Sales Compilation

7/23/2019 Sales Compilation

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CIR vs. Arnoldus CarpentryG.R. No. 71122 March 25, 1988acts! Arnoldus Carpentry Shop, Inc. is a domestic corporation which has been in

existence since 1960. It has for its secondary purpose the preparin!, processin!,

buyin!, sellin!, exportin!, importin!, manufacturin!, tradin! and dealin! in cabinet

shop products, wood and metal home and o"ce furniture, cabinets, doors, windows,etc., includin! their component parts and materials, of any and all nature and

description. #hese furnitures, cabinets and other woodwor$ were sold locally and

exported abroad. %or this business &enture, Arnoldus $ept samples or models of its

woodwor$ on display from where its customers may refer to when placin! their

orders.

Sometime in 'arch 19(9, the examiners of the Commissioner of Internal )e&enue

*CI)+ conducted an in&esti!ation of the business tax liabilities of Arnoldus pursuant

to etter of Authority. ater Arnoldus recei&ed a letter-notice of tax deciency

assessment inclusi&e of char!es and interest for the year 19(( in the amount of /

10,(0.9. #his tax deciency was a conse2uence of the 34 tax imposed onArnoldus5 !ross export sales which, in turn, resulted from the examiners ndin!

that cate!ori7ed Arnoldus as a contractor. A!ainst this assessment, Arnoldus led a

protest with the CI). In the protest letter, Arnoldus5 mana!er maintained that the

carpentry shop is a manufacturer and therefor entitled to tax exemption on its !ross

export sales under Section 0 *e+ of the 8ational Internal )e&enue Code. e

explained that it was the (4 tax exemption on export sales which prompted pri&ate

respondent to exploit the forei!n mar$et which resulted in the increase of its forei!n

sales to at least :4 of its total !ross sales in 19((. Arnoldus5 protest with the CI)

was denied, which prompted it to appeal the case to the Court of #ax Appeal which

subse2uently also denied Arnoldus5 protest.

Issue; <hether Arnoldus is a contractor or a manufacturer=

"eld; Arnoldus is a manufacturer as dened in the #ax Code and not a

contractor under Section 0:*e+ of the #ax Code as the CI) would ha&e the Court

decide. Arnoldus5 business does not fall under the denition of independent

contractors. CI) wants to impress upon the Court that under Art. 1>6( of the 8CC,

the true test of whether or not the contract is a piece of wor$ or a contract of sale is

the mere existence of the product at the time of the perfection of the contract such

that if the thin! already exists, the contract is of sale, if not, it is wor$. #his is not

the test followed in this ?urisdiction. @ased on Art. 1>6(, what determines whetherthe contract is one of wor$ or of sale is whether the thin! has been manufactured

specially for the customer and upon his special order. #he distinction between a

contract of sale and one for wor$, labor and materials is tested by the in2uiry

whether the thin! transferred is one not in existence and which ne&er would ha&e

existed but for the order of the party desirin! to ac2uire it, or a thin! which would

ha&e existed and has been the sub?ect of sale to some other persons e&en if the

order had not been !i&en.



#$ed%sh Match vs. Court o& AppealsG.R. No. 12812'. (cto)er 2', 2''*acts! Swedish 'atch, A@ *S'A@+ is a corporation or!ani7ed under the laws of

Sweden not doin! business in the /hilippines. S'A@, howe&er, had three subsidiary

corporations in the /hilippines, one bein! /himco. Sometime in 19, S#)A, then

parent company of S'A@, decided to sell S'A@ to Bemland 'ana!ement Ser&ices,

now $nown as Swedish 'atch 8 of 8etherlands, *S'8+. S'8 adopted a twoD

pron!ed strate!y, the rst bein! to sell its shares in /himco and the other mo&e was

to sell at once or in one pac$a!e all the S'8 companies worldwide which were

en!a!ed in match and li!hter operations thru a !lobal deal.

Bd Bnri2ue7 was commissioned and !ranted full powers to ne!otiate by S'8, with

the resultin! transaction, howe&er, made sub?ect to nal appro&al by the board.

Bnri2ue7 was held under strict instructions that the sale of /himco shares should be

executed on or before 30 Eune 1990, in &iew of the ti!ht loan co&enants of S'8.

