[01-01] Coronel v.

CA (GR 103577, 7 October 1996)

263 SCRA 15
Third division, Melo (J): 3 concur, 1 took no part.
Facts: Romulo Coronel executed a document entitled Receipt of Downpayment in favor of Ramona Patricia Alcaraz
for P50,000 downpayment of the amount of P1.24M as purchase price for an inherited house and lot, without
reservation to withhold the transfer of such property until full payment. The purpose of such downpayment was for the
heirs to transfer the title to their name. Upon the registration of the property to name of the heirs, the Coronels sold the
same property to Catalina B. Mabanag for P1.58M. The Coronels rescinded the contract with Alcaraz by depositing the
downpayment amount in a bank account in favor of Alcaraz. Alcaraz filed a complaint for specific performance, which
the trial and the appellate court ruled in her favor.
Issue: Whether the receipt of downpayment serves a contract to sell or a conditional contract of sale.
Held: The agreement is a contract of sale as there was no express reservation of ownership or title to the subject parcel
of land. Petitioners did not merely promise to sell the property to private respondent upon the fulfillment of the
suspensive condition but on the contrary, having already agreed to sell the subject property, they undertook to have the
certificate of title changed to their names and immediately thereafter, to execute the written deed of absolute sale. The
suspensive condition was fulfilled on 6 February 1985 and thus, the conditional contract of sale between the parties
became obligatory, the only act required for the consummation thereof being the delivery of the property by means of
the execution of the deed of absolute sale in a public instrument, which petitioners unequivocally committed themselves
to do as evidenced by the Receipt of Down Payment.
[01-02] Romero v. CA (GR 107207, 23 November 1995)
250 SCRA 15
Third division, Vitug (J): 4 concur
Facts: Virgilio Romero and his foreign partners decided to put up a central warehouse in Metro Manila. Alfonso Flores,
in behalf of Enriqueta Chua vda. De Ongsiong, proposed the latters lot to Romero as the site for the said warehouse. A
contract denominated as Deed of Conditional Sale was executed between Romero and Ongsiong where the amount
of P50,000 was received from Romero for the purpose of taking up am ejectment case against the squatters found
therein. Ongsiong sought to return the amount she received from Romero as she claimed she is unable to rid the land
of squatters, notwithstanding the favorable judgment already promulgated by the court in the ejectment case. Romeros
counsel refused the tender and expressed willingness to underwrite the expense of executing the judgment chargeable
to the purchase price of the land. Ongsiong filed a case with the trial court for the rescission of the deed of conditional
sale, and for the consignation of the amount of P50,000. The trial court rendered a decision in favor of Romero, which
was reversed by the Court of Appeals.
Issue: Whether the Deed of Conditional Sale is a perfected contract of sale
Held: The deed of sale, even if denominated as a deed of conditional sale, may be treated as absolute in nature,
especially if title to the property sold is not reserved in the vendor or if the vendor is not granted the right to unilaterally
rescind the contract predicated on the fulfillment or non-fulfillment of the prescribed condition. In determining the real
character of contract, the substance and not the title given by the party is more significant. Upon perfection, i.e. where
the seller obligates himself, for a price certain, to deliver and to transfer ownership of a specific thing or right to the
buyer over which the latter agrees, the parties are bound not only to the fulfillment of what was expressly stipulated but

also the consequences which may be in keeping with good faith, usage and law. Being a perfected contract of sale, no
rescission can be had. The proper action is an action for damages. Arguendo that rescission is available as a remedy,
as provide by Article 1191 in reciprocal obligations, it may only be availed of by the injured party.
[01-03] Fule v. CA (GR 112212, 2 March 1998)
Third division, Romero (J): 3 concur
Facts: Fr. Antonio Jacobe initially mortgage a 10-hectare property in Tanay, Rizal (covered by TCT 320725) to the Rural
Bank of Alaminos, Laguna to secure a loan in the amount of P10,000. Said mortgage was later foreclosed and the
property offered for public auction upon his default. In June 1984, Gregorio Fule, as corporate secretary of the bank,
asked Remelia Dichoso and Olivia Mendoza to look for a buyer who might be interested in the Tanay property. The two
found one in the person of Ninevetch Cruz. It so happened that in January of said year, Gregorio Fule, also a jeweler,
has shown interest in buying a pair of emerald-cut diamond earrings owned by Dr. Cruz. Dr. Cruz has declined Fules
offer to buy said jewelry for P100,000; and a subsequent bid by Fule to buy them for US$6,000 at $1 to P25 while
making a sketch of said jewelry during an inspection at the lobby of Prudential Bank (the latter instance was declined,
since the exchange rate appreciated to P19 per dollar). Subsequently, however, negotiations for the barter of the jewelry
and the Tanay property ensued. Atty. Belarmino was requested by Dr. Cruz to check the property and found out that no
sale or barter was feasible as the 1-year period of redemption has not expired. In an effort to cut through any legal
impediment, Fule executed on 19 October 1984, a deed of redemption on behalf of Fr. Jacobe purportedly in the
amount of P15,987.78, and on even date, Fr. Jacobe sold the property to Fule for P75,000.00. The haste with which the
two deeds were executed is shown by the fact that the deed of sale was notarized ahead of the deed of redemption. As
Dr. Cruz had already agreed
to the proposed barter, Fule went to Prudential Bank to take a look at the jewelry. On 23 October 1984, Fule met Atty.
Belarmino at the latters residence to prepare the documents of sale. Atty. Belarmino accordingly caused the
preparation of a deed of absolute sale while Fule and Dr. Cruz attended to the safekeeping of the jewelry. The following
day, Fule, together with Dichoso and Mendoza, arrived at the residence of Atty. Belarmino to finally execute a deed of
absolute sale. Fule signed the deed and gave Atty. Belarmino the amount of P13,700.00 for necessary expenses in the
transfer of title over the Tanay property; and issued a certification to the effect that the actual consideration of the sale
was P200,000.00 and\ not P80,000.00 as indicated in the deed of absolute sale (the disparity purportedly aimed at
minimizing the amount of the capital gains tax that Fule would have to shoulder). Since the jewelry was appraised only
at P160,000.00, the parties agreed that the balance of P40,000.00 would just be paid later in cash. Thereafter, at the
bank, as pre-arranged, Dr. Cruz and the cashier opened the safety deposit box, and delivered the contents thereof to
Fule. Fule inspected the jewelry, near the electric light at the banks lobby, for 10-15 minutes. Fule expressed his
satisfaction by nodding his head when asked by Dr. Cruz if the jewelry was okay. For services rendered, Fule paid the
agents, Dichoso and Mendoza, the amount of US$300.00 and some pieces of jewelry. He did not, however, give them
half of the pair of earrings in question, which he had earlier promised. Later in the evening, Fule arrived at the residence
of Atty. Belarmino complaining that the jewelry given him was fake. Dichoso, who borrowed the car of Dr. Cruz, called
up Atty. Belarmino. Informed that Fule was at the lawyers house, went there posthaste thinking that Fule had finally
agreed to give them half of the pair of earrings, only to find Fule demonstrating with a tester that the earrings were fake.
Fule then accused Dichoso and Mendoza of deceiving him which they, however, denied. They countered that Fule could
not have been fooled because he had vast experience regarding jewelry. Fule nonetheless took back the US$300.00
and jewelry he had given them. Thereafter, the group decided to go to the house of a certain Macario Dimayuga, a
jeweler, to have the earrings tested. Dimayuga, after taking one look at
the earrings, immediately declared them counterfeit. At around 9:30 p.m., Fule went to one Atty. Reynaldo Alcantara
residing at Lakeside Subdivision in San Pablo City, complaining about the fake jewelry. Upon being advised by the
latter, Fule reported the matter to the police station where Dichoso and Mendoza likewise executed sworn statements.

