SALES

Dizon vs. Court of Appeals

G.R. No. 122544 302 SCRA 288
FIRST DIVISION
Ponente: Martinez, J

Facts:
On 1974, Private respondent Overland Express Lines, Inc (lessee) entered into a
Contract of Lease with Option to Buy with petitioners (lessors) involving a land
situated at Quezon City for one (1) year. During that period the respondent was
granted an option to purchase the land. 1976, for failure of lessee to pay the
rentals the petitioners filed an action for ejectment. The City Court rendered judgment
ordering lessee to vacate the leased premises and to pay the rentals in arrears and
damages with interests. Lessee filed a petition enjoining the enforcement of said
judgment and dismissal of the case for lack of jurisdiction. Such petition was denied.
Thereafter, lessee filed for an action for specific performance to compel the execution
of a deed of sale pursuant to the option to purchase and the receipt of the partial
consideration given to Alice Dizon and for the fixing of period to pay the balance.
Respondent Court of Appeals rendered a decision upholding the jurisdiction of City
Court and concluding that there was a perfected contract of sale between the parties
due to the said partial payment. Petitioner’s motion for reconsideration was denied by
the respondent Court.

Issues:
Whether the Quezon City court has jurisdiction over the ejectment case?
Whether the money given constitutes partial consideration to the option to purchase
the land?
Whether or not there is a perfected contract of sale?

Ruling:
1. The petitioneres had a cause of action to institute an ejectment suit against the
lessee with the City Court thus the city court (now MTC) has jurisdiction over it. The
filing of lessor of a suit with the RTC did not dives the City Court of its jurisdiction to
take cognizance over the ejectment case.

2. The term stipulated in the contract of lease with option to buy is just one (1) year.
Having failed to exercise the option within that period, the lessee cannot enforce its
option to purchase anymore. Even assuming that such option still subsists, when the
lessee tendered the amount on 1975, the suit for specific performance to enforce the
option to purchase was filed only on 1985 ore more than ten (10) years after accrual
of the cause of action. Since the lessee did not purchase within the stipulated one (1)
year and afterwhich still kept possession thereof, there was an implicit renewal of the
contract reviving all the terms in the original contract which are only germane to the
lessee’s rights of continued enjoyment of the property leased. The option to purchase
is not deemed
incorporated.

3. There was no perfected contract of sale between the parties. In herein case, the
lessee gave the money to Alice Dizon in an attempt to resurrect the lapsed option.The
basis for agency is representation and a person dealing with an agent is put upon
inquiry and must discover upon his peril the authority of the agent. Here, there was no
showing that petitioners consented to the act of Alice Dizon nor authorized her to act
on their behalf with regard to her transaction with the lessee. Therefore, one of the
essential elements for a contract of sale to be perfected is lacking: consent.

CASE 2

Inocencio Yu Dino vs. Court of Appeals

June 20, 2001 G.R. No. 113564
359 SCRA 91
First Division
Puno, J.:

FACTS:
Petitioners spouses Dinoare engaged in the business of manufacturing and selling
shirts.1 Respondent Sio is part owner and general manager of a manufacturing
corporation doing business under the trade name "Universal Toy Master
Manufacturing." Petitioners and respondent Sio entered into a contract whereby the
latter would manufacture for the petitioners 20,000 pieces of vinyl frogs and 20,000
pieces of vinyl mooseheads at P7.00 per piece in accordance with the sample
approved by the petitioners. These frogs and mooseheads were to be attached to the
shirts petitioners would manufacture and sell.

Respondent Sio delivered in several installments the 40,000 pieces of frogs and
mooseheads. Petitioner fully paid the agreed price. Subsequently, petitioners returned
to respondent 29,772 pieces of frogs and mooseheads for failing to comply with the
approved sample. Petitioners then demanded from the respondent a refund of the
purchase price of the returned goods in the amount of P208,404.00. As respondent Sio
refused to pay. Petitioners filed action for collection of a sum of money.