Bnri2ue7 came to the /hilippines in 8o&ember 199 and informed the /hilippinenancial and business circles that the /himco shares were for sale. Se&eral

interested parties tendered oFers to ac2uire the /himco shares, amon! whom were

the A%/ )etirement and Separation @enets System, herein respondent AS

'ana!ement G He&elopment Corporation and respondent Antonio iton?ua

*iton?ua+, the president and !eneral mana!er of AS.

In a letter iton?ua submitted to S'A@ a rm oFer to buy all of the latters shares in

/himco and all of /himcos shares in the other two subsidiary company for the sum

of /(:0,000,000.00. #hrou!h its CB, 'assimo )ossi, S'A@, in its letter dated 1

Hecember 199, than$ed respondents for their interest in the /himco shares and

informed respondents that their price oFer was below their expectations but ur!edthem to underta$e a comprehensi&e re&iew and analysis of the &alue and prot

potentials of the /himco shares, with the assurance that respondents would en?oy a

certain priority althou!h se&eral parties had indicated their interest to buy the

shares. #hereafter, an exchan!e of correspondence ensued between petitioners and

respondents re!ardin! the pro?ected sale of the /himco shares. #wo days prior to

the deadline for submission of the nal bid, iton?ua ad&ised )ossi that they would

be unable to submit the nal oFer by the deadline, considerin! that the ac2uisition

audit of /himco and the re&iew of the draft a!reements had not yet been

completed. Bnri2ue7 sent notice to iton?ua that they would be constrained to

entertain bids from other parties in &iew of iton?uas failure to ma$e a rmcommitment for the shares of Swedish 'atch in /himco by 30 Eune 1990. In a letter

dated 3 Euly 1990, )ossi informed iton?ua that on Euly 1990, they si!ned a

conditional contract with a local !roup for the disposal of /himco. e told iton?ua

that his bid would no lon!er be considered unless the local !roup would fail to

consummate the transaction on or before 1: September1990.



Apparently ir$ed by S'A@5s decision to ?un$ his bid, iton?ua asserted that, for all

intents and purposes, the SJ36 million bid which he submitted on 1 'ay 1990

was their nal bid based on the nancial statements for the year 199. e pointed

out that they submitted the best bid and they were already nali7in! the terms of

the sale. e stressed that they were rmly committed to their bid of SJ36 million

and if e&er there would be ad?ustments in the bid amount, the ad?ustments werebrou!ht about by S'A@s subse2uent disclosures and &alidated accounts, such as

the aspect that only ninetyDsix percent *964+ of /himco shares was actually bein!

sold and not oneDhundred percent *1004+.

'ore than two months from receipt of iton?uas last letter, Bnri2ue7 sent a fax

communication to the former, ad&isin! him that the proposed sale of S'A@s shares

in /himco with local buyers did not materiali7e. Bnri2ue7 then in&ited iton?ua to

resume ne!otiations with S'A@ for the sale of /himco shares. e indicated that

S'A@ would be prepared to ne!otiate with AS on an exclusi&e basis for a period of

fteen *1:+ days from 6 September 1990 sub?ect to the terms contained in the

letter. Additionally, Bnri2ue7 claried that if the sale would not be completed at the

end of the 1:Dday period, S'A@ would enter into ne!otiations with other buyers.

Shortly thereafter, iton?ua sent a letter expressin! his ob?ections to the totally new

set of terms and conditions for the sale of the /himco shares. e emphasi7ed that

the new oFer constituted an attempt to reopen the already perfected contract of

sale of the shares in his fa&or. e intimated that he could not accept the new terms

and conditions contained therein.

In its rder dated 1( April 1991, the )#C dismissed respondents complaint. It ruled

that there was no perfected contract of sale between petitioners and respondents.

#he court a 2uo said that the letter dated 11 Eune 1990, relied upon by respondents,showed that petitioners did not accept the bid oFer of respondents as the letter was

a mere in&itation for respondents to conduct a due dili!ence process or preD

ac2uisition audit of /himcos match and forestry operations to enable them to

submit their nal oFer on 30 Eune 1990. Assumin! that respondents bid was fa&ored

by an oral acceptance made in pri&ate by o"cers of S'A@, the trial court noted,

such acceptance was merely preparatory to a formal acceptance by the S'A@the

acceptance that would e&entually lead to the execution and si!nin! of the contract

of sale. 'oreo&er, the court noted that respondents failed to submit their nal bid

on the deadline set by petitioners.