On 26 October 1984, Fule filed a complaint before the RTC San Pablo City against private respondents praying, among
other things, that the contract of sale over the Tanay property be declared null and void on the ground of fraud and
deceit. On 30 October 1984, the lower court issued a temporary restraining order directing the Register of Deeds of
Rizal to refrain from acting on the pertinent documents involved in the transaction. On 20 November 1984, however, the
same court lifted its previous order and denied the prayer for a writ of preliminary injunction. After trial, the lower court
rendered its decision on 7 March 1989; holding that the genuine pair of earrings used as consideration for the sale was
delivered by Dr. Cruz to Fule, that the contract was valid even if
the agreement between the parties was principally a barter contract, that the agreement has been consummated at the
time the principal parties parted ways at the bank, and that damages are due to the defendants. From the trial courts
adverse decision, petitioner elevated the matter to the Court of Appeals. On 20 October 1992, the Court of Appeals,
however, rendered a decision affirming in toto the lower courts decision. His motion for reconsideration having been
denied on 19 October 1993. Hence, the petition for review on certiorari.

[01-04] Ong v. CA (GR 97347, 6 July 1999)

First division, Ynares-Santiago (J): 4 concur
Facts: On 10 May 1983, Jaime Ong and spouses Miguel and Alejandra Robles executed an Agreement of Purchase
and Sale respecting 2 parcels of land situated at Barrio Puri, San Antonio, Quezon (agricultural including rice mill,
piggery) for P2M (initial payment of P600,000 broken into P103,499.91 directly paid to seller on 22 March 1983 and
P496,500.09 directly paid to BPI to answer for part of sellers loan with the bank; and balance of 1.4M to be paid in 4
equal quarterly installments of P350,000 the first of which due and demandable on 15 June 1983); binding themselves
that upon the payment of the total purchase price the seller delivers a good and sufficient deed of sale and conveyance
for the parcels of land free and clear from liens and encumbrances, that seller delivers, surrenders and transfers the
parcels of land including all improvements thereon and to transfer the operations of the piggery and rice mill to the
buyer; and that all payments due and demandable under the contract effected in the residence of the seller unless
otherwise designated by the parties in writing. On 15 May 1983, Ong took possession of the subject parcels of land
together with the piggery, building, ricemill, residential house and other improvements thereon. Pursuant to the contract,
Ong paid the spouses the sum of P103,499.91 2 by depositing it with the UUCPB. Subsequently, Ong deposited sums
of money with the BPI, in accordance with their stipulation that petitioner pay the loan of the spouses with BPI. To
answer for his balance of P 1.4M, Ong issued 4 post-dated Metro Bank checks payable to the spouses in the amount of
P350,000.00 each (Check 137708-157711). When presented for payment, however, the checks were dishonored due to
insufficient funds. Ong promised to replace the checks but failed to do so. To make matters worse, out of the
P496,500.00 loan of the spouses with BPI, which ong, as per agreement, should have paid, Ong only managed to dole
out no more than P393,679.60. When the bank threatened to foreclose the spouses mortgage, they sold 3 transformers
of the rice mill worth P51,411.00 to pay off their outstanding obligation with said bank, with the knowledge and
conformity of Ong. Ong, in return, voluntarily gave the spouses authority to operate the rice mill. He, however,
continued to be in possession of the two parcels of land while the spouses were forced to use the rice mill for residential
purposes. On 2 August 1985, the spouses, through counsel, sent Ong a demand letter asking for the return of the
properties. Their demand was left unheeded, so, on 2 September 1985, they filed with the RTC Lucena City, Branch 60,
a complaint for rescission of contract and recovery of properties with damages. Later, while the case was still pending
with the trial court, Ong introduced major improvements on the subject properties by constructing a complete fence
made of hollow blocks and expanding the piggery. These prompted the spouses to ask for a writ of preliminary
injunction; which the trial court granted, and thus enjoined Ong from introducing improvements on the properties except
for repairs. On 1 June 1989, the trial court rendered a decision in favor of the spouses: ordering the contract entered
into by the parties set aside, ordering the delivery of the parcels of land and the

improvements thereon to the spouses, ordering the return of the sum of P497,179.51 to Ong by the spouses, ordering
Ong to pay the spouses P100,000 for exemplary damages and P20,000 as attorneys fees and litigation expenses.
From this decision, petitioner appealed to the Court of Appeals, which affirmed the decision of the RTC but deleted the
award of exemplary damages. In affirming the decision of the trial court, the Court of Appeals noted that the failure of
petitioner to completely pay the purchase price is a substantial breach of his obligation which entitles the private
respondents to rescind their contract under Article 1191 of the New Civil Code. Hence, the petition for review on
certiorari. The Supreme Court affirmed the decision rendered by the Court of Appeals with the modification that the
spouses are ordered to return to Ong the sum P48,680.00 in addition to the amounts already awarded; with costs
against petitioner Ong.

