This action might not be possible to undo. Are you sure you want to continue?
I. Introduction 1. Coronel v. CA (GR 103577, 7 October 1996)
Coronel v. CA [G.R. No. 103577. October 7, 1996.] Third division, Melo (J): 3 concur, 1 took no part. Facts: On 19 January 1985, Romulo Coronel, et al. executed a document entitled “Receipt of Down Payment” in favor of Ramona Patricia Alcaraz for P50,000 downpayment of the total amount of P1.24M as purchase price for an inherited house and lot (TCT 119627, Registry of Deeds of Quezon City), promising to execute a deed of absolute sale of said property as soon as such has been transferred in their name. The balance of P1.19M is due upon the execution of said deed. On the same date, Concepcion D. Alcaraz, mother of Ramona, paid the down payment of P50,000.00. On 6 February 1985, the property originally registered in the name of the Coronels’ father was transferred in their names (TCT 327043). However, on 18 February 1985, the Coronels sold the property to Catalina B. Mabanag for P1,580,000.00 after the latter has paid P300,000.00. For this reason, Coronels canceled and rescinded the contract with Alcaraz by depositing the down payment in the bank in trust for Alcaraz. On 22 February 1985, Alcaraz filed a complaint for specific performance against the Coronels and caused the annotation of a notice of lis pendens at the back of TCT 327403. On 2 April 1985, Mabanag caused the annotation of a notice of adverse claim covering the same property with the Registry of Deeds of Quezon City. On 25 April 1985, the Coronels executed a Deed of Absolute Sale over the subject property in favor of Mabanag. On 5 June 1985, a new title over the subject property was issued in the name of Mabanag under TCT 351582. In the course of the proceedings, the parties agreed to submit the case for decision solely on the basis of documentary exhibits. Upon submission of their respective memoranda and the corresponding comment or reply thereto, and on 1 March 1989, judgment was handed down in favor of the plaintiffs, ordering the defendant to execute a deed of absolute sale of the land covered by TCT 327403 and canceling TCT 331582 and declaring the latter without force and effect. Claims for damages by plaintiffs and counterclaims by the defendants and intervenors were dismissed. A motion for reconsideration was thereafter filed, which was denied. Petitioners interposed an appeal, but on 16 December 1991, the CA rendered its decision fully agreeing with the trial court. Hence, the instant petition. The Supreme Court dismissed the petition and affirmed the appealed judgment. 1. Receipt of downpayment a binding contract; Meeting of the minds The document embodied the binding contract between Ramona Patricia Alcaraz and the heirs of Constancio P. Coronel, pertaining to a particular house and lot covered by TCT 119627, as defined in Article 1305 of the Civil Code of the Philippines. 2. Definition of contract of sale The Civil Code defines a contract of sale, in Article 1458, as “one of the contracting parties obligates himself to transfer the ownership of and to deliver a determinate thing, and the other to pay therefor a price certain in money or its equivalent.” Sale, thus, by its very nature a consensual contract because it is perfected by mere consent. 3. Elements of contract of sale; Contract to sell not contract of sale due to the lack of first element; Distinction necessary when property is sold to a third person The essential elements of a contract of sale are (a) Consent or meeting of the minds, that is, consent to transfer ownership in exchange for the price; (b) Determinate subject matter; and (c) Price certain in money or its equivalent. A Contract to Sell may not be considered as a Contract of Sale because the first essential element is lacking. It is essential to distinguish between a contract to sell and a conditional contract of sale specially in cases where the subject property is sold by the owner not to the party the seller contracted with, but to a third person. 4. Contract to sell: Seller agrees to sell property when purchase price is delivered to him; seller reserves transfer of title until fulfillment of suspensive condition (payment) In a contract to sell, the prospective seller explicitly reserves the transfer of title to the prospective buyer, meaning, the prospective seller does not as yet agree or consent to transfer ownership of the property subject of the contract to sell until the happening of an event, which for present purposes taken to be the full payment of the purchase price. What the seller agrees or
Page 1 of 87
obliges himself to do is to fulfill his promise to sell the subject property when the entire amount of the purchase price is delivered to him. In other words the full payment of the purchase price partakes of a suspensive condition, the non-fulfillment of which prevents the obligation to sell from arising and thus, ownership is retained by the prospective seller without further remedies by the prospective buyer. 5. Contract to sell: failure to deliver payment is not a breach but event preventing vendor to convey title; obligation demandable upon full payment of price; promise binding if supported by payment distinct from the price When a contract is a contract to sell where the ownership or title is retained by the seller and is not to pass until the full payment of the price, such payment being a positive suspensive condition and failure of which is not a breach, casual or serious, but simply an event that prevented the obligation of the vendor to convey title from acquiring binding force (Roque v. Lapuz). Upon the fulfillment of the suspensive condition which is the full payment of the purchase price, the prospective seller’s obligation to sell the subject property by entering into a contract of sale with the prospective buyer becomes demandable as provided in Article 1479 of the Civil Code (“A promise to buy and sell a determinate thing for a price certain is reciprocally demandable.”) An accepted unilateral promise to buy or to sell a determinate thing for a price certain is binding upon the promissor if the promise is supported by a consideration distinct from the price. 6. Contract to sell defined A contract to sell be defined as a bilateral contract whereby the prospective seller, while expressly reserving the ownership of the subject property despite delivery thereof to the prospective buyer, binds himself to sell the said property exclusively to the prospective buyer upon fulfillment of the condition agreed upon, that is, full payment of the purchase price. 7. Contract to sell not a conditional contract of sale (existence of first element) A contract to sell may not even be considered as a conditional contract of sale where the seller may likewise reserve title to the property subject of the sale until the fulfillment of a suspensive condition, because in a conditional contract of sale, the first element of consent is present, although it is conditioned upon the happening of a contingent event which may or may not occur. 8. Conditional contract of sale: if suspensive condition not fulfilled, pefection abated; if fulfilled, contract of sale perfected and ownership automatically transfers to buyer If the suspensive condition is not fulfilled, the perfection of the contract of sale is completely abated (cf. Homesite and Housing Corp. vs. Court of Appeals, 133 SCRA 777 ). However, if the suspensive condition is fulfilled, the contract of sale is thereby perfected, such that if there had already been previous delivery of the property subject of the sale to the buyer, ownership thereto automatically transfers to the buyer by operation of law without any further act having to be performed by the seller. 9. Contract to sell: if suspensive condition fulfilled, seller has still to convey title even if property is previously delivered In a contract to sell, upon the fulfillment of the suspensive condition which is the full payment of the purchase price, ownership will not automatically transfer to the buyer although the property may have been previously delivered to him. The prospective seller still has to convey title to the prospective buyer by entering into a contract of absolute sale. 10. Contract to sell: there is no double sale; if property sold to another, the seller may be sued for damages In a contract to sell, there being no previous sale of the property, a third person buying such property despite the fulfillment of the suspensive condition such as the full payment of the purchase price, for instance, cannot be deemed a buyer in bad faith and the prospective buyer cannot seek the relief of reconveyance of the property. There is no double sale in such case. Title to the property will transfer to the buyer after registration because there is no defect in the owner-seller’s title per se, but the latter, of course, may be sued for damages by the intending buyer. 11. Conditional contract of sale: sale becomes absolute upon fulfillment of condition; if property sold to another, first buyer may seek reconveyance In a conditional contract of sale, upon the fulfillment of the suspensive condition, the sale becomes absolute and this will definitely affect the seller’s title thereto. In fact, if there had been previous delivery of the subject property, the seller’s ownership or title to the property is automatically transferred to the buyer such that, the seller will no longer have any title to transfer to any third person. Applying Article 1544 of the Civil Code, such second buyer of the property who may have had actual or constructive knowledge of such defect in the seller’s title, or at least was charged with the obligation to discove r such defect, cannot be a registrant in good faith. Such second buyer cannot defeat the first buyer’s title. In case a title is issued to the second buyer, the first buyer may seek reconveyance of the property subject of the sale.
Page 2 of 87
12. Interpretation of contracts, natural and meaning of words unless technical meaning was intended It is a canon in the interpretation of contracts that the words used therein should be given their natural and ordinary meaning unless a technical meaning was intended (Tan vs. Court of Appeals, 212 SCRA 586 ). 13. Document entitled “Receipt of Down Payment” indicates Conditional Contract of Sale and not contract to sell The agreement could not have been a contract to sell because the sellers made no express reservation of ownership or title to the subject parcel of land. Furthermore, the circumstance which prevented the parties from entering into an absolute contract of sale pertained to the sellers themselves (the certificate of title was not in their names) and not the full payment of the purchase price. Under the established facts and circumstances of the case, had the certificate of title been in the names of petitioners-sellers at that time, there would have been no reason why an absolute contract of sale could not have been executed and consummated right there and then. Moreover, unlike in a contract to sell, petitioners did not merely promise to sell the property to private respondent upon the fulfillment of the suspensive condition. 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. What is clearly established by the plain language of the subject document is that when the said “Receipt of Down Payment” was prepared and signed by petitioners, the parties had agreed to a conditional contract of sale, consummation of which is subject only to the successful transfer of the certificate of title from the name of petitioners’ father to their names. 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.” 14. Article 1475 and 1181 applies to present case; Perfection of a contract of sale and Conditional obligation based on the happening of the event Article 1475 of the New Civil Code provides that “the contract of sale is perfected at the moment there is a meeting of minds upon the thing which is the object of the contract and upon the price.” From that moment, the parties may reci procally demand performance, subject to the provisions of the law governing the form of contracts. Article 1181 of the same code provides that “in conditional obligations, the acquisition of rights, as well as the extinguishment or loss of those already ac quired, shall depend upon the happening of the event which constitutes the condition.” In the present case, since the condition contemplated by the parties which is the issuance of a certificate of title in petitioners’ names was fulfilled on 6 February 1985, the respective obligations of the parties under the contract of sale became mutually demandable, i.e. the sellers were obliged to present the TCT already in their names to he buyer, and to immediately execute the deed of absolute sale, while the buyer on her part, was obliged to forthwith pay the balance of the purchase price amounting to P1,190,000.00. 15. Condition deemed fulfilled when obligor voluntary prevents its fulfillment; Condition fulfilled, such fact controlling over hypothetical arguments Article 1186 provides that “the condition shall be deemed fulfilled when the obligor voluntarily prevents its fulfillment.” T hus, in the present case, the petitioners having recognized that they entered into a contract of sale subject to a suspensive condition, as evidenced in the first paragraph in page 9 of their petition, cannot now contend that there could have been no perfected contract of sale had the petitioners not complied with the condition of first transferring the title of the property under their names. It should be stressed and emphasized that the condition was fulfilled on 6 February 1985, when TCT 327403 was issued in petitioners’ name, and such fact is more controlling than mere hypothetical arguments. 16. Retroactivity of conditional obligation to day of constitution of obligation Article 1187 provides that “the effects of conditional obligation to give, once the condition has been fulfilled, shall retro act to the day of the constitution of the obligation.” In obligations to do or not to do, the courts shall determine, in each case, the retroactive effect of the condition that has been complied with. In the present case, the rights and obligations of the parties with respect to the perfected contract of sale became mutually due and demandable as of the time of fulfillment or occurrence of the suspensive condition on 6 February 1985. As of that point in time, reciprocal obligations of both seller and buyer arose. 17. Succession as a mode of transferring ownership Article 774 of the Civil Code defines Succession as a mode of transferring ownership, providing “succession is a mode of acquisition by virtue of which the property, rights and obligations to the extent and value of the inheritance of a person are transmitted through his death to another or others by his will or by operation of law.” In the present case, petitioners -sellers being the sons and daughters of the decedent Constancio P. Coronel are compulsory heirs who were called to succession by operation of law. Thus, at the instance of their father’s death, petitioners stepped into his shoes insofar as the subject property is concerned, such that any rights or obligations pertaining thereto became binding and enforceable upon them. It is expressly
Page 3 of 87
provided that rights to the succession are transmitted from the moment of death of the decedent (Article 777, Civil Code; Cuison vs. Villanueva, 90 Phil. 850 ). 18. Estoppel, as to lack of capacity Article 1431 provides that “through estoppel an admission or representation is ren dered conclusive upon the person making it, and cannot be denied or disproved as against the person relying thereon.” In the present case, the petitioners, having represented themselves as the true owners of the subject property at the time of sale, cannot claim now that they were not yet the absolute owners thereof at the time they entered into agreement. 19. Mere allegation is not evidence The supposed grounds for petitioners’ rescission, are mere allegations found only in their responsive pleadings, w hich by express provision of the rules, are deemed controverted even if no reply is filed by the plaintiffs (Sec. 11, Rule 6, Revised Rules of Court). The records are absolutely bereft of any supporting evidence to substantiate petitioners’ allegations. We have stressed time and again that allegations must be proven by sufficient evidence (Ng Cho Cio vs. Ng Diong, 110 Phil. 882 ; Recaro vs. Embisan, 2 SCRA 598 ). Mere allegation is not an evidence (Lagasca vs. De Vera, 79 Phil. 376 ). 20. No stipulation to authorize extrajudicial rescission of contract of sale Even assuming arguendo that Ramona P. Alcaraz was in the United States of America on 6 February 1985, petitioners-sellers’ act of unilaterally and extrajudicially rescinding the contract of sale cannot be justified as there was no express stipulation authorizing the sellers to extrajudicially rescind the contract of sale. (cf Dignos vs. CA, 158 SCRA 375 ; Taguba vs. Vda. de Leon, 132 SCRA 722 ) 21. Estoppel, acceptance of check from buyer’s mother; buyer’s absence not a ground for rescission Petitioners are estopped from raising the alleged absence of Ramona P. Alcaraz because although the evidence on record shows that the sale was in the name of Ramona P. Alcaraz as the buyer, the sellers had been dealing with Concepcion D. Alcaraz, Ramona’s mother, who had acted for and in behalf of her daughter, if not also in her own behalf. Indeed, the down payment was made by Concepcion D. Alcaraz with her own personal check (Exh. “B”; Exh. “2″) for and in behalf of Ramona P. Alcaraz. There is no evidence showing that petitioners ever questioned Concepcion’s authority to represent Ramona P. Alcaraz when they accepted her personal check. Neither did they raise any objection as regards payment being effected by a third person. Accordingly, as far as petitioners are concerned, the physical absence of Ramona P. Alcaraz is not a ground to rescind the contract of sale. 22. Buyer not in default as there is no proof that seller presented the TCT and signify their readiness to execute the deed of absolute sale Article 1169 of the Civil Code defines when a party in a contract involving reciprocal obligations may be considered in default. Said article provides that “those obliged to deliver or to do something, incur in delay from the time the obligee judicially or extrajudicially demands from them the fulfillment of their obligation. xxx In reciprocal obligations, neither party incurs in delay if the other does not comply or is not ready to comply in a proper manner with what is incumbent upon him. From the moment one of the parties fulfill his obligation, delay by the other begins.” In the present case, there is no proof offered whatsoe ver to show that the seller actually presented the new transfer certificate of title in their names and signified their willingness and readiness to execute the deed of absolute sale in accordance with their agreement. Ramona’s corresponding obligation to pay the balance of the purchase price in the amount of P1,190,000.00 (as buyer) never became due and demandable and, therefore, she cannot be deemed to have been in default. 23. Double sale; Article 1544, paragraph 2 applies in the present case Article 1544 of the Civil Code provides that “If the same thing should have been sold to different vendees, the ownership shall be transferred to the person who may have first taken possession thereof in good faith, if it should be movable property. Should if be immovable property, the ownership shall belong to the person acquiring it who in good faith first recorded it in the Registry of Property. Should there be no inscription, the ownership shall pertain to the person who in good faith was first in the possession; and, in the absence thereof to the person who presents the oldest title, provided there is good faith.” In the present case, the record of the case shows that the Deed of Absolute Sale dated 25 April 1985 as proof of the second contract of sale was registered with the Registry of Deeds of Quezon City giving rise to the issuance of a new certificate of title in the name of Catalina B. Mabanag on 5 June 1985. Thus, the second paragraph of Article 1544 shall apply. 24. Double sale presumes title to pass to first buyer, exceptions
Page 4 of 87
581. a notice of lis pendens had been annotated on the TCT in the names of petitioners. therefore. CA (GR 107207. Mabanag could not have in good faith registered the sale entered into on 18 February 1985 because as early as 22 February 1985. Ongsiong filed a complaint for ejectment (Civil Case 7579) against Melchor Musa and 29 other squatter families with the MTC Parañaque. Bad faith in registration does not confer registrant any right If a vendee in a double sale registers the sale after he has acquired knowledge that there was a previous sale of the same property to a third party or that another person claims said property in a previous sale. stronger in right). denominated “Deed of Conditional Sale. 69 SCRA 99. 43 Phil. potior jure (first in time. is an agent or a co-buyer is undisturbed Although there may be ample indications that there was in fact an agency between Ramona as principal and Concepcion.00 per sq. the Flores spouses called on Romero with a proposal that should he advance the amount of P50. de Ongsiong. that the second realty buyer must act in good faith in registering his deed of sale (Cruz v. or.citing Palarca vs. since knowledge taints his registration with bad faith (see also Astorga vs. except for the presence of squatters in the area.000 sq. presumes title or ownership to pass to the first buyer. title or ownership will not transfer to him to the prejudice of the first buyer. Prius tempore. m. Court of Appeals. Unless. 87 SCRA 349 . knowledge gained by the second buyer of the first sale defeats his rights even if he is first to register. Cabana. nor in such assumption disputed between mother and daughter. m. In 1988. 26 December 1984). when the second buyer. At the time of registration. 23 November 1995) Romero v. Ongsiong would agree to sell the property for only P800. 58530. the lot was covered by TCT 361402 in the name of Enriqueta Chua Vda. A few months later. forthwith received and acknowledge a check for P50. the provision on double sale. 27. The issue whether Concepcion. Knowledge by the first buyer of the second sale cannot defeat the first buyer’s rights except when the second buyer first registers in good faith the second sale (Olivares vs. A day or so after the announcement. Agency. what finds relevance and materiality is not whether or not the second buyer was a buyer in good faith but whether or not said second buyer registers such second sale in good faith. citing Carbonell vs. stronger in right).000. 95843. G. in good faith. Tanega. G. Cagaoan. was engaged in the business of production. Gonzales. 02 September 1992). Mabanag thus cannot close her eyes to the defect in petitioners’ title to the property at the time of the registration of the property. petitioner knew that the same property had already been previously sold to Coronel. a contract. in behalf of Ongsiong. 554. at least. judgment was rendered ordering the Page 5 of 87 . Director of Land. CA.00 from Romero. 129 SCRA 656.00 which could be used in taking up an ejectment case against the squatters. CA [GR 107207. In the present case. as agent insofar as the subject contract of sale is concerned.” was executed between Romero and Ongsiong. Romero visited the property and. mother of Ramona. acquires possession of the property ahead of the first buyer. second paragraph. Court of Appeals. and (b) should there be no inscription by either of the two buyers. The Court did not touch this issue and did not disturb the low er courts’ ruling on this point. whereas Mabanag registered the said sale sometime in April 1985. to merit the protection of Article 1544. Romero. Fernandez vs.R. 43 Phil. 26. Crisostomo vs. manufacture and exportation of perlite filter aids. Romero v. Flores. accompanied by a broker. Mercader. The project was made known to several freelance real estate brokers. 146. the exceptions being: (a) when the second buyer. offered a parcel of land measuring 1.952 sq. the registration will constitute a registration in bad faith and will not confer upon him any right. a civil engineer.R. No. the second buyer satisfies these requirements. registers the sale ahead of the first buyer. potior jure (first in time. 2. 159 SCRA 33). No. Alfonso Flores and his wife. Pursuant to this agreement. he found the place suitable for a central warehouse. good faith in recording of second sale. On 09 June 1988. she was charged with knowledge that a previous buyer is claiming title to the same property. Parañaque. Located in Barangay San Dionisio. It was further held that it is essential. First to register in good faith The governing principle is prius tempore. without knowledge of any defect in the title of the property sold. m. Vitug (J): 4 concur Facts: Virgilio R. not in buying In a case of double sale. in good faith.Article 1544. Metro Manila. the issue of whether or not Concepcion was also acting in her own behalf as a co-buyer is not squarely raised in the instant petition. Cagaoan vs. 43 Phil. or on 21 February 1989.000. Conversely. Double sale. Romero expressed his concurrence. Later. her mother.) 28. 25. Double sale. Romero and his foreign partners decided to put up a central warehouse in Metro Manila on a land area of approximately 2. that is. 23 November 1995] Third division. permalite insulation and process perlite ore. (Salvoro vs.
thus dismissed the complaint and ordered Ongsiong to eject or cause the ejectment of the squatters from the property and to execute the absolute deed of conveyance upon payment of the full purchase price by Romero.000. On 26 June 1990. On 19 June 1989. to the compliance by one party of an undertaking the fulfillment of which would beckon. refused the tender. Perfected contract of sale. 1. counsel for Ongsion. advised Atty. on 25 August 1989. in reality. substance more significant than title given to it by parties In determining the real character of the contract. Apostol that the Deed of Conditional Sale had been rendered null and void by virtue of his client’s failure to evict the squatters from the premises within the agreed 60 -day period. 3. the condition is imposed upon the perfection of the contract itself. under Article 1191 of the Civil Code. rescind the agreement. Civil Case 89-4394) for a rescission of the deed of “conditional” sale. the court suspended the enforcement of the writ of execution accordingly. Romero filed his petition for review on certiorari before the Supreme Court. 2. was the party who could. Atty. Ongsiong sought to return the P50. citing the favo rable decision and the writ of execution issued pursuant thereto. The Supreme Court reversed and set aside the questioned decision of the Court of Appeals.F. Jr.. Ongsiong appealed to the Court of Appeals. Page 6 of 87 . the Presidential Commission for the Urban Poor (”PCUD”).000 deposited with the trial court. Apostol reminded Ongsiong on the expiry of the 45-day grace period and reiterated his client’s willingness to underwrite the expenses for the execution of the judgment and ejectment of the occupants. may be treated as absolute in nature. On 29 May 1992. the payment of the agreed purchase price and. The decision was handed down beyond the 60-day period (expiring 09 August 1988) stipulated in the contract. Sergio A. Where. On 08 June 1989. or subject to. a deed of sale. absolute or conditional A perfected contract of sale may either be absolute or conditional depending on whether the agreement is devoid of. the demandability of the reciprocal prestation of the other party. The reciprocal obligations referred to would normally be. filed with the RTC Makati (Branch 133. and expressed Romero’s willingness to underwrite the expenses for the execution of the judgment and ejectment of the occupants chargeable to the purchase price of the land. Joaquin Yuseco. and for the consignation of P50. any condition imposed on the passing of title of the thing to be conveyed or on the obligation of party thereto. When ownership is retained until the fulfillment of a positive condition the breach of the condition will simply prevent the duty to convey title from acquiring an obligatory force. through its Regional Director for Luzon (Viloria). without pronouncement as to cost. 1545. Civil Code). asked the MTC Parañaque for a grace period of 45 days from 21 April 1989 within which to relocate and transfer the squatter families.00 advance payment. the appellate court rendered its decision. of the prescribed condition.000.” Meanwhile. being the injured party. The writ of execution of the judgment was issued. the MTC issued an alias writ of execution in Civil Case 7579 on motion of Ongsiong but the squatters apparently still stayed on. Atty. On 27 June 1989. Atty. in the case of vendee. For example. on 30 March 1989.00 cash. the RTC rendered decision holding that Ongsiong had no right to rescind the contract since it was she who “violated her obligation to eject the squatters from the subject property” and that Romero. plus damages. He added that private respondent had “decided to retain the property. in turn. and entered another ordering Romero to pay Ongsiong the balance of the purchase price and the latter to execute the deed of absolute sale in favor of petitioner.00 she received from Romero since. the other party may either refuse to proceed or waive said condition (Art. counsel for Romero.000.defendants to vacate the premises. If the condition is imposed on an obligation of a party which is not complied with. Ongsiong prompted by Romero’s continued refusal to accept the return of the P50. In a letter. Apostol. as the case may be. of course. Meanwhile. Failing to obtain a reconsideration. without costs. Condition in the context of a perfected contract of sale The term “condition” in the context of a perfected contract of sale pertains. although denominated as a deed of conditional sale. the title given to it by the parties is not as much as significant as its substance. The lower court. she said. 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. the failure of such condition would prevent the juridical relation itself from coming into existence. still later. Real character of a contract. reversed and set aside the decision appealed from and entered another declaring he contract of conditional sale of 9 June 1988 cancelled and ordering Romero to accept the return of the downpayment in the amount of P50. Acting favorably on the request. dated 07 April 1989. she could not “get rid of the squatters” on the lot.