Issue; <hether the series of written communications between petitioners andrespondents collecti&ely constitute a &alid contract of sale=

"eld; 8o. A contract of sale re2uires the concurrence of three elements, consent or

meetin! of the minds, that is, consent to transfer ownership in exchan!e for the

price, determinate sub?ect matter, and price certain in money or its e2ui&alent.

Such contract is born from the moment there is a meetin! of minds upon the thin!

which is the ob?ect of the contract and upon the price. In !eneral, contracts under!o



three distinct sta!es, ne!otiation, perfection or birth, and consummation.

8e!otiation be!ins from the time the prospecti&e contractin! parties manifest their

interest in the contract and ends at the moment of a!reement of the parties.

/erfection or birth of the contract ta$es place when the parties a!ree upon the

essential elements of the contract. Consummation occurs when the parties full or

perform the terms a!reed upon in the contract, culminatin! in the extin!uishmentthereof. iton?ua repeatedly stressed in his letters that they would not be able to

submit their nal bid by 30 Eune 1990.<ith indubitable inconsistency, respondents

later claimed that for all intents and purposes, the SJ36 million was their nal bid.

If this were so, it would be inane for iton?ua to state, as he did, in his letter dated

Eune 1990 that they would be in a position to submit their nal bid only on 1(

Euly 1990. #he lac$ of a denite oFer on the part of respondents could not possibly

ser&e as the basis of their claim that the sale of the /himco shares in their fa&or was

perfected, for one essential element of a contract of sale was ob&iously wantin! the

price certain in money or its e2ui&alent. #he price must be certain, otherwise there

is no true consent between the parties. #here can be no sale without a price.

Krantin! ar!uendo, that the amount of SJ36 million was a denite oFer, it would

remain as a mere oFer in the absence of e&idence of its acceptance. #o produce a

contract, there must be acceptance, which may be express or implied, but it must

not 2ualify the terms of the oFer. #he acceptance of an oFer must be un2ualied

and absolute to perfect the contract. In other words, it must be identical in all

respects with that of the oFer so as to produce consent or meetin! of the minds.

(la+uer vs. uru+ananG.R. No. 1589'7 e)ruary 12, 2''7acts! Bduardo @. la!uer alle!es that he was the owner of 60,000 shares of stoc$

of @usinessday Corporation with a total par &alue of /600,000.00. At the time hewas employed with the corporation as Bxecuti&e iceD/resident of @usinessday, and

/resident of @usinessday Information Systems and Ser&ices and of @usinessday

'ar$etin! Corporation, petitioner, to!ether with respondent )aul ocsin and Bnri2ue

Eoa2uin, was acti&e in the political opposition a!ainst the 'arcos dictatorship.

Anticipatin! the possibility that petitioner would be arrested and detained by the

'arcos military, ocsin, Eoa2uin, and ector olifeLa had an unwritten a!reement

that, in the e&ent that petitioner was arrested, they would support the petitioner5s

family by the continued payment of his salary. la!uer also executed a Special

/ower of Attorney appointin! as his attorneysDinDfact ocsin, Eoa2uin and oleLa

for the purpose of sellin! or transferrin! his shares of stoc$ with @usinessday. #he

parties ac$nowled!ed the S/A before respondent Bmilio /uru!!anan, Er., who wasthen the Corporate Secretary of @usinessday, and at the same time, a notary public

for Mue7on City. la!uer was arrested by the military and detained for alle!edly

committin! arson. Hurin! his detention, ocsin ordered /uru!!anan to cancel the

la!uer5s shares in the boo$s of the corporation and to transfer them to ocsin5s

name. ocsin e&en sent an employee of @usinessday, %ernando, to Camp Crame to

pretend to borrow la!uer5s certicate of stoc$ for the purpose of usin! it as



additional collateral for @usinessday5s then outstandin! loan with the 8ational

In&estment and He&elopment Corporation. <hen the borrowed stoc$ certicate was

returned, the word cancelled was already written therein. <hen the la!uer

became upset, it explained that this was merely a mista$e committed by ocsin5s

secretary. @ut by the time la!uer was released from prison 6 years later, he was

no lon!er a shareholder.

Accordin! to the respondents, they were ?ust doin! what was accorded in the S/A,

!i&en that the price of the shares plummeted below mar$et &alue because of the

sti!ma brou!ht about by la!uer bein! a &ery prominent oppositionist. In &iew of

petitioner5s pre&ious instructions, ocsin decided to buy the shares himself.