[01-05] Gaite v. Fonacier (GR L-11827, 31 July 1961)

En Banc, Reyes JBL (J): 9 concur
Facts: Isabelo Fonacier was the owner and/or holder of 11 iron lode mineral claims (Dawahan Group), situated in Jose
Panganiban, Camarines Norte. By a Deed of Assignment dated 29 September 1952, Fonacier constituted and
appointed Fernando A. Gaite as his true and lawful attorney-in-fact to enter into a contract with any individual or juridical
person for the exploration and development of the mining claims on a royalty basis of not less than P0.50 per ton of ore
that might be extracted therefrom. On 19 March 1954, Gaite in turn executed a general assignment conveying the
development and exploitation of said mining claims unto the Larap Iron Mines, owned solely by him. Thereafter Gaite
embarked upon the development and exploitation of the mining claims, opening and paving roads within and outside
their boundaries, making other improvements and installing facilities therein for use in the development of the mines,
and in time extracted therefrom what he claimed and estimated to be approximately 24,000 metric tons of iron ore. For
some reason or another, Isabelo Fonacier decided to revoke the authority granted by him to Gaite, and Gaite assented
thereto subject to certain conditions. As a result, a document entitled Revocation of Power of Attorney and Contract
was executed on 8 December 1954, wherein Gaite transferred to Fonacier, for the consideration of P20,000, plus 10%
of the royalties that Fonacier would receive from the mining claims, all his rights and interests on all the roads,
improvements, and facilities in or outside said claims, the right to use the business name Larap Iron Mines and its
goodwill, and all the records and documents relative to the mines. In the same document, Gaite transferred to Fonacier
all his rights and interests over the 24,000 tons of iron ore, more or less that the former had already extracted from the
mineral claims, in consideration of the sum of P75,000, P10,000, of which was paid upon the signing of the agreement,
and the balance to be paid out of the first letter of credit covering the first shipment of iron ores or the first amount
derived from the local sale of iron ore made by the Larap Mines & Smelting Co. To secure the payment of the balance,
Fonacier promised to execute in favor of Gaite a surety bond; delivered on 8 December 1954 with Fonacier as principal
and the Larap Mines and Smelting Co. and its stockholders as sureties. A second bond was executed by the parties to
the first bond, on the same day, with the Far Eastern Surety and Insurance Co. as additional surety, but it provided that
the liability of the
surety company would attach only when there had been an actual sale of iron ore by the Larap Mines & Smelting Co.
for an amount of not less than P65,000. Both bond were attached and made integral parts of the Revocation of Power
of Attorney and Contract. On the same day that Fonacier revoked the power of attorney, Fonacier entered into a
Contract of Mining Operation with Larap Mines and Smelting Co., Inc. to grant it the right to develop, exploit, and
explore the mining claims, together with the improvements therein and the use of the name Larap Iron Mines and its
goodwill, in consideration of certain royalties. Fonacier likewise transferred, in the same document, the complete title to
the approximately 24,000 tons of iron ore which he acquired from Gaite, to the Larap Mines & Smelting Co., in
consideration for the signing by the company and its stockholders of the surety bonds delivered by Fonacier to Gaite.
On 8 December 1955, the bond with respect to the Far Eastern Surety and Insurance Company expired with no sale of
the approximately 24,000 tons of iron ore, nor had the 65,000 balance of the price of said ore been paid to Gaite by

Fonacier and his sureties. Whereupon, Gaite demanded from Fonacier and his sureties payment of said amount. When
Fonacier and his sureties failed to pay as demanded by Gaite, the latter filed a complaint against them in the CFI Manila
(Civil Case 29310) for the payment of the P65,000 balance of the price of the ore, consequential damages, and
attorneys fees. Judgment was, accordingly, rendered in favor of plaintiff Gaite ordering defendants to pay him, jointly
and severally, P65,000 with interest at 6% per annum from 9 December 1955 until full payment, plus costs. From this
judgment, defendants jointly appealed to the Supreme Court as the claims involved aggregate to more than P200,000.
The Supreme Court affirmed the decision appealed from, with costs against appellants.
[01-06] Acap v. CA (GR 118114, 7 December 1995)
First Division, Padilla (J): 4 concur
Facts: The title to Lot 1130 of the Cadastral Survey of Hinigaran, Negros Occidental was evidenced by OCT R-12179.
The lot has an area of 13,720 sq. m. The title was issued and is registered in the name of spouses Santiago Vasquez
and Lorenza Oruma. After both spouses died, their only son Felixberto inherited the lot. In 1975, Felixberto executed a
duly notarized document entitled Declaration of Heirship and Deed of Absolute Sale in favor of Cosme Pido. Since
1960, Teodoro Acap had been the tenant of a portion of the said land, covering an area of 9,500 sq. m. When ownership
was transferred in 1975 by Felixberto to Cosme Pido, Acap continued to be the registered tenant thereof and religiously
paid his leasehold rentals to Pido and thereafter, upon Pidos death, to his widow Laurenciana. The controversy began
when Pido died interstate and on 27 November 1981, his surviving heirs executed a notarized document denominated
as Declaration of Heirship and Waiver of Rights of Lot 1130 Hinigaran Cadastre,
wherein they declared to have adjudicated upon themselves the parcel of land in equal share, and that they waive,
quitclaim all right, interests and participation over the parcel of land in favor of Edy de los Reyes. The document was
signed by all of Pidos heirs. Edy de los Reyes did not sign said document. It will be noted that at the time of Cosme
Pidos death, title to the property continued to be registered in the name of the Vasquez spouses. Upon obtaining the
Declaration of Heirship with Waiver of Rights in his favor,\ de los Reyes filed the same with the Registry of Deeds as
part of a notice of an adverse claim against the original certificate of title. Thereafter, delos Reyes sought for Acap to
personally inform him that he had become the new owner of the land and that the lease rentals thereon should be paid
to him. Delos Reyes alleged that he and Acap entered into an oral lease agreement wherein Acap agreed to pay 10
cavans of palay per annum as lease rental. In 1982, Acap allegedly complied with said obligation. In 1983, however,
Acap refused to pay any further lease rentals on the land, prompting delos Reyes to seek the assistance of the then
Ministry of Agrarian Reform (MAR) in Hinigaran, Negros Occidental. The MAR invited Acap, who sent his wife, to a
conference scheduled on 13 October 1983. The wife stated that the she and her husband did not recognize delos
Reyess claim of ownership over the land. On 28 April 1988, after the lapse of four (4) years, delos Reys field a
complaint for recovery of possession and damages against Acap, alleging that as his leasehold tenant, Acap refused
and failed to pay the agreed annual rental of 10 cavans of palay despite repeated demands. On 20 August 1991, the
lower court rendered a decision in favor of delos Reyes, ordering the forfeiture of Acaps preferred right of a Certificae of
Land Transfer under PD 27 and his farmholdings, the return of the farmland in Acaps possession to delos Reyes, and
Acap to pay P5,000.00 as attorneys fees, the sum of P1,000.00 as expenses of litigation and the amount of P10,000.00
as actual damages. Aggrieved, petitioner appealed to the Court of Appeals. Subsequently, the CA affirmed the lower
courts decision, holding that de los
Reyes had acquired ownership of Lot No. 1130 of the Cadastral Survey of Hinigaran, Negros Occidental based on a
document entitled Declaration of Heirship and Waiver of Rights, and ordering the dispossession of Acap as leasehold
tenant of the land for failure to pay rentals Hence, the petition for review on certiorari. The Supreme Court granted the
petition, set aside the decision of the RTC Negros Occidental, dismissed the complaint for recovery of possession and
damages against Acap for failure to properly state a cause of action, without prejudice to private respondent taking the
proper legal steps to establish the legal mode by which he claims to have acquired ownership of the land in question.

