G.R. NO. L-8506 AUGUST 31, 1956 CELESTINO V. COLLECTOR OF INTERNAL REVENUE FACTS 1.

Celestino Co & Company is a duly registered general co-partnership doing business under the trade name of "Oriental Sash Factory". 2. From 1946 to 1951 it paid percentage taxes of 7 per cent on the gross receipts of its sash, door and window factory, in accordance with section 186 of the National Revenue Code imposing taxes on sale of manufactured articles. 3. However in 1952 it began to claim liability only to the contractor's 3 per cent tax (instead of 7 per cent) under section 191 of the same Code. Petitioner claims that it does not manufacture ready-made sash, doors and windows for the public and that it makes these articles only special order of its customers. 4. Petitioner failed to convince the Bureau of Internal Revenue. 5. It brought the matter to the Court of Tax Appeals, where it also failed. CTA, in its decision, assailed that:
Petitioner has chosen for its tradename and has offered itself to the public as a Factory, which means it is out to do business, in its chosen lines on a big scale. As a general rule, sash factories receive orders for doors and windows of special design only in particular cases but the bulk of their sales is derived from a ready-made doors and windows of standard sizes for the average home.. Even if we were to believe petitioners claim that it does not manufacture ready-made sash, doors and windows for the public and that it makes these articles only special order of its customers, that does not make it a contractor within the purview of section 191 of the national Internal Revenue Code there are no less than fifty occupations enumerated in the aforesaid sectionand after reading carefully each and every one of them, we cannot find under which the business of manufacturing sash, doors and windows upon special order of customers fall under the category mentioned under Sec 191.

The important thing to remember is that Celestino Co & Company habitually makes sash, windows and doors, as it has represented in its stationery and advertisements to the public. That it manufactures the same is practically admitted by appellant itself. The fact that windows and doors are made by it only when customers place their orders, does not alter the nature of the establishment, for it is obvious that it only accepted such orders as called for the employment of such material-moulding, frames, panels-as it ordinarily manufactured or was in a position habitually to manufacture. The Oriental Sash Factory does nothing more than sell the goods that it massproduces or habitually makes; sash, panels, moldings, frames, cutting them to such sizes and combining them in such forms as its customers may desire. Appellant invokes Article 1467 of the New Civil Code to bolster its contention that in filing orders for windows and doors according to specifications, it did not sell, but merely contracted for particular pieces of work or merely sold its services. In our opinion when this Factory accepts a job that requires the use of extraordinary or additional equipment, or involves services not generally performed by it-it thereby contracts for a piece of work filing special orders within the meaning of Article 1467. The orders herein exhibited were not shown to be special. They were merely orders for work nothing is shown to call them special requiring extraordinary service of the factory. The thought occurs to us that if, as alleged-all the work of appellant is only to fill orders previously made, such orders should not be called special work, but regular work. The Supreme Court affirms the assailed decision by the CTA.

ISSUE Whether the petitioner company provides special services or is engaged in manufacturing. HELD The petitioner company IS ENGAGED IN MANUFACTURING. RATIO

G.R. NO. L-11491 AUGUST 23, 1918 QUIROGA V. PARSONS HARDWARE FACTS 1. On January 24, 1911, plaintiff and the defendant entered into a contract making the latter an agent of the former. 2. 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. 3. 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. 4. 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. 5. 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.

First, 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. Second, the price agreed upon was the one determined by the plaintiff for the sale of these beds in Manila, with a discount of from 20 to 25 per cent, according to their class. Payment was to be made at the end of sixty days, or before, at the plaintiff's 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. It must be understood that a contract is what the law defines it to be, and not what it is called by the contracting parties. In respect to the defendant's 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.

ISSUE 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. HELD The defendant was a PURCHASER of the plaintiff for the sale of his beds. RATIO In order to classify a contract, due regard must be given to its essential clauses.

G.R. NO. L-45955 APRIL 5, 1939 VDA. DE JOSE V. BARRUECO FACTS 1. Mary Ando leased from Julio Barrueco a China cabinet valued at P70. She undertook, under the lease, to pay P14 upon signing the contract and P5 monthly thereafter for a period not specified but extendible at the owner's pleasure. 2. The contract of lease further provided that upon lessee's default, the contract would be rescinded; that the lessee was not liberty to remove said cabinet from the house where she lived, and that upon failure to comply with the terms of the lease, the owner could immediately take possession of the property leased. 3. Under similar terms and conditions, Mary Ando also leased from said store a narra wardrobe valued at P120, paying P24 cash and P10 monthly. 4. Unable to pay the rent of the house, Mary Ando attempted to move therefrom, taking with her the cabinet and the wardrobe. She was presented from doing so by Teodorica R. Viuda de Jose, the owner of the house, who claimed to be entitled to the said personal properties in lieu of rents due. 5. CFI held that the contract of lease was fictitious and that the real contract between the plaintiff and Mary Ando was one of sale on the installment basis. However, it was reversed by the Court of Appeals, and said that the contract was that of a contract of lease. ISSUE Whether the contract is of a contract of sale or of contract of lease.

