ROSA LIM, petitioner, vs.
COURT OF APPEALS and PEOPLE OF THE
PHILIPPINES, respondents
FACTS: Petitioner Rosa Lim who had come from Cebu received from private
respondent Victoria Suarez the following two pieces of jewelry: one (1) 3.35 carat
diamond ring worth P169,000.00 and one (1) bracelet worth P170,000.00, to be sold
on commission basis. The agreement was reflected in a receipt marked as Exhibit A
for the prosecution. Petitioner returned the bracelet to Vicky Suarez, but failed to
return the diamond ring or to turn over the proceeds thereof if sold. As a result, private
complainant, aside from making verbal demands, wrote a demand letter to petitioner
asking for the return of said ring or the proceeds of the sale thereof. In response,
petitioner, thru counsel, wrote a letter to private respondents counsel alleging that Rosa
Lim had returned both ring and bracelet to Vicky Suarez sometime in September,
1987, for which reason, petitioner had no longer any liability to Mrs. Suarez insofar as
the pieces of jewelry were concerned. Irked, Vicky Suarez filed a complaint for estafa
under Article 315, par. 1(b) of the Revised Penal Code for which the petitioner herein
stands convicted.
ISSUE: Whether or not the contract between petitioner and private respondent Suarea
is a contract of agency to sell.
HELD: Yes, the Contracts entered into by the peitioner and private respondent is a
contract of agency to sell. CONTRACTS ARE OBLIGATORY IN WHATEVER
FORM ENTERED; PLACE OF SIGNATURE IMMATERIAL; PARTY BOUND
THEREON THE MOMENT SHE AFFIXED HER SIGNATURE. - Rosa Lims
signature indeed appears on the upper portion of the receipt immediately below the
description of the items taken. We find that this fact does not have the effect of altering
the terms of the transaction from a contract of agency to sell on commission basis to a
contract of sale. Neither does it indicate absence or vitiation of consent thereto on the
part of Rosa Lim which would make the contract void or voidable. The moment she
affixed her signature thereon, petitioner became bound by all the terms stipulated in
the receipt. She, thus, opened herself to all the legal obligations that may arise from
their breach. This is clear from Article 1356 of the New Civil Code which provides:
Contracts shall be obligatory in whatever form they may have been entered into,
provided all the essential requisites for their validity are present. In the case before us,
the parties did not execute a notarial will but a simple contract of agency to sell on
commission basis, thus making the position of petitioners signature thereto immaterial.
LOURDES VALERIO LIM, petitioner,
vs.
PEOPLE OF THE PHILIPPINES, respondents
Facts: Lim is a businesswoman. She went to the house of Maria Ayroso and proposed
to sell Ayrosos tobacco. Ayroso agreed to the proposition of the appellant to sell her
tobacco consisting of 615 kilos at P1.30 a kilo. The appellant was to receive the
overprice for which she could sell the tobacco. EXHIBIT A:
To Whom It May Concern:
This is to certify that I have received from Mrs. Maria de Guzman Vda. De Ayroso. of
Gapan, Nueva Ecija, six hundred fifteen kilos of leaf tobacco to be sold at Pl.30 per
kilo. The proceed in the amount of Seven Hundred Ninety Nine Pesos and 50/100 (P
799.50) will be given to her as soon as it was sold. (This was signed by the appellant
and witnessed by the complainant's sister, Salud Bantug, and the latter's maid,
Genoveva Ruiz.)
Of the total value of P799.50, the appellant had paid to Ayroso only P240.00,
and this was paid on three different times. Demands for the payment of the
balance of the value of the tobacco were made but even trips to Lims camarin
proved futile because the same was empty. Petitioner Lourdes Valerio Lim was found
guilty by the TrialCourt and Court of Appeals of the crime of estafa (Ca only modified
the penalty).
Issue: Wether or not the receipt, Exhibit "A", is a contract of agency to sell or a
contract of sale of the subject tobacco between petitioner and the complainant,
Maria de Guzman Vda. de Ayroso, thereby precluding criminal liability of petitioner
for the crime charged.
Held: It is a contract of Agency. It is clear in the agreement, Exhibit "A", that the
proceeds of the sale of the tobacco should be turned over to the complainant as soon
as the same was sold, or, that the obligation was immediately demandable as soon as
the tobacco was disposed of. Hence, Article 1197 of the New Civil Code, which
provides that the courts may fix the duration of the obligation if it does not fix a period,
does not apply.
Re: Agency
Aside from the fact that Maria Ayroso testified that the appellant asked her to be her
agent in selling Ayroso's tobacco, the appellant herself admitted that there was an
agreement that upon the sale of the tobacco she would be given something. The
appellant is a businesswoman, and it is unbelievable that she would go to the extent of
going to Ayroso's house and take the tobacco with a jeep which she had brought if she
did not intend to make a profit out of the transaction. Certainly, if she was doing a
favor to Maria Ayroso and it was Ayroso who had requested her to sell her tobacco, it
would not have been the appellant who would have gone to the house of Ayroso, but
it would have been Ayroso who would have gone to the house of the appellant and
deliver the tobacco to the appellant. (CA) The fact that appellant received the tobacco
to be sold at P1.30 per kilo and the proceeds to be given to complainant as soon as it
was sold, strongly negates transfer of ownership of the goods to the petitioner. The
agreement (Exhibit "A') constituted her as an agent with the obligation to return the
tobacco if the same was not sold.