Althou!h the capital deciency suFered by @usinessday caused the boo$ &alue of

the shares to plummet below par &alue, ocsin, ne&ertheless, bou!ht the shares at

par &alue. owe&er, he had to borrow from @usinessday the funds he used in

purchasin! the shares from petitioner, and had to pay the petitioner in installments

of /10,000.00 e&ery 1:th and 30th of each month.

Issue; <hether there was a &alid contract of sale for the shares of stoc$ owned by

la!uer to ocsin=

"eld; Nes. la!uer ar!ues that the records failed to show that he !a&e his consent

to the sale of the shares to ocsin for the price of /600,000.00. #his ar!ument is

unsustainable. la!uer recei&ed from ocsin, throu!h his wife and inDlaws, the

installment payments for a total of /600,000.00 from 190 to 19, without any

protest or complaint. It was only four years after 19 when la!uer demanded the

return of the shares. la!uer claim that he did not instruct ocsin to deposit the

money to the ban$ accounts of his inDlaws fails to pro&e that petitioner did not !i&e

his consent to the sale since ocsin was authori7ed, under the S/A, to ne!otiate the

terms and conditions of the sale includin! the manner of payment. 'oreo&er, had

ocsin !i&en the proceeds directly to la!uer, as the latter su!!ested in this

petition, the proceeds were li$ely to ha&e been included amon! the properties

which were conscated by the military. Instead, ocsin deposited the money in the

ban$ accounts of la!uer5s inDlaws, and conse2uently, assured that the la!uer5s

wife recei&ed these amounts. In addition, la!uer made two inconsistent

statements when he alle!ed that ocsin had not as$ed him to endorse and deli&er

the shares of stoc$, and when %ernando as$ed the la!uer to endorse and deli&er

the certicates of stoc$, but he refused and e&en became upset. In either case, both

statements only pro&e that la!uer refused to honor his part as seller of the shares,e&en after recei&in! payments from the buyer. ad la!uer not $nown of or !i&en

his consent to the sale, he would ha&e !i&en bac$ the payments as soon as

%ernando as$ed him to endorse and deli&er the certicates of stoc$, an incident

which une2ui&ocally conrmed that the funds he recei&ed, throu!h his wife and his

inDlaws, were intended as payment for his shares of stoc$s. Instead, he held on to

the proceeds of the sale after it had been made clear to him that ocsin had



considered the /600,000.00 as payment for the shares, and as$ed la!uer, throu!h

%ernando, to endorse and deli&er the stoc$ certicates for cancellation.

-CA vs. #pouses #antosG.R. No. 8'298 Apr%l 2/, 199'acts; A person identifyin! himself as /rofessor Eose Cru7 and dean of He la Salle

Colle!e placed an order by telephone with BHCA for >06 boo$s, payable on deli&ery.

BHCA prepared and deli&ered the same to!ether with an in&oice. In turn Cru7 issued

a personal chec$ co&erin! the purchase price of /,99:.6:. Cru7 then sold 10 of

the boo$s to pri&ate respondent eonor Santos who, after &erifyin! the sellers

ownership from the in&oice he showed her, paid him /1,(00.00. BHCA made an

in2uiry with the He la Salle Colle!e was informed that there was no such person in

its employ %urther &erication re&ealed that Cru7 had no more account or deposit

with the /hilippine Amanah @an$, a!ainst which he had drawn the payment chec$.

BHCA then went to the police, which set a trap and arrested Cru7. In&esti!ation

disclosed his real name as #omas de la /eLa and his sale of 10 of the boo$s he had

ordered from BHCA to Santos. BHCA and the police went to Santos5 store and sei7edthe sub?ect boo$s. Spouses Sanos sued for reco&ery of the boo$s after demand for

their return was re?ected by BHCA. BHCA ar!ues that it was unlawfully depri&ed of

the boo$s, because the impostor ac2uired no title to the boo$s and that he could

not ha&e &alidly transferred the boo$s to the pri&ate respondents.