It is the legal effect of the whole which is to be sought for. The form of the instrument is of little account. We find that the parties intended to have the ownership of the furniture transferred to Mary Ando upon the latter complying with the conditions of the contract. Sellers desirous of making conditional sales of their goods, but who do not wish openly to make a bargain in that form, for one reason or another, have frequently resorted to the device of making contracts in the form of leases either with options to the buyer to purchase for a small consideration at the end of term, provided the so-called rent has been duly paid, or with stipulations that if the rent throughout the term is paid, title shall thereupon vest in the lessee. It is obvious that such transactions are leases only in name. The so-called rent must necessarily be regarded as payment of the price in installments since the due payment of the agreed amount results, by the terms of the bargain, in the transfer of title to the lessee.

In H. E. Heacock Co. vs. Buntal Manufacturing Co.: (MS Translated) Furthermore we must say that the fact of having fixed the price of the machine in the contract, makes this not lease, but buying and selling, because in lease contracts, as opposed to contracts for sale, is redunduncia injustifiable, fix or make mention of the price of the thing given in lease followed. (Arts. 1445, 1543, code Civil.) When the terms of a contract are not clear or are contradictory to each other, such as those of Exhibit A, it must give effect to the intention of the parties (art 1281 of the Civil Code), and the intention of the plaintiff and the defendants in this case according to see it printed in the contract Exhibit A, whereas together all their terms and clauses is that the contract they concluded was the purchase in installments, rather than lease. In Manila Gas Corporation vs. Calupitan: (MS Translated)

HELD The contract is of a CONTRACT OF SALE. RATIO The answer to this question is not to be found in any denomination which the parties may have given to the instruments, and not alone in any particular provision it contains, disconnected from all others, but in the ruling intention of the parties, gathered from the language they have used.

For the considerations set out above, we are of opinion, and so declare, that when in a contract entitled movable thing lease stipulates that the so-called tenant pay certain amount to sign the contract, and on or before the 5 day of every month, another certain amount, in respect of rent, giving the so-called right tenant's option to buy the aforementioned Cabinet before expiry of the term of the lease which is the time that is required to pay this amount at the rate of a little a month, minus the payments made on concept of advancement and supposed monthly rentals, and said so-called tenant makes the advancement and pay several months, becoming noted in its account and receipts that are issued to you that such payments are on account of the amount of the allegedly leased furniture thing Giuliani has the concept of forward sale and not lease.

G.R. NO. 109125 DECEMBER 2, 1994 ANG YU ASUNCION V. CA FACTS

10. RTC ordered the Cu Unjiengs to execute the necessary Deed of Sale of the property in litigation in favor of plaintiffs in recognition of petitioners right of first refusal. This was set aside by CA. ISSUE

1. Plaintiffs are tenants or lessees of residential and commercial spaces owned by defendants situated at Binondo, Manila; that they have occupied said spaces since 1935 and have been religiously paying the rental and complying with all the conditions of the lease contract. 2. On several occasions before October 9, 1986, defendants informed plaintiffs that they are offering to sell the premises and are giving them priority to acquire the same. 3. During the negotiations, Bobby Cu Unjieng offered a price of P6-million while plaintiffs made a counter offer of P5-million; that plaintiffs thereafter asked the defendants to put their offer in writing to which request defendants agreed. 4. In October 24, 1986, petitioners asked the respondents to specify the terms and conditions of the offer to sell. 5. Petitioners now raise that since respondents failed to specify the terms and conditions of the offer to sell and because of information received that the latter were about to sell the property, plaintiffs were compelled to file the complaint to compel defendants to sell the property to them. 6. The trial court found that the respondents offer to sell was never accepted by the petitioners for the reason that they did not agree upon the terms and conditions of the proposed sale, hence, there was no contract of sale at all. The Court of Appeals affirmed the decision of the lower court. This decision was brought to the Supreme Court by petition for review on certiorari which subsequently denied the appeal on May 6, 1991 for insufficiency in form and substance. 7. On November 15, 1990, while CA-G.R. CV No. 21123 was pending consideration by this Court, the Cu Unjieng spouses executed a Deed of Sale transferring the property in question to herein respondent Buen Realty and Development Corporation, for P15,000,000.00. 8. On July 1, 1991, respondent as the new owner of the subject property wrote a letter to the petitioners demanding that the latter vacate the premises. 9. On July 16, 1991, the petitioners wrote a reply to respondent corporation stating that the latter brought the property subject to the notice of lis pendens regarding Civil Case No. 87-41058 annotated on TCT No. 105254/T881 in the name of the Cu Unjiengs.