Fule v. 6. otherwise. Article 1545 of the Civil Code allows the obligee to choose between proceeding with the agreement or waiving the performance of the condition. Gregorio Fule. He has agreed. No. 4. as corporate secretary of the bank. 2 March 1998) Fule v. asked Remelia Dichoso and Olivia Mendoza to look for a buyer who might be interested in the Tanay property. 1998. It was Ongsiong who has failed in her obligation under the contract. 8. Ongsiong’s action for rescission was not warranted as she was not the injured party. From the moment the contract is perfected. since the exchange rate appreciated to P19 per dollar). may be in keeping with good faith. Romero has waived the performance of the condition imposed on Ongsiong to free the property from squatters.. to shoulder the expenses of the execution of the judgment in the ejectment case and to make arrangement with the sheriff to effect such execution. according to their nature. Further.in the case of the vendor. leaving unaffected obligation itself. In the present case. In the present cas. usage and law A sale is at once perfected where a person (the seller) obligates himself. Rizal (covered by TCT 320725) to the Rural Bank of Alaminos. 112212. This option clearly belongs to petitioner (Romero) and not to private respondent (Ongsiong). neither may petitioner demand its reimbursement from private respondent. Ongsiong is obligated to evict the squatters on the property. Dr.000.000 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. Cruz has declined Fule’s offer to buy said jewelry for P100. 3. to pay the balance of the purchase price. March 2. also a jeweler. 7. this offer to pay. Atty. only the condition is avoided. 5. In June 1984. Laguna to secure a loan in the amount of P10. be void in accordance with Article 1182 of the Civil Code bu t a “mixed” condition “dependent not on the will of the vendor alone but also of third persons like the squatters and government agencies and personnel concerned. opting to proceed with sale. for a price certain. It so happened that in January of said year. has shown interest in buying a pair of emerald-cut diamond earrings owned by Dr. Evidently. where the so-called “potestative condition” is imposed not on the birth of the obli gation but on its fulfillment. the parties are bound not only to the fulfillment of what has been expressly stipulated but also to all the consequences which. only the condition is avoided and does not affect obligation itself The undertaking required of private respondent does not constitute a “potestative condition dependent solely on his will” tha t might.e. The ejectment of the squatters is a condition the operative act of which sets into motion the period of compliance by Romero of his own obligation. Options available under Article 1545 belongs to injured party Ongsiong’s failure to “remove the squatters from the property” within the stipulated period gives Romero the right to either refuse to proceed with the agreement or waive that condition in consonance with Article 1545 of the Civil Code. to deliver and to transfer ownership of a specified thing or right to another (the buyer) over which the latter agrees. in the present case is the timely eviction of the squatters on the property). If condition is imposed on the fulfillment of the obligation and not the birth thereof. i. negotiations for the barter of the jewelry and the Tanay property ensued. Petitioner. Gregorio Fule. The two found one in the person of Ninevetch Cruz.R. private respondent may not subject it to forfeiture. under the agreement. and not dependent on the sole will of the debtor. in fact. Said mortgage was later foreclosed and the property offered for public auction upon his default. Article 1191 The right of resolution of a party to an obligation under Article 1191 of the Civil Code is predicated on a breach of faith by the other party violates the reciprocity between them. Rescission by non-injured party not warranted. CA (GR 112212. Romero (J): 3 concur Facts: Fr. usage and law.] Third division. however.” However. and a subsequent bid by Fule to buy them for US$6.000. Antonio Jacobe initially mortgage a 10-hectare property in Tanay. would likewise suffice to defeat Ongsiong’s prerogative to rescind thereunder. Subsequently. Romero did not breach the agreement. CA [G. assuming for the sake of argument that such a demand is proper under Article 1592 of the Civil Code. Parties bound to fulfill what is expressly stipulated and all consequences in keeping with good faith. In contracts of sale particularly. Potestative condition is mixed. Cruz Page 7 of 87 . Belarmino was requested by Dr. may not demand the reimbursement of the advance payment When petitioner having opted to proceed with the sale. the fulfillment of certain express warranties (which. Perfection of a sale. hiring been made prior to the demand for rescission. Cruz. Parenthetically.
inter alia. the Supreme Court’s jurisdiction is only limited to reviewing errors of law in the absence of any showing that the findings complained of are totally devoid of support in the record or that they are glaringly erroneous as to constitute serious abuse of discretion. Cruz and the cashier opened the safety deposit box. Cruz had already agreed to the proposed barter. His motion for reconsideration having been denied on 19 October 1993. but ordered Dr.000. Fule executed on 19 October 1984. Dr. who borrowed the car of Dr. and on even date. Later in the evening. On 20 October 1992. 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. Fule arrived at the residence of Atty. complaining about the fake jewelry. that: (1) the conclusion is a finding grounded on speculations. From the trial court’s adverse decision. only to find Fule demonstrating with a tester that the earrings were fake. to have the earrings tested. Cruz if the jewelry was okay. the group decided to go to the house of a certain Macario Dimayuga. Fule reported the matter to the police station where Dichoso and Mendoza likewise executed sworn statements. went beyond the issues of the case and the same is contrary to the admission of both parties. holding that the genuine pair of earrings used as consideration for the sale was delivered by Dr. Fule went to Prudential Bank to take a look at the jewelry. In an effort to cut through any legal impediment. and issued a certification to the effect that the actual consideration of the sale was P200. however. however. among other things.000. On 20 November 1984.00 for necessary expenses in the transfer of title over the Tanay property. together with Dichoso and Mendoza.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). (5) when the findings of fact are conflicting.. at the bank. 2. Fule went to one Atty. At around 9:30 p.to check the property and found out that no sale or barter was feasible as the 1-year period of redemption has not expired. Thereafter.987. that the contract of sale over the Tanay property be declared null and void on the ground of fraud and deceit. which he had earlier promised. rendered a decision affirming in toto the lower court’s decision. He did not. absurd and impossible. and thus examine and weigh anew the facts regarding the genuineness of the earrings bartered in exchange for the Tanay property. Cruz to Fule. Fule signed the deed and gave Atty.00. As a general rule.00 and jewelry he had given them. Fule met Atty. Belarmino the amount of P13. Dichoso. that the agreement has been consummated at the time the principal parties parted ways at the bank. (2) the inference is manifestly mistaken. the parties agreed that the balance of P40. New factual issues cannot be examined as it unduly transcends the limits of the Supreme Court’s review power The Supreme Court cannot entertain a factual issue. Fule inspected the jewelry. in making its findings.78. Fule expressed his satisfaction by nodding his head when asked by Dr. Upon being advised by the latter.000 within 10 days from the finality of the decision. the Supreme Court accords conclusiveness to a lower court’s findings of fact unless it is shown. (4) when the judgment is based on a misapprehension of facts. Cruz to pay Fule the balance of the purchase price of P40. They countered that Fule could not have been fooled because he had vast experience regarding jewelry. and that damages are due to the defendants. To reiterate. Fule then accused Dichoso and Mendoza of deceiving him which they. however. The immediate rendition of the decision was no Page 8 of 87 . Fule. near the electric light at the bank’s lobby. Thereafter. Atty. the Court of Appeals. called up Atty. The following day. Belarmino to finally execute a deed of absolute sale. Immediate rendition of decision not anomalous No proof has been adduced that Judge Jaramillo was motivated by a malicious or sinister intent in disposing of the case with dispatch. immediately declared them counterfeit.000. and delivered the contents thereof to Fule. the petition for review on certiorari. (3) when there is a grave abuse of discretion. On 26 October 1984. went there posthaste thinking that Fule had finally agreed to give them half of the pair of earrings. denied. Reynaldo Alcantara residing at Lakeside Subdivision in San Pablo City.m. Dimayuga. Since the jewelry was appraised only at P160. Belarmino complaining that the jewelry given him was fake. and (6) when the Court of Appeals. Fule paid the agents. a jeweler. petitioner elevated the ma tter to the Court of Appeals. Belarmino accordingly caused the preparation of a deed of absolute sale while Fule and Dr. after taking one look at the earrings. Cruz attended to the safekeeping of the jewelry. Fule filed a complaint before the RTC San Pablo City against private respondents praying. As Dr.000. as prearranged. Belarmino at the latter’s residence to prepare the documents of sale. The Supreme Court affirmed in toto the decision of the Court of Appeals. 1. surmises or conjectures. 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. Dichoso and Mendoza. For services rendered.000. Jacobe purportedly in the amount of P15. Fr. as this would unduly transcend the limits of the Court’s review power in petitions of this nature which are confined merely to pure questions of law. Jacobe sold the property to Fule for P75. however. Cruz.700. Belarmi no. a deed of redemption on behalf of Fr. On 30 October 1984. Informed that Fule was at the lawyer’s house. for 10-15 minutes. the lower court rendered its decision on 7 March 1989. give them half of the pair of earrings in question. arrived at the residence of Atty. After trial. Hence.00 and some pieces of jewelry. On 23 October 1984.00 would just be paid later in cash.00 and not P80. with costs against petitioner. that the contract was valid even if the agreement between the parties was principally a barter contract. Neither is there proof that someone else wrote the decision for him.00. Fule nonetheless took back the US$300. the same court lifted its previous order and denied the prayer for a writ of preliminary injunction. the amount of US$300.
mistake must “refer to the substance of the thing that is the object of the contract. therefore. In fact. Cruz to believe that the Tanay property was worth exchanging for her jewelry as he represented that its value was P400. No inducement made by the private respondents There is fraud when. From this moment. who l ed Dr. Formal requirements are. Hence. 3. Ownership transferred upon actual or constructive delivery Page 9 of 87 . it was certainly contrary to the nature of a businessman-banker like him to have parted with his real estate for half its price. the Supreme Court does not see anything wrong in the practice of writing a decision days before the scheduled promulgation of judgment and leaving the dispositive portion for typing at a time close to the date of promulgation. through the insidious words or machinations of one of the contracting parties. may be in keeping with good faith. Mistake.00. Mistake caused by manifest negligence cannot invalidate a judicial act To invalidate a contract. Cruz did not initially accede to petitioner’s proposal to buy the said jewelry.” 8. dishonesty.” An example of mistake as to the object of the contract is the substitution of a specific thing contemplated by the parties with another. for the benefit of third parties. through his agents. considering the value of both the jewelry and his land. intimidation. contingency or ris k affecting the object of the contract. Contract of sale absolute if no stipulation that title to property is reserved to seller until full payment. Neither can Judge Jaramillo be made administratively answerable for the immediate rendition of the decision. provided that no malice or any wrongful conduct attends its adoption. Contract perfected by mere consent. In the present case. and registration only to affect third parties. the records. Article 1358 of the Civil Code which requires the embodiment of certain contracts in a public instrument. on account of his work as a banker-jeweler. The practice serves the dual purposes of safeguarding the confidentiality of draft decisions and rendering decisions with promptness. violence. according to their nature. Further. The contract can be voided in accordance with law so as to compel the parties to restore to each other the things that have been the subject of the contract with their fruits.” The two -year period within which Judge Jaramillo handled the case provided him with all the time to study it and even write down its facts as soon as these were presented to court. binds parties to stipulation and all the consequences. the other is induced to enter into a contract which. and the price with interest. without them.more than Judge Jaramillo’s compliance with his duty as a judge to “dispose of the court’s business promptly and decide cases within the required periods. even though there may have been no damage to the contracting parties are: (1) those where one of the parties is incapable of giving consent to a contract. Being consensual. it can be rightfully assumed that he was an expert on matters regarding gems. Judge Jaramillo is presumed to have performed his job in accordance with law and should instead be commended for his close attention to duty. On the contrary. “(t)here is no mistake if the party alleging it knew the doubt. Cruz to exchange her jewelry for the Tanay property. He had the intellectual capacity and the business acumen as a banker to take precautionary measures to avert such a mistake. Voidable or annullable contracts Contracts that are voidable or annullable. it appears that it was petitioner. corruption or bad faith. private respondents endeavored to make such substitution of an inferior one or one with Russian diamonds for the jewelry he wanted to exchange with his 10-hectare land. 5. Cruz induced petitioner to sell his Tanay property or that she cajoled him to take the earrings in exchange for said property.000. In the present case. the parties are bound not only to the fulfillment of what has been expressly stipulated but also to all the consequences which. Contract of sale perfected upon meeting of minds upon the thing object of the contract and upon price. Rather. a contract of sale has the force of law between the contracting parties and they are expected to abide in good faith by their respective contractual commitments. and (2) those where the consent is vitiated by mistake. Dr. Embodiment of contract in public instrument only for convenience. 7. usage and law. he would not have agreed to. Lack of formal requirements does not invalidate the contract The Civil Code provides that contracts are perfected by mere consent. the petitioner failed to prove the fact that prior to the delivery of the jewelry to him. it was in fact petitioner who resorted to machinations to convince Dr. or to those conditions which have principally moved one or both parties to enter into the contract. 4. The acts of a judge which pertain to his judicial functions are not subject to disciplinary power unless they are committed with fraud. If indeed petitioner’s property was truly wor th that much. undue influence or fraud. As the Civil Code provides. is only for convenience.000.00 or more than double that of the jewelry which was valued only at P160. Neither is there any evidence showing that Dr. are bare of any evidence manifesting that private respondents employed such insidious words or machinations to entice petitioner into entering the contract of barter. in the absence of sufficient proof to the contrary. Non-compliance therewith does not adversely affect the validity of the contract nor the contractual rights and obligations of the parties thereunder. In short. and registration of the instrument only adversely affects third parties. Fraud. A contract of sale is perfected at the moment there is a meeting of the minds upon the thing which is the object of the contract and upon the price. A mistake caused by manifest negligence cannot invalidate a juridical act.
The factual findings of the courts a quo to the effect that petitioner filed this case because he was the victim of fraud. and that he filed the action for the nullification of the contract of sale with unclean hands. correctly ruled that there were no legal bases for the nullification of the contract of sale. CA (GR 97347. Legaspi. Such stipulations are not manifest in the contract of sale. both the trial and appellate courts. 12 Award of moral and exemplary damages Moral and exemplary damages may be awarded without proof of pecuniary loss.] First division. (3) Should he be in default. all deserve full faith and credit to support the conclusion that petitioner was motivated more by ill will than a sincere attempt to protect his rights in commencing suit against respondents. 9.” 11. the court shall take into account the circumstances obtaining in the case and assess damages according to its discretion. Statements of facts should establish such data rather than mere conclusions or opinions of witnesses. even going to the extent of sketching their appearance. oppressive or malevolent manner. for moral damages to be awarded. the cause of action of the instant case appears to have been contrived by petitioner himself. In the present case. considering his exposure to the banking and jewelry businesses. San Antonio. Neither did petitioner demand payment of the price as in fact he filed an action to nullify the contract of sale. (2) Should the thing sold and delivered produce fruits or income. Why at the precise moment when he was about to take physical possession thereof he failed to exert extra efforts to check their genuineness despite the large consideration involved has never been explained at all by petitioner. such indemnity could not be outrightly awarded. He must likewise establish sufficient data upon which the court can properly base its estimate of the amount of damages. His acts thus failed to accord with what an ordinary prudent man would have done in the same situation. No. 97347. 13. cannot apply in the present case. Contract silent when balance is due and demandable. Cruz is not a sufficient cause to invalidate the contract or bar the transfer of ownership and possession of the things exchanged considering the fact that their contract is silent as to when it becomes due and demandable. Article 1589 of the Civil Code prescribes the payment of interest by the vendee “for the period between the delivery of the thing and the payment of the price” in cases “(1) Should it have been so stipulated. under settled jurisprudence. 1999. Quezon (agricultural including rice mill.00 forming part of the consideration was still payable to Fule. as a rule. Case distinguished from de la Cruz v Legaspi The present case should be distinguished from De la Cruz v. title passed to the vendee upon delivery of the thing sold since there was no stipulation in the contract that title to the property sold has been reserved in the seller until full payment of the price or that the vendor has the right to unilaterally resolve the contract the moment the buyer fails to pay within a fixed period. the same. July 6. where the court held that failure to pay the consideration after the notarization of the contract as previously promised resulted in the vendee’s liability for payment of interest.A contract of sale being absolute in nature. The same holds true with respect to the award of exemplary damages where it must be shown that the party acted in a wanton. however. it is essential that the claimant must have satisfactorily proved during the trial the existence of the factual basis of the damages and its causal connection with the adverse party’s acts. non-payment does not invalidate the contract While it is true that the amount of P40. CA [G. petitioner took pains to thoroughly examine said jewelry. that he could not have been such a victim because he should have examined the jewelry in question before accepting delivery thereof. it must be shown that the person to whom these are awarded has sustained injury. To warrant the award of damages. It must be noted that before petitioner was able to convince Dr. upon the actual and constructive delivery thereof. 6 July 1999) Ong v. would not have been a reason for awarding moral and exemplary damages. from the time of judicial or extrajudicial demand for the payment of the price.000. therefore. 10 No interest due if it is not stipulated Failure to pay the balance of the purchase price does not result in the payment of interest thereon. its nonpayment by Dr. respectively. Cruz and Fule.R. Instead. This is not a situation where petitioner’s complaint was simply found later to be bas ed on an erroneous ground which. piggery) for P2M (initial Page 10 of 87 . In the present. If the court has no proof or evidence upon which the claim for moral damages could be based. 4. In awarding such damages. there is no stipulation for the payment of interest in the contract of sale nor proof that the Tanay property produced fruits or income. moral damages cannot be recovered from a person who has filed a complaint against another in good faith because it is not sound policy to place a penalty on the right to litigate. Ong v. Ownership over the parcel of land and the pair of emerald-cut diamond earrings had been transferred to Dr. Cruz to exchange her jewelry for the Tanay property. Thus. Rule that moral damages cannot be recovered from person who filed a complaint does not apply in present case While. Jaime Ong and spouses Miguel and Alejandra Robles executed an “Agreement of Purchase and Sale” respecting 2 parcels of land situated at Barrio Puri. Ynares-Santiago (J): 4 concur Facts: On 10 May 1983.
that seller delivers. Although both presuppose contracts validly entered into and subsisting and both require mutual restitution when proper.. residential house and other improvements thereon. the checks were dishonored due to insufficient funds.09 directly paid to BPI to answer for part of seller’s loan with the bank. which the trial court granted. testimonial and documentary. with the knowledge and conformity of Ong. the petition for review on certiorari. et seq. Ong only managed to dole out no more than P393. building. and thus enjoined Ong from introducing improvements on the properties except for repairs. When presented for payment. 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.00 to pay off their outstanding obligation with said bank. the spouses. From this decision. 2. particularly where the findings of both the trial court and the appellate court on the matter coincide.000 for exemplary damages and P20. to secure the reparation of damages caused to them by a contract. Rescission as a remedy to secure the reparation of damages caused by a contract. ordering the delivery of the parcels of land and the improvements thereon to the spouses. To answer for his balance of P 1. by restoration of things to their condition at the moment prior to the celebration of the contract. which affirmed the decision of the RTC but deleted the award of exemplary damages. Subsequently. and in which each party is a debtor and a creditor of the other. they sold 3 transformers of the rice mill worth P51.payment of P600. Rescission of reciprocal obligations under Article 1191 distinguished from rescission of contract under Article 1383 Rescission of reciprocal obligations under Article 1191 of the New Civil Code should be distinguished from rescission of contracts under Article 1383.000. while the case was still pending with 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. as per agreement.680. continued to be in possession of the two parcels of land while the spouses were forced to use the rice mill for residential purposes. Ong promised to replace the checks but failed to do so. of the New Civil Code. and balance of 1. they filed with the RTC Lucena City. which even if initially valid. adduced by the parties to an appeal. a complaint for rescission of contract and recovery of properties with damages. Ong deposited sums of money with the BPI.500. 3. It implies a contract. the trial court rendered a decision in favor of the spouses: ordering the contract entered into by the parties set aside. Hence. Ong issued 4 post-dated Metro Bank checks payable to the spouses in the amount of P350. These prompted the spouses to ask for a writ of preliminary injunction. 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. Reciprocal obligations are those which arise from the same cause.411. in accordance with their stipulation that petitioner pay the loan of the spouses with BPI. ordering the return of the sum of P497. Pursuant to the contract. so. Reevaluation of evidence not the function of the Supreme Court It is not the function of the Supreme Court to assess and evaluate all over again the evidence. 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. ricemill. voluntarily gave the spouses authority to operate the rice mill. To make matters worse. On 1 June 1989. as contemplated in Articles 1380. Ong paid the spouses the sum of P103. is a remedy granted by law to the contracting parties and even to third persons. They are to be performed simultaneously such that the performance of one is conditioned upon the simultaneous fulfillment of the other. produces a lesion or a pecuniary damage to someone. Article 1380 Rescission. however. out of the P496. such that the obligation of one is dependent upon the obligation of the other.00 loan of the spouses with BPI.00 each (Check 137708-157711).” Resolution is a principal action which is based on breach Page 11 of 87 .000 the first of which due and demandable on 15 June 1983). While Article 1191 uses the term “rescission.51 to Ong by the spouses. He. was “resolution. In affirming the decision of the trial court. Branch 60. On 15 May 1983. 4. on 2 September 1985. should have paid.179. There is no cogent reason shown that would justify the court to discard the factual findings of the two courts below and to superimpose its own.91 directly paid to seller on 22 March 1983 and P496.499.” the original term which was used in the old Civil Code. 1. through counsel. even if this should be valid.91 2 by depositing it with the UUCPB. from which the article was based.000 broken into P103.500. however. they are not entirely identical. Ong took possession of the subject parcels of land together with the piggery. When the bank threatened to foreclose the spouses’ m ortgage. Their demand was left unheeded.4M.679. sent Ong a demand letter asking for the return of the properties. 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 P48.00 in addition to the amounts already awarded. ordering Ong to pay the spouses P100. petitioner appealed to the Court of Appeals. On 2 August 1985.499. Rescission applicable to reciprocal obligations under Article 1191 Article 1191 of the New Civil Code refers to rescission applicable to reciprocal obligations.000 as attorney’s fees and litigation expenses. Ong introduced major improvements on the subject properties by constructing a complete fence made of hollow blocks and expanding the piggery. Ong.60. which ong. Later. in return.4M to be paid in 4 equal quarterly installments of P350. with costs against petitioner Ong.
ownership is. the concurrence of the following requisites is indispensable: (1) there must be a previous valid obligation. (3) those undertaken in fraud of creditors when the latter cannot in any manner collect the claims due them. and (4) there must be the validity of the new contract. Contract to sell distinguished from contract of sale In a contract of sale. n ot a failure of a condition to render binding that obligation. (2) those agreed upon in representation of absentees. Ong introduced major improvements on the premises even while the case against him was pending before the trial court. Records further show that Ong agreed to the sale of MERALCO transformers by the spousess to pay for the balance of their subsisting loan with BPI. there must be an express intention to novate. This promise to sell was subject to the fulfillment of the suspensive condition of full payment of the purchase price by the Ong. reserved in the vendor and is not to pass to the vendee until full payment of the purchase price. Article 1383 is inapplicable. 7. Novation not presumed Article 1292 of the New Civil Code states that. Failure to pay. Although the parties agreed to credit the proceeds from the sale of the transformers to petitioner’s obligation. the Court found no reason to depart from the ruling of the trial court and the appellate court that petitioner is a builder in bad faith. however. the contract entered into by the parties obviously does not fall under any of those mentioned by Article 1381. In the present case. he was supposed to reimburse the same later to respondent spouses. the failure of which is not a breach. if the latter suffer the lesion stated in the preceding number. his failure to do so brought about a situation which prevented the obligation of the spouses to convey title from acquiring an obligatory force. (2) there must be an agreement of the parties concerned to a new contract.” Novation is never presumed.of a party. This can only mean that there was never an intention on the part of either of the parties to novate petitioner’s manner of payment. 9. in contravention of the manner of payment stipulated in their contract. the requisites are not found. Hence. The spouses bound themselves to deliver a deed of absolute sale and clean title covering the two parcels of land upon full payment by the buyer of the purchase price of P2M. objected to by the spouses. In a contract to sell. Novation is never presumed. These installments were. The subsequent acts of the parties hardly demonstrate their intent to dissolve the old obligation as a consideration for the emergence of the new one. by agreement. the agreement of the parties the present case may be set aside. but not because of a breach on the part of Ong for failure to complete payment of the purchase price.” In the present case. Consequently. It is true that Ong paid the spouses small sums of money amounting to P48. but a situation that prevents the obligation of the vendor to convey title from acquiring an obligatory force. 10. “In order that an obligation may be extinguished by another which substitutes the same. “Agreement of Purchase and Sale” is in the nature of contract to sell A careful reading of the parties’ “Agreement of Purchase and Sale” shows that it is in the nature of a contract to sell. (5) all other contracts specially declared by law to be subject to rescission. 6. while in a contract to sell. the title to the property passes to the vendee upon the delivery of the thing sold. (4) those which refer to things under litigation if they have been entered into by the defendant without the knowledge and approval of the litigants or of competent judicial authority. or that the old and the new obligations be on every point incompatible with each other. and ong replied that these represented the interest of the principal amount which he owed them. Requisites of novation In order for novation to take place. Rescissible contract under Article 1381 Article 1381 of the New Civil Code enumerates rescissible contracts as “(1) those which are entered into by guardians wheneve r the wards whom they represent suffer lesion by more than one fourth of the value of the things which are the object thereof. Page 12 of 87 . casual or serious. the parties never even intended to novate their previous agreement. 8. It must be stressed that the breach contemplated in Article 1191 of the New Civil Code is the obligor’s failure to comply with an obligation already extant. Rather. is not even a breach but merely an event which prevents the vendor’s obligation to convey t itle from acquiring binding force. it is imperative that it be so declared in unequivocal terms. while rescission under Article 1383 is a subsidiary action limited to cases of rescission for lesion under Article 1381 of the New Civil Code. Contract was not novated as to the manner and time of payment. 5. Moreover.00.680. The non-fulfillment of the condition of full payment rendered the contract to sell ineffective and without force and effect. (3) there must be the extinguishment of the old contract. it must be proven as a fact either by express stipulation of the parties or by implication derived from an irreconcilable incompatibility between the old and the new obligation. in this instance. In the present case. He introduced the improvements on the premises knowing fully well that he has not paid the consideration of the contract in full and over the vigorous objections of respondent spouses. the payment of the purchase price is a positive suspensive condition. Builder in bad faith As regards the improvements introduced by Ong to the premises and for which he claims reimbursement.