[01-07] Quijada v. CA (GR 126444, 4 December 1998)

Second Division, Martinez (J): 3 concur
Facts: Petitioners (Alfonso, Cresente, Reynalda, Demetrio, Eliuteria, Eulalio, and Warlito) are the children of the late
Trinidad Corvera Vda. de Quijada. Trinidad was one of the heirs of the late Pedro Corvera and inherited from the latter
the 2-hectare parcel of land subject of the case, situated in the barrio of San Agustin, Talacogon, Agusan del Sur. On 5
April 1956, Trinidad Quijada together with her sisters Leonila Corvera Vda. de Sequena and Paz Corvera Cabiltes and
brother Epapiadito Corvera executed a conditional deed of donation of the 2-hectare parcel of land in favor of the
Municipality of Talacogon, the condition being that the parcel of land shall be used solely and exclusively as part of the
campus of the proposed provincial high school in Talacogon. Apparently, Trinidad remained in possession of the parcel
of land despite the donation. On 29 July 1962, Trinidad sold 1 hectare of the subject parcel of land to Regalado
Mondejar. Subsequently, Trinidad verbally sold the remaining 1 hectare to Mondejar without
the benefit of a written deed of sale and evidenced solely by receipts of payment. In 1980, the heirs of Trinidad, who at
that time was already dead, filed a complaint for forcible entry against Mondejar, which complaint was, however,
dismissed for failure to prosecute. In 1987, the proposed provincial high school having failed to materialize, the
Sangguniang Bayan of the municipality of Talacogon enacted a resolution reverting the 2 hectares of land donated back
to the donors. In the meantime, Mondejar sold portions of the land to Fernando Bautista, Rodolfo Goloran, Efren
Guden, and Ernesto Goloran. On 5 July 1988, the petitioners filed a complaint against private respondents (Mondejar,
Rodulfo and Ernesto Goloran, Asis, Ras, Abiso, Bautista, Macasero and Maguisay) for quieting of title, recovery of
possession and ownership of parcels of land with claim for attorneys fees and damages. The trial court rendered
judgment in favor of the petitioners, holding that Trinidad Quijada did not have legal title or right to sell the land to
Mondejar as it belongs to the Municipality of Talacogon at that time, and that the deed of sale in favor of Mondejar did
not carry the conformity and acquiescence of her children considering that Trinidad was already 63 years old and a
widow. The trial court ordered the defendants (private respondents), and any person acting in defendants behalf to
return and
vacate the 2 hectares of land to the plaintiff, and to remove their improvements constructed on the lot; ordered the
cancellation of the deed of sale executed by Trinidad to Mondejar, as well as the deeds of sale/relinquishments
executed by Mondejar to the other defendants; and ordered the defendants to pay the plaintiffs, in solidum, the amount
of P10,000, P8,000, and P30,000 as attorneys fees, expenses of litigation and moral damages, respectively. On
appeal, the Court of Appeals reversed and set aside the judgment a quo ruling that the sale made by Trinidad Quijada
to respondent Mondejar was valid as the former retained an inchoate interest on the lots by virtue of the automatic
reversion clause in the deed of donation. Thereafter, petitioners filed a motion for reconsideration. When the CA denied
their motion, petitioners instituted a petition for review to the Supreme Court. The Supreme Court affirmed the assailed
decision of the Court of Appeals.
[01-08] Celestino Co v. Collector of Internal Revenue (GR L-8506, 31 August 1956)
First Division, Bengzon (J): 7 concur
Facts: Celestino Co & Company is a duly registered general copartnership doing business under the trade name of
Oriental Sash Factory. From 1946 to 1951 it paid percentage taxes of 7% on the gross receipts of its sash, door and
window factory, in accordance with section 186 of the National Revenue Code imposing taxes on sales of manufactured
articles. However in 1952 it began to claim liability only to the contractors 3% tax (instead of 7%) under section 191 of
the same Code; and having failed to convince the Bureau of Internal Revenue, it brought the matter to the Court of Tax
Appeals, where it also failed. Hence, the appeal. The Supreme Court affirmed the appealed decision.
1. Business name and income militates against claim as ordinary contractor