HELD RATIO Observe, however, that the option is not the contract of sale itself. The optionee has the right, but not the obligation, to buy. Once the option is exercised timely, i.e., the offer is accepted before a breach of the option, a bilateral promise to sell and to buy ensues and both parties are then reciprocally bound to comply with their respective undertakings. In the law on sales, the so-called right of first refusal is an innovative juridical relation. Needless to point out, it cannot be deemed a perfected contract of sale under Article 1458 of the Civil Code. An option or an offer would require, among other things, a clear certainty on both the object and the cause or consideration of the envisioned contract. In a right of first refusal, while the object might be made determinate, the exercise of the right, however, would be dependent not only on the grantor's eventual intention to enter into a binding juridical relation with another but also on terms, including the price, that obviously are yet to be later firmed up. Prior thereto, it can at best be so described as merely belonging to a class of preparatory juridical relations governed not by contracts (since the essential elements to establish the vinculum juris would still be indefinite and inconclusive) but by, among other laws of general application, the pertinent scattered provisions of the Civil Code on human conduct.

G.R. NO. L-11872 DECEMBER 1, 1917 MERCADO V. ESPIRITU FACTS 1. The plaintiffs alleged that they and their sisters Concepcion and Paz, all surnamed Mercado, were the children and sole heirs of Margarita Espiritu, a sister of the deceased Luis Espiritu. 2. That Margarita Espiritu died in 1897, leaving as her paraphernal property a tract of land of 48 hectares. 3. The defendant (Luis Espiritu) was accused to have induced, and fraudulently succeeded in getting the plaintiffs to sell their land for a sum of P400 as opposed to its original value. 4. The annulment of a deed of sale was sought by the plaintiffs. They asserted that two of the four parties were minors. These two minors (Domingo & Josefa Mercado) presented themselves to be of legal age upon signing it and they made a manifestation in front of the notary public. ISSUE Whether the petitioners are bound by the contract or not because they are minors. HELD Petitioners are BOUND by the contract. RATIO The courts, in their interpretation of the law, have laid down the rule that the sale of real estate, made by minors who pretend to be of legal age, when in fact they are not, is valid, and they will not be permitted to excuse themselves from the fulfillment of the obligations contracted by them, or to have them annulled in pursuance of the provisions of Law 6, title 19, of the 6th Partida; and the judgment that holds such a sale to be valid and absolves the purchaser from the complaint filed against him does not violate the laws relative to the sale of minors' property, nor the juridical rules established in consonance therewith.

The courts laid down that such sale of real estate was still valid since it was executed by minors, who have passed the ages of puberty and adolescence, and are near the adult age, and that the minors pretended that they had already reached their majority.
Article 38. Minority, insanity or imbecility, the state of being a deaf-mute, prodigality and civil-interdiction are mere restrictions on the capacity to act, and do not exempt the incapacitated person from certain obligations, as when the latter arise from his acts or from property relations, such as easements.

Also, these minors cannot be permitted afterwards to excuse themselves from compliance with the obligation assumed by them or seek their annulment. This is in accordance with the provisions of the law on estoppels. This is in accordance with the provisions of the law on estoppel.
Art 1431 of Civil Code. Through estoppel, an admission or representation is rendered conclusive upon the person making it, and cannot be denied or disproved as against the person relying thereon.

This is also in accordance with the provisions of Rule 123, Sec 68, Par. A
Rule 123, sec 68, Par. A. Whenever a party has, by his own declaration, act or omission, intentionally and deliberately led another to believe a particular thing to be true, and to act upon such belief, he cannot, in any litigation arising out of such declaration, act or omission, cannot be permitted to falsify it.

G.R. No. L-1720 March 4, 1950 SI SUAN V. ALCANTARA FACTS 1. On August 3, 1931, a deed of sale was executed by Rufino Alcantara and his sons Damaso Alcantara and Ramon Alcantara conveying to Sia Suan five parcels of land. Ramon Alcantara was then 17 years, 10 months and 22 days old. 2. On August 27, 1931, Gaw Chiao (husband of Sia Suan) received a letter from Francisco Alfonso, attorney of Ramon Alcantara, informing Gaw Chiao that Ramon Alcantara was a minor and accordingly disavowing the contract. 3. After being contacted by Gaw Chiao, however, Ramon Alcantara executed an affidavit in the office of Jose Gomez, attorney of Gaw Chiao, wherein Ramon Alcantara ratified the deed of sale. On said occasion Ramon Alcantara received from Gaw Chiao the sum of P500. 4. In the meantime, Sia Suan sold one of the lots to Nicolas Azores from whom Antonio Azores inherited the same. 5. An action was instituted by Ramon Alcantara in the Court of First Instance of Laguna for the annulment of the deed of sale as regards his undivided share in the two parcels of land. 6. CFI decided against of Alcantara. Court of Appeals reversed this on the ground that the deed of sale is not binding against Ramon Alcantara in view of his minority on the date of its execution, and accordingly sentenced Sia Suan to pay and reconvey to him the title. ISSUE Whether Alcantara is bound by the contract or not due to his minority. HELD Alcantara is BOUND by the contract. RATIO In support of the contend that the deed of sale is binding on the appellee, counsel for the appellants invokes the decision in Mercado and Mercado vs. Espiritu.