P10. as additional surety.000. on the same day. liquidated or compensatory damages in addition to exemplary damages were awarded. Fonacier (GR L-11827. L-11827.000.000 tons of iron ore.000 tons of iron ore.. As a result. jointly and severally. together with the improvements therein and the use of the name “Larap Iron Mines” and its goodwill. Gaite transferred to Fonacier all his rights and interests over the “24. so that if the suspensive condition does not take place.11. P65.000 tons of iron ore which he acquired from Gaite.R. On 8 December 1955. Isabelo Fonacier decided to revoke the authority granted by him to Gaite. temperate. The Supreme Court affirmed the decision appealed from. Fonacier entered into a “Contract of Mining Operation” with Larap Mines and Smelting Co. Fonacier constituted and appointed Fernando A. delivered on 8 December 1954 with Fonacier as principal and the Larap Mines and Smelting Co.000. When Fonacier and his sureties failed to pay as demanded by Gaite. Whereupon. Fonacier [G. but was only a suspensive period or term. the bond with respect to the Far Eastern Surety and Insurance Company expired with no sale of the approximately 24. a document entitled “Revocation of Power of Attorney and Contract” was executed on 8 December 1954. Reyes JBL (J): 9 concur Facts: Isabelo Fonacier was the owner and/or holder of 11 iron lode mineral claims (Dawahan Group).50 per ton of ore that might be extracted therefrom.000. To secure the payment of the balance.. situated in Jose Panganiban. for the consideration of P20. more or less” that the former had already extracted from the mineral claims. Gaite v. improvements. and facilities in or outside said claims.000 balance of the price of the ore. Shipment or local sale of ore not a condition precedent but a suspensive period or term The shipment or local sale of the iron ore is not a condition precedent (or suspensive) to the payment of the balance of P65. Judgment was. to grant it the righ t to develop. in consideration for the signing by the company and its stockholders of the surety bonds delivered by Fonacier to Gaite. Fonacier promised to execute in favor of Gaite a surety bond. Deletion of award of exemplary damages correct The award of exemplary damages was correctly deleted by the Court of Appeals inasmuch as no moral. Both bond were attached and made integral parts of the “Revocation of Power of Attorney and Contract. For some reason or another. What characterizes a conditional obligation is the fact that its efficacy or obligatory force (as distinguished from its demandability) is subordinated to the happening of a future and uncertain event.000.000) will be paid out of the first letter of credit Page 13 of 87 . 1961. 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. accordingly. opening and paving roads within and outside their boundaries.] En Banc. wherein Gaite transferred to Fonacier. and attorney’s fees. 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. 31 July 1961) Gaite v.000 with interest at 6% per annum from 9 December 1955 until full payment. plus costs. the latter filed a complaint against them in the CFI Manila (Civil Case 29310) for the payment of the P65. plus 10% of the royalties that Fonacier would receive from the mining claims. owned solely by him. Camarines Norte. Gaite demanded from Fonacier and his sureties payment of said amount. to the Larap Mines & Smelting Co. the parties would stand as if the conditional obligation had never existed. and all the rec ords and documents relative to the mines. Thereafter Gaite embarked upon the development and exploitation of the mining claims. and Gaite assented thereto subject to certain conditions.000. consequential damages. the right to use the business name “Larap Iron Mines” and its goodwill. 5. 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. with the Far Eastern Surety and Insurance Co.000 metric tons of iron ore. the comp lete title to the approximately 24. rendered in favor of plaintiff Gaite ordering defendants to pay him. nor had the 65. of which was paid upon the signing of the agreement. By a “Deed of Assignment” dated 29 September 1952. 2. 1. all his rights and interests on all the roads. exploit. From this judgment. July 31. making other improvements and installing facilities therein for use in the development of the mines. Gaite in turn executed a general assignment conveying the development and exploitation of said mining claims unto the Larap Iron Mines. The words of the contract express no contingency in the buyer’s obligation to pay. Inc. and its stockholders as sureties. A second bond was executed by the parties to the first bond.000 balance of the price of said ore been paid to Gaite by Fonacier and his sureties. and explore the mining claims. in consideration of th e sum of P75. with costs against appellants. In the same document. for an amount of not less than P65. On 19 March 1954. and in time extracted therefrom what he claimed and estimated to be approximately 24. in consideration of certain royalties. in the same document. Fonacier likewise transferred.” On the same day that Fonacier revoked the power of attorney. defendants jointly appealed to the Supreme Court as the claims involved aggregate to more than P200. No. The contract stipulates that “the balance of Sixty-Five Thousand Pesos (P65.
000. and when through fortuitous event they disappear. a security that Gaite considered essential and upon which he had insisted when he executed the deed of sale of the ore to Fonacier. therefore. would assume the risk of not being paid at all.000. The fact that appellants did put up such bonds indicates that they admitted the definite existence of their obligation to pay the balance of P65. and if there was any. emptio spei). hence.000. 8. To consider sale as a condition precedent leaves the payment at the discretion o fthe debtor To subordinate the obligation to pay the remaining P65. Such construction of the contract should be avoided. unless he immediately gives new ones equally satisfactory. Contract of sale commutative and onerous. it is not in the usual course of business to do so. In the present case. No waiver intended by creditor Gaite’s acceptance of the surety company’s bond with full knowledge that on its face it would automatically expire within one year was not a waiver of its renewal after the expiration date. While in a sale the obligation of one party can be lawfully subordinated to an uncertain event. in fine. 5. what is undetermined is merely the exact date at which it will be made. Appellants would thus be able to postpone payment indefinitely. because of their failure to renew the bond of the Far Eastern Surety Company or else replace it with an equivalent guarantee. . the doubt shall be settled in favor of the greatest reciprocity of interests” and there can be no question that greater reciprocity obtains if the buyer’s obligation is deemed to be actually existing. with o nly its maturity (due date) postponed or deferred. There is no uncertainty that the payment will have to be made sooner or l ater. Interpretation incline in favor of the “greatest reciprocity of interests” Assuming that there could be doubt whether by the wording of the contract the parties intended a suspensive condition or a suspensive period (dies ad quem) for the payment of the P65. 3. so that the other understands that he assumes the risk of receiving nothing for what he gives (as in the case of a sale of hopes or expectations.000 to the sale or shipment of the ore as a condition precedent. for Gaite stood to lose and had nothing to gain thereby.covering the first shipment of iron ore . the rules of interpretation would incline the scales in favor of “the greatest reciprocity of interests”. not an aleatory contract The sale of the ore to Fonacier was a sale on credit. unless immediately renewed or replaced. than if such obligation were viewed as non-existent or not binding until the ore was sold. But in the latter case the defendantsappellants’ obligation to pay became absolute after 1 year from the transfer of the ore to Fonacier by virtue of the deed. for the sale or shipment could not be made unless the appellants took steps to sell the ore. The expiration of the bonding company’s undertaking on 8 December 1955 substantially reduced the security of the vendor’s rights as creditor for the unpaid P65. . it could be rationally explained only if the appellants had agreed to sell the ore and pay Gaite before the surety company’s bond expired on 8 December 1955. Article 1378. Non-renewal of bond impaired the securities given to the creditor Appellants have forfeited the right to compel Gaite to wait for the sale of the ore before receiving payment of the balance of P65. the existence of the obligation to pay is recognized. paragraph 1. Gaite. or that Fonacier understood that Gaite assumed any such risk. but each party anticipates performance by the other from the very start. since sale is essentially onerous.” etc. only its maturity or demandability is deferred. By the very terms of the contract. No such waiver could have been intended. provides “if the contract is onerous.000. (3) When by his own acts he has impaired said guaranties or securities after their establishment. and that the previous sale or shipment of the ore was not a suspensive condition for the payment of the balance of the agreed price. 7. would be tantamount to leaving the payment at the discretion of the debtor. The case squarely comes under paragraphs 2 and 3 of Article 1198 of the Civil Code of the Philippines which provides “(2) When he does not furnish to the creditor the guaranties or securities which he has promised. The Civil Code of the Philippines. the contingent character of the obligation must clearly appear. nothing is found in the record to evidence that Gaite desired or assumed to run the risk of losing his rights over the ore without getting paid for it. Sale of ore to Fonacier was a sale on credit.” Appellants’ failure to renew or extend the surety company’s bond upon its expiration plainly impaired the securities given to the creditor (appellee Gaite). Each party assume correlative obligation and anticipate performance from the other A contract of sale is normally commutative and onerous: not only does each one of the parties assume a correlative obligation (the seller to deliver and transfer ownership of the thing sold and the buyer to pay the price). 6. Page 14 of 87 . and not an aleatory contract where the transferor. but was intended merely to fix the future date of the payment. 4.
The lot has an area of 13.S. Thus. to his widow Laurenciana. vs. that the evidence shows that neither of the parties had actually measured or weighed the mass. Applying the tonnage factor provided by the chief of Mines and Metallurgical Division of the Bureau of Mines which was between 3 metric tons minimum to 5 metric tons maximum. Edy de los Reyes did not sign said document. The contract expressly stated the amount to be 24. nor could Gaite have been guilty of any fraud in making any misrepresentation to appellants as to the total quantity of ore in the stockpiles of the mining claims in question since Gait e’s estimate appears to be substantially correct. 1995. applying art. 7 December 1995) Acap v.R. 186 U. 6. and not the actual number of units or tons contained therein. In 1975. the product is 21. S. Ed. It will be noted that at the time of Cosme Pido’s death. In 1982. 279. Inc. 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. upon Pido’s death. CA [G. No short-delivery made by Gaite This is a case of a sale of a specific mass of fungible goods for a single price or a lump sum.720 sq. covering an area of 9. his surviving heirs executed a notarized document denominated as “Declaration of Heirship and Waiver of Rights of Lot 1130 Hinigaran Cadastre.000 tons. Padilla (J): 4 concur Facts: The title to Lot 1130 of the Cadastral Survey of Hinigaran. the mass. vs. 1164).” wherein they declared to have adjudicated upon themselves the parcel of land in equal share. Pine River Logging & Improvement Co.7 tons which is not far from the 24. The controversy began when Pido died interstate and on 27 November 1981.000 tons estimate. When ownership was transferred in 1975 by Felixberto to Cosme Pido.809. Upon obtaining the Declaration of Heirship with Waiver of Rights in his favor. After both spouses died. there was no short-delivery as would entitle appellants to the payment of damages. so that all that was required of the seller Gaite was to deliver in good faith to his buyer all of the ore found in the mass. nor was the price of P75. 872. stated in the contract. and that they waive.. which was near the 3. 171 So. U.000 tons of iron ore. 46. 1480. The title was issued and is registered in the name of spouses Santiago Vasquez and Lorenza Oruma.. the quantity of “24. being a mere estimate by the parties of the total tonnage weight of the mass. New Civil Code). Acap v. second par.9.500 sq. The sale between the parties is a sale of a specific mass of iron ore because no provision was made in their contract for the measuring or weighing of the ore sold in order to complete or perfect the sale. Acap allegedly complied with said obligation.609 cubic meters of ore. Since 1960. 118114. The document was signed by all of Pido’s heirs. CA (GR 118114. Teodoro Acap had been the tenant of a portion of the said land. Page 15 of 87 . their only son Felixberto inherited the lot. (cf. and second. 2459 of the Luisiana Civil Code). Gamatero (at the request of Krakower. m. interests and participation over the parcel of land in favor of Edy de los Reyes. therefore. more or less. 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. m. York Oilfield Salvage Co. title to the property continued to be registered in the name of the Vasquez spouses. Negros Occidental was evidenced by OCT R-12179. Felixberto executed a duly notarized document entitled “Declaration of Heirship and Deed of Absolute Sale” in favor of Cosme Pido.3 metric ton tonnage factor adopted by Engr. quitclaim all right. 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. Inc. Thereafter. December 7. a stockholder of Larap). The subject-matter of the sale is. a determinate object.000 agreed upon by the parties based upon any such measurement (see Art. notwithstanding that the quantity delivered is less than the amount estimated by them (Mobile Machinery & Supply Co.. L..] First Division. and if appellant’s witness is correct in his estimate of 6. more or less”. so that they both tried to arrive at the total quantity by making an estimate of the volume thereof in cubic meters and then multiplying it by the estimated weight per ton of each cubic meter. Acap continued to be the registered tenant thereof and religiously paid his leasehold rentals to Pido and thereafter. No.
In the present case. It is in effect an extrajudicial settlement between the heirs under Rule 74 of the Rules of Court. such as sale. 1130 of the Cadastral Survey of Hinigaran. through occupation. Hence. technically speaking.000. and is no better than a notice of lis pendens which is a notice of a case already pending Page 16 of 87 . “Declaration of Heirship and Waiver of Rights” an extrajudicial settlement between heirs under Rule 74 of the Rules of Court In a Contract of Sale. In the present case. after the lapse of four (4) years.00 as actual damages. namely. The second is. donation. barter. de los Reyes. Subsequently. has no basis both in fact and in law. prompting delos Reyes to seek the assistance of the then Ministry of Agrarian Reform (MAR) in Hinigaran. The wife stated that the she and her husband did not recognize delos Reyes’s claim of ownership over the land. is not per se sufficient to give rise to ownership over the res. the return of the farmland in Acap’s possession to delos Reyes. the validity of which is yet to be established in court at some future date.000. however. the original mode (i. one of the contracting parties obligates himself to transfer the ownership of and to deliver a determinate thing. Summon of Ministry of Agrarian Reform does not conclude actuality of sale nor notice of such sale The conclusion. The MAR invited Acap. Contract of Sale. assignment or mutuum). to a conference scheduled on 13 October 1983. through succession mortis causa or tradition as a result of certain contracts. The first presumes the existence of a contract or deed of sale between the parties. On 20 August 1991.In 1983. Aggrieved. A notice of adverse claim does not prove ownership over the lot. The Supreme Court granted the petition. being then a stranger to the succession of Cosme Pido. the trial court erred in equating the nature and effect of the Declaration of Heirship and Waiver of Rights the same with a contract (deed) of sale. ownership and real rights are acquired only pursuant to a legal mode or process. and Acap to pay P5. cannot conclusively claim ownership over the subject lot on the sole basis of the waiver document which neither recites the elements of either a sale. Sale of hereditary rights and waiver of hereditary rights distinguished There is a marked difference between a sale of hereditary rights and a waiver of hereditary rights. That right or title must be completed by fulfilling certain conditions imposed by law. Adverse claim not sufficient to cancel the certificate of tile and for another to be issued in his name A notice of adverse claim. mode is the actual process of acquisition transfer of ownership over a thing in question.00 as attorney’s fees. however justified. ordering the forfeiture of Acap’s preferred right of a Certificae of Land Transfer under PD 27 and his farmholdi ngs. or a donation.e. the lower court rendered a decision in favor of delos Reyes. and ordering the dispossession of Acap as leasehold tenant of the land for failure to pay rentals. Hence.. petitioner appealed to the Court of Appeals. the sum of P1. the CA affirmed the lower court’s decision. 4. 2. made by the trial and appellate courts. “A notice of adverse claim is nothing but a notice of a claim adverse to the registered owner. alleging that as his leasehold tenant. 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. by its nature. Negros Occidental. a declaration of heirship and waiver of rights operates as a public instrument when filed with the Registry of Deeds whereby the intestate heirs adjudicate and divide the estate left by the decedent among themselves as they see fit. the petition for review on certiorari.e. dismissed the complaint for recovery of possession and damages against Acap for failure to properly state a cause of action. set aside the decision of the RTC Negros Occidental. Classes of modes of acquiring ownership Under Article 712 of the Civil Code. acquisitive prescription. and the other party to pay a price certain in money or its equivalent. On 28 April 1988. Negros Occidental based on a document entitled “Declaration of Heirship and Waiver of Rights”. 6. that a “sale” transpired between Cosme Pido’s heirs and de los Reyes and that Acap acquired actual knowledge of said sale when he was summoned by the Ministry of Agrarian Reform to discuss de los Reyes’ claim over the lot in question. Asserted right or claim to ownership not sufficient per se to give rise to ownership over the res An asserted right or claim to ownership or a real right over a thing arising from a juridical act. 1. holding that de los Reyes had acquired ownership of Lot No. a mode of extinction of ownership where there is an abdication or intentional relinquishment of a known right with knowledge of its existence and intention to relinquish it. delos Reys field a complaint for recovery of possession and damages against Acap. 5. 3. law or intellectual creation) and the derivative mode (i. does not however prove private respondent’s ownership over the tenanted lot.000. the modes of acquiring ownership are generally classified into two (2) classes. Acap refused and failed to pay the agreed annual rental of 10 cavans of palay despite repeated demands. in favor of other persons who are co-heirs in the succession. or any other derivative mode of acquiring ownership. who sent his wife. Acap refused to pay any further lease rentals on the land. On the other hand.00 as expenses of litigation and the amount of P10. While title is the juridical justification.
Bautista. In fact. even if in 1982. Trinidad remained in possession of the parcel of land despite the donation. since de los Reyes has not established a cause of action for recovery of possession against Acap. Acap had been a registered tenant in the subject land since 1960 and religiously paid lease rentals thereon. This notwithstanding the fact that initially. Agusan del Sur. to hold that there was no unjustified or deliberate refusal by Acap to pay the lease rentals or amortizations to the landowner/agricultural lessor which. 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. 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. Apparently. 9. Talacogon. Ras. 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. 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. Rodolfo Goloran. de Sequeña 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. he filed a notice of adverse claim on the said lot to establish ownership thereof (which cannot be done). Efren Guden. Eulalio. Abiso. it is clear that Acap had misgivings over de los Reyes’ claim of ownership over the said land because in the October 1983 MAR conferen ce. The trial court rendered judgment in favor of the petitioners. For in 1983. In the meantime. while the existence of said adverse claim was duly proven (thus being file d with the Registry of Deeds which contained the Declaration of Heirship with Waiver of rights an was annotated at the back of the Original Certificate of Title to the land in question). CA [G. December 4. the right of Acap as a registered tenant to the land cannot be perfunctorily forfeited on a mere allegation of de los Reyes’ ownership without the correspondin g proof thereof. de los Rey es allegedly informed Acap that he had become the new owner of the land. 126444. It stands to reason. Trinidad Quijada together with her sisters Leonila Corvera Vda. recovery of possession and ownership of parcels of land with claim for attorney’s fees and damages. de los Reyes failed to established in his favor by clear and convincing evidence. In 1987. Subsequently. Reynalda. CA (GR 126444. de Quijada. Acap may have. Trinidad sold 1 hectare of the subject parcel of land to Regalado Mondejar. Acap even secured a certificate from the MAR date d 9 May 1988 to the effect that he continued to be the registered tenant of Cosme Pido and not of delos Reyes. and Ernesto Goloran. Sanction of forfeiture of tenant’s preferred right and possession of farmholdings should not be applied The sanction of forfeiture of his preferred right to be issued a Certificate of Land Transfer under PD 27 and to the possession of his farmholdings should not be applied against Acap. 4 December 1998) Quijada v. No unjustified or deliberate refusal to pay the lease rentals to the landowner / agricultural lessor De los Reyes never registered the Declaration of Heirship with Waiver of Rights with the Registry of Deeds or with the MAR. which complaint was. he continued to be the registered tenant of Cosme Pido and his family (after Pido’s death). Cresente. and Warlito) are the children of the late Trinidad Corvera Vda. the proposed provincial high school having failed to materialize. In his mind. Eliuteria.” In the present case. In 1980. situated in the barrio of San Agustin. however.R. 1998. Transaction between heirs and de los Reyes binding between parties. 7. 7. and to remove their improvements constructed Page 17 of 87 . but cannot affect right of Acap to tenanted land without corresponding proof thereof While the transaction between Pido’s heirs and de los Reyes may be binding on both parties. On 5 July 1988. Mondejar sold portions of the land to Fernando Bautista.] Second Division. 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. his wife Laurenciana categorically denied all of de los Reyes’ allegations. filed a complaint for forcible entry against Mondejar. On 5 April 1956. Asis. On 29 July 1962. the petitioners filed a complaint against private respondents (Mondejar. there is no evidence whatsoever that a deed of sale was executed betw een Cosme Pido’s heirs and de los Reyes transferring the rights of the heirs to the land in favor of de los Reyes. assumed such statement of de los Reyes to be true and may have in fact delivered 10 cavans of palay as annual rental for 1982 to latter. in this case. Martinez (J): 3 concur Facts: Petitioners (Alfonso. Rodulfo and Ernesto Goloran. 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. but instead. who at that time was already dead. the Sangguniang Bayan of the municipality of Talacogon enacted a resolution reverting the 2 hectares of land donated back to the donors. 8. No. dismissed for failure to prosecute. the heirs of Trinidad. therefore. De los Reyes’ right or interest t herefore in the tenanted lot remains an adverse claim which cannot by itself be sufficient to cancel the OCT to the land and title to be issued in de los Reyes’ name. Macasero and Maguisay) for quieting of title. Quijada v. in good faith. Demetrio.in court.
When the CA denied their motion. Moreover. not in the 1960’s when they had no interest over the property at that time except under the deed of donation to which private respondents were not privy. Such condition. 6. The Supreme Court affirmed the assailed decision of the Court of Appeals. Only then. ownership is immediately transferred to the latter and that ownership will only revert to the donor if the resolutory condition is not fulfilled. is perfected by mere consent. when the non-fulfillment of the resolutory condition was brought to the donor’s knowledge. Sale.on the lot. The donation is perfected once the acceptance by the donee is made known to the donor. (b) Delay in asserting complainant’s right after he had knowledge of the defendant’s conduct and after he has an opportun ity to sue. Since no period was imposed by the donor on when must the donee comply with the condition. Thereafter. in the present case. 2. elements Laches presupposes failure or neglect for an unreasonable and unexplained length of time. or of one under whom he claims.000.” Its essenti al elements of (a) Conduct on the part of the defendant. 1. 3. It has been ruled that when a person donates land to another on the condition that the latter would build upon the land a school.” The donation further provides that should “th e proposed Provincial High School be discontinued or if the same shall be opened but for some reason or another. being a consensual contract. In the present case. the donation remains effective and the donee continues to be the owner subject only to the rights of the donor or his successors-in-interest under the deed of donation. however. Such inchoate interest may be the subject of contracts including a contract of sale. In the present case. good customs. Laches. (d) Injury or prejudice to the defendant in the event relief is accorded to the complainant” are absent in this case. as well as the deeds of sale/relinquishments executed by Mondejar to the other defendants. 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. notwithstanding the condition imposed by the donee. donation being a mode of acquiring and transmitting ownership. It would have been different if the donor-seller sold her interests over the property under the deed of donation which is subject to the possibility of reversion of ownership arising from the nonfulfillment of the resolutory condition. public order or public policy The donation made on April 5.000 as attorney’s fees. Such period. however. and P30. what the donor sold was the land itself which she no longer owns. Seller need not own property when sold but when delivered Page 18 of 87 . good customs. Interest over property under conditional deed of donation. not the land itself The donor may have an inchoate interest in the donated property during the time that ownership of the land has not reverted to her. expenses of litigation and moral damages. On appeal. to do that which. by exercising due diligence. became irrelevant herein when the donee manifested that it cannot comply with the condition and the same was made known to the donor. and. morals. is the construction of the school. in solidum. the same may in the future be closed” the donated property shall automatically revert to the donor. public order or public policy was validly imposed in the donation. respectively. could or should have been done earlier. morals. the condition imposed is not a condition precedent or a suspensive condition but a resolutory one. So long as the resolutory condition subsists and is capable of fulfillment. P8. petitioners had previously filed an ejectment suit against private respondents only that it did not prosper on a technicality. Donation as mode of acquiring ownership When the Municipality’s acceptance of the donation was made known to the donor. not being contrary to law. giving rise to a presumption that the party entitled to assert it either has abandoned or declined to assert it. petitioners instituted a petition for review to the Supreme Court. 1956 by Trinidad Quijada and her brother and sisters was subject to the condition that the donated property shall be “used solely and exclusively as a part of the campus of the proposed Provincial High School in Talacogon. Inchoate interest may be subject of contract including a contract of sale. and ordered the defendants to pay the plaintiffs. 4. petitioners’ cause of action to quiet title commenced only when the property revert ed to the donor and/or his successors-in-interest in 1987. that ownership of the donated property reverted to the donor as provided in the a utomatic reversion clause of the deed of donation. thus. the former became the new owner of the donated property. “it is negligence or omission to assert a right within a reason able time. Condition to construct school is a resolutory condition The resolutory condition. ordered the cancellation of the deed of sale executed by Trinidad to Mondejar. Condition valid in donation if not contrary to law.000. the latter remains the owner so long as he has tried to comply with the condition within a reasonable period. the amount of P10. (c) Lack of knowledge or notice on the part of the defendant that the complainant would assert the right on which he bases his suit. giving rise to the situation complained of. petitioners filed a motion for reconsideration. Accordingly. 5.
the sale is still valid. sashes. In the present case. No factual or legal basis for the award of fees and damages There is neither factual nor legal basis for the trial court’s award of attorney’s fees. 8. 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. Moreover. It cannot be said that private respondents had compelled petitioners to litigate with third persons.69. 8. 9. Moral damages cannot likewise be justified as none of the circumstances enumerated under Articles 2219 27 and 2220 28 of the New Civil Code concur in this case. L-8506. Manila. are outside the commerce of men. in accordance with section 186 of the National Revenue Code imposing taxes on sales of manufactured articles.R. is perfected by mere consent. Ownership by the seller on the thing sold at the time of the perfection of the contract of sale is not an element for its perfection. Perfection per se does not transfer ownership which occurs upon the actual or constructive delivery of the thing sold. To rule that the donated properties are outside the commerce of men would render nugatory the unchallenged reasonableness and justness of the condition which the donor has the right to impose as owner thereof. In the present case.) 926 Raon St. August 31. the Company has chosen for its tradename and has offered itself to the public as a “Factory”. The Supreme Court affirmed the appealed decision. Manufacturers of all kinds of doors. used season-dried and kiln-dried lumber. A perfected contract of sale cannot be challenged on the ground of non-ownership on the part of the seller at the time of its perfection. the objects referred to as outside the commerce of man are those which cannot be appropriated. windows and sash of its special and limited customers. Objects outside of the commerce of man are those which cannot be appropriated Nowhere in Article 1409 (4) is it provided that the properties of a municipality. where it also failed. Bengzon (J): 7 concur Facts: Celestino Co & Company is a duly registered general copartnership doing business under the trade name of “Oriental Sash Factory”. 1956. 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. Article 1434 of the New Civil Code supports the ruling that the seller’s “title passes by operation of law to the buyer. as shown from the investigation of the Company’s books of accounts (for transactions covering the period of 1 January 1952 to 30 September 1952). Hence. ownership is transferred to Mondejar and those who claim their right from him. litigation expenses and moral damage s. such as the open seas and the heavenly bodies. there being no stipulation to that effect and the case does not fall under any of the exceptions. be recovered in the present case. it brought the matter to the Court of Tax Appeals. which is manifested the moment there is a meeting of the minds as to the offer and acceptance thereof on three (3) elements: subject matter. hence.” This rule applies not only when the subject matter of the contract of sal e is goods. Neither can it be ruled that the former acted in “gross and evident bad faith” in refusing to satisfy the latter’s claims considering that private respondents were u nder an honest belief that they have a legal right over the property by virtue of the deed of sale. whether it be those for public use or its patrimonial property.] First Division. Thus. door and window factory. No. Article 1409 (4) does not provide that the properties of a municipality are outside the commerce of man. Further.Sale. CIR (GR L-8506. in its chosen lines on a big scale. 33076. such circumstance happened in this case when petitioners (Trinidad’s heirs) became the owners of the subject property upon the reversion of the ownership of the land to them.” It is unlikely that these act w ere made solely for the purpose of supplying the needs for doors. and having failed to convince the Bureau of Internal Revenue. windows. What the law requires is that the seller has the right to transfer ownership at the time the thing sold is delivered. Moreover. It occurs upon the constructive or actual delivery of the subject matter to the buyer when the seller or her successors-in-interest subsequently acquires ownership thereof. of the best quality workmanship. so as to render the contract involving the same inexistent and void from the beginning when sold. but also to other kinds of property. the lots were conditionally owned by the municipality. 31 August 1956) Celestino Co v. Tel. Celestino v. doors and windows worth P188. 1. etc. Quiapo. it sold sash. following the general rule in Article 2208 of the New Civ il Code. Attorney’s fees and expenses of litigation cannot. including real property. Collector of Internal Revenue [G.754. being a consensual contract. Prop. No. 7. Celestino Co & Company habitually Page 19 of 87 . the appeal. Consequently. Seller’s title passes by operation of law to the buyer The consummation of the perfected contract is another matter. furnitures. However in 1952 it began to claim liability only to the contractor’s 3% tax (instead o f 7%) under section 191 of the same Code. which means it is out to do busi ness. From 1946 to 1951 it paid percentage taxes of 7% on the gross receipts of its sash. price and terms of payment of the price.