The company has taken all the trouble and expense of registering a special trade name for its sash business and has
ordered company stationery carrying the bold print Oriental Sash Factory (Celestino Co & Company, Prop.) 926 Raon
St. Quiapo, Manila,
Tel. No. 33076, Manufacturers of all kinds of doors, windows, sashes, furnitures, etc. used season-dried and kiln-dried
lumber, of the best quality workmanship. It is unlikely that these act were made solely for the purpose of supplying the
needs for doors, windows and sash of its special and limited customers. Further, the Company 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. Moreover, as shown from the investigation of the Companys books of accounts (for transactions covering
the period of 1 January 1952 to 30 September 1952), it sold sash, doors and windows worth P188,754.69. It will be
difficult to believe that such amount that ran to six figures was derived entirely from its few customers who made special
orders. Thus, Celestino Co & Company habitually makes sash, windows and doors, as it has represented in its
stationery and advertisements to the public, and it has admitted by the appellant itself that the company manufactures.
2. Construction work contractors defined
Construction work contractors are those who alter or repair buildings, structures, streets, highways, sewers, street
railways, railroads, logging roads, electric, steam or water plants telegraph and telephone plants and lines, electric lines
or power lines, and includes any other work for the construction, altering or repairing for which machinery driven by
mechanical power is used. (Payton vs. City of Anadardo 64 P. 2d 878, 880, 179 Okl. 68).
3. Nature of business does not fall in any of the occupation that may be classified as contractor within the
purview of
Section 191 of the National Internal Revenue Code
Even if it were to believe that the company does not manufacture ready-made sash, doors and windows for the public
and that it makes these articles only upon 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 said section of the National Internal Revenue Code subject to percentage tax, not one under which the business
enterprise of petitioner could appropriately fall. It would require a stretch of the law to make the business of
manufacturing sash, doors and windows upon special order of customers fall
under the category of road, building, navigation, artesian well, water works and other construction work contractors.
4. Percentage tax imposed under Section 191 of the Tax Code a tax on sales of service, while tax imposed by
Section 186
a tax on original sales of articles
The percentage tax imposed in section 191 of the Tax Code is generally a tax on the sales of services, in contradiction
with the tax imposed in section 186 of the same Code which is a tax on the original sales of articles by the
manufacturer, producer or importer. (Formillezas Commentaries and Jurisprudence on the National Internal Revenue
Code, Vol II, p. 744). The fact that the articles sold are manufactured by the seller does not exchange the contract from
the purview of section 186 of the National Internal Revenue Code as a sale of articles.
5. Custom specifications required by customer does not alter character of business, the company does not
become an

employee or servant of the customer

Nobody will say that when a sawmill cuts lumber in accordance with the peculiar specifications of a customer, sizes not
previously held in stock for sale to the public, it thereby becomes an employee or servant of the customer, not the seller
of lumber. The same consideration applies to this sash manufacturer. The Sash Factory does nothing more than sell the
goods that it mass-produces or habitually makes; sash, panels, mouldings, frames, cutting them to such sizes and
combining them in such forms as its customers may desire.
6. Installation of window panels not construction work in common parlance
Petitioners idea of being a contractor doing construction jobs is untenable. Nobody would regard the doing of two
window panels as construction work in common parlance.
7. Contract of sale distinguished from a contract for a piece of work
Article 1467 of the New Civil Code provides 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 contract for a piece of work. In the present case, it is
apparent that the Factory did not merely sell its services to Teodoro & Co. because it also sold the materials. When it
sold materials ordinarily manufactured by it (sash, panels, mouldings), although in such form or combination as suited
the fancy of the purchaser, such new form does not divest the Factory of its character as manufacturer. Neither does it
take the transaction out of the category of sales under Article 1467 because although the Factory does not, in the
ordinary course of its business, manufacture and keep on stock doors of the kind sold to Teodoro, it could stock and/or
probably had in stock the sash, mouldings and panels it used therefor.
8. Contract for a piece of work in Factory happens if the use of extraordinary or additional equipment is
required or if it
involves services not generally performed by it
When the 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, i.e. filling special orders within the meaning of Article
1467. In the present case, however, the orders exhibited were not shown to be special. They were merely orders for
work, regular work.
9. Transfers under Section 186 of the Tax Code
If all the work of appellant is only to fill orders previously made, such orders should not be called special work, but
regular work; and supposing for the moment that the transactions were not sales, they were neither lease of services
nor contract jobs by a contractor. Still, as the doors and windows had been admittedly manufactured by the Sash
Factory, such transactions could be, and should be taxed as transfers thereof under section 186 of the National
Revenue Code.
[2nd] Sales (under Atty. Amadeo Paolo Dimayuga, Arellano Law, First Semester, SY 2003-2004. [Full syllabus])
http://berneguerrero.com/node/29 21
[01-09] CIR v. Engineering Equipment and Supply (GR L-27044, 30 June 1975)