The Court of Appeals has refused to apply this doctrine on the ground that the appellants did not actually pay any amount in cash to the appellee and therefore did not suffer any detriment by reason of the deed of sale, it being stipulated that the consideration therefore was a pre-existing indebtedness of appellee's father, Rufino Alcantara. We are of the opinion that the Court of Appeals erred. In the first place, in the case cited, the consideration for sale consisted in greater part of pre-existing obligation. In the second place, under the doctrine, to bind a minor who represents himself to be of legal age, it is not necessary for his vendee to actually part with cash, as long as the contract is supported by a valid consideration. Since appellee's conveyance to the appellants was admittedly for and in virtue of a pre-existing indebtedness (unquestionably a valid consideration), it should produce its full force and effect in the absence of any other vice that may legally invalidate the same. It is not here claimed that the deed of sale is null and void on any ground other than the appellee's minority. Appellee's contract has become fully efficacious as a contract executed by parties with full legal capacity. The circumstance that, about one month after the date of the conveyance, the appellee informed the appellants of his minority, is of no moment, because appellee's previous misrepresentation had already estopped him from disavowing the contract. Said belated information merely leads to the inference that the appellants in fact did not know that the appellee was a minor on the date of the contract, and somewhat emphasizes appellee's had faith, when it is borne in mind that no sooner had he given said information than he ratified his deed of sale upon receiving from the appellants the sum of P500.

G.R. No. L-46850 June 20, 1940 SUI PIN V. CANTOLLAS FACTS 1. Spouses Pedro Velegao and Casimira Cantollas were indebted to El Hogar Filipino in the sum of P2,000 secured by a mortgage on certain land. 2. Upon the death of Pedro Velegao in the same year, there remained an unpaid balance of P1,300. 3. On April 2, 1932 Casimira Cantollas and her son Blas Velegao, who succeeded to the mortgaged land, entered into a contract with Uy Siu Pin by which Casimira and Blas agreed to deliver the latter to possess and enjoy the same with its improvements during the period of fifteen years from April 2, 1932, on condition that Uy Siu Pin would pay to El Hogar Filipino the unpaid balance, together with all other expenses. 4. It was further covenanted that after the lapse of fifteen years, Uy Siu Pin would return the land to them without any obligation on the part of the latter to pay anything to Uy Siu Pin. But, if after the expiration of five years from April 2, 1932, Casimira and Blas would be in a position to do so, they had the right to redeem said land by paying to Uy Siu Pin or his successors in interest. 5. When Uy Siu Pin ceased to make further payments to El Hogar Filipino , as a result of which the latter foreclosed the mortgage. 6. Mother and son failed to buy the foreclosed land but Siu Pin successfully bought the land. 5. Uy Siu Pin in turn sold the land to his wife Chua Hue in consideration of P4,000. ISSUE HELD RATIO It cannot be contended with fairness that Uy Siu Pin acquired the land in his own right from El Hogar Filipino after the latter had foreclosure the mortgage thereon, because the foreclosure was brought about by his own failure to pay, as stipulated in the contract Exhibit A, the indebtedness of Casimira and Blas. Neither could the latter be blamed for their failure to redeem the land from El Hogar Filipino after the foreclosure sale, for the

reason that they had the perfect right to rely on their contract with Uy Siu Pin. In any event, whether we consider Uy Siu Pin as having purchased the land from El Hogar Filipino in his own right, and not on behalf of Casimira Cantollas and Blas Velegao, he is still bound, under the circumstances of this case, to reconvey the same to Casimira and Blas after the expiration of the period stipulated in the existing contract. The sale from Uy Siu Pin to his wife Chua Hue is null and void not only because the former had no right to dispose of the land in controversy in view of the existence of the contract Exhibit A but because such sale comes within the prohibition of article 1458 of the Civil Code. It is not necessary to dwell upon the sale from Chua Hue to the intervenor Juan Magbajos, as the latter has not appealed from the decision complained of by the petitioners.