structures. streets. altering or repairing for which machinery driven by mechanical power is used. 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. but regular work. 5. it could stock and/or probably had in stock the sash. 6. as it has represented in its stationery and advertisements to the public.” In the present case. but if the goods are to be manufactured specially for the customer and upon his special order. 7. (Payton vs. p. building. they were neither lease of services nor contract jobs by a Page 20 of 87 . frames.” 2. panels. however. mouldings). Vol II. steam or water plants telegraph and telephone plants and lines. and supposing for the moment that the transactions were not sales. navigation. highways. mouldings. 3. mouldings and panels it used therefor. 9. is a contract of sale. 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. Custom specifications required by customer does not alter character of business. in the ordinary course of its business. In the present case. and it has admitted by the appellant itself that the company “manufactures. panels. Construction work contractors defined Construction work contractors are those who alter or repair buildings. Installation of window panels not construction work in common parlance Petitioner’s idea of being a contractor doing construction jobs is untenable. i. Nobody would regard the doing of two window panels as construction work in common parlance. Transfers under Section 186 of the Tax Code If all the work of appellant is only to fill orders previously made.e. 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. although in such form or combination as suited the fancy of the purchaser. 68). The same consideration applies to this sash manufacturer. When it sold materials ordinarily manufactured by it (sash. and includes any other work for the construction. railroads. City of Anadardo 64 P. water works and other construction work contractors. sash. or involves services not generally performed by it. 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. Percentage tax imposed under Section 191 of the Tax Code a tax on sales of service. Neither does it take the transaction out of the category of sales under Article 1467 because although the Factory does not. It would require a stretch of the law to make the business of manufacturing sash.makes sash. sizes not previously held in stock for sale to the public. it is apparent that the Factory did not merely sell its services to Teodoro & Co. the orders exhibited were not shown to be special. filling special orders within the meaning of Article 1467. There are no less than fifty occupations enumerated in the said section of the National Internal Revenue Code subject to percentage tax. not the seller of lumber. it thereby becomes an employee or servant of the customer. and not for the general market. 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. it thereby contracts for a piece of work. whether the same is on hand at the time or not. 4. sewers. logging roads. such orders should not be called special work. street railways. manufacture and keep on stock doors of the kind sold to Teodoro. (Formilleza’s Commentaries and Jurisprudence on the National Internal Revenue Code. cutting them to such sizes and combining them in such forms as its customers may desire. doors and windows upon special order of customers fall under the category of ‘road. it is contract for a piece of work. 880. because it also sold the materials. 8. doors and windows for the public and that it makes these articles only upon special order of its customers. electric. that does not make it a contractor within the purview of section 191 of the National Internal Revenue Code. windows and doors. producer or importer. The Sash Factory does nothing more than sell the goods that it mass-produces or habitually makes. They were merely orders for work. 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. regular work. not one under which the business enterprise of petitioner could appropriately fall. 2d 878. such new form does not divest the Factory of its character as manufacturer. 179 Okl. artesian well. electric lines or power lines. 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.
on which occasion voluminous records of the firm were seized and confiscated. or his collection agent. now Commissioner. however. With costs against the Company. is engaged in the design and installation of central type air conditioning system. June 30. instead of Section 186 of the same Code. 9. in line with the observation of the Chief.587. and being an operator of an integrated engineering ship. appealed to the Supreme Court on 18 January 1967. contested the tax assessment and requested that it be furnished with the details and particulars of the Commissioner’s assessment. On 27 July 1956. 1975. on 4 January 1967.56 representing deficiency advance sales tax and manufacturers sales tax. inclusive of the 25% and 50% surcharges. 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 Commissioner replied that the assessment was in accordance with law and the facts of the case.362. Engineering Equipment (GR L-27044. On 30 September 1957. This assessment was revised on 23 January 1959. the Company. The Commissioner.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. Esguerra (J): 4 concur Facts: Engineering Equipment and Supply Co. On the other hand. Manufacturer defined Section 194 of the Tax code provides that “’Manufacturer’ includes every person who by physical or chemical process alters th e exterior texture or form or inner substance of any raw material or manufactured or partially manufactured products in such manner as to prepare it for a special use or uses to which it could not have been put in its original condition. the Company payment of the increased amount and suggested that P10. L-27044. National Bureau of Investigation (NBI) and Bureau of Internal Revenue (BIR) agents on 27 September 1956. Acting on these denunciations.] First Division. labor and materials is tested by the inquiry whether the thing Page 21 of 87 . modifying the decision appealed from. 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 Company’s deficiency tax liabilities from P916. On 29 November 1966. the CTA rendered its decision. filed with the CTA a motion for reconsideration.] Engineering Equipment and Supply v. such t ransactions could be. The firm. a raid and search was conducted by a joint team of Central Bank. June 30. Still. On 3 March 1959. as the doors and windows had been admittedly “manufactured” by the Sash Factory.” 2. or who by any such process alters the quality of any such material or manufactured or partially manufactured product so as to reduce it to marketable shape. 1. prompting the Company to file also with the Supreme Court its appeal (GR L-27452). or combines the same to produce such finished products for the purpose of their sale or distribution to others and not for his own use or consumption. BIR Law Division. Since the two cases involve the same parties and issues. the Court decided to consolidate and jointly decide them. now Commissioner. which was denied on 6 April 1967. of Internal Revenue that the Company be assessed for P480. (GR L-27044).65 to P740. On 30 July 1959. and who in addition alters such raw material or manufactured or partially manufactured products. The Supreme Court affirmed the decision appealed from with modification that the Company is also made liable to pay the 50% fraud surcharge. (CB). L-27452. or prepare it for any of the uses of industry.912.362.contractor. revenue examiners reported and recommended to the then Collector. Test to distinguish contract of sale and contract for work. one Juan de la Cruz. the Commissioner assessed against. and demanded upon. No. and should be taxed as “transfers” thereof under section 186 of the National Revenue Code. and was raised to P916.R. CIR [G. or who by any such process combines any such raw material or manufactured or partially manufactured products with other materials or products of the same or of different kinds and in such manner that the finished product of such process of manufacture can be put to special use or uses to which such raw material or manufactured or partially manufactured products in their original condition could not have been put.000 be paid as compromise in extrajudicial settlement of the Company’s penal liability for violation of the Tax Code. Engineering Equipment and Supply [G.R. not satisfied with the decision of the CTA. CIR v. pumping plants and steel fabrications. based on findings after conferences had with the Company’s Accountant and Auditor. wrote the then Collector. the sum of P174. is an engineering and machinery firm. 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. No.86. 1975. labor and materials The distinction between a contract of sale and one for work. 30 June 1975) CIR v. The Company was likewise denounced to the Central Bank for alleged fraud in obtaining its dollar allocations.62 as compensating tax and 25% surcharge for the period from 1953 to September 1956.141.
Engineering Equipment Co. The unitary equipment classification includes those designs such as room air conditioner. par. rather the manufacturers. The Company fabricates. the defendants order for it. As it imports goods not subject to sales tax.” 4. is a contract of sale. require the installation of components at different points in a building and their interconnection. The window type air conditioner is a sort of compromise. and no change or modification of it is made at defendant’s request. Trinidad 43. it also liable to 30% compensation tax (Section 190 in relation to Section 18[m]. unitary and central system There is a great variety of equipment in use to do air conditioning. however. would seem to be that he renders service in the course of an independent occupation. 5. Generally. Engineering Equipment Co. The Company.) The true test of a contractor as was held in the cases of Luzon Stevedoring Co. whether the same is on hand at the time or not. it is a contract of sale. prepares the plans and specifications therefor which are distinct and different from each other. The central type air conditioning system is an engineering job that requires planning and meticulous layout due to the fact that usually architects assign definite space and usually the spaces they assign are very small and of various sizes. were able to satisfy themselves that the desired comfort within a room could be made by a Page 22 of 87 . The room air conditioner is a unitary equipment designed specifically for a room or similar small space. subject to contractors tax (Section 191). unitary and central system. 1970 Ed. 7. is subject to the contractors tax prescribed by Section 191 of the Code and not to the advance sales tax imposed by Section 185(m) in relation to Section 194 of the same Code. It is unique among air conditioning equipment in two respects: It is in the electrical appliance classification. an d in consequence of. (Arañas. If the article ordered by the purchaser is exactly such as the plaintiff makes and keeps on hand for sale to anyone. Since it has been proved that the Company imported air conditioning units parts or accessories thereof for use in its construction business and these items were never sold resold bartered or exchanged the Company should be held liable to pay taxes prescribed under Section 190 of the Code. 318. Contractor defined. 816. representing the will of his employer only as to the result of his work. or a thing which would have existed and has been the subject of sale to some other persons even if the order had not been given. heat exchangers or coils). Central-station systems. vs. Article 1467 provides that “a contra ct 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. 3. but without the 50% mark up provided in Section 183[b] The Company. and still others as components to be assembled into a tailor-made system to fit a particular building. in the pursuit of the independent business. Phil. being a contractor and not a manufacturer. often referred to as applied or built-up systems.” The facts and circumstances support the theory that the Company is a contractor rather than a manufacturer. and La Carlota Sugar Central vs. and it is made by a great number of manufacturers (Engineering handbook by LC Morrow). undertakes to do a specific job or piece of work for other persons. Contract of sale distinguished from a contract for a piece of work The New Civil Code distinguishes a contract of sale from a contract for a piece of work. 803. it cannot control humidity to the desired level. in buildings dissimilar to existing buildings. and not as to the means by which it is accomplished. and the imported air conditioning units and spare parts or accessories thereof are supplied and installed upon previous orders of its customers conformably with their needs and requirements. assembled and produced locally for sale to the general market. Air conditioning equipment grouped into 2 classifications. assembles. is a contractor and not a manufacturer The Company did not manufacture air conditioning units for sale to the general public. and installation involves only making service connection such as electricity. p. the air conditioning units and spare parts or accessories thereof used are not the window type of air conditioner which are manufactured. using his own means and methods without submitting himself to control as to the petty details. 6. supplies and installs in the buildings of its various customers the central type air conditioning system. This compensating tax is not a tax on the importation of goods but a tax on the use of imported goods not subject to sales tax. even though it may be entirely made after. should be held liable to the payment of 30% compensating tax in accordance with Section 190 of the Tax Code in relation to Section 185(m) of the same.. it is a contract for a piece of work. 191(2). Some devices are designed to serve a specific type of space. but without the 50% mark up provided in Section 183(b). water and drains. where all of the functional components are included in one or two packages. 819. but if the goods are to be manufactured specially for the customer and upon his special order and not for the general market.transferred is one not in existence and which never would have existed but for the order of the party desiring to acquire it. which were used in executing contracts entered into by it. Trinidad 43. 807-808. they may be grouped into two classifications. therefore. by hit and miss. Phil. Annotations and Jurisprudence on the National Internal Revenue Code. Test to determine contractor The word “contractor” has come to be used with special reference to a person who. but imported some items (as refrigeration compressors in complete set. others to perform a specific function.
was a contractor engaged in the construction or improvement of real property.” and that “since the imported air conditioning units and spare parts or accessories thereof are subject to t he Page 23 of 87 . Windows . and that the customers did not purchase the equipment and have the same installed. 841 and Manila Trading & Supply Co. SM Lawrence Co. Manila and not as manufacturers.. otherwise know as the National Internal Revenue Code. Manila. Lawrence Co. Collector of customs. Manufacturers of All Kinds of Doors. Appellee took the position that appellant was not engaged in the business of selling air conditioning equipment as such but in the furnishing to its customers of completed air conditioning systems pursuant to contract. In the present case. Celestino Co & Co. which work requires. as it did register a special trade name for its sash business and ordered company stationery carrying the bold print “ORIENTAL SASH FACTORY (CELESTINO CO AND COMPANY. the appellant installed system of ducts running from the basic units through walls. Phil.) 926 Raon St. the Court cannot agree with the CTA in absolving the Company from the 50% fraud surcharge. Collector of Internal Revenue. the Court held the taxpayer to be a manufacturer rather than a contractor of sash. Similarly.. doors and windows manufactured in its factory. Company liable to 50% fraud surcharge The communications (between the Company and various suppliers such as Trane Co. is liable for sale or use tax as a contractor rather than a retailer of tangible personal property. that “if any article withdrawn from the customhouse or the post office without payment of the compensating tax is subsequently used by the importer for other purposes corresponding entry should be made in the looks of accounts if any are kept or a written notice thereof sent to the Collector of Internal Revenue and payment of the corresponding compensating tax made within 30 days from the date of such entry or notice and if tax is not paid within such period the amount of the tax shall be increased by 25% the increment to be a part of the tax. Inc. 174 Marques de Comillas. To transmit the warm or cool air over the buildings. 97. The contract called for completed air conditioning systems which became permanent part of the buildings and improvements to the realty. McFarland. Also. Advertising Associates v. v. Quiapo. Commissioner of Internal Revenue of the State of Tennessee and McCanless. 3629). Celestino Co intended itself to be a manufacturer of doors. vs. Company liable to 25% compensation tax. Machinery Mechanical Supplies. Celestino Co v. vs.754. as a general rule. 56 O.. 9 June 1949. In Celestino Co. City of Manila. etc. 253.” Likewise. is the one on all fours with the present case. ceilings and floors to convey cool air to various parts of the building. irrespective of the tax status of its contractors.. The Court found said sum difficult to have been derived from its few customers who placed special orders for these items. PROP. which “sales” were reflected in their books of accounts totalling P118. From the very start.G. in addition to the furnishing of a cooling unit. and Owens-Corning Fiberglass Corp. . 355 SW 2d. Acme Industries Inc. 636. does not provide for the filing of a compensating tax return and payment of the 25% surcharge for late payment thereof. 10. 100. 361. The cases cited by the Commissioner (Advertising Associates. No. vs.69 for the period of only nine (9) months. CIR. It likewise paid the contractors tax on all the contracts for the design and construction of central system. but the bulk of their sales is derived from ready-made doors and windows of standard sizes for the average home. sashes etc. whereas the central type system definitely requires an intelligent operator. sash factories receive orders for doors and windows of special design only in particular cases. ot did not have ready-made air conditioning units for sale. 101.M.” The Court held the appellant a contractor which used the materials and the equipment upon the value of which the tax herein imposed war levied in the performance of its contracts with its customers. However. 99 Phil. Collector of Customs. Tel. 16 June 1956 and 24 August 1956 respectively. are not in point. Celestino Co never put up a contractor’s bond as required by Article 1729 of the Civil Code. as amended by CA 503. Under the original text of Section 190 of the Tax Code. Section 190 of the Tax Code was subsequently amended by RA 48. Section 190 as amended The original text of Section 190 of Commonwealth Act 466. the connection of such unit with electrical and plumbing facilities and the installation of ducts within and through walls. ceilings and floors to registers. 11. 1 July 1948. 8. Engineering Equipment had intent to misdeclare its importation as evidenced by its communications. effective on 1 October 1939. Contractors.) presented as exhibits in the case were strongly indicative of the fraudulent intent of the Company to misdeclare its importation of air conditioning units and spare parts or accessories thereof to evade payment of the 30% tax.definite setting of the machine as it comes from the factory. otherwise it will be tantamount to giving premium to a plainly intolerable act of tax evasion. Since the commission of fraud is altogether too glaring. 9. “where the cause presents the quest ion of whether one engaged in the business of contracting for the establishment of air conditioning system in buildings. 1511 and 1612 effective 1 October 1946. Manila Trading v. CIR of the State of Tennessee and McCanless is on all fours with present case The case of S. McFarland. and as such was liable for sales or use tax as the consumer of materials and equipment used in the consummation of contracts. . as amended by CA 503. Engineers. windows. which invariably provides among other s. the contention of the Company that it is not subject to the 25% surcharge appears to be legally tenable. City of Manila not applicable The Company did not and was not engaged in the manufacture of air conditioning units but had its services contracted for the installation of a central system. Neither are they applicable because the facts in all the cases cited are entirely different. vs. the Company advertised itself as Engineering Equipment and Supply Company.
The latter took possession of the building but on account of NIDC’s noncompliance with the terms and conditions of the deed of sale. as the 30% compensating tax was not paid by petitioner within the time prescribed by Section 190 of the Tax Code as amended. as well as the Court of Appeals. . Prescription of tax assessment is 10 years if based on false or fraudulent return to evade tax A review of the record reveals that the Company filed a tax return or declaration with the Bureau of Customs before it paid the advance sales tax of 7%. the trial court rendered a decision. providing that “(a) in the case of a false or fraudulent return with intent to evade tax or of a failure to file a return.compensating tax of 30% as the same were used in the construction business of Engineering.] Third Division. Section 332 (a) of the Tax Code therefore is applicable. when the judgment is premised on a misapprehension of facts. On 2 September 1965. Almeda filed on 8 May 1971 an action for damages against the Corporation with the then CFI Rizal (Civil Case 14712). . Prescription not yet set in. upon Almeda’s posting of a bond of P50. it is incumbent upon the latter to comply with the aforequoted requirement of Section 190 of the Code.” Thus. CA (GR 52267. labor. The system was completed in 1963 and accepted by Almeda. Sapico to render a technical evaluation of the system in relation to the contract with the Corporation. CA [G. who paid in full the contract price. Acting on this information.000. surmises or conjectures. and on 15 April 1974. considering the preponderance of evidence of fraud with the intent to evade the higher rate of percentage tax due from the Company. which affirmed on 28 November 1978 the decision of the trial court. The trial court granted the motion and. The ownership of the building having been decreed back to Almeda. 1. . and the declaration filed reveals that it did in fact misdeclare its importations. Sapico enumerated the defects of the system and concluded that it was “not capable of maintaining the desired room temperature of 76ºF — 2ºF.R. mistaken or impossible. fraud or omission. v. Thereafter. Almeda prayed for the amount of P210. the tax may be assessed. The Court has consistently held that the factual findings of the trial court. Makati in consideration of P12. hence.000. the former undertook to fabricate. 52267. furnish and install the air-conditioning system in the latter’s building along Buendia Avenue. It is not the function of this Court to re-examine the findings of fact of the appellate court unless said findings are not supported by the evidence on record or the judgment is based on a misapprehension of facts. The complaint alleged that the air-conditioning system installed by the Corporation did not comply with the agreed plans and specifications. alleging prescription. but which was denied by the Court.” 12. Engineering Machinery v. when there is grave abuse of discretion in the appreciation of facts. Almeda filed an ex-parte motion for preliminary attachment on the strength of the Corporation’s own statement to the effect that it had sold its business and was no longer doing business in Manila.00 as attorney’s fees. attorney’s fees and costs). when the inference made is manifestly absurd. 24 January 1996) Engineering and Machinery Corp. The Corporation was to furnish the materials.00 representing the rectification cost.000. tools and all services required in order to so fabricate and install said system. Hence. In his report.” On the basis of this report. plus damages. P100.000. he re-acquired possession sometime in 1971. 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 Almeda’s building.00. No. It was then that he learned from some NIDC employees of the defects of the air-conditioning system of the building. Almeda was able to secure judicial rescission thereof. it instituted a petition for review on certiorari under Rule 45 of the Rules of Court. The Court’s power to review The Supreme Court reviews only errors of law in petitions for review on certiorari under Rule 45. by posting in its books of accounts or notifying the Collector of Internal Revenue that the imported articles were used for other purposes within 30 days. January 24. or a proceeding in court for the collection of such tax may be begun without assessment at any time within ten years after the discovery of the falsity. In due course. when the findings went beyond the issues of the case and the same are contrary to the admissions of Page 24 of 87 . Panganiban (J): 3 concur Facts: Pursuant to the contract dated 10 September 1962 between the Engineering and Machinery Corporation (the Corporation) and Almeda. are final and conclusive and may not be reviewed on appeal. 10. The Corporation moved to dismissed the case. without costs. Almeda commissioned Engineer David R.00. 1996.00 as damages and P15.000. Section 332 (a) provides for the exceptions as to period of limitation of assessment and collection of taxes. the tax assessment was made within the period prescribed by law and prescription had not set in against the Government. Consequently. it is therefore subject to the 25% surcharge for delinquency in the payment of the said tax. Almeda sold the building to the National Investment and Development Corporation (NIDC). The Supreme Court denied the petition and affirmed the decision assailed. Among the exceptional circumstances where a reassessment of facts found by the lower courts is allowed are when the conclusion is a finding grounded entirely on speculation. Petitioner appeal ed to the Court of Appeals. ordered the issuance of a writ of attachment.
1467. there is a contract for a piece of work. Naturally. 8.” 6. 4 years. 8411). but if the goods are to be manufactured specially for the customer and upon his special order.” Article 1566 provides that “the vendor is responsible to the vendee for any hidden faults or defects in the thing sold. Remedy against violation of the warranty against hidden defects The remedy against violations of the warranty against hidden defects is either to withdraw from the contract (rehibitory action) or to demand a proportionate reduction of the price (accion quanti minoris). or in the absence of which. and not for the general market. In such case. even though he was not aware thereof.” 3. 4.” Article 1715 provides that “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.” and provides further that the provision “shall not apply if the contrary has been stipulated. 99 Phil. 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. 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 . But if one of the parties accepts the undertaking on the basis of some plan. but said vendor shall not be answerable for patent defects or those which may be visible. in consideration of a certain price or compensation. the contract is one for a piece of work. had the vendee been aware thereof.” (Celestino Co. the employer may require that the contractor remove the defect or execute another work. Provisions on warranty against hidden defects The provisions on warranty against hidden defects. Should the work be not of such quality. a Page 25 of 87 . 2. the price or compensation for the system manufactured and installed will depend greatly on the particular plans and specifications agreed upon with the customers. should they render it unfit for the use for which it is intended. he shall deliver the thing produced to the employer and transfer dominion over the thing. Collector. Thus. are found in Articles 1561 and 1566. then the contract is one of sale. if the parties intended that at some future date an object has to be delivered. It is not the Corporation’s line of business to manufacture air -conditioning systems to be sold “off-the-shelf. 5. vs. “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. — 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. by reason of his trade or profession. with damages in either case. If the contractor fails or refuses to comply with this obligation.” 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. Contract of a piece of work defined Article 1713 of the Civil Code defines a contract for a piece of work as “by the contract for a piece of work the contractor bi nds himself to execute a piece of work for the employer. Article 1714 provides that “if the contractor agrees to produce the work from material furnished by him. To Tolentino. we find none of the above grounds present to justify the re-evaluation of the findings of fact made by the courts below. Article 1561 provides that “the vendor shall be responsible for warranty against the hidden defects which the thing sold may have. the employer may have the defect removed or another work executed. taking into account the work he will employ personally or through another. at the contractor’s cost. or also furnish the material. After a careful study of the case at bench. the contract is one of sale.” 7.both appellant and appellee. 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. Prescriptive period as specified in express warranty. Civil Code). On the other hand. referred to in Article 1714. or should they diminish its fitness for such use to such an extent that. he would not have acquired it or would have given a lower price for it. The contractor may either employ only his labor or skill. not a sale. and the vendor was not aware of the hidden faults or defects in the thing sold. without considering the work or labor of the party bound to deliver. or for those which are not visible if the vendee is an expert who. Obligations of a contractor for a piece of work The obligations of a contractor for a piece of work are set forth in Articles 1714 and 1715 of the Civil Code. the distinction between the two contracts depends on the intention of the parties. should have known them. it is a contract for a piece of work (Art. Contract for a piece of work distinguished from a contract of sale A contract for a piece of work. Contract in question is one for a piece of work The contract in question is one for a piece of work. Prescriptive period of 6 months for rehibitory action is applicable only in implied warranties While it is true that Article 1571 of the Civil Code provides for a prescriptive period of six months for a rehibitory action.
it is evident that the defect in the installation was not apparent at the time of the delivery and acceptance of the work. Puyat sent a cable to the Starr Piano Company. as the law gives him 10 years within which to file an action based on breach thereof. Arco Amusement [G. and upon delivery of the same to Arco and the presentation of necessary papers. Arco. As held by the Court of Appeals. Puyat would. was acting as exclusive agents in the Philippines for the Starr Piano Company of Richmond. This amount of $160 does not represent actual out-of-pocket expenses paid by Puyat. they sought to obtain a reduction from Puyat or rather a reimbursement.R.700. parts and accessories not in accordance with the plan and specifications provided for in the contract and the deviations made in putting into the air-conditioning system parts and accessories not in accordance with the contract specifications. which is four years (Article 1389. Moreover. order sound reproducing equipment from the Star Piano Company and that Arco Amusement would pay Puyat. on behalf of Arco Amusement.600 with its 10 per cent commission. inquiring about the equipment desired and making the said company to quote its price of $1. Action not prescribed The lower courts opined and so held that the failure of the defendant to follow the contract specifications and said omissions and deviations having resulted in the operational ineffectiveness of the system installed makes the defendant liable to the plaintiff in the amount necessary to rectify to put the air conditioning system in its proper operational condition to make it serve the purpose for which the plaintiff entered into the contract with the defendant. inter alia. Said provision states. Puyat informed the plaintiff of the price of $1. will apply. which dealt in cinematograph equipment and machinery. and that the defendant had obtained a discount from the Starr Piano Company. USA. Inc. and in the absence of such period. said officials of Arco were convinced that the prices charged them by the defendant were much too high including the charges for out-of-pocket expenses.” 11. Article 1715 in relation to Article 1144 apply. inasmuch as this provision does not contain a specific prescriptive period.cursory reading of the ten preceding articles to which it refers will reveal that said rule may be applied only in case of implied warranties. the ‘Teatro Arco’. plus all expenses. and being agreeable to the price. it is impossible to determine by the simple inspection of air conditioning system installed in an 8-floor building whether it has been furnished and installed as per agreed specifications. Acceptance of the work by the employer does not relieve the contractor of liability for any defect in the work The mere fact that Almeda accepted the work does not. Civil Code) shall apply. However. insurance. and $160. Gonzalo Puyat & Sons. “as the breach of contract consisted in appellant’s omission to install the equipment *sic+. Failing in this they brought an action with the CFI Manila. its name was changed to Arco Amusement Company. that actions “upon a written contract” prescribe in 10 years. (Villostas v. Arco Amusement (GR 47538. was engaged in the business of operating cinematographs. About the same time. At the expense of the Arco. Indiana. and the defendant was duly paid the price of $1. 10. No.600 of the equipment. he following year. banking charges. formally authorized the order. freight. the general rule on rescission of contract. ipso facto. relieve the Corporation from liability for deviations from and violations of the written contract. Arco. Laurel (J): 4 concur Facts: In the year 1929. and not a suit to enforce warranties against hidden defects. Puyat and Sons v. cables. by reading reviews and literature on prices of machinery and cinematograph equipment. the prescriptive period is the one specified in the express warranty. was duly paid by the Arco to Puyat. Three years later. 47538. 20 June 1941) Puyat & Sons v. in a letter dated 19 November 1929. For these reasons. for all expenses and charges. etc. filed by one Fidel Reyes against Puyat.700 FOB factory Richmond. approached Puyat. The equipment arrived about the end of the year 1929. Since the governing contract was executed on 10 September 1962 and the complaint was filed on 8 May 1971. The equipment under the second order arrived in due time. June 20. After some negotiations. the general law on prescription. In 1930.. 1941. such as. and where there is an express warranty in the contract. desiring to equip its cinematograph with sound reproducing devices. but a mere flat charge and rough estimate made by Puyat equivalent to 10% of the price of $1.700. in addition to the price of the equipment. Indiana. 10% commission.] First Division. Original complaint is one for arising from breach of a written contact and not a suit to enforce warranty against hidden defects. in addition to its other business. another order for sound reproducing equipment was placed by Arco with Puyat. CA) 9. plus the 10% commission agreed upon the plus all the expenses and charges. in connection with a civil case in Vigan. which is Article 1144 of the Civil Code. on the same terms as the first order. From the very nature of things. the governing law therefore is Article 1715. having concluded that the original complaint is one for damages arising from breach of a written contract. the officials of the Arco discovered that the price quoted to them by Puyat with regard to their two orders was not the net price but rather the list price. it was agreed between the parties. considering further that Almeda is not an expert to recognize the same. Thus. Page 26 of 87 . it is clear that the action has not prescribed. prescription in 10 years. the price of $1.