Engineering Equipment and Supply v. CIR [G.R. No. L-27452. June 30, 1975.]
First Division, Esguerra (J): 4 concur
Facts: Engineering Equipment and Supply Co. is an engineering and machinery firm; and being an operator of an
integrated engineering ship, is engaged in the design and installation of central type air conditioning system, pumping
plants and steel fabrications. On 27 July 1956, one Juan de la Cruz, wrote the then Collector, now Commissioner, of
Internal Revenue denouncing the Company for tax evasion by misdeclaring its imported articles and failing to pay the
correct percentage taxes due thereon in connivance with its foreign suppliers. The Company was likewise denounced to
the Central Bank for alleged fraud in obtaining its dollar allocations. Acting on these denunciations, a raid and search
was conducted by a joint team of Central Bank, (CB), National Bureau of Investigation (NBI) and Bureau of Internal
Revenue (BIR) agents on 27 September 1956, on which occasion voluminous records of the firm were seized and
confiscated. On 30 September 1957, revenue examiners reported and recommended to the then Collector, now
Commissioner, of Internal Revenue that the Company be assessed for P480,912.01 as deficiency advance sales tax on
the theory that it misdeclared its importation of air conditioning units and parts and accessories thereof which are
subject to tax under Section 185(m) 1 of the Tax Code, instead of Section 186 of the same Code. This assessment was
revised on 23 January 1959, in line with the observation of the Chief, BIR Law Division, and was raised to P916,362.56
representing deficiency advance sales tax and manufacturers sales tax, inclusive of the 25% and 50% surcharges. On
3 March 1959, the Commissioner assessed against, and demanded upon, the Company payment of the increased
amount and suggested that P10,000 be paid as compromise in extrajudicial settlement of the Companys penal liability
for violation of the Tax Code. The firm, however, contested the tax assessment and requested that it be furnished with
the details and particulars of the Commissioners assessment. The Commissioner replied that the assessment was in
accordance with law and the facts of the case. On 30 July 1959, the Company appealed the case to the Court of Tax
Appeals (CTA) and during the pendency of the case the investigating revenue examiners reduced the Companys
deficiency tax liabilities from P916,362.65 to P740,587.86, based on findings after conferences had with the Companys
Accountant and Auditor. On 29 November 1966, the CTA rendered its decision, modifying the decision appealed from,
declaring the Company as contractor exempt from the deficiency manufacturers sales tax covering the period from 1
June 1948 to 2 September 1956 but ordered said company to pay the Commissioner, or his collection agent, the sum of
P174,141.62 as compensating tax and 25% surcharge for the period from 1953 to September 1956; With costs against
the Company. The Commissioner, not satisfied with the decision of the CTA, appealed to the Supreme Court on 18
January 1967, (GR L-27044).
On the other hand, the Company, on 4 January 1967, filed with the CTA a motion for reconsideration; which was denied
on 6 April 1967, prompting the Company to file also with the Supreme Court its appeal (GR L-27452). Since the two
cases involve the same parties and issues, the Court decided to consolidate and jointly decide them. The Supreme
Court affirmed the decision appealed from with modification that the Company is also made liable to pay the 50% fraud
surcharge.
[01-10] Engineering and Machinery Corp. v. CA (GR 52267, 24 January 1996)
Third Division, Panganiban (J): 3 concur
Facts: Pursuant to the contract dated 10 September 1962 between the Engineering and Machinery Corporation (the
Corporation) and Almeda, the former undertook to fabricate, furnish and install the air-conditioning system in the latters
building along Buendia Avenue, Makati in consideration of P12,000.00. The Corporation 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 Almeda, who paid in full the contract price. On 2 September 1965, Almeda 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, Almeda was able to secure judicial rescission
thereof. The ownership of the building having been decreed back to Almeda, he re-acquired possession sometime in

1971. It was then that he learned from some NIDC employees of the defects of the airconditioning system of the
building. Acting on this information, Almeda commissioned Engineer David R. Sapico to render a technical evaluation of
the system in relation to the ] contract with the Corporation. In his report, Sapico enumerated the defects of the system
and concluded that it was not capable of maintaining the desired room temperature of 76oF 2oF.
On the basis of this report, Almeda filed on 8 May 1971 an action for damages against the Corporation with the then
CFI Rizal (Civil Case 14712). The complaint alleged that the air-conditioning system installed by the Corporation did not
comply with the agreed plans and specifications, hence, Almeda prayed for the amount of P210,000.00 representing the
rectification cost, P100,000.00 as damages and P15,000.00 as attorneys fees. The Corporation moved to dismissed
the case, alleging prescription, but which was denied by the Court. Thereafter, Almeda filed an ex-parte motion for
preliminary attachment on the strength of the Corporations own statement to the effect that it had sold its business and
was no longer doing business in Manila. The trial court granted the motion and, upon Almedas posting of a bond of
P50,000.00, ordered the issuance of a writ of attachment. In due course, and on 15 April 1974, the trial court rendered a
decision, which ordered the Corporation to pay Almeda the amount needed to rectify the faults and deficiencies of the
air-conditioning system installed by the Corporation in Almedas building, plus damages, attorneys fees and costs).
Petitioner appealed to the Court of Appeals, which affirmed on 28 November 1978 the decision of the trial court. Hence,
it instituted a petition for review on certiorari under Rule 45 of the Rules of Court. The Supreme Court denied the
petition and affirmed the decision assailed; without costs.
[01-11] Puyat & Sons v. Arco Amusement (GR 47538, 20 June 1941)
First Division, Laurel (J): 4 concur
Facts: Gonzalo Puyat & Sons is the exclusive agent of Starr Piano Company of Richmond, Indiana USA, in the
Philippines. Teatro Arco, or Arco Amusement Company, desiring to equip its cinematograph with sound reproducing
devices, approached Puyat. It was agreed by the parties that Puyat would in behalf of Arco order equipment from Starr
Piano and that Arco would pay Puyat in addition to price of the equipment, 10% commission plus all expenses such as
freight, insurance, banking charges, cables, etc. Puyat informed Arco that the price of the equipment was $1,700, to
which Arco agreed. Later, a similar arrangement was made by Arco for the purchase of similar equipment for $1,600
with 10% commission, with Puyat charging an additional flat charge of $160 for all expenses and charges. 3 years later,
Arco learned that the price quoted by Puyat on the 2 orders were not the net price but the list price for the equipment.
Arco filed a complaint with the trial court (CFI) demanding reimbursement from said overpriced sales. The trial court
ruled in favor of Puyat, but the Court of Appeals reversed such decision and declared Puyat an agent of Arco
Amusement in the purchase of said equipment.
Issue: Whether the agreement made between Puyat and Arco Amusement is that of purchase and sale or that of
agency.
Held: Gonzalo Puyat & Sons cannot be the agent of Arco Amusement in the purchase of equipment from Starr Piano
Company as Puyat & Sons is already the exclusive agent of Starr Piano in the Philippines. Puyat cannot be the agent of
both vendor and purchaser. The fact that a commission was offered to the other does not necessarily mean that the
latter has become the agent of the former, as this was only an additional price which Arco bound itself to pay and which
is not incompatible with the contract of purchase and sale. Puyat is not bound to reimburse the profit acquired in the
transaction, as this is the very essence of commerce involving middlemen and merchants. The contract is the law
between the parties. What does not appear on the face of the contract should be regarded as dealers or traders talk
which cannot bind either party. Not every concealment is fraud, short of fraud, and
such as that in this case, is considered as business acumen.

