili. However, the parties agreed on
establishing a partnership instead of a corporation, which entailed the drafting of several
agreements.

November 29, 1947 Woodhouse entered into a written agreement with Halili. Said agreement
has the following provisions:

1. they shall organize a partnership for the bottling and distribution of Mision soft drinks, with
Woodhouse as industrial partner or manager, and Halili as a capitalist
2. Halili would decide matters of general policy regarding the business, while the Woodhouse
would attend to the operation and development of the bottling plant

3. Woodhouse would secure the Mission Soft Drinks franchise for and in behalf of the proposed
partnership

4. Woodhouse receive 30% of the net profits of the business

December 3, 1947 Woodhouse & Halili signed the contract. Afterwards, they went to the US.

December 10, 1947 A franchise agreement was entered into the Mission Dry Corporation and
Halili and/or Woodhouse. Halili was granted the exclusive right, license, and authority to
produce, bottle, distribute, and sell Mission beverages in the Philippines.

Woodhouse went to work in January 1948 even though the operations only started on the 1 st
week of February 1948.

January 1948 Woodhouse was given P2,000 as advance on account of profits aside from the
use of a car.

Woodhouse was given same amount in February. However, he was only given P1,000 in March.
The car, Woodhouse was using, was withdrawn by Halili sometime in March.

Hence, Woodhouse demanded from Halili the execution of the partnership agreement. Halili
excused himself at first. Then, Halili promised that he would execute the agreement once the
product sales has increased to P50,000.

Since nothing favorable happened and Halili even refused to give further allowances to
Woodhouse, Woodhouse filed a complaint for the execution of the contract of partnership, an
accounting of the profits, and a share thereof of 30% including damages of P200,000.

CFI: ordered Halili to render an accounting of the profits and to pay Woodhouse 15% of said
profits

Issue:

WON Woodhouse and Halili entered into a valid contract of partnership [YES]

Ratio:
It is evident from the correspondences1 between Woodhouse and Mission Dry, and the
testimony2 of Woodhouses counsel that Woodhouse represented himself as the exclusive
grantee of the franchise even though he was only granted a 30-day option.

Halili would not have gone into the business unless the franchise was raised in his name, or at
least in the name of the partnership.

The final agreement entered into by Woodhouse and Halili contained statements that would
confirm that Halili believed, or was made to believe, that Woodhouse was the grantee of an
exclusive franchise. Thus, it was agreed upon that the franchise was to be transferred to the
name of the partnership, and that, upon its dissolution or termination, it shall be reassigned to
the Woodhouse.

1 . . . He told me to come back to him when I was able to speak with authority so that we could come to terms as far as he
and I were concerned. That is the reason why the cable was sent. Without this authority, I am in a poor bargaining
position. . .
I would propose that you grant me the exclusive bottling and distributing rights for a limited period of time, during which
I may consummate my plants. . . .

2 I don't recall any discussion about that matter. I took along with me the file of the office with regards to this matter. I
notice from the first draft of the document which I prepared which calls for the organization of a corporation, that the
manager, that is, Mr. Woodhouse, is represented as being the exclusive grantee of a franchise from the Mission Dry
Corporation

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