It was apparently to guard against an exhorbitant additional price that Arco sought to limit it to 10%t. the petition for the issuance of a writ of certiorari to the Court of Appeals for the purposed of reviewing its decision in civil case GR 1023. What does not appear are regarded as dealer’s or trader’s not binding the parties The contract is the law between the parties and should include all the things they are supposed to have been agreed upon. Parsons Hardware Co. and the principal must indemnify the agent for all damages which the latter may incur in carrying out the agency without fault or imprudence on his part (article 1729.671. on that ground alone. and those agreed upon. Doles v. and sentenced Puyat to pay Arco alleged overpayments in the total sum of $1. 8 Allen.600″ is incompatible with the pretended relation of agency between the parties. Hosser v. 92. with Puyat. Brosscell. 47 Ill. 173 Mass. Conner. this does not necessarily make the petitioner an agent of the respondent. 5. 3. and which stipulation is not incompatible with the contract of purchase and sale. Contract.. it alone must bear the blame. Arco is estopped from questioning that additional price.. This is the very essence of commerce without which merchants or middleman would not exist. 38 Phil. The facts and circumstances indicated to not point to anything but plain ordinary transaction where Arco enters into a contract transaction.. and short of fraud. Vendor not bound to reimburse difference of cost and sales price A vendor is not bound to the vendee for any difference between the cost price and the sales price which represents the profit realized by the vendor out of the transaction.) 4. such as change in prices.52 or P2. Agency. 501. Agent exempt from all liability in discharge of commission if in accordance with instructions received from principal In agency. Puyat acting as agent of Arco in the purchase of the equipment in question. Page 27 of 87 . 411. Puyat & Sons already the agent of Starr Piano Company of Richmond. 120 Ill. 1. is incompatible with the admitted fact that Puyat is the exclusive agent of Starr Piano in the Philippines.600. respectively. Bank v. (See Quiroga vs. within certain limits. Not every concealment is fraud. the plaintiff (respondent) might still legally hold the defendant (petitioner) to the prices fixed of $1. as this provision is only an additional price which the respondent bound itself to pay. Not every concealment is fraud. loss of the goods not covered by insurance or failure of the Starr Piano Company to properly fill the orders as per specifications. Commission does not necessarily make one the agent of the other While the letters state that Puyat was to receive 10% commission. without pronouncement regarding costs. The fact that Puyat obtained more or less profit than Arco calculated before entering into the contract of purchase and sale. What does not appear on the face of the contract should be regarded merely as “dealer’s” or “trader’s talk”. together with legal interest thereon from the date of the filing of the complaint until said amount is fully paid. is no ground for rescinding the contract of purchase and sale. sometimes add to the list price when they resell to local purchasers. is no ground for rescinding the contract or reducing the price agreed upon between the parties. Hence. and it cannot rescind the contract. 56 So. Indiana. Buyer estopped when it agreed to conditions and price It is well known that local dealers acting as agents of foreign manufacturers. The Supreme Court granted the writ of certiorari. Puyat was not duty bound to reveal the private arrangement it had with the Starr Piano Company relative to such discount to its prospective customers. 334. 161. (Nolbrook v. Copper.700 and $1. as well as to pay the costs of the suit in both instances. aside from obtaining a discount from the home office. If the respondent later on discovers itself at the short end of a bad bargain. for the sound reproducing equipment subject of its contract with Puyat. The appellate court. a contract of purchase and sale. held that the relation between the parties was that of agent and principal. mistake in their quotation.. it were better that. Civil Code). The fact that “whatever unforseen events might have taken place unfavorable to the defendant (petitioner). 212. 6. Rep. the latter as exclusive agent of the Starr Piano Company in the United States. which can not bind either party. 576. is the law between the pa rties..700 and $1. Indiana. It is out of the ordinary for one to be the agent of both the vendor and the purchaser. and absolved Puyat from the complaint. 11 Am.The trial court held that the contract between the parties was one of the outright purchase and sale. Bank v. Code of Commerce). however..) The letters which Arco accepted the prices of $1. are clear in their terms and admit of no other interpretation than that Arco agreed to purchase from Puyat the equipment in question at the prices indicated which are fixed and determinate. 2.. the agent is exempted from all liability in the discharge of his commission provided he acts in accordance with the instructions received from his principal (section 254. and absolved Puyat & Sons from the complaint in GR 1023. much less compel a reimbursement of the excess price.335. reversed the decision of the appellate court. business acumen permit of the loosening of the sleeves and of the sharpening of the intellect of men and women in the business world. Merrill. maybe business acumen.04. in the Philippines To hold the petitioner an agent of Arco in the purchase of equipment and machinery from the Starr Piano Company of Richmond. Palmer.
subsequent to. none of the other clauses of the contract is found to substantially support Quiroga’s contention. The word agency. and effect of subsequent consent to such breach In respect to the defendant’s obligation to order by the dozen. 3. either by agreement or by law. Quiroga was to furnish the Parson with the beds (which the latter might order. Avancena (J): 5 concur Facts: On 24 January 1911. constituting its cause and subject matter. but not when. The words commission on sales used in clause (A) of article 1 mean nothing else than a mere discount on the invoice price.] En Banc. the least that can be s aid is that they are not incompatible with the contract of purchase and sale. Effect of breach. not as the parties stipulated it. and such obligations implied in a contract of commercial agency. 23 August 1918) Quiroga v. at the price stipulated) and that Parson was to pay the price in the manner stipulated.12. a contract was entered into by and between the Quiroga and J. Classification of a contract defined by law. on the part of each of them. the execution of the contract. he returns it. II. as in the instant case. Quiroga maintains that Parsons is his agent for the sale of his bed in Iloilo. Parsons (GR 11491. to pay their price. Quiroga v. are precisely the essential features of a contract of purchase and sale. its essential agreements are clearly set forth and plainly show that the contract belongs to a certain kind and not to another. With regard to the remaining clauses. was necessarily obliged to pay their price within the term fixed. according to their class. 2. the effect of its breach would only entitle the plaintiff to disregard the orders which the defendant might place under other conditions. due regard must be given to its essential clauses. The Court thus affirmed the judgment appealed from. Commission on sale merely a discount. In the contract in question. Parties to a contract of sale Page 28 of 87 . and not one called by the parties The agreements contained in the document that has been drafted. and it gives no right to have the contract considered. to have an open establishment in Iloilo. Only the acts of the contracting parties. are expressly set forth in the contract. and does not pay its price. itself to conduct the agency. August 23. 11491. and in connection with. and that the obligations the breach of which is alleged as a cause of action are not imposed upon the defendant. not considered when essential agreements are set forth in the contract The acts of the parties merely show that. if Parson so preferred. The price agreed upon was the one determined by Quiroga for the sale of these beds in Manila. without any other consideration and regardless as to whether he had or had not sold the beds. By virtue of the contract between Quiroga and Parson. the latter. to keep the beds on public exhibition. 5. with costs against the appellant. Acts subsequent to contract suppletory. there was mutual tolerance in the performance of the contract in disregard of its terms. he waives his right and cannot complain for having acted thus at his own free will. the clauses. and to pay for the advertisement expenses for the same. None of these conveys the idea of an agency. at Quiroga’s request. and not one of commercial agency. There was the obligation on the part of Quiroga to supply the beds. the only one expressly imposed by the contract. must be considered for the purpose interpreting the contract. and to order the beds by the dozen and in no other manner. with a discount of from 20 to 25 per cent. other clauses are not incompatible with contract of purchase and sale The contract by and between the defendant and the plaintiff is one of purchase and sale. and if he does not succeed in selling it. and not what it is called by the contracting parties. only expresses that the defendant was the only one that could sell Quiroga’s beds in the Visayan Islands. but delivers to the principal the price he obtains from the sale of the thing to a third person. Parsons Hardware [G. on receiving the beds. Quiroga alleges that Parson violated its obligation not to sell the beds at higher prices than those of the invoices. Payment was to be made at the end of sixty days. 1918. in Manila. or before. These features exclude the legal conception of an agency or order to sell whereby the mandatory or agent received the thing to sell it. or in cash. None of these. In the classification of the contract. also used in articles 2 and 3. it must be understood that a contract is what the law defines it to be. but if the plaintiff consents to fill them. Essential clauses given due regard to classify a contract. except the obligation to order the beds by the dozen and in no other manner. and in these last two cases an additional discount was to be allowe d for prompt payment. Parsons (to whose rights and obligations Parsons Hardware later subrogated itself) for the exclusive sale of Quiroga Beds in the Visayan Islands. Besides the clause made in the basis of a commission on sales. Contract of purchase and sale In order to classify a contract. when such interpretation is necessary. and. 4. 1. but as they performed it. No. on the part of Parson.R. constitute a contract of purchase and sale. The Supreme Court held that the contract by and between the plaintiff and the defendant was one of purchase and sale.
2. which was saved from the ravages of war. Collector of Internal Revenue [G. the spouses had neither property nor business of their own. which were set aside. G. the circumstantial evidence is against petitioner’s claim.325. The Supreme Court affirmed the appealed decision with cost against the petitioner. Antonio protested the assessment. No evidence proving pre-marital agreement of absolute separation between the spouses Aside from the material inconsistencies in the testimony of petitioner’s witnesses. (5) The Day Book of the Register of Deeds on which the agreement would have been entered. No. May 27. Moran. demanding the payment of only P3. 4. the Collector considered the sales made by Antonia as Antonio’s original sales taxable under Section 186 of the National Internal Revenue Code and. denied the same. 1959). revealing for the first time the existence of an alleged premarital agreement of complete separation of properties between him and his wife.13. under certain conditions. January 28. so that.. strangely enough. the Collector issued a modified assessment. Article 7 and 10 of Code of Commerce does not exempt from the prohibition of sale between spouses under Article 1490 of the Civil Code Article 7 and 10 of the Code of Commerce merely state. however. usufruct. 1957 Ed. Antonio appealed to the Court of Tax Appeals. Antonio again requested for reconsideration. Trial court’s judgment on the degree of credence of witness conside red seriously by the Supreme Court When the credibility of witnesses is the one at issue. since such a pre-nuptial agreement could not be effective before marriage is celebrated. Mariano Osorio.. the Conference Staff of the Bureau of Internal Revenue eliminated the 50% fraud penalty and held that the taxes assessed against him before 1948 had already prescribed. Reyes JBL (J): 6 concur Facts: On 20 May 1944. Based on these findings. On 9 July 1954. but that even during their taxable years. and up to around 1952. did not show that the document in question was among those recorded therein. Antonio Medina married Antonia Rodriguez. Later. Government always an interested party in taxable transactions The government is always an interested party to all matters involving taxable transactions and qualified to question their Page 29 of 87 . sold in Manila the logs bought from her husband through the same agent. in turn. On the thesis that the sales made by Antonio to his wife were null and void pursuant to the provisions of Article 1490 of the Civil Code of the Philippines. and administration of their properties and business were in the husband. but the Collector. (4) Although petitioner already knew that Article 1490 prohibits sales between spouses married under a community system. 3. The transactions permitted therein however are those entered into with strangers.] En Banc.R. imposed a tax assessment on Antonio. 3. Antonio acquired forest concessions in the municipalities of San Mariano and Palanan. 1961. This is all the more true because not every copy of the supposed agreement. The proceeds were either received by Osorio for Antonio or deposited by said agent in Antonio’s current account with the PNB. applying the “best evidence rule”. the Collector insisted on his demand. Antonia. Antonia started to engage in business as a lumber dealer. Isabela. in his letter of 4 April 1955. Medina v. and contending that the assessment for the years 1946 to 1952 had already prescribed. R. and do not constitute exceptions to the prohibitory provisions of Article 1490 against sales between spouses. did not act in accordance with its alleged covenants. 10-12). therefore. pp. the ownership. as to have really urged them to enter into the supposed property agreement. Bautista. Mariano Osorio. they neither had any property nor business of their own. 28 January 1961) Medina v. Nos. On 30 November 1963. the trial court’s judgment as to their degree of credence deserves ser ious consideration by this Court (Collector vs. is patently absurd. Hence a petition to review the decision of the CTA. et al. After one hearing. particularly the one that was said to have been filed with the Clerk of Court of Isabela. the couple. L-12259.68. (2) The testimony that the separation of property agreement was recorded in the Registry of Property 3 months before the marriage. CIR (GR L-15113. it was not until July 1954 that the allege the existence of the alleged property separation agreement. was accounted for as lost. (3) Despite their insistence on the existence of the ante-nuptial contract. however. the c ourt did right in giving little or no credence to the secondary evidence to prove the due execution and contents of the alleged document (see Comments on the Rules of Court. Before 1946. (1) It appears that at the time of the marriage between the petitioner and his wife. 1. L-15113. In 1949. the logs cut and removed by the Antonio from his concessions were sold to different persons in Manila through his agent. which rendered judgment upholding a tax assessment of the Collector of Internal Revenue except with respect to the imposition of so-called compromise penalties. a presumption that the wife is authorized to engage in business and for the incidents that flow therefrom when she so engages therein. From 1946 to 1948. Vol. Antonio filed a petition for reconsideration. L-12250. Antonio sold to her almost all the logs produced in his San Mariano concession.
. It cannot be contended thus that the Collector cannot assail the questioned sales. No. the sales made by the petitioner 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. Civil Case 15620) on 19 June 1980 for quieting of title and damages against Calimlim-Canullas. Spouse cannot alienate property without the consent of the other In the case of Maramba vs. In the present case. Melencio-Herrera (J): 5 concur Facts: Mercedes Calimlim-Canullas and Fernando Canullas were married on 19 December 1962. June 22. without costs. Canullas abandoned his family and lived with Corazon Daguines.] First Division. is that held in Padilla vs.. A petition for review on certiorari was filed with Supreme Court. 6. upon which the spouses have built a house.R. 55. 5. Canullas sold the subject property with the house thereon to Daguines for the sum of P2. V-1 and citing this Court’s ruling in U. m. Mariano Osorio. Upon reconsideration and on 27 November 1980. located at Bacabac. 70 Phil. he inherited the land.validity or legitimacy whenever necessary to block tax evasion. Canullas described the house as “also inherited by me from my deceased parents. Collector of Internal Revenue. he being a stranger to said transactions. During the pendency of the appeal. the trial court ruled in favor of Daguines as the lawful owner of the land as well as ½ of the house erected on the land.S. however. house and improvements null and void. vs. 337 and 338 of the Tax Code and the pertinent portions of Revenue Regulations No. however. Fortun (GR 57499. which value would be reimbursed at the liquidation of the conjugal partnership. Land and building belongs to the conjugal partnership. Pangasinan. and declared the sale of the lot. Contracts violative of Article 1490 null and void Contracts violative of the provisions of Article 1490 of the Civil Code are null and void (Uy Sui Pin vs. Lozano. They begot five children. Revenue officers can require production of books of accounts and other records from taxpayers Illegally obtained documents and papers are admissible in evidence. and relying on Sections 3. spouse owning the land becomes the creditor of the conjugal partnership Pursuant to the second paragraph of Article 158 of the Civil Code.” Unable to take possession of the lot and house. 22 June 1984) Calimlim-Canullas v. Calimlim-Canullas resisted and claimed that the house in dispute where she and her children were residing. On 6 October 1980. 1984. 14. becomes conjugal property only when the conjugal partnership is liquidated and indemnity paid to the owner of the land. Calimlim-Canulas v. where the conversion of the properties from paraphernal to Page 30 of 87 . On 15 April 1980. (?) Illegally obtained documents and papers admissible to evidence. if they are found to be competent and relevant to the case (see Wong & Lee vs. 45 Phil. being void transactions. In the document of sale.. Petitioner’s imputation. 57499. 2. Fernando Canullas and Corazon Daguines were convicted of concubinage in a judgment rendered on 27 October 1981 by the then CFI Pangasinan. 10.00. The better rule. Bugallon. the lower court modified the judgment by declaring Daguines as the lawful owner of the land and 10 coconut trees thereon but declaring the sale of the conjugal house including 3 coconuts and other crops during the conjugal relation of the spouses null and void. 9. Paterno. The spouse owning the lot becomes a creditor of the conjugal partnership for the value of the lot. Uy Coque vs.” both the land and the building belong to the conjugal partnership but the conjugal partnership is indebted to the husband for the value of the land. which provides that “buildings constructed at the expense of the partnership during the marriage on land belonging to one of the spouses also pertain to the partnership. which judgment has become final. After Canullas’ father died in 1965. 1. but the value of the land shall be reimbursed to the spouse who owns the same. that the sale of the land together with the house and improvements to Daguines was null and void because they are conjugal properties and she had not given her consent to the sale. Daguines initiated a complaint beore the CFI Pangasinan (Branch 1.000. that the documentary evidence i s illegally seized. the Collector maintains tha t he and other internal revenue officers and agents could require the production of books of accounts and other records from a taxpayer. were built and planted with conjugal funds and through her industry. Aviado 38 Phil. Sioca. 104 Phil. is vehemently denied by him. They lived in a small house on the residential land in question with an area of approximately 891 sq. Branch II. however. Fortun [G. In 1978. Padilla v. Lozano. 469). 43). it was held that the land belonging to one of the spouses. The Supreme Court set aside the decision and resolution of the lower court. including the coconut trees on the land. Cantollas. Paterno is better rule than Maramba v.
and Jodie or Joji. produce no effect whatsoever. That sale was subversive of the stability of the family. Bautista [CA]) 5. did not inform her father Page 31 of 87 . Moreover. The prohibitions apply to a couple living as husband and wife without benefit of marriage. The couple have 3 children (Junie.” Article 1352 also provides that “contracts w ithout cause. Harriet. morals. 1). The cause is unlawful if it is contrary to law. public order. under the 1943 decision. CA [G. who in turn replied that she was objecting to the sale. object. policy considerations of the most exigent character as well as the dictates of morality require that the same prohibition should apply to a common-law relationship. subject to the suspensive condition that their values would be reimbursed to the widow at the liquidation of the conjugal partnership.R.735. Guiang v. the Corpuzes. She wrote a letter to her mother informing her. The latter have since then occupied the ½ portion and built their house thereon. however. which is the cornerstone of family law. On 22 April 1988. or public policy are void and inexistent from the very beginning. Harriet. Sometime in January 1990. so that the danger that the law seeks to avoid is correspondingly increased.” In the present case. m. (Buenaventura v. or with unlawful cause. Bautista [CA] was cited in Matabuena vs. or public policy. donations between spouses during marriage are prohibited. Gilda Corpuz left for Manila. It was also designed to prevent the exercise of undue influence by one spouse over the other. with the consent of her husband. good customs. or purpose is contrary to law. So long as marriage remains the cornerstone of our family law. No. The consideration was payable in installment. (LRC) Psd-165409) located in Barangay Gen. as pointed out by Ulpian. with Gilda Corpuz as vendee. was not able to go abroad. Block 9. a prejudice deeply rooted in our ancient law. Panganiban (J): 4 concur Facts: Gilda and Judie Corpuz were married civilly on 24 December 1968 in Bacolod City. the contract of sale was null and void for being contrary to m orals and public policy. Similarly. in the present case. Thus. morals. and stayed for sometime in Manila. considering the foregoing premises. Unfortunately. public order. it would not be just that such donations should subsist. 3. Cervantes. with right of cancellation in favor of vendor should vendee fail to pay 3 successive installments. On 14 February 1983.” Those provision s are dictated by public interest and their criterion must be imposed upon the will of the parties. Canullas cannot have alienated the house and lot to Daguines since the wife had not given her consent to the sale. Contract of sale null and void for being contrary to morals and public policy Article 1409 of the Civil Code provides “contracts whose cause. And this is so because if transfers or conveyances between spouses were allowed during marriage. to the time immediately before the death of one spouse that ended the conjugal partnership. They can not be considered to have become conjugal property only as of the time their values were paid to the estate of the widow because by that time the conjugal partnership no longer existed and it could not acquire the ownership of said properties. June 26. 1998. Harriet Corpuz learned that her father intended to sell the remaining ½ portion including their house. reason and morality alike demand that the disabilities attached to marriage should likewise attach to concubinage. On June 1989. Disabilities attached to marriage also applies to concubinage The ruling in Buenaventura vs. Law prohibits sale and donation between husband and wife. CA (GR 125172. such applies even those living together without benefit of marriage The law prohibits the spouses from selling property to each other subject to certain exceptions.] First Division. as well as to protect the institution of marriage. 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 would destroy the system of conjugal partnership. They are thus adjoining neighbors of the Corpuzes. New Civil Code). once paid. then there is every reason to apply the same prohibitive policy to persons living together as husband and wife without benefit of nuptials. “the condition of those who incurred guilt would turn out to be better than those in legal union. lest the conditions of those who incurred guilt should turn out to be better. 15. the effects of the fulfillment of the condition should be deemed to retroact to the date the obligation was constituted (Article 1187. to look for work abroad. otherwise. of their homelot to the Guiangs. If the policy of the law is to prohibit donations in favor of the other consort and his descendants because of fear of undue influence and improper pressure upon the donor. bought a 421 sq. she became a victim of an unscrupulous illegal recruiter. 125172. Paulino Santos (Bo.conjugal assets should be deemed to retroact to the time the conjugal buildings were first constructed thereon or at the very latest. Koronadal. a basic social institution which public policy cherishes and protects. lot (Lot 8. good customs. a basic policy in civil law. 4.00. The acquisition by the partnership of the properties was. the Corpuzes sold ½ portion of their lot to spouses Antonio and Luzviminda Guiang. 26 June 1998) Guiang v. For it is not to be doubted that assent to such irregular connection for thirty years bespeaks greater influence of one party over the other. reiterating that while Article 133 of the Civil Code considers as void a donation between the spouses during the marriage. South Cotabato from Manuel Callejo who signed as vendor through a conditional deed of sale for a total consideration of P14.