Issue;<hether BHCA has been unlawfully depri&ed of the boo$s because the chec$

issued by the impostor in payment therefor was dishonoured=

"eld; #he contract of sale is consensual and is perfected once a!reement is

reached between the parties on the sub?ect matter and the consideration. It is clear

from Articles 1>(:, 1>((D( of the 8CC that ownership in the thin! sold shall notpass to the buyer until full payment of the purchase only if there is a stipulation to

that eFect. therwise, the rule is that such ownership shall pass from the &endor to

the &endee upon the actual or constructi&e deli&ery of the thin! sold e&en if the

purchase price has not yet been paid. 8onDpayment only creates a ri!ht to demand

payment or to rescind the contract, or to criminal prosecution in the case of

bouncin! chec$s. @ut absent the stipulation abo&e noted, deli&ery of the thin! sold

will eFecti&ely transfer ownership to the buyer who can in turn transfer it to

another. Actual deli&ery of the boo$s ha&in! been made, Cru7 ac2uired ownership

o&er the boo$s which he could then &alidly transfer to the spouses Santos. #he fact

that he had not yet paid for them to BHCA was a matter between him and BHCA anddid not impair the title ac2uired by the spouses Santos to the boo$s.

0anon+on vs. #asonG.R. No. 1*'889. May 9, 2''2acts! Cayco 'arine Ser&ice is en!a!ed in the business of haulin! oil. It is owned

and operated by Iluminada Cayco li7on. %elicidad Samson, Casiano A. sin, Alberto

@elbes, and uisito enus were amon! the employees of Cayco and led a



complaint a!ainst their employer for ille!al dismissal, underpayment of wa!es, nonD

payment of holiday pay, rest day pay and lea&e pay. 8)C directed Cayco and

li7on to pay the complainants, separation pay, bac$wa!es, and, : days ser&ice

incenti&e lea&e pay limited to the three *3+ years bac$ from the lin! of the

complaint.

Cayco and li7on sou!ht reconsideration of the 8)Cs decision but it pro&ed futile.

n appeal to the Supreme Court, the Court resol&ed to deny the petition for nonD

compliance with a Supreme Court Circular and also for the failure of Cayco and

li7on to establish !ra&e abuse of discretion on the part of the 8)C. Accordin!ly,

the decision of the 8)C became nal and executory on April 9, 199( and a writ of

execution was issued directin! the 8)C sheriF to collect from Cayco and li7on.

After the notice of le&y-sale on execution of personal property was issued, a motor

tan$er, owned by li7on was sei7ed, to be sold at public auction howe&er a certain

Horotea #anon!on led a third party claim before the labor arbiter, alle!in! that she

was the owner of the sub?ect motor tan$er, ha&in! ac2uired the same from li7on

on Euly 9, 199(, for and in consideration of /1,100,000.00.

Issue; <hether or not #anon!on is a buyer in !ood faith and for &alue=

"eld; 8o. #here is su"cient basis that petitioner was a buyer in bad faith. #he

?ud!ment fa&orin! respondents a!ainst Cayco and li7on was rendered on Euly 1,

1996, and a"rmed by this Court &ia a Eanuary 1:, 199( )esolution. #he <rit of

Bxecution was issued by the labor arbiter on Euly >, 199(. #he sale of the le&ied

tan$er, howe&er, was made only on Euly 9, 199(. li7on act was a ca&alier attempt

to e&ade payment of the ?ud!ment debt. She ob&iously !ot word of the issuance of

the <rit and disposed of the tan$er to pre&ent its sale on execution. Hespite

$nowled!e of these antecedents, #anon!on bou!ht the tan$er barely ten days

before it was le&ied upon on Au!ust , 199(.It is not only the proximity in time that

supports this ndin!. nder Article 13( of the Ci&il Code, alienations by onerous

title are presumed to be fraudulent when done by persons a!ainst whom some

?ud!ment has been rendered or some writ of attachment issued in any instance. It

was stress that in the present case, the <rit of Attachment has been issued, the

le&y already made and, as will later be discussed, the property still in the name of

li7on and Cayco. It is also more than coincidental that the purchase price for the

tan$er was /1,100,000.00, while li7ons ?ud!ment debt to respondents amounted

to /1,19,>.::.

A purchaser in !ood faith or an innocent purchaser for &alue is one who buys

property and pays a full and fair price for it at the time of the purchase or before

any notice of some other persons claim on or interest in it. #anon!on should ha&e

in2uired whether li7on had other unsettled obli!ations and encumbrances that

could burden the sub?ect property. Any person en!a!ed in business would be wary

of buyin! from a company that is closin! shop, because it may be dissipatin! its

assets to defraud its creditors.



Documents

Sales Compilation