[01-12] Quiroga v. CA (GR 11491, 23 August 1918)

38 Phil 501
En Banc, Avancena (J): 5 concur
Facts: A contract was entered between Quiroga and Parsons for the exclusive sale of Quiroga beds in the Visayas
Islands, specifically Iloilo. Quiroga furnishes the beds to Parson, who in turn pay the price in the manner stipulated.
Quiroga provided a discount of 20 to 25% for the beds, depending on their class. Later, Quiroga filed a case against
Parsons for violation of its obligation not to sell the beds at higher price than those of the invoices, etc. (which are not
expressly stipulated in the contract, except for the manner the beds are ordered by the dozen). Quiroga maintains that
Parson is his agent for the sale of his beds in Iloilo, and that the contract is that of commercial agency.
Issue: Whether the contact is that of sale or of commercial agency.
Held: The contract between the parties is a contract of purchase and sale as Parson, by receiving the bed, 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 bed. The words commission on sales in the contract is nothing else than a mere discount
on the invoice price. Further, the word agency used thereon only expresses that Parson was the sole seller of Quiroga
beds in the Visayas. None of the other clauses of the contract are not incompatible with the contract of purchase and
sale.
[02] Parties to a Contract of Sale
[02-01] Medina v. CIR (GR L-15113, 28 January 1961)
1 SCRA 302
En Banc, Reyes JBL (J): 6 concur
Facts: Antonio Medina is married to Antonia Rodriguez (since 1944), both not having property or business of their own
at that time of marriage. Antonio in 1946 acquire forest concessions in Isabela (Sn. Mariano and Palanan). Logs cut and
removed by Antonio from his concessions were initially sold to different persons in Manila through his agent Mariano
Osorio. The wife later engaged in business as lumber dealer and sold all logs produced in the Sn. Mariano concession
to persons in Manila through the same agent. The Collector of Internal Revenue imposed a tax assessment on Antonio
Medina considering the sales of the wife as that of Antonios original sales taxable under Section 186 NIRC. Antonio
appealed, contending that the spouses had a premarital agreement of absolute separation of property, the records of
which was allegedly destroyed during World War II. The Collector modified the assessment, reducing the amount to be
paid. Antonio requested for consideration, but which was denied. Antonio appealed to the CTA, which upheld the
assessment of the collector except for so-called compromise penalties.\ Antonio filed present petition.
Issue: Whether the sale made by Antonio to his wife were valid so as to exempt the sales made by Antonia from being
considered as part of Antonios original sales taxable under Section 186 of the NIRC.
Held: As there is no evidence of a pre-marital agreement of absolute separation between the spouses, the sales made
by Antonio (as forest concessionaire) to his wife (as lumber dealer) are null and void as these are contracts violative of
Article 1490 of the Civil Code. Being void transactions, the sales made by Antonio to his wife were correctly disregarded
by the Collector in his tax assessments that considered as the taxable sales those made by the wife through the
spouses common agent, Osorio.

[02-02] Calimlim-Canullas v. Fortun (GR 57499, 22 June 1984)

128 SCRA 675
First Division, Melencio-Herrera (J): 5 concur
Facts: Fernando Canullas and Mercedes Calimlim were married in 1962. They lived in a small house on a 891 sq.m.
residential land in Pangasinan (Bagabac, Bugallon). When Canullas father died in 1965, he inherited the land. In 1978,
he abandoned the family and lived with Corazon Daguines. In 1980, he sold the property to Daguines for P2,000.
Daguines filed a complaint for quieting of title and damages against Mercedes, after the former was unable to take
possession of the house and lot. The trial court (CFI) ruled in favor of Daguines, ruling that she is the owner of . of the
land as well as . of the house erected on said land. Upon
reconsideration, the judgment was modified wherein Daguines is the owner of the land and 10 coconut trees thereon,
and the sale of the conjugal house including 3 coconuts and other crops planted during the conjugal relation of the
spouses is null and void.
Issue: Whether the sale made by Fernando Canullas to Corazon Daguines was valid.
Held: The contract of sale was null and void for being contrary to morals and public policy, pursuant to Article 1409 of
the Civil Code. The sale was made by a husband in favor of a concubine after he had abandoned his family and left the
conjugal home where his wife and children lived and from whence they derived their support. That sale was subversive
of the stability of the family, a basic social institution which public policy cherishes and protects.
[02-03] Guiang v. CA (GR 125172, 26 June 1998)
291 SCRA 372
First Division, Panganiban (J): 4 concur
Facts: Judie and Gilda Corpuz were married in 1968 in Bacolod City. In 1983, the spouses bought a lot in South
Cotabato (Brgy. Gen. Paulino Santos, Koronadal) from Manuel Callejo through a conditional deed of sale, the
consideration payable in installment. In 1988, the spouses sold half of the land to Antonio and Luzviminda Guiang. The
latter build their house on their half of the lot. In 1989, Gilda went to Manila, with the consent of her husband, to look for
work abroad. She became a victim of an unscrupulous illegal recruiter. While she was in Manila, her husband sold the
remaining half of the property to the Guiangs, even if the latter heldthe letter of Gildas protestations over said sale. To
cure the defect in the husbands title over the land, Luzviminda Guiang executed another agreement over the lot with
the widow of Manuel Callejo (Manuela Jimenez). A week after, Gilda returned to Koronodal and gathered her children,
living in different households, and stayed at their house. The Guiangs filed a complaint against Gilda with the barangay
authorities for trespassing. An amicable settlement was signed before the barangay captain, requiring Gilda and her
family to vacate the premises free of charge. Gilda, alleging coercion and misrepresentation, sought to annul said
document, to no avail. Gilda, then, filed an amended complaint against her husband and the Guiangs, seeking that the
court declare the deed of sale involving the conjugal property null and void. The lower court (RTC) ruled in favor of
Gilda Corpuz but ordered her to pay the amounts paid as unpaid balance for the lot and the realty taxes incurred by the
Guiangs. The appellate court affirmed said ruling.
Issue: Whether the sale made by Judie Corpuz to Antonio and Luzviminda Guiang is valid.
[02-04] Rubias v. Batiller (GR L 35702, 29 May 1973)