Luzviminda Guiang so that Guiang would advise her father. with costs against the Guiangs. On 30 January 1996. 1. filing the same with the MTC Koronadal. the Guiangs filed an appeal with the Court of Appeals. Amendatory effect of Article 124 FC to Article 166 NCC in relation to Article 173 NCC Under Article 166 of the Civil Code. thus the nullity of the contract of sale is premised on the absence of private respondent’s consent. The alienation or encumbrance if so made however is not null and void. in the absence of his wife Gilda Corpuz.00. and may be perfected as a binding contract upon the acceptance by the other spouse or authorization by the court before the offer is withdrawn by either or both offerors . On 28 May 1990. Manuela Callejo. However. 2. Gilda stayed put in her house and lot. The Supreme Court denied the petition. together and stayed at their house.00 for the preparation of the Deed of Transfer of Rights. The new sale describes the lot sold as Lot 8.00. Dissatisfied. declaring the deed of transfer of rights and the amicable settlement null and void. She was informed by her children that their father had a wife already.000. P100. The said Complaint sought the declaration of a certain deed of sale.00. but instead gave the letter to Mrs. widow of Manuel Callejo (the original registered owner).50 as the total documentary stamp tax on the various documents. On 11 March 1990. South Cotabato (Branch 25) rendered a decision in favor of Gilda Corpuz.about this.62 representing ½ of the amount of realty taxes paid by the Guiangs. The offended wife may bring an action to annul the said alienation or encumbrance. and on 1 March 1990. without pronouncement as to costs. Gilda Corpuz returned home. On 9 September 1992. These expenses particularly the taxes and other expenses towards the transfer of the title to the Guiangs were incurred for the whole Lot 9. the husband cannot generally alienate or encumber any real property of the conjugal partnership without the wife’s consent. having assumed the remaining obligation of the Corpuzes to Mrs. She gathered her children. the Civil Code requires the concurrence of the following elements: (1) cause. recognizing her lawful and valid ownership and possession over the remaining ½ portion of the lot. Contract void for lack of consent by the other spouse The consent of one spouse to the contract of sale of the conjugal property was totally inexistent or absent. As a consequence of the sale. Judie Corpuz sold the remaining ½ portion of the lot and the house thereon to Luzviminda Guiang thru a document known as ‘Deed of Transfer of Rights’ (Exh. The last element is indubitably absent in the present case.00 was to be paid in June 1990. Her husband was nowhere to be found. certification fee of P5. Thus. Judie Corpuz signed as a witness to the sale. Believing that she had received the shorter end of the bargain. the other spouse may assume sole powers of administration. South Cotabato. In the absence of such authority or consent. Koronadal. These powers do not include the powers of disposition or encumbrance which must have the authority of the court or the written consent of the other spouse. (165a)” 3. (2) object. the parties thereat signed a document known as ‘amicable settlement’ requiri ng the Corpuzes to leave the house voluntarily on or before 7 April 1990. P535. and affirmed the challenged decision and resolution.72 for the capital gains tax. and ordering Gilda Corpuz to reimburse the Guiangs the amount of P9. both with legal interests thereon computed from the finality of the decision. with the filing of the instant suit. Judie Corpuz’s children Junie and Harriet signed the document as witnesses. It is merely voidable. 1). P127. On 5 March 1990.000.62 basic tax and special educational fund on the lot. who were staying in different households. Block 9. Luzviminda Guiang as vendee executed another agreement over the lot with Manuela Jimenez Callejo. In case of disagreement.00. which involved the conjugal property of private respondent and her husband. obviously to cure whatever defect in Judie Corpuz’s title over the lot transferred. P22.00 as the amount they paid to Mrs. said contract properly falls within the ambit of Article 124 of the Family Code. Article 124 of the Family Code provides that “the administration and enjoyment of the conjugal partnership property shall belong to both spouses jointly. Callejo. On 16 March 1990. subject to recourse to the court by the wife for proper remedy. the husband’s decision shall prevail.000 corresponding to the payment made by the Guiangs to Callejo for the unpaid balance and another P379.50 as transfer tax. The Guiangs followed thru the amicable settlement with a motion for the execution of the amicable settlement. who signed as vendor for a consideration of P9. the provision of Article 173 Page 32 of 87 . the appellate court affirmed the decision of the lower court. For staying in their house sold by her husband. a total of P759. (LRC) Psd-165408. and (3) consent. However. This being the case.000. Block 8. Their motion for reconsideration was also denied. Annulment not having been made. ‘A’) for a total consideration of P30. the disposition or encumbrance shall be void. which mus t be availed of within five years from the date of the contract implementing such decision” and that “in the event that one spouse is incapacitated or otherwise unable to participate in the administration of the conjugal properties. Gilda approached the Barangay Captain for the annulment of the settlement. Gilda Corpuz filed an Amended Complaint against her husband Judie Corpuz and the Guiangs. without any charge.000. (LRC) Psd-165409.00 of which P5. a standard fee of P17. A petition for review was before the Supreme Court. Gilda was complained against by the Guiangs before the Barangay authorities of Barangay General Paulino Santos (Bo. elements To constitute a valid contract. for trespassing (Barangay Case 38). P9. South Cotabato. the transaction shall be construed as a continuing offer on the part of the consenting spouse and the third person. Valid contract. the Guiangs spent P600. The proceedings [are] still pending before the said court. The RTC Koronodal. null and void.
5. The CFI heard the land registration case on 11 November 1952. In any event. whereby he was issued a plan Psu-99791 (containing an area of 171. or any act or contract of the husband which tends to defraud her or impair her interest in the conjugal partnership property. the Director of Forestry and other oppositors. By no stretch of the imagination. ask the courts for the annulment of any contract of the husband entered into without her consent. Rubias v. it cannot be denied that the ‘amicable settlement’ entered into by Gilda Corpuz and the Guiangs is a contract. Barotac Viejo. GLRO Rec. Execution of document “amicable settlement” does not affect void character of deed of sale The fraud and the intimidation referred to by petitioners were perpetrated in the execution of the document embodying the amicable settlement. Moreover. for 1947 & 1948.” The particular provision giving the wife 10 years during the marriage to annul the alienation or encumbrance was not carried over to the Family Code. The fact remains that such contract was entered into without the wife’s consent. The settlement. which he caused to be surveyed on 18-31 July 1934.R. during the marriage and within ten years from the transaction questioned. Void contract cannot be ratified By the specific provision of the law [Article 1390. Militante has also declared the land for taxation purposes under TD 5172 in 1940. Batiller (GR L-35702. TD 2434 in the name of Liberato Demontaño for the land described therein was cancelled by TD 5172 of Militante. On 22 September 1958. Isaias Batiller had declared for taxation purposes Lot 2 of Psu-144241 under TD 8583 for 1957 and a portion of Lot 2 under TD 8584 for 1945. under TD T-86 for 1945. after which the barangay authorit ies secured an “amicable settlement” and the Guiangs filed before the MTC a motion for its execution. Batiller paid the land taxes for Lot 2 on 9 November 1960 for the year 1945 and 1946. the record of the case was lost before it was heard. the Deed of Transfer of Rights cannot be ratified. 4.of the Civil Code of the Philippines provides that “the wife may. for 1948. when such consent is required. so after the war Militante petitioned the Court to reconstitute the record of the case.” 6.) Before the war with Japan. Militante appealed to the Court of Appeals (CA-GR 13497-R). 1950 and 1960 as shown Page 33 of 87 . Amicable settlement cannot be considered a continuing offer Neither can the “amicable settlement” be considered a continuing offer that was accepted and perfected by the parties. It is a direct offshoot of the Deed of Transfer of Rights. Civil Code]. can the Court interpret this document as the acceptance mentioned in Article 124. TD 9868 for 1964. and for 1948 and 1949.] First Division. May 29. may demand the value of property fraudulently alienated by the husband. for 1947. the land technically described in Psu-99791. The sale was duly recorded in the Office of the Register of Deeds for the Province of Iloilo (Entry 13609) on 14 July 1960. Batiller [G. Gilda Corpuz alleged during trial that barangay authorities made her sign said document through misrepresentation and coercion. It is thus clear that any alienation or encumbrance made after 3 August 1988 when the Family Code took effect by the husband of the conjugal partnership property without the consent of the wife is null and void. Militante sold to Domingo Rubias. However. Domingo Rubias declared the land for taxation purposes under Tax Declaration (TD) 8585 for 1957. during the war with Japan. and after trial the Court dismissed the application for registration. No. 54852). for 194546. Article 1422 of the Civil Code provides that “a contract which is the direct result of a previous illegal contract. however. 16. Teehankee (J): 8 concur Facts: Francisco Militante claimed ownership of a parcel of land located in the Barrio General Luna. his son-in-law and a lawyer by profession. The record was reconstituted in the CFI Iloilo (Land Case R-695. By express provision of law (Article 1422). and paid the land taxes for 1940. 29 May 1973) Rubias v. TD 9533 and TD 10019 for 1961. even by an ‘amicable settlement’. L-35702. following the last sentence of Article 124. Pending the disposal of the appeal or on 18 June 1956. Its tenor was to the effect that the Guiangs would vacate the property. The order of the pertinent events is clear: after the sale. under TD 7122 for 1948. 1973. Demontaño paid the land tax under TD 2434 on 20 December 1939 for the years 1938 and 1959. The participation by some barangay authorities in the ‘amicable settlement’ cannot otherwise validate an invalid act. Militante filed with the CFI Iloilo an application for the registration of title of the land technically described in Psu-99791 opposed by the Director of Lands. she or her heirs after the dissolution of the marriage. such a contract is also void. the CA promulgated its judgment confirming the decision of the trial court dismissing the Application for Registration filed by Militante. paying the land taxes under TD 8585 and TD 9533.3561 hectares. its execution does not alter the void character of the deed of sale between the husband and the Guiangs. Iloilo. TD 8483 was revised by TD 9498 while TD 9584 was cancelled by TD 9584 both in the name of Batiller. the Guiangs filed a complaint for trespassing against Gilda Corpuz. does not mention a continuing offer to sell the property or an acceptance of such a continuing offer. Should the wife fail to exercise this right. is also void and inexistent.
Rubias filed a suit to recover the ownership and possession of certain portions of lot under Psu-99791. Wolfson v. The Supreme Court affirmed the order of dismissal appealed. the property and rights in litigation or levied upon an execution before the court within whose jurisdiction or territory their exercise their respective functions. the CFI decided the case likewise in favor of Batiller. and a plan approved by Director of Lands on 15 November 1956 was issued. Estate of Martinez superceded by case of Director of Lands v. and other officers and employees connected with the administration of justice. to be declared absolute owner of the land and to be restored to possession thereof with damages. Francisco Militante in 1956. bought from his father-in-law. public and peaceful poss ession in the concept of owner of the land and the Director of Lands’ approval of his survey plan thereof. Batiller’s evidence de aling with his and his ancestors’ continuous. On 31 August 1964. prosecuting attorneys. either in person or through the mediation of another xxx  Justices. the court therein practically agreeing that the contract between Rubias and Militante was null and void.The land claimed by Batiller as his own was surveyed on 6-7 June 1956. 3. with respect to the property and rights which may be the object of any litigation in which they may take part by virtue of their profession. was bereft of any factual or legal basis. Thus. Rubias appealed from the decision of the Municipal Court of Barotac Viejo to the CFI Iloilo. holding that he has “better right to possess the land in question having been in the actual possession thereof under a claim of title many years before Militante sold the land to Rubias. Therefore. the Court in Abagat affirmed the invalidity and nullity of the lawyer’s purchase of the land in litigation from his client. On May 1961 and after trial. open. are likewise already duly established facts of record. against its present occupant Batiller. Purchase of a lawyer of a property in litigation prohibited. Rubias filed a forcible Entry and Detainer case against Batiller in the Justice of the Peace Court of Barotac Viejo. Rubias’ evidence dealing with the source of the alleged right and title of Militante’s predecessors are already made of record. Estate of Martinez which held that a sale of property in litigation to the party litigant’s lawyer “its not void but voidable at the election of the vendor” has been superseded by the 1929 case of Director of Lands vs. judges. Rubias’ purchase of the property in litigation from his client(and father-in-law) was void and could produce no legal effect. which was likewise denied by the lower court on 14 January 1966. Rubias had no cause of action Rubias complaint. The chain of Militante’s alleged title and right to the land allegedly tracing back to Demontano in the land registration case and was rejected by the Iloilo land registration court. clerks of superior and inferior courts.by the certificate of the treasurer. On 17 August 1965. Abagat The 1911 case of Wolfson v. by virtue of Article 1409. On 26 November 1964 and after the trial. the Court expressly cited two antecedent cases involving the same transaction of purchase of property in litigation by the lawyer which was expressly declared invalid under Article 1459 of the Civil Code of Spain (of which Article 1491 of our Civil Code of the Philippines is the counterpart) upon challenge thereof not by the vendor-client but by the adverse parties against whom the lawyer was seeking to enforce his rights as vendee thus acquired. Neither can the right to set up the defense of illegality be waived. in the land registration case as well as in the ejectment case wherein the Iloilo CFI recogniz ed the superiority of Batiller’s right to the land as against Rubias. Iloilo. 1. 2. Pre-trial practically amounted to a full dress trial when parties agreed and stipulated on facts and submitted their respective documentary exhibits The pre-trial conference held by the trial court at which the parties with their counsel agreed and stipulated on the material and relevant facts and submitted their respective documentary exhibits as referred to in the pre-trial order. the CFI dismissed the case. In this later case of Abagat. the decision of which was affirmed by final judgment by the Court of Appeals. identified as Psu 155241.”) and that consequently. which certified said appeal to the Supreme as involving purely legal questions.” 4. On 22 April 1960. paragraph (5) of the Philippine Civil Code (“The following persons cannot acquire any purchase. Rubias filed a motion for reconsideration. Contract void and cannot be ratified The purchase by a lawyer of the property in litigation from his client is categorically prohibited by Article 1491. ordered the issuance of a writ of possession for the return of the land by the lawyer to the adverse parties without reimbursement of the price paid by him and Page 34 of 87 . There was no right or title to the land that could be transferred or sold by Militante’s purported sale in favor of Rubias in 1956. Rubias prayed also for damages and attorney’s fees. this prohibition includes the act of acquiring by assignment and shall apply to lawyers. the Municipal Court of Barotac Viejo decided the case in favor of the Batiller. who allegedly entered said portions of the lot in 1945 and in 1959. paragraph (7) of our Civil Code which provides that contracts “expressly prohibited or declared void by law” ar e “inexistent and void from the beginning” and that “(T)hese contracts cannot be ratified. the lower court did not err in dismissing Rubias’ complaint upon Batiller’s motion after the pr etrial. The CA’s final judgment affirming the dismissal of Militante’s application of registration mad e it conclusive that Militante lack rightful claim or title to the land. Abagat. practically amounted to a full dress trial which placed on record all the facts and exhibits necessary for a djudication of the case. Thereafter. with costs against Rubias. even at a public or judicial au ction. Rubias filed an appeal before the Court of Appeals.
from acquiring such property in their trust or control either directly or indirectly and “even at a public or judicial auction. and (6) others especially disqualified by law. or the intention which could not be ascertained may have been clarified by the parties. judicial officers and employees. Thus. the permanent disqualification of public and judicial officers and lawyers grounded on public policy differs from the first three cases of guardians. Who may invoke the inexistence of contract. Prohibitions under Article 1491 NCC (Article 1459 Spanish Civil Code) Article 1491 of our Civil Code (like Article 1459 of the Spanish Civil Code) prohibits in its six paragraphs certain persons. have been well aware of the defect in his title and is. fiscals and lawyers under paragraph 5 of the codal article. the nullity of the acts hereinbefore referred to must be asserted by the person having the necessary legal capacity to do so and decreed by a co mpetent court. (4) public officers and employees. from the beginning. Creditors may attach property of the debtor which has been alienated by the latter under a void contract. morals. the other party can simply set up the nullity as a defense. who cannot enforce the contract. 6. Proper action to be filed Tolentino. such may be subject to second contract The nullity of prohibited contracts is definite and permanent and cannot be cured by ratification. Now then: As the code does not recognize such nullity by the mere operation of law.other expenses. object. and of Castan] 8. Civil Code). it does not retroact to the date of the first contract. The public interest and public policy remain paramount and do not permit of compromise or ratification. but if any party should bring an action to enforce it.” Page 35 of 87 . an action is necessary to declare its inexistence. (2) agents. a mortgagee can allege the inexistence of a prior encumbrance. Nullity of prohibited contracts definite and permanent and cannot be cured by ratification. the intervention of the competent court is necessary to declare the absolute nullity of the contract and to decree the restitution of what has been given under it. The causes of nullity which have ceased to exist cannot impair the validity of the new contract.” He further stated that (as to action on contract) “even when the contract is void or inexistent. Manresa’s view not applicable under the NCC. in his treaties on the Civil Code. the Court must limit ourselves to classifying as void all acts done contrary to the express prohibition of the statute. good customs. If the void contract is still fully executory. The ratification or second contract would then be valid from its execution.” This is no longer true and applicable to the Philippine Civil Code which does recognize the absolute nullity of contracts “whose cause. therefore. hence.” as follows: (1) guardians. the vie w taken by the code. 9. it has been opined that they may be “ratified” by means of and in “the form of a new contract. the transferor can recover it by the accion reivindicatoria. will retroact to the very day when the contract was entered into. of Perez Gonzales. the object which was illegal at the time of the first contract. consequently. when it has already been fulfilled. if there has been a void transfer of property. judicial officers. The criterion of nullity of such prohibited contracts under Article 1459 of the Spanish Civil Code (Article 1491 of our Civil Code) as a matter of public order and policy as applied by the Supreme Court of Spain to administrators and agents should certainly apply with greater reason to judges. Spanish Supreme Court and modern authors have veered away from Manresa on this point The reason given by Manresa in considering such prohibited acquisitions under Article 1459 of the Spanish Civil Code as merely voidable at the instance and option of the vendor and not void is “that the Code does not recognize such nullity de pleno derecho. He must. and any possessor may refuse to deliver it to the transferee. public order or public policy” or which are “expre ssly prohibited or declared void by law” and declares such contracts “inexistent and void from the beginning. agents and administrators (Article 1491. 5. and ruled that the purchaser-lawyer is a lawyer and is presumed to know the law. stated that (as to persons affected) “any person may invoke the inexistence of the contract whenever juridical effects founded thereon are asserted against him.” citing from Manresa that “(C)onsidering the question from the point of view of the civil law. The judgment. however. that violation of the prohibition contract cannot be validated by confirmation or ratification. the Court expressly reserved decision on “whether or not the judgment in question actually falls within the prohibition of the article” and held only that the sale’s “voidability can not be asserted by one not a property t o the transaction or his representative. (3) administrators. however. prosecuting attorneys. Wolfson case decided in line with Manresa’s view In Wolfson. by reason of the relation of trust or their peculiar control over the property. [also see viewpoints of Gullon Ballesteros in Curso de Derecho Civil (Contratos Especiales 1968). or the service which was impossible may have become possible. or purpose is contrary to law. no party need bring an action to declare its nullity. If object has subsequently become legal. the Supreme Court of Spain ruled that the prohibition of Article 1459 of the Spanish Civil Code is based on public policy. may have already become lawful at the time of the ratification or second contract.” 7.” The Supreme Court of Spain and modern authors have likewise veered from Manresa’s view of the Spanish codal provision itself. a possessor in bad faith. a debtor can assert the nullity of an assignment of credit as a defense to an action by the assignee. In this aspect. as to whose transactions. In its sentencia of 11 June 1966. Nobody can take the law into his own hands. in which case its validity shall be determined only by the circumstances at the time of execution of such new contract. Thus. and lawyers.
it is essential that the proof submitted establish some agreement between Silverio Chioco and Trinidad Mactal to the effect that Chioco should buy the property for the benefit of Mactal. The motion was granted. cannot be annulled as there was no proof of a previous agreement between Chioco and her. v. and that Article 1459 of the Civil Code applies. even if no collusion is proved. 31 May 1956) Philippine Trust Co. and in March 1928 she bought it from Chioco. Roldan. as guardian. which her attorney admits. Page 36 of 87 . were part of the properties inherited by Mariano L. and the sale should be annulled for violating Article 1459 of the Civil Code prohibiting the guardian from purchasing the property of her ward. Ramos. Rodriguez v. out of the price of P14. Manila). 1. 3.522 yearly. Article 1459 applies Remembering the general doctrine that guardianship is a trust of the highest order. even if no actual collusion is proved (so hard to prove) between such guardian and the intermediate purchaser. required Roldan to pay him beginning with 1947 the fruits. wherein Socorro Roldan. through h er brother-in-law. either express or implied. and on 12 August 1947 obtained a judicial confirmation of the sale.” The subsequent purchase of Mactal. sold to herself. a motion asking for authority to sell as guardian the 17 parcels for the sum of P14. guardianship proceedings were instituted.700 to Dr. the Court declared the “in order to bring the sale in this case within the part of Arti cle 1459. This would uphold a sound principle of equity and justice.00. the guardian ( Roldan) took by purchase her ward’s parcels (thru Dr. and charged appellees with the costs. The Supreme Court annulled the 3 contracts of sale in question. v. Ramos. On 13 August 1947.000. Ramos to the effect that the latter would buy the lands for her but the fact remains that she acquired her protege’s properties. the purpose of the sale being allegedly to invest the money in a residential house. the Court has no hesitation to declare that. for the sum of P15.400 yearly while the parcels of land yield for the stepmother an average o P1. whereas the harvest from the seventeen parcels netted his step-mother a yearly profit of P1. where the guardian Mactal sold in January 1926 the property of her ward to Silverio Chioco. On 21 October 1947. No. only 1 day had elapsed from the judicial approval of the sale (August 12). a deed of conveyance covering the same 17 parcels. amounted to P1.700 with legal interest from 12 August 1947. In view of his minority. her brother-in-law. Roldan sold 4 parcels out of the 17 to Emilio Cruz for P3. 4. and the trustee cannot be allowed to have any inducement to neglect his ward’s interest and in line with the court’s suspicion whenever the guardian acquires the ward’ s property. Ramos). 1956. surviving spouse of Bernardo and stepmother to Mariano. The Philippine Trust Company replaced Roldan as guardian on 10 August 1948. Hence. ordered Roldan and Emilio Cruz to deliver said parcels of land to the minor. Manila.] En Banc. may be deduced from the very short time between the two sales.000. which the minor desired to have on Tindalo Street. (ordinarily the city lot is more valuable than the building) the result is that the price paid for the 17 parcels gave the minor an income of only P1. Mactal does not apply. L-8477. The temptation which naturally besets a guardian so circumstanced. Mactal. Two years had elapsed between the sales. filed before the CFI Manila a complaint against Roldan to annul 2 contracts regarding 17 parcels of land claiming that the stepmother in effect. authorized the minor to deliver directly to Emilio Cruz. reserving to herself the right to repurchase. Estimating such lot at P14. length of time different. And if we were technical. The CA affirmed the judgment. Minor on losing end in the transaction The calculation. On 5 August 1947. the late Marcelo Bernardo. If there was no such agreement.700 only. with the obligation to return to Roldan the price of P14. Guardianship is a trust of the highest order. On 27 July 1947. Fidel C. the properties of her ward. only 1 week had elapsed. sufficient to dispel suspicion In Rodrigues v. there may have been no previous agreement between her and Dr. 2. Roldan filed in said guardianship proceedings (Special Proceeding 2485. declared the minor as the owner of the 17 parcels of land. quoted above. does not include the price of the lot on which the house was erected.700 above mentioned.000.200 a year. then the sale cannot be set aside. Roldan [G. Roldan (GR L-8477. would uphold equity and justice The guardian may have acted without malice. and such period of time was sufficient to dispel the natural suspicion of the guardian’s motives or actions. necessitates the annulment of the transaction. Two months later. Bengzon (J): 8 concur Facts: 17 parcels located in Guiguinto.R. May 31.17. Bulacan.522 a year. In the present case. executed the proper deed of sale in favor of Ramos. within 1 year. to the purchase by the guardian (August 13). the appeal. Philippine Trust Co. That she planned to get them for herself at the time of selling them to Dr.522. Annulment of the transaction. that the investment in the Tindalo Street house produces to the minor the rentals of P2. the sum of P3. was appointed his guardian. in said case.000. Bernardo from his father. the Company. The minor was on the losing end. in the eyes of the law. as guardian. Ramos executed in favor of Roldan. The trial court upheld the contracts but allowing the minor to repurchase all the parcels by paying P15.
to the State. 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 vendor’s land. Three Sales void From both the legal and equitable standpoints these three sales should not be sustained: the first two for violation of article 1459 of the Civil Code. A perusal of the deed fails to disclose any ambiguity or obscurity in its provisions. It is a document evidencing the agreement of herein parties for the sale of coconut Page 37 of 87 . It was further stipulated that the vendor’s right. January 30. the land was still under lease to one Ramon Sua. interest and participation her ein conveyed is of his own exclusive and absolute property. On 5 January 1973.R. Alonzo [G. there is nothing in the record to show that at any time after the supposed cancellation of the award on 27 January 1965. was to be paid by Pichel directly to Ramon Sua so as to release the land from the clutches of the latter. reversion proceedings against Lot 21 were instituted by the State. i.e. The terms of the agreement are clear and unequivocal. it was categorically stated that a cancellation of an award granted pursuant to the provisions of RA 477 does not automatically divest the awardee of his rights to the land.700 with legal interest.” In the present case. No.5. 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. Sua In Ras vs. from 15 September 1968 to 1 January 1976.200 with interests from the date of the filing of the complaint until paid. Alonzo could exercise all the rights pertaining to a grantee with respect to Lot 21. it actually is. following ruling in Ras v. the petition to review on certiorari was raised before the Supreme Court. Hence. and ordered Alonzo to pay back Pichel the consideration of the sale in the sum of P4. Even as of the date of sale. Court to apply the contract according to its express terms The first and fundamental duty of the courts is the application of the contract according to its express terms. 3.00. with costs against Pichel. in violation of law.. On 14 August 1968. Until and unless an appropriate proceeding for reversion is instituted by the State. 1982. Alonzo filed an action for the annulment of a “Deed of Sale” before the CFI Basilan City. Alonzo’s rights to the land were reinstated. title. and it was the agreement that part of the consideration of the sale. Subject Matter of Sale 18. Contract clear and unequivocal. In the present case. Construction or interpretation of document not called for Construction or interpretation of the document in question is not called for. Applying the doctrine announced in the Ras case. from the cancellation of the award in 1965 to its reinstatement in 1972. Pichel for the first time since the execution of the deed of sale in his favor. In July 1972. the literal meaning of its stipulation shall control.650. the grantee cannot be said to have been divested of whatever right that he may have over the same property. and its reacquisition of the ownership and possession of the land decreed by a competent court. hence the literal and plain meaning thereof should be observed. L-36902. in consideration of P4. a contract of lease of the land itself. however. Lamitan. Alonzo and his wife sold to Pichel through a “deed o f sale” all the fruits of the coconut trees which may be harvested in the land for the period. 1. without costs. for all legal intents and purposes. through his guardian to repay P14. The award was cancelled by the Board of Liquidators on 27 January 1965 on the ground that. 30 January 1982) Pichel v. Basilan City in accordance with RA 477.00.200. 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. therefore. Such cancellation does not result in the immediate reversion of the property subject of the award. The Supreme Court set aside the judgment of the lower court and entered another dismissing the complaint. nor is there doubt as to the real intention of the contracting parties. Pending said payment Alonzo refused to allow the Pichel to make any harvest. III. Instead. and Pichel to pay the sum of P500. an encumbrance prohibited under RA 477. previous thereto. Sua. 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. Alonzo (GR L-36902. and the third because Roldan could pass no title to Emilio Cruz.00 as attorney’s fees. and could exercise all the rights pertaining thereto. Such is the mandate of the Civil Code of the Philippines which provides that “if the term s of a contract are clear and leave no doubt upon the intention of the contracting parties. Within said period. caused the harvest of the fruit of the coconut trees in the land. the admitted fact is that the award was reinstated in 1972. Vendor grantee under RA 477. interpretation being resorted to only when such literal application is impossible.] First Division. Alonzo was proved to have alienated the land to another. The court thus held that the deed of sale is null and void. 2. Alonzo is not deemed to have lost any of his rights as grantee of Lot 21 under RA 477 during the period material to the present case. the “Deed of Sale” dated 14 August 1968 is precisely what it purports to be. In 1972. in the sum of P3. Pichel v.