ENGINEERING & MACHINERY CORPORATION, petitioner, vs. COURT OF
APPEALS and PONCIANO L. ALMEDA, respondents.
FACTS: Pursuant to the contract dated September 10, 1962 between petitioner and
private respondent, the former undertook to fabricate, furnish and install the air-
conditioning system in the latters building along Buendia Avenue, Makati in
consideration of P210,000.00. Petitioner was to furnish the materials, labor, tools and
all services required in order to so fabricate and install said system. The system
was completed in 1963 and accepted by private respondent, who paid in full the
contract price.
On September 2, 1965, private respondent sold the building to the National
Investment and Development Corporation (NIDC). The latter took possession of the
building but on account of NIDCs noncompliance with the terms and conditions of the
deed of sale, private respondent was able to secure judicial rescission thereof. The
ownership of the building having been decreed back to private respondent, he re-
acquired possession sometime in 1971. It was then that he learned from some NIDC
employees of the defects of the air-conditioning system of the building.
Acting on this information, private respondent commissioned Engineer David R.
Sapico to render a technical evaluation of the system in relation to the contract with
petitioner. In his report, Sapico enumerated the defects of the system and concluded
that it was not capable of maintaining the desired room temperature of 76F - 2F
(Exhibit C)
On the basis of this report, private respondent filed on May 8, 1971 an action for
damages against petitioner with the then Court of First Instance of Rizal (Civil Case
No. 14712). The complaint alleged that the air-conditioning system installed by
petitioner did not comply with the agreed plans and specifications. Hence, private
respondent prayed for the amount of P2 10,000.00 representing the rectification cost,
P100,000.00 as damages and P15,000.00 as attorneys fees.
ISSUE: Is a contract for the fabrication and installation of a central air-conditioning
system in a building, one of sale or for a piece of work?
HELD: The court ruled that the contract entered by the parties was a contract for a
piece of work.
Article 1713 of the Civil Code defines a contract for a piece of work thus:
By the 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. The
contractor may either employ only his labor or skill, or also furnish the material.
A contract for a piece of work, labor and materials may be distinguished from a
contract of sale by the inquiry as to whether the thing transferred is one not in existence
and which would never have existed but for the order of the person desiring it. In such
case, the contract is one for a piece of work, not a sale. On the other hand, if the thing
subject of the contract would have existed and been the subject of a sale to some other
person even if the order had not been given, then the contract is one of sale.
Thus, Mr. Justice Vitug explains that
A contract for the delivery at a certain price of an article which the vendor in
the ordinary course of his business manufactures or procures for the general market,
whether the same is on hand at the time or not is a contract of sale, but if the goods are
to be manufactured specially for the customer and upon his special order, and not for
the general market, it is a contract for a piece of work (Art. 1467, Civil Code). The
mere fact alone that certain articles are made upon previous orders of customers will
not argue against the imposition of the sales tax if such articles are ordinarily
manufactured by the taxpayer for sale to the public (Celestino Co vs. Collector, 99
Phil. 841).
To Tolentino, the distinction between the two contracts depends on the intention of the
parties. Thus, if the parties intended that at some future date an object has to be
delivered, without considering the work or labor of the party bound to deliver, the
contract is one of sale. But if one of the parties accepts the undertaking on the basis of
some plan, taking into account the work he will employ personally or through another,
there is a contract for a piece of work.
Clearly, the contract in question is one for a piece of work. It is not petitioners line of
business to manufacture air-conditioning systems to be sold off-the-shelf. Its business
and particular field of expertise is the fabrication and installation of such systems as
ordered by customers and in accordance with the particular plans and specifications
provided by the customers. Naturally, the price or compensation for the system
manufactured and installed will depend greatly on the particular plans and
specifications agreed upon with the customers.
The obligations of a contractor for a piece of work are set forth in Articles 1714 and
1715 of the Civil Code, which provide:
Art. 1714. If the contractor agrees to produce the work from material furnished by him,
he shall deliver the thing produced to the employer and transfer dominion over the
thing. This contract shall be governed by the following articles as well as by the
pertinent provisions on warranty of title and against hidden defects and the payment
of price in a contract of sale.
Art. 1715. The contractor shall execute the work in such a manner that it has the
qualities agreed upon and has no defects which destroy or lessen its value or fitness
for its ordinary or stipulated use. Should the work be not of such quality, the employer
may require that the contractor remove the defect or execute another work. If the
contractor fails or refuses to comply with this obligation, the employer may have the
defect removed or another work executed, at the contractors cost.
The provisions on warranty against hidden defects, referred to in Art. 1714 above-
quoted, are found in Articles 1561 and 1566, which read as follows:
Art. 1561. The vendor shall be responsible for warranty against the hidden defects
which the thing sold may have, should they render it unfit for the use for which it is
intended, or should they diminish its fitness for such use to such an extent that, had
the vendee been aware thereof, he would not have acquired it or would have given a
lower price for it; but said vendor shall not be answerable for patent defects or those
which may be visible, or for those which are not visible if the vendee is an expert who,
by reason of his trade or profession, should have known them.