51 SCRA 120
First Division, Teehankee (J): 8 concur
Facts: Francisco Militante claimed ownership over land in Iloilo (Bo. Gen. Luna, Barotac Viejo), to which he filed an
application for registration of title with the CFI Iloilo. The application was opposed by the Director of Lands. The CFI
dismissed the registration. Pending disposal of the appeal in the Court of Appeals, Militante sold the land to Domingo
Rubias, his son-in-law and a lawyer by profession. Rubias declared the land for taxation purposes under various tax
declarations and land taxes. The CA likewise dismissed Militantes application. Meanwhile, other claimants declared the
same land for taxation purposes (tax declaration and land tax), one of whom is Isaias Batiller. In 1960, Rubias filed a
forcible entry case against Batiller before the municipal court, which the latter ruled in favor of Batiller. Rubias appealed
to the CFI, which affirmed the judgment in favor of Batiller. In 1964, Rubias filed a suit to recover ownership and
possession of land to claim portions of lot, bought from Militante, which were occupied by Batiller. The lower court (CFI)
dismissed the case. Rubias appealed to the Court of appeals which certified the appeal to the Supreme Court for
involving purely legal questions.
Issue: Whether the sale of the lot by Francisco Militante to his son-in-law Domingo Rubias is valid for the latter to claim
ownership over said lot
Held: The purchase by a lawyer of the property in litigation from his client is categorically prohibited by Article 1491,
paragraph (5) of the Civil Code, and that consequently, Rubias purchase of the property in litigation from his father-inlaw was void and could produce no legal effect (Article 1409 [7] of the Civil Code). It is void and not voidable (as the
1929 case of Director of Lands v. Abagat which declared such purchase void superceded the 1911 case of Wolfson v.
Estate of Martinez which declared such purchase mere voidable). The nullity of prohibited contracts is definite and
permanent and cannot be cured by ratification. The public interest and public policy remain paramount and do not
permit of compromise or ratification. However, when the causes of nullity which have ceased to exist, a second contract
may be executed and would then be valid from its execution; however, it does not retroact to the date of the first
contract. Still, Rubias complaint, to be declared absolute owner of the land and to be restored to possession thereof
with damages, was beneft of any factual or legal basis. The CAs final judgment affirming the dismissal of Militantes
application of registration made it conclusive that Militante lack rightful claim or title to the land. There was no right or
title to the land that could be transferred or sold by Militantes purported sale in favor of Rubias in 1956.
[02-05] Philippine Trust Co. v. Roldan (GR L 8477, 31 May 1956)
99 Phil 392
En Banc, Bengzon (J): 8 concur
Facts: 17 parcels of land (Guiguinto, Bulacan) were inherited by Mariano L. Bernardo from his father. Socorro Roldan,
his stepmother, was appointed by the court as his guardian. Roldan was able to secure permission later on to sell his
wards property for the alleged purpose of investing the proceeds thereof in a residential house in Manila, to which
Mariano allegedly desired.
Roldan sold the parcels of land to his brother-in-law Dr. Fidel C. Ramos, to which a judicial confirmation of the sale was
obtained. The next day, Ramos executed a deed of conveyance covering the same parcels for the sum of P15,000. Two
months later, Roldan sold 4 parcels to Emilio Cruz for P3,000, reserving to herself the right to purchase. The Philippine
Trust Company replaced Roldan as guardian a year later, and thereafter, filed a complaint in the lower court to annul the
contracts regarding the parcel of land pursuant to the prohibitions provided in Article 1459. The trial court upheld the
validity of the contracts but allowing the minor to repurchase the land for P15,000 within one year.

Issue: Whether the contracts of sale involving the 17 parcels of land are valid.
Held: The three contracts of sale are void; the first two for violation of article 1459 of the Civil Code; and the third
because Roldan could pass no title to Emilio Cruz. The annulment carries with is (Article 1303 Civil Code) the obligation
of Roldan to return the 17 parcels together with their fruits and the duty of the minor, through his guardian to repay
P14,700 with legal interest. Guardianship is a trust of the highest order, and the trustee cannot be allowed to have any
inducement to neglect his wards interest and in line with the courts suspicion whenever the guardian acquires the
wards property, the Court has no hesitation to declare that, in the eyes of
the law, the guardian (Roldan) took by purchase her wards parcels (thru Dr. Ramos), and that Article 1459 of the Civil
Code applies. The reconveyance of the property to Roldan after being sold to her brother-in-law within a week of each
other, or a day after the judicial confirmation of sale was obtained, raises suspicions. Even if arguendo she acted
without malice, the temptation which naturally besets a guardian so circumstanced, necessitates the annulment of the
transaction, even if no actual collusion is proved (so hard to prove) between such guardian and the intermediate
purchaser. This would uphold a sound principle of equity and justice.
[03-01] Pichel v. Alonzo (GR L-36902, 30 January 1982)
First Division, Guerrero (J): 5 concur
Facts: Prudencio Alonzo was awarded by the Government that parcel of land designated as Lot 21 of Subdivision Plan
Psd-32465 of Balactasan, Lamitan, Basilan City in accordance with RA 477. The award was cancelled by the Board of
Liquidators on 27 January 1965 on the ground that, previous thereto, Alonzo was proved to have alienated the land to
another, in violation of law. In 1972, Alonzos rights to the land were reinstated. On 14 August 1968, Alonzo and his wife
sold to Pichel through a deed of sale all the fruits of the coconut trees which may be harvested in the land for the
period, from 15 September 1968 to 1 January 1976, in consideration of P4,200.00. It was further stipulated that the
vendors right, title, interest and participation herein conveyed is of his own exclusive and absolute property, free from
any liens and encumbrances and he warrants to the Vendee good title thereto and to defend the same against any and
all claims of all persons whomsoever. Even as of the date of sale, however, the land was still under lease to one Ramon
Sua, and it was the agreement that part of the consideration of the sale, in the sum of P3,650.00, was to be paid by
Pichel directly to Ramon Sua so as to release the land from the clutches of the latter. Pending said payment Alonzo
refused to allow the Pichel to make any harvest. In July 1972, Pichel for the first time since the execution of the deed of
sale in his favor, caused the harvest of the fruit of the coconut trees in the land. Alonzo filed an action for the annulment
of a Deed of Sale before the CFI Basilan City. On 5 January 1973, the lower court rendered its decision holding that
although the agreement in question is denominated by the parties as a deed of sale of fruits of the coconut trees found
in the vendors land, it actually is, for all legal intents and purposes, a contract of lease of the land itself; an
encumbrance prohibited under RA 477. The court thus held that the deed of sale is null and void, and ordered Alonzo to
pay back Pichel the consideration of the sale in the sum of P4,200 with interests from the date of the filing of the
complaint until paid, and Pichel to pay the sum of P500.00 as attorneys fees; with costs against Pichel. Hence, the
petition to review on certiorari was raised before the Supreme Court. The Supreme Court set aside the judgment of the
lower court and entered another dismissing the complaint; without costs.