250. It is the other way around. What the law expressly disallows is the encumbrance or alienation of the land itself or any of the permanent improvements thereon. In the present case. European Railway Co. pursuant to the terms of the first paragraph of Section 8. or the good will of a trade and the like. he actually takes possession of the land. to be used. 9.. or young animals not yet in existe nce.. or the wool that shall thereafter grow upon sheep. 21 Am. A valid sale may be made of a thing. Thus. The thing sold. He may make a valid sale of the wine that a vineyard is expected to produce. or fruits to grow. (104 Jurisprudencia Civil. Hence. They include whatever is built. the first pertaining to the accessory or improvements (coconut trees) while the second. things having a potential existence may be the object of the contract of sale. at least during harvest time.. 443. to the principal (the land). 1643. Cutting vs. or the grain a fieldmay grow in a given time. Civil Code of the Philippines) is erroneous. 479. Rodriguez vs. pending crops which have potential existence may be the subject matter of sale (Sibal vs. Grantee under RA 477 not prohibited to sell the natural/industrial fruits of the land awarded to him The grantee of a parcel of land under RA 477 is not prohibited from alienating or disposing of the natural and/or industrial fruits of the land awarded to him. and benefit involve the same and analogous meaning relative to the general utility of which a given thing is capable.. A man may sell property of which he is potentially and not actually possessed. however. Valdez. 490). St.” and that “a contract of sale may be absolute or conditional. Hull. inasmuch as the terms enjoyment. or the milk a cow may yield during the coming year. 48 Conn. Borromeo. which though not yet actually in existence. must be specific and identified. Permanent improvements on a parcel of land are things incorporated or attached to the property in a fixed manner. and not for the lease of the land itself. 522-523). sold or otherwise disposed of by the owner of the land. much less extended further to include the lease of the land itself.” The subject matter of the contract of sale are the fruits of the coconut trees on the land during the years from 15 September 1968 up to 1 January 1976. 165)” pp. the sale of the nuts cannot be interpreted nor construed to be a lease of the trees. enjoyment of property Article 1543 of the Civil Code defines the contract of lease as the giving or the concession of the enjoyment or use of a thing for a specified time and fixed price. the lower court’s holding that the contract in question fits the definition of a le ase of things wherein one of the parties binds himself to give to another the enjoyment or use of a thing for a price certain and for a period which may be definite or indefinite (Art. 40 Am. Packers Exchange. naturally or artificially. 387. and the title will vest in the buyer the moment the thing comes into existence (Emerson vs. 7. or what may be taken at the next case of a fisherman’s net. and then belonging to the vendor. Contract of sale and lease of things distinguished The essential difference between a contract of sale and a lease of things is that the delivery of the thing sold transfers ownership. machinery. 512). 67 Me. trees and plants would fall under the category of permanent improvements. 50 Phil. Transfer of accessory does not transfer principal The possession and enjoyment of the coconut trees cannot be said to be the possession and enjoyment of the land itself because these rights are distinct and separate from each other. while in lease no such transfer of ownership results as the rights of the lessee are limited to the use and enjoyment of the thing leased. animal houses. 63). the alienation or encumbrance of which is prohibited by RA 477. Article 1458 provides that “by the contract of sale one of the contracting parties obligates himself to transfer the ownership of and to deliver a determinate thing. Rep. use. buildings. Houses. which subject matter is a determinate thing. essential elements valid The document in question expresses a valid contract of sale as it has the essential elements of a contract of sale as defined under Article 1458 of the New Civil Code. Page 38 of 87 . and gains exclusive use thereof without the interference or intervention of the lessor. In clear and express terms. enjoyed. In cannot be said that the possession and enjoyment of the coconut trees to be the possession and enjoyment of the land itself because the lessee in order to enjoy his right under the contract. immutability or immovability. is reasonably certain to come into existence as the natural increment or usual incident of something already in existence. A transfer of the accessory or improvement is not a transfer of the principal. 5. Things having potential existence may be the object of the contract of sale Under Article 1461 of the New Civil Code.” 4. up to 1 January 1976. While coconut trees are permanent improvements of a land. Contract of sale valid. 8. the grantee of Lot 21 had the right and prerogative to sell the coconut fruits of the trees growing on the property. Rep. In the present case. gathers all of the fruits of the coconut trees in the land. and the other to pay therefor a price certain in money or its equivalent. and since such contract is a form of enjoyment of the property. the document defines the object of the contract thus: “the herein sale of coconut fruits are for all the fruits on the aforementioned parcel of land during the years from 15 September 1968. 43 Phil.fruits of Lot 21. it is evident that it must be regarded as one of the means of enjoyment referred to in said Article 398. Contract of lease. They must be also owned at the time by the vendor (Hull vs. 6. the accessory follows the principal. Things of this nature are said to have a potential existence.. planted or sown on the land which is characterized by fixity. their nuts are natural or industrial fruits which are meant to be gathered or severed from the trees.
12. except (1) When exemplary damages are a warded. On 15 November 1932.” and he has the “legiti mate right” to file an action for annulment “which no law can stop” as there is a perfected and valid contract . members of guerilla organizations and other qualified persons were given the opportunity to acquire government lands by purchase. (3) In criminal cases of malicious prosecution against the plaintiff. Party cannot impugn the validity of the contract after receiving the consideration for the sale The vendor-grantee. laborers and skilled workers.” None of the legal grounds enumerated exists to justify or warrant the grant of attorney’s fees. m. othe r than judicial costs.000 sq.788 sq. Lot 1214-B-2. The vendor cannot claim that he has the “privilege to change his mind and claim it as (an) implied lease. On 27 November 1931 she donated to the then Municipality of Iloilo. m. Grant of attorney’s fees not justified Article 2208 of the Civil Code provides that “in the absence of stipulation. Purpose of RA 477. m. Lot 1214 was divided by Certeza Surveying Co. (2) When the defendant’s act or omission has compelled the plaintiff to litigate with third persons or to incur expenses to protect his interest. Melli za sold her remaining interest in Lot 1214 to Remedios Sian Villanueva (thereafter TCT 18178). for the grantee is encouraged and induced to be more industrious and productive. And still later. The donation was however revoked by the parties for the reason that the area donated was found inadequate to meet the requirements of the development plan of the municipality. among other properties.” On 14 January 1938.788 sq. cannot be recovered. 13. As approved by the Bureau of Lands. Juliana Melliza executed an instrument without any caption providing for the absolute sale involving all of lot 5. Lot 1214-B-2 and Lot 1214-B-3. Bengzon JP (J): 8 concur. (7) In actions for the recovery of wages of household helpers. m. and Section 8 thereof By virtue of RA 477. to serve as site for the municipal hall. m. cannot be allowed to impugn the validity of the contracts he entered into. (10) When at least double judicial costs are awarded. 1 on leave Facts: Juliana Melliza during her lifetime owned. of Lot 2 (sublots 2-B and 2-C). Section 8 was included to protect the grantees “from themselves and the incursions of opportunists who prey on their misery and poverty. On the contrary. 11. (9) In a separate c ivil action to recover civil liability arising from a crime. with 6. 9. 30 April 1968) Melliza v. which succeeded to the Municipality of Iloilo. donated the city hall site together with the building Page 39 of 87 . m. of Lot 1214 (sublots 1214-B2 and 1214-B3) in favor of the Municipal Government of Iloilo for the sum of P6. (11) In any other case where the court deems it just and equitable that attorney’s fees and expenses of litigation should be recovered. m. It could not have been the intention of the legislature to prohibit the grantee from selling the natural and industrial fruits of his land.653 sq. the so. these lots and portions being the ones needed by the municipal government for the construction of avenues.” On 24 August 1949 the City of Iloilo. (5) Where the defendant acted in gross and evident bad faith in refusing to satisfy the plaintiff’s plainly valid. Annotated at the back of Pio Sian Melliza’s title certificate was the following “that a portion of 10. 5 and 1214. 2. taking into account their limited means. became Lot 1214-D. m. 1968. April 30. not only to enable them to improve their standard of living. Lot 1214-B was further divided into Lots 1214-B-1. of Lot 1214..422. (6) In actions for legal support. bona fide occupants.. (8) In actions for indemnity under workmen’s compensation and employer’s liability laws. Remedios in turn on 4 November 1946 transferred her rights to said portion of land to Pio Sian Melliza (thereafter TCT 2492). 7669 sq.” It is there to insure that the grantees themselves benefit from their respective lots. parks and City hall site according the “Arellano plan. for otherwise. and a portion of 10.. City of Iloilo (GR L-24732.562 sq. after having received the consideration for the sale of his coconut fruits. and Lot 1214-B-3. At the same time. became known as Lot 1214-B. the aim of the law is thereby achieved.135 sq. Lot 1214-B-1. but likewise to help provide for the annual payments to the Government of the purchase price of the lots awarded to them. It was intended for these persons to make good and productive use of the lands awarded to them. 3 parcels of residential land in Iloilo City (OCT 3462). (4) In case of a clearly unfounded civil action or proceeding against the plaintiff. The total area of Lot 1214 was 29. attorney’s fees and expenses of litigation. veterans. Inc. 19. In all cases . of Lot 1214 now designated as Lots 1412 -B-2 and 1214-B-3 of the subdivision plan belongs to the Municipality of Iloilo as per instrument dated 15 November 1932. Legislature does not intend to prohibit the grantee from selling natural and industrial fruits of his land The purpose of the law is not violated when a grantee sells the produce or fruits of his land.called “Arellano Plan. thus making it possible for him and his family to be economically self-sufficient and to lead a respectable life.” Subsequently.073 sq. just and demandable claim. into Lots 1214-A and 1214-B. to the prejudice of petitioner who contracted in good faith and for a consideration. was designated as Lot 1214-C..10.R. Melliza v.] En Banc. with 4. it would lead to an absurd situation wherein the grantee would not be able to receive and enjoy the fruits of the property in the real and complete sense. the Government is assured of payment on the annual installments on the land. with 4. Said parcels of land were known as Lots Nos. No. the attorney’s fees and expenses of litigation must be reasonable. to the exclusion of other persons. L-24732. Iloilo City [G.
Art. considering the said lots specifically mentioned in the public instrument. Pio Sian Melliza appealed to the Court of Appeals.788 square meters specifically mentioned but included whatever was needed for the construction of avenues. Nonetheless. 1. The site donated consisted of Lots 1214-B. and then it goes on to further describe. the Municipality of Iloilo possessed it together with the other lots sold. and thus it held that Iloilo City had the right to donate Lot 1214-B to UP. the CFI rendered its decision on 15 August 1957. 1273. since the contract is in the nature of law as between the parties and their successors in interest. Sometime in 1952. New Civil Code). that the specific mention of some of the lots covered by the sale in effect fixed the corresponding location of the city hall site under the plan. since these lots were already plainly and very clearly described by their respective lot number and areas. Lot 1214-B is contiguous to Lot 1214-C and 1214-D. because as alleged by Pio Sian Melliza. the CA affirmed the interpretation of the CFI that the portion of Lot 1214 sold by Juliana Melliza was not limited to the 10. is fulfilled if object of sale is capable of being made determinate at the time of the contract The requirement of the law that a sale must have for its object a determinate thing. 1460. Pio Sian Melliza thereupon made representations. 3.350 sq. The University of the Philippines.. and dismissed the complaint. thru his lawyer.thereon. After stipulation of facts and trial. according to the Arellano plan. Hence. by stating that said lots were the ones needed for the construction of the city hall site. The Supreme Court affirmed the decision appealed from insofar as it affirms that of the CFI. were needed for the construction of the city hall site. The area needed under that plan for city hall site was then already known. there would scarcely have been any need for the next paragraph. meanwhile. Page 40 of 87 . with its area. Tthe previous donation of land for city hall site on 27 November 1931 was revoked on 6 March 1932 for being inadequate in area under said Arellano plan. at the time the contract is entered into. 5. with the city authorities for payment of the value of the lot (Lot 1214-B). and is in the heart of the city hall site Lot 1214-B is contiguous to Lots 1214-C and 1214-D. m. by reference to the Arellano plan. it ordered the remand of the case for reception of evidence to determine the area actually taken by Iloilo City for the construction of avenues. Said instrument described 4 parcels of land by their lot numbers and area. more or less. with its avenues and parks. not only those lots already mentioned. and the projected city hall site. 1214-B. avenues and parks according to the Arellano plan. with a total area of 15. dismissing the complaint. 5. On 10 December 1955 Pio Sian Melizza filed an action in the CFI Iloilo against Iloilo City and the University of the Philippines for recovery of Lot 1214-B or of its value. it could be determined which. but the lots object of the sale. Said next paragraph does not really add to the clear description that was already given to them in the previous one. therefore. It sits practically in the heart of the city hall site. 4. as then shown in the Arellano plan (Exhibit 2). 7152 covering the three lots. as of the time of the execution of the contract. 1214-C and 1214-D. the appeal by Pio San Melliza to the Supreme Court. because of inadequacy of the area of the lot donated. If the parties intended merely to cover the specified lots (Lots 2. that. a previous donation for this purpose between the same parties was revoked by them. obtained Transfer Certificate of Title No. after execution of the contract. the University of the Philippines enclosed the site donated with a wire fence. admittedly covered by the public instrument. that sale must have a determinate thing as object. without costs. 2. the City did not have funds. For this matter. Intent of the parties as to the object of the public instrument The paramount intention of the parties was to provide Iloilo municipality with lots sufficient or adequate in area for the construction of the Iloilo City hall site. for rendering determinate said lots without the need of a new and further agreement of the parties. and how much of the portions of land contiguous to those specifically named. the object of the sale is capable of being made determinate without the necessity of a new or further agreement between the parties (Art. is fulfilled as long as. Requirement. It is stipulated that. will be found needed for the purpose at hand. On 19 May 1965. 1214-C and 1214D). avenues and parks. Said court ruled that the instrument executed by Juliana Melliza in favor of Iloilo municipality included in the conveyance Lot 1214-B. Area of land needed for the city hall site known The Arellano plan was in existence as early as 1928. The specific mention of some of the lots plus the statement that the lots object of the sale are the ones needed for city hall site. Interpretation of contract involves question of law The interpretation of the public instrument dated 15 November 1932 involves a question of law. It is therefore the more reasonable interpretation to view it as describing those other portions of land contiguous to the lots that. No recovery was obtained. parks and for city hall site. Nos. to the University of the Philippines (Iloilo branch). Arellano plan in existence since 1928. old Civil Code. the construction of the city hall site. parks and the city hall site. 1214-C and 1214-D. sufficiently provides a basis.
200. Gonzales [G. Judgment was rendered for P3.000 only.R. Said instrument was also registered with the Register of Deeds and such registration was annotated at the back of the corresponding title certificate of Juliana Melliza.000 and the additional P1.. Eastern Mining Co. 9935. he should have examined the Arellano plan in relation to the public instrument. Pio Sian Melliza a notary public and thus aware of the terms of the public instrument Pio Sian Melliza. The contract placed no restriction upon him in the matter of obtaining the sugar. even when neither has been delivered. therefore.6. he was aware of its terms. 2.200 under paragraph 4 of the contract. From these stipulated facts. filed a complaint against Gonzales.” Article 1452 provides that “the injury to or the profit of the thing sold shall. In Eveland vs. In the contract. after the contract has been Page 41 of 87 . now Iloilo City. it can be inferred that Pio Sian Melliza knew of the aforesaid terms of the instrument or is chargeable with knowledge of them. Relief for non-delivery Article 1450 defines a perfected sale as follows: “The sale shall be perfected between vendor and vendee and shall be binding on both of them. within the period of 3 months (1 January-31 March 1912) at any place within the municipality of Sta. Gonzales (GR 9935. There is not the slightest intimation in the contract that the sugar was to be raised by Gonzales. and in case.000 received and also the sum of P1. Gonzales alleged that the court erred in refusing to permit parol evidence showing that the parties intended that the sugar was to be secured from the crop which the defendant raised on his plantation. Principles of civil law. As such. without costs. under this contract nor had it been able to recover the P3. Gaspar (2 Phil 592) the Court declined to allow parol evidence showing that a party to a written contract was to become a partner in a firm instead of a creditor of the firm. 1915. where Gonzales was obligated to deliver 600 piculs of sugar of the 1st and 2nd grade to Yu Tek. and prayed for judgment for the P3. that furthermore. and equity. Yu Tek & Co. February 1. 7. or its representative may designate. as well as laches. 20. 1 dissents Facts: A written contract was executed between Basilio Gonzalez and Yu Tek and Co. as well as laches. unless there has been fraud or mistake. 1 February 1915) Yu Tek v. 3. In the present case. the contract will be rescinded and Gonzales shall be obligated to return the P3. and that he was unable to fulfill the contract by reason of the almost total failure of his crop. Applying. The contract contained no such condition and the court declined to receive parol evidence thereof. No sugar had been delivered to Yu Tek & Co. 1. estoppel. then by the City of Iloilo and later by the University of the Philippines of Lot 1214-B as part of the city hall site conveyed under that public instrument. Gonnzales does not deliver. Lot included in conveyance For 20 long years. notwithstanding that he owned a plantation himself. Cases where parol evidence was denied by the Court In Pastor v. and from this judgment both parties appealed. No.000. was the notary public of the public instrument. Perfected contract of sale defined. from the stipulation of facts. Parol evidence not admissible as it should not serve to incorporate additional conditions into a contract While parol evidence is admissible in a variety of ways to explain the meaning of written contracts. and raised proper objections thereto if it was his position that the same was not included in the same. he should have taken notice of the possession first by the Municipality of Iloilo. (14 Phil 509) a contract of employment provided that the plaintiff should receive from the defendant a stipulated salary and expenses The defendant in said case sought to interpose as a defense to recovery that the payment of the salary was contingent upon the plaintiff’s employment redounding to the benefit of the defendant company.] First Division. which Yu Tek & Co. Trent (J): 4 concur. The Supreme Court affirmed the judgment appealed from with the modification allowing the recovery of P1. if they have agreed upon the thing which is the object of the contract and upon the price. it cannot serve the purpose of incorporating into the contract additional contemporaneous conditions which are not mentioned at all in the writing. Yutek v. Rights determined by the writing itself Parties are presumed to have reduced to writing all the essential conditions of their contract. said lot must necessarily be deemed included in the conveyance in favor of Iloilo municipality. Gonzales undertook to deliver a specified quantity of sugar within a specified time. as he was at liberty to purchase it on the market or raise it himself. did not object to said possession. Pio Sian Melliza and his predecessors-in-interest. that knowing so. The case appears to be one to which the rule which excludes parol evidence to add to or vary the terms of a written contract is decidedly applicable. Rosa. estoppel and equity applied. nor exercise any act of possession over Lot 1214-B. 4. The rights of the parties must be determined by the writing itself.200 by way of indemnity for loss and damages. principles of civil law.
in the Barretto case. The agreement upon the “thing” which was the object of the contract was not within the meaning of article 1450. Gonzales having defaulted in his engagement. 9.000 which it advanced to Gonzales.perfected. where a quantity of hemp was the subject of the contract. the tobacco factory which the parties dealt with was specifically pointed out and distinguished from all other tobacco factories.'’ There was no delivery under the contract. Va. In Page 42 of 87 . the sale is perfected and the title passes. by weight. As there was no perfected sale. Neither party could point to any specific quantity of sugar. If called upon to designate the article sold. it was impossible that he an d Seegars & Co. Rep. Since Mitchell was offering to sell by sample shoes. Liquidated damage The contract plainly states that if Gonzales fails to deliver the 600 piculs of sugar within the time agreed on. a particular tobacco factory with its contents was held sold under a contract which did not provide for either delivery of the price or of the thing until a future time. and recognized by the press in which the cotton was stored. in said case. Contracting parties free to stipulate.. vs. Under the provisions of article 1255 of the Civil Code contracting parties are free to execute the contracts that they may consider suitable. although the delivery of the price was withheld until the necessary documents of ownership were prepared by the vendee. the hemp was destroyed. It was held that it was still at the risk of the seller. 47 Sou. a promise of sale and not a sale. It is our purpose to distinguish the case at bar from all these cases. 1096. for instance. part of which had not been manufactured and the rest of which were incorporated in Witt Shoe Co. and that the buyer was entitled to recover the $3. and 1182 are not applicable.. the title to which was to pass. The defendant drew a bill of exchange in the sum of P800. Yu Tek & Co. Shields. is entitled to recover the P3. Cases In McCullough vs. it was held that in receiving an order for a quantity of goods. Whereupon. a contract was entered into by a traveling salesman for a quantity of shoes. In the Tan Leonco case. should at that time have agreed upon the specific objects. and thus set apart and distinguished from all other hemp. that such appropriation takes place only when the goods as ordered are delivered to the public carriers at the place from which they are to be shipped. be governed by the provisions of articles 1096 and 1182. it is clear that Gonzales could only say that it was “sugar. and which becomes effective for that purpose only when specific goods are thereafter appropriated to the contract. the particular shares of stock which the parties desired to transfer were capable of designation. consigned to the person by whom the order is given. 7.000 paid on account of the price.” He coul d only use this generic name for the thing sold. Rugely. In the McCullough case. 242). Similarly. Go Inqui (8 Phil. 6. Seegars & Co. or public order. the agent receiving the order merely enters into an executory contract for the sale of the goods. In Tan Leonco vs. the title had passed and the loss was the vendee’s. and hence there could have been no sale. to be supplied from a general stock. (10 La. Perfected sale. at which time and place. but that the cotton had been destroyed by fire before it was weighed. the customary unit of weight being denominated a ‘’picul. 547. Aenlle & Co.” 10. (110 La... it is clear that articles 1452. 49) a sale of a specific house was held perfected between the vendor and vendee. Executory contracts In Witt Shoe Co. warehoused at another place.000 and pay the sum of P1. For the purpose of sale its bulk is weighed. therefore.’s stock in Lynchburg. (122 La. Ann. There cannot be the slightest doubt about the meaning of this language or the intention of the parties. In State vs. It was held that the hemp having been already delivered. had received $3. Prior to the presentation of the bill for payment. which does not divest or transfer the title of any determinate object. the contract will be rescinded and he will be obliged to return the P3. no room for interpretation. 8.. 145. in the present case.200 by way of indemnity for loss and damages. morals. Santa Marina (26 Phil 200). 34 Sou. and.000 on account of the price. There was no “appropriation” of any particular lot of sugar. it was shown that quantity had been deposited in a specific warehouse. Blair & Co. of a kind and at a price agreed on.” There is a perfected sale with regard to the “thing” whenever the article of sale has been physically segregated from all other articles. the defendants therein had made a contract for the sale. 11.. 444). of a lot of cotton. specified shares of stock in a tobacco factory were held sold by a contract which deferred delivery of both the price and the stock until the latter had been appraised by an inventory of the entire assets of the company.. representing the price which had been agreed upon for the hemp thus delivered. the defendant suspended payment of the bill. American jurisprudence. In Barretto vs. which had been presented to the purchaser. So. Present case different from cases cited with perfected contracts The contract in the present case is different from the contracts discussed in the cases referred to. 531) the plaintiff had delivered a quantity of hemp into the warehouse of the defendant.. There is no room for either interpretation or construction. In Borromeo vs. in the absence of a more specific agreement on the subject. Stipulation clear. provided they are not in contravention of law. and had given an order for its delivery. Sugar is one of the staple commodities of this country. American jurisprudence: Recovery of payment. Contract in present case merely an executory agreement: a promise of sale and not a sale The contract in the present case was merely an executory agreement. Rep. 673). Applicability to present case In Larue & Prevost vs. Franco (5 Phil. et al. the sales having been made by sample. (3 Phil 285).