RTC ruled in favor of the petioners. Respondent Sio sought recourse in the Court of
Appeals. The appellate court affirmed the trial court decision. Respondent then filed a
Motion for Reconsideration and a Supplemental Motion for Reconsideration alleging
therein that the petitioners' action for collection of sum of money based on a breach of
warranty had already prescribed. On January 24, 1994, the respondent court reversed
its decision and dismissed petitioners' Complaint for having been filed beyond the
prescriptive period. Hence, this petition

ISSUE:
Whether the contract between the contracting parties is a contract of sale or a contract
for a piece of work
Whether the respondent is responsible for the warranty against hidden defects

RULING:
Petition is DENIED

The contract between the petitioners and respondent stipulated that respondent would
manufacture upon order of the petitioners 20,000 pieces of vinyl frogs and 20,000
pieces of vinyl mooseheads according to the samples specified and approved by the
petitioners. Respondent Sio did not ordinarily manufacture these products, but only
upon order of the petitioners and at the price agreed upon. Clearly, the contract
executed by and between the petitioners and the respondent was a contract
for a piece of work. At any rate, whether the agreement between the parties was one
of a contract of sale or a piece of work, the provisions on warranty of title against
hidden defects in a contract of sale apply to the case at bar.

A hidden defect is one which is unknown or could not have been known to the
vendee.

CASE 3

ONAPAL PHILS. COMMODITIES, INC. vs. THE

COURT OF APPEALS and SUSAN CHUA
February 1, 1993 GR No. 90707
Campos, Jr., J.:

FACTS:
ONAPAL Phils. Commodities, Inc. is a commission merchant/broker licensed by
SEC, engaged in commodity futures trading.

Futures Commission Merchant/Broker refers to a corporation or partnership, which

must be registered and licensed as a Futures Commission Merchant/Broker and is
engaged in soliciting or in accepting orders for the purchase or sale of any commodity
for future delivery on or subject to the rules of the contract market and that, in
connection with such solicitation or acceptance of orders, accepts any money,
securities or property (or extends credit in lieu thereof) to margin, guarantee or secure
any trade or contract that results or may result therefrom. Its Account Executive
Elizabeth Diaz invited Susan Chua to invest in commodity futures trading and they
subsequently entered into a commodity futures contract without explanation to Susan
as to the risks involved.

A commodity futures contract refers to an agreement to buy or sell a specified

quantity and grade of a commodity at a future date at a price established at the floor of
the exchange.

As stipulated in the trading contract, Susan may withdraw anytime and she did. From
P 800,000 Susan invested, she was able to get only P 470,000. Hence, complaint was
filed with the trial court. The trial court found and rendered the trading contract a
specie of gambling and therefore null and void. CA upheld the judgment.
Hence, petition for certiorari with SC.

ISSUE
W/N THE TRADING CONTRACT IS NULL AND VOID AS IT APPEARS TO BE
A SPECIE OF GAMBLING
RULING
Petition Dismissed. The trading contract signed by the parties, is a contract for the
sale of products for future delivery, in which either seller or buyer may elect to make
or demand delivery of goods agreed to be bought and sold, but where no such delivery
is actually made. By delivery is meant the act by which the res or
subject is placed in the actual or constructive possession or control of another.
ONAPAL received the customer's orders and private respondent's money. As per
terms of the trading contract, customer's orders shall be directly transmitted by the
petitioner as broker to its principal, Frankwell Enterprises Ltd. of
Hongkong , which in turn must place the customer's orders with the Tokyo Exchange.
There is no evidence that the orders and money were transmitted to its principal
Frankwell Enterprises Ltd. in Hongkong nor were the orders forwarded to the Tokyo
Exchange. We draw the conclusion that no actual delivery of goods and commodity
was intended and ever made by the parties. In the realities of the transaction, the
parties merely speculated on the
rise and fall in the price of the goods/commodity subject matter of the transaction. If
private respondent's speculation was correct, she would be the winner and the
petitioner, the loser, so petitioner would have to pay private respondent the "margin".
But if private respondent was wrong in her speculation then she would emerge as the
loser and the petitioner, the winner. The petitioner would keep the money or collect
the difference from the private respondent. This is clearly a form of gambling
provided for with unmistakeable certainty under Article 2018