Article 1349 of the New Civil Code provides that “the fact that the quantity is not determi nate shall not be an obstacle Page 43 of 87 . Thus. Civil Code of the Philippines). Soriano insisted that the palay grains delivered be paid.] Third Division. the present petition for review with the sole issue of whether or not there was a contract of sale in the present case. and the other party to pay therefore a price certain in money or its equivalent. On 30 September 1982. On 23 December 1986. No need to create new contract The fact that the exact number of cavans of palay to be delivered has not been determined does not affect the perfection of the contract.250. IAC [G.) 3. Sale defined Article 1458 of the Civil Code of the Philippines defines sale as a contract whereby one of the contracting parties obligates himself to transfer the ownership of and to deliver a determinate thing. 2. the trial court found Soriano a bona fide farmer and rendered judgment ordering the NFA.R. 8 March 1989) National Grains Authority v. Cabal wrote Soriano advising him to withdraw from the NFA warehouse the 630 cavans stating that NFA cannot legally accept the said delivery on the basis of the subsequent certification of the BAEX technician (Napoleon Callangan) that Soriano is not a bona fide farmer. Contract defined.00 representing the unpaid price of the 630 cavans of palay plus legal interest thereof (12% per annum. One of its incidental functions is the buying of palay grains from qualified farmers. March 8. Leon Soriano offered to sell palay grains to the NFA.our opinion there is nothing in the contract under consideration which is opposed to any of these principles. by agreement of the parties and upon order of the trial court. which were processed and accordingly. National Grains Administration v. The quota noted in the Farmer’s Information Sheet represented the maximum number of cavans of palay that Soriano may sell to the NFA. being the palay grains produced in Soriano’s farmland and the NFA was to pay the same depending upon its quality. The essential requisites of contracts are: (1) consent of the contracting parties. Cagayan. the 630 cavans of palay in question were withdrawn from the warehouse of NFA. on the other hand. Present case involves a perfected contract of sale In the present case. there was already a meeting of the min ds between the parties. Ben de Guzman.640 cavans of palay. Meanwhile. Hence. The palay delivered were not rebagged. The object of the contract. Soriano initially offered to sell palay grains produced in his farmland to NFA. without costs. 1318. 74470. When the latter accepted the offer by noting in Soriano’s Farmer’s Information Sheet a quota of 2. No. The contention that – since the delivery were not rebagged. (2) object certain which is the subject matter of the contract. He submitted the documents required by the NFA for pre-qualifying as a seller. its officers and agents to pay Soriano the amount of P47. he was informed that its payment will be held in abeyance since Mr. he was given a quota of 2. classified and weighed in accordance with the palay procurement program of NFA. The Supreme Court dismissed the instant petition for review. to give something or to render some service (Art. which was denied by the court on 6 December 1982. NFA) is a government agency created under PD 4. 1305. classified and weighed. NFA and Cabal filed a motion for reconsideration.640 cavans. requisites A contract. is untenable. He then filed a complaint for specific performance and/or collection of money with damages on 2 November 1979. the then IACupheld the findings of the trial court and affirmed the decision ordering NFA and its officers to pay Soriano the price of the 630 cavans of rice plus interest. Appeal was filed with the Intermediate Appellate Court. Quantity being indeterminate does not affect perfection of contract. Instead of withdrawing the 630 cavans of palay. Cabal was still investigating on an information he received that Soriano was not a bona fide farmer and the palay delivered by him was not produced from his farmland but was taken from the warehouse of a rice trader. On 23 August 1979. 1. and (3) cause of the obligation which is established (Art. When Soriano demanded payment of the 630 cavans of palay. 1989. through the Provincial Manager (William Cabal) of NFA in Tuguegarao. IAC (GR 74470. Soriano delivered 630 cavans of palay. 21. from the filing of complaint on 20 November 1979 until fully paid). with respect to the other. Medialdea (J): 4 concur Facts: National Grains Authority (now National Food Authority. On 28 August 1979. and affirmed the assailed decision of the then IAC (now Court of Appeals) is affirmed. this is a clear case of liquidated damages. 4. is a meeting of minds between two (2) persons whereby one binds himself. there was no acceptance of the offer thus – this is a clear case of policitation or an unaccepted offer to sell. Civil Code of the Philippines. against the NFA and William Cabal (Civil Case 2754). The motion for reconsideration of the appellate court’s decision was denied in a resolution dated 17 April 1986. On 23 and 24 August 1979.
value.O. On 17 December 1981. or Schuback will endorse the case to its lawyers. November 11. among others. Schuback referred the list to Schuback Hamburg for quotations. San Jose submitted to Schuback a list of the parts he wanted to purchase with specific part numbers and description. description. March 29. attorney’s fees and costs against San Jose. Ramon San Jose (Philippine SJ Industrial Trading) established contact with Johannes Schuback & Sons Philippine Trading Corporation through the Philippine Consulate General in Hamburg. 6. Hence. On 24 December 1981. On 16 October 1981.) 22.” (Obana vs. and reinstated the decision of the trial court dated 13 June 1988 with modification. Schuback Hamburg received invoices from NDK for partial deliveries on Order 12204.917. the petition for review on certiorari. the appellate court reversed the decision of the trial court and dismissed Schuback’s complaint. 1993. unearned profits. even if neither is delivered. 2nd par. An order confirmation was later sent by Schuback Hamburg to Schuback which was forwarded to and received by San Jose on 3 February 1981. It ruled that there was no perfection of contract since there was no meeting of the minds as to the price between the last week of December 1981 and the first week of January 1982.061. CA (GR 105387. Soriano can deliver so much of his produce as long as it does not exceed 2.] Third Division. Schuback Hamburg issued a Statement of Account to Schuback enclosing therewith Debit Note charging Schuback 30% cancellation fee. 11 November 1993) Schuback & Sons v.to the existence of the contract. 135 SCRA 557. 560) Article 1475 of the Civil Code provides that “The contract of sale is perfected at the moment there is a meeting of minds upon the thing which is the object of the contract and upon the price.” Schuback immediately ordered the items needed by San Jose fro m Schuback Hamburg. Said invoice required that the letter of credit be opened in favor of Schuback Hamburg. without the need of a new contract between the parties. C. Schuback submitted its formal offer containing the item number. Schuback sent to San Jose a letter dated 25 November 1981 enclosing its offer on the items listed. Schuback reminded San Jose to open the letter of credit to avoid delay in shipment and payment of interest. Romero (J): 4 concur Facts: In 1981. Acceptance is on the offer and not the goods delivered Sale is a consensual contract. Upon receipt of the quotations. General Manager of Schuback. because he wanted to purchase MAN bus spare parts from Germany. Sale a consensual contract. Schuback Hamburg in turn ordered the items from NDK. The above will serve as our initial PO. “there is perfection when there is consent upon the subject matter and price. Civil Code. Schuback Hamburg sent Schuback a proforma invoice to be used by San Jose in applying for a letter of credit.81. Page 44 of 87 . San Jose informed Schuback of his desire to avail of the prices of the parts at that time and enclosed its Purchase Order 0101 dated 14 December 1981. (Article 1475. Compliance of mutual obligations once a contract of sale is perfected From the moment the contract of sale is perfected. San Jose wrote in ink above his signature: “NOTE: Ab ove PO will include a 3% discount. No. Schuback communicated with its trading partner. at the latter’s residence. Demand letters sent to San Jose by Schuback’s counsel dated 22 March 1983 and 9 June 1983 were to no avail. At the bottom of said PO. unearned profits in the amount of DM 14. On 29 December 1981. Dieter Reichert. 105387. 1985.07. the trial court ruled in favor of Schuback by ordering San Jose to pay it. San Jose acknowledged receipt of the invoice. The quantities were written in ink by San Jos e in the same PO previously submitted. storage and interest charges in the total amount of DM 51. On 16 February 1984. On 16 February 1982. it is incumbent upon the parties to comply with their mutual obligations or “the parties may reciprocally demand performance” thereof. or their peso equivalent. Schuback Hamburg paid NDK.n.A.” In the present case. L-36249. and requested that he be given a 15% discount on all items. 5. Said amount was deducted from Schuback’s account with Schuback Hamburg. Johannes Schuback and Sohne Handelsgesellschaft m. Johannes-Schuback v.b. (Schuback Hamburg) regarding the spare parts San Jose wanted to order. The Supreme Court granted the petition. In the meantime.B. a supplier of MAN spare parts in West Germany. Schuback sent a rejoinder explaining that there is a valid PO and suggesting that San Jose either proceed with the order and open a letter of credit or cancel the order and pay the cancellation fee of 30% F. quantity.R. actual compensatory damages in the amount of DM 51. San Jose elevated his case before the Court of Appeals. & Co. West Germany. Schuback filed a complaint for recovery of actual or compensatory damages. part number. San Jose informed Schuback that he preferred genuine to replacement parts. provided it is possible to determine the same. Schuback again reminded San Jose of his order and advised that the case may be endorsed to its lawyers. unit price and total to San Jose. San Jose replied that he did not make any valid PO and that there was no definite contract between him and Schuback. On 4 January 1982.917.640 cavans. there was no need for NFA and Soriano to enter into a new contract to determine the exact number of cavans of palay to be sold. interest. San Jose personally submitted the quantities he wanted to Mr. On 18 October 1982. On 4 December 1981.81. CA [G. On 18 February 1992.” The acceptance referred to which determines consent is the acceptance of the offer of one party by the other and not of the goods delivered. In its decision dated 13 June 1988..
and Remedios Pilotan. The offer was manifested on 17 December 1981 when Schuback submitted its proposal containing the item number. Through their tenants. San Jose informed Schuback of his desire to avail of the prices of the parts at that time and simultaneously enclosed its PO 0101 dated 14 December 1981. where they lived with Virgilio and 15 tenants. legally-married couple.] First Division. Quantity is immaterial to the perfection of a sales contract Although the quantity to be ordered was made determinate only on 29 December 1981. but rather on 24 December 1981. in consideration of the amount of P4. description. these essential elements had already concurred. Esperanza and Caridad Nanaman filed intestate estate proceedings concerning the estate of their father. Virgilio was reared by the Nanaman spouses since he was two years old. Gregorio’s daughters by still another woman.00. On 16 February 1954. Letter of credit only a mode of payment. Rosita S.R. In 1953. Juan Nanaman opposed it. Hilaria then administered the property with the help of Virgilio. such did not prevent the perfection of the contract between the parties.1. show that as of 24 December 1981. On 15 May 1954. Deleste and the heirs of the Nanaman spouses executed an amicable settlement of the Page 45 of 87 . the facts indicate that consent on b oth sides has been manifested. CA (GR 59550. Perfection of a contract of sale A “contract of sale is perfected at the moment there is a meeting of minds upon the thing which is the object of the contract and upon the price. 4. No. which from the facts disclosed. During their marriage. Thus. when Edilberto Noel took over as regular administrator of the estate. On 16 June 1956. Juan Nanaman included the 34. when San Jose failed to open an irrevocable letter of credit without recourse in favor of Schuback Hamburg. From then on. No. Schuback did not incorporate any provision declaring their contract of sale without effect until after the fulfillment of the act of opening a letter of credit. 11 January 1995) Noel v. January 11. On 24 December 1981. quantity is immaterial in the perfection of a sales contract. Hilaria and Virgilio executed a deed of sale over the same tract of land also in favor of Deleste in consideration of the sum of P16. Rufo C. It is not among the essential requirements of a contract of sale enumerated in Article 1305 and 1474 of the Civil Code.” In the present case.800. Deleste has paid the taxes on the property. a son of Hilaria’s deceased brother.” 2. Noel v.000. mortgaged the 34. corn and bananas. 3. not on 29 December 1981. To adopt the Court of Appeals’ ruling that the contract of sale was dependent on the opening of a letter of credit would be untenable from a pragmatic point of view because San Jose would not be able to avail of the old prices which were open to him only for a limited period of time. 1995. Gregorio. On 2 October 1945. CA [G.] Mercado v. however. a meeting of the minds between vendor and vendee has occurred. Gregorio. The offer must be certain and the acceptance absolute. What is of importance is the meeting of the minds as to the object and cause. In the present case. On 26 November 1954.00. 1995. the unit price and total to San Jose. and Esperanza and Caridad Nanaman. not an essential requirement of sale The opening of a letter of credit in favor of a vendor is only a mode of payment. Schuback did not reserve title to the goods until San Juan had opened a letter of credit. Quiason (J): 4 concur Facts: Gregorio Nanaman and Hilaria Tabuclin were a childless. Virgilio declared the property in his name for taxation purposes under Tax Declaration 5534. Deleste paid the taxes for 1952. Salas (Deleste’s driver). On 1 November 1952. At this stage. Deleste. quantity. Hilaria’s brother. Consent manifested: Offer and acceptance Article 1319 of the Civil Code provides that “consent is manifested by the meeting of t he offer and acceptance upon the thing and the cause which are to constitute the contract.7-hectare land in the list of the assets of the estate. the petition was amended to include the estate of Hilaria with Alejo Tabuclin. the brother of Gregorio. January 11. Having discovered that the property was in arrears in the payment of taxes from 1952. had a child named Virgilio Nanaman by another woman. Gregorio died. 60636. the absence of any of which will prevent the perfection of the contract from taking place. On 27 October 1954. 1953 and 1954. for the opening of a letter of credit is not to be deemed a suspensive condition. Gregorio and Hilaria acquired certain property including a 34. As only Esperanza. The document was notarized on 17 February 1954 and was registered with the Register of Deeds of Iligan City on 2 March 1954. Having been appointed special administrator of the estate of the Nanaman couple. as additional petitioners. CA [G. On 18 July 1957. and Julio Tabuclin. A qualified acceptance constitutes a counter offer. part number. Witnesses to the sale were the wife of Virgilio. Jose. 23.7-hectare land in Tambo. Iligan City on which they planted sugarcane. the object of the contract being the spare parts and the consideration. Hilaria died. Hilaria and Virgilio enjoyed the produce of the land to the exclusion of Juan Nanaman. Hilaria and Virgilio. Nanaman. Caridad and Virgilio Nanaman were named as heirs of Gregorio in the petition. perfection of the contract took place. 59550.7-hectare land in favor of Jose C. he was not able to take possession of the land in question because it was in the possession of Deleste and some heirs of Hilaria.R. the price stated in Schuback’s offer dated 17 December 1981 and accepted by San Jose on 24 December 1981.
In the absence of proof of gross inadequacy of the price. before the effectivity of this Code. 1. Seemingly inadequate consideration does not render a contract of sale as one of mortgage The contract involving the 34.7hectare land because it was conjugal property. Noel filed an action against Deleste for the reversion of title over the 34. Consequently. Subsequently. Manufacturers Hanover & Trust Corporation. questioning the Court of Appeals’ Amended Decision applying the doctrine of laches and equating the said doctrine with acquisitive prescription (GR 59550). however. and by the Rules of Court. He also became a trustee with respect to the other half for the benefit of whoever may be legally entitled to inherit the said portion. who is survived by brothers or sisters or children of brothers or sisters of the decedent was entitled to receive in usufruct the part of the inheritance pertaining to said heirs. 46 Phil. Noel appealed to the Court of Appeals. appealed to the Supreme Court. with or wit hout a will. and held that in the absence of proof of adverse possession by Hilaria. It reconsidered the Decision of 18 February 1980 insofar as it declared Deleste and the estate of Gregorio as co-owners of the 34. Right to alienate halfinterest Under Article 953 thereof. Pinito W.7-hectare land from Deleste. shall be governed by the Civil Code of 1889. and reinstated and affirmed in toto the Decision dated 18 February 1980. mistake or misrepresentation attended in the execution of the deed of sale and that no proof was shown that the contract was merely a mortgage. to file an action to recover the 34. another petition for certiorari to declare the sale to Deleste as an equitable mortgage. she should be considered as holding the property pursuant to her usufructuary rights over the same under the provisions of the Spanish Civil Code of 1889. The appellate court.Nanaman estate. Under the law in force in 1945. was filed by Atty.. It is only this undivided half-interest that she could validly alienate.500 as rental of the ½ interest of the estate from 1957 until the land is returned. On 18 February 1980 . representing the heirs of Hilaria (GR 60636). the court set aside its approval and declared it null and void. It should be noted that two contracts had been executed involving said property (the 1 November 1952 mortgage and the 16 February 1954 sale). Cosalan. Art. were consolidated in the resolution of 2 September 1991 and were jointly considered. the trial court rendered a decision. 3. over the undivided half of the estate (Spanish Civil Code of 1889.7-hectare property was one of sale and not of mortgage in the absence of a showing that the findings complained of are totally devoid of support in the record or that they are so glaringly erroneous as to constitute serious abuse of discretion (Andres v. Iligan City sold to him by Hilaria Tabuclin. succession to the estate of Gregorio was governed primarily by the provisions of the Spanish Civil Code of 1889. 2. Wife has full ownership of undivided half-interest and the usufruct over the other.000 as attorney’s fees. on 30 April 1963. to pay the sum of P2. Hilaria. On 14 May 1981. there was no basis for the action to annul the sale and therefore there was no starting point in reckoning the prescriptive period of four years. was indeed a sale. in favor of all the heirs of the intestate estate for the reason that not all of the heirs of Gregorio Nanaman have signed and agreed. The court thereafter ordered Noel. Deleste filed a motion for the reconsideration of said decision praying for the total affirmance of the decision of the trial court. holding that the action for annulment of the deed of sale had prescribed in 1958 inasmuch as the sale was registered in 1954 and that Gregorio’s heirs had slept on their rights by allowing Hilaria to exercise rights of ownership over Gregorio’s share of the conjugal property after his death in 1945. 177 SCRA 618 ). It found that no fraud. had full ownership. The Court further ordered Deleste to return the land in question to the administrator of the estate. as regular administrator. and to pay the expenses of litigation and the sum of P3. not merely usufruct. Page 46 of 87 . 179 ).7-hectare land. as new administrator of the estate. 493). The surviving spouse became the owner of one-half interest of the conjugal estate in his own right. that the sale was made with what might appear as an inadequate consideration does not make the contract one of mortgage (Askay v. Bonifacio Legaspi. The two cases. the surviving spouse was given the management of the conjugal property until the affairs of the conjugal partnership were terminated. however. Deleste agreed “to relinquish his rights to ½ of the entire parcel of land in Tambo. Mercado.7-hectare land to the Nanaman estate and to order Deleste to pay the rentals and a ttorney’s fees to the estate. The court approved the amicable settlement but when it was questioned by some heirs. In the document. The Supreme Court reversed and set aside the amended decision dated 14 May 1981 of the Court of Appeals. and Hilaria could sell only her ½ share thereof. and Deleste. by other previous laws. the Court of Appeals promulgated an amended decision. the law in force at the time of the death of Gregorio. On 14 December 1973. the appellate court ruled that the transaction between Hilaria and Virgilio. a spouse like Hilaria. Succession in the present case governed by the Civil Code of 1889 Gregorio died in 1945 long before the effectivity of the Civil Code of the Philippines on 30 August 1950. arising from the same decision of the Court of Appeals. Under Article 2263 of the said Code. “rights to the inheritance of a person who died. agreed with Noel that Hilaria could not validly sell the 37. It affirmed its previous decision regarding the due execution of the deed of sale adding that since no fraud attended its execution. The Court also ruled that the prescriptive period of 10 years had not yet elapsed when the action to recover the property was filed in 1963.” Thus. 1889 Civil Code.
except for very strong reasons. 3 SCRA 744 *1961+). Virgilio’s possession not under the claim of ownership The possession of Virgilio. Prescription is ten years in an action to recover the undivided half-interest The action to recover the undivided half-interest of the collateral heirs of Gregorio prescribes in 10 years. v. when the complaint for the Page 47 of 87 . Noel. Moreover. 49 Phil. an implied trust was created on the one-half undivided interest over the 34. Doctrine cannot prejudice the rights of an owner or original transferee The doctrine of laches does not apply. Surviving spouse cannot acquire a title by prescription over said administered half Being a trustee with respect to the other half for the benefit of whoever may be legally entitled to inherit the said portion. Art. Upon orders of the court in the intestate proceedings. the Court said that Article 1456 merely expresses a rule recognized in Gayondato v. The principal obligation of a seller is “to transfer the ownership of” the property sold (Civil Code of the Philippines. 9. Court of Appeals. 261 (1958). Melchor. The 10-year prescriptive period within which the collateral heirs of Gregorio could file an action to recover their share in the property sold to Deleste (prescripcion extintiva) accrued only on 2 March 1954. Coronel v.E. 92 Phil.7-hectare land in favor of the real owners. 6. clearly there was a mistake on the part of Hilaria and Virgilio in selling an undivided interest in the property which belonged to the collateral heirs of Gregorio. his hiring of tenants to till the land. Virgilio is not a heir of Gregorio. Article 998 of the Civil Code of the Philippines. by force of law. Although he was treated as a child by the Nanaman spouses. was governed by the Civil Code of the Philippines. 103 Phil. Arradaza v. 530 ). Intermediate Appellate Court. 11. This law stems from the principle that nobody can dispose of that which does not belong to him (Azcona v. 446 . actions based upon an obligation created by law. The doctrine of stale demands would apply only where by reason of the lapse of time. Under Article 1456 of said Code. the administrator of the estate of the Nanaman spouses. 244 (1926). NEMO DAT QUAD NON HABET . his registration of the land in his name for tax purposes. considered a trustee of an implied trust for the benefit of the person from whom the property comes. Inc.. Therefore.4. Lasam. 24 SCRA 434 ). Purchaser is a trustee of an implied trust if property is acquired by mistake or fraud The sale. Uson v. Del Rosario. which made Deleste a trustee of an implied trust in favor of the said heirs. Lotho. Mistake attended sale of undivided interest in property belonging to the collateral heirs of Gregorio While it cannot be said that fraud attended the sale to Deleste.” In Diaz v. the person obtaining it is. is not disposed to sanction the application of the doctrine of laches to prejudice or defeat the rights of an owner or original transferee (Raneses v. 78 SCRA 175 ). Burnaman. 5. immediately filed an action to recover possession and ownership of the property. for an unreasonable and unexplained length of time. when the deed of sale was registered with the Register of Deeds (Cf. could or should have been done earlier (Cristobal v. 456 ). th is Court. Insular Treasurer. which gave an illegitimate child certain hereditary rights. 60 Phil. 187 SCRA 397 ). 1889 Civil Code. “*i+t would be inequitable to allow a party to enforce his legal rights” (Z. 33 Phil. 170 SCRA 12 ). Gorricho. being illegitimate. Said Article provides that “if the property is acquired through mistake or fraud. Ice and Cold Storage Industries of the Philippines. Ona. Virgilio had no right at all to transfer ownership over which he did not own. 1132 ). 103 Phil. Under Article 1144 of the Civil Code of the Philippines. and his enjoyment of the produce of the tenants. 7. Applying said rule. illegitimate children who were not natural were disqualified to inherit under the said Code (Cid v. 59 Phil. The surviving husband as the administrator and liquidator of the conjugal estate occupies the position of a trustee of the highest order and is not permitted by the law to hold that estate or any portion thereof adversely to those for whose benefit the law imposes upon him the duty of administration and liquidation” (Pamittan v. can be brought within ten years from the time the right of action accrues (Rosario v. 2253. Inc. essential that seller is the owner of the property In a contract of sale. 8. 10. Auditor General. There is no evidence to prove indubitably that Virgilio asserted a claim of ownership over the property in his own right and adverse to all including Hilaria. No right to transfer ownership Virgilio was not an heir of Gregorio under the Spanish Civil Code of 1889. by exercising due diligence. to do that which. it is essential that the seller is the owner of the property he is selling. There is no evidence showing any failure or neglect on his part. From 2 March 1954 to 30 April 1963. appear more as acts done to help Hilaria in managing the conjugal property. Art. Contract of sale. 908 *1934+). having been made in 1954. Reyes. could not benefit Virgilio because the right of ownership of the collateral heirs of Gregorio had become vested upon his death (Civil Code of the Philippines. 1458). the Gayondato court held that the buyer of a parcel of land at a public auction to satisfy a judgment against a widow acquired only one-half interest on the land corresponding to the share of the widow and the other half belonging to the heirs of her husband became impressed with a constructive trust in behalf of said heirs. Laches do not apply. The cause of action is based on Article 1456 of the Civil Code of the Philippines. the surviving spouse “could therefore no more acquire a title by prescription against those for whom he was administering the conjugal estate than could a guardian against his ward or a judicial administrator against the heirs of an estate.
and as a result. defendants refused to return the said parcels of land to plaintiffs.recovery of the property was filed. that latter asked the defendants to return the same but despite the intervention of the Barangay Captain of their place. The plaintiffs appealed to the Court of Appeals (CA GR CV 36473).00. another covenant was entered into by the parties. the literal meaning of its stipulations shall control.] Third Division. Crisostomo. at the time. 2. It should be stressed that Manuel S. July 24. CA (GR 116635. CA [G. both entered on 23 May 1983 by the Registry of Deeds for the Province of Isabela.000.000. they obtained a loan from the Ilagan Branch of the DBP (Ilagan. No. 427 ).000. The trial court ruled in favor of the defendants. which provides that “if the terms of a contract are clear a nd leave no doubt upon the intention of the contracting parties. 116635. Both parcels are situated in San Manuel. Conchita. then. and to pay reasonable rents on said 2 hectares at P5.500. agreeing to return subject lands when plaintiffs have the money to redeem the same.0880 hectares. thereby impelling the plaintiffs to come to court for relief. Agustinos Recoletos v.” In the present case. authorized officer of DBP. DBP became the absolute owner of said parcels of land for which it was issued new certificates of title. defendant Anacleto having been made to believe. 32 Phil. defendants theorized that they acquired the lands in question from the DBP. Therefore. which amounts spouses Anacleto Nool and Emilia Nebre (defendants) failed to pay.00. the alleged contract of repurchase being Page 48 of 87 .00 per cropping from the time of judicial demand until the said lots shall have been delivered to the defendants. 1.000. secured by a real estate mortgage on said parcels of land. to deliver peaceful possession of the 2 hectares. which were still registered in the names of Victorino and Francisco Nool. and the same day the said arrangement was made. the latter was issued new certificates of title on 8 February 1988. and to pay the costs. About 2 years thereafter. 24. the plaintiffs were to regain possession of the 2 hectares of land. and were misled by plaintiffs when defendant Anacleto Nool signed the private writing. Anacleto agreed to buy from Conchita the 2 parcels of land under controversy.000. Article 1370 NCC applicable only to valid and enforcement contracts Article 1370 of the Civil Code. Spouses Conchita Nool and Gaudencio Almojera (plaintiffs) alleged that they are the owners of the subject land as they bought the same from Victorio and Francisco Nool. Article 1422 of the Civil Code provides that “a contract which is the direct result of a previous illegal contract. P30. ordering the plaintiffs to return to the defendants the sum of P30. The 10-year prescriptive period before title to real estate shall vest by adverse possession (prescripcion adquisitiva) is also reckoned in the case of Deleste from 2 March 1954 (Corporacion de PP. is also void and inexistent.00 plus interest thereon at the legal rate. from the time of filing of defendants’ counterclaim until the same is ful ly paid. whereby the defendants agreed to return to plaintiffs the lands in question. Since nothing was sold. Another lot previously owned by Francisco Nool (TCT T-100945) has an area of 3. On the other hand. that as part of their arrangement or understanding. and for the failure of the plaintiffs to pay the said loan. which the latter did. that his sister. at anytime the latter have the necessary amount. and that as they are in dire need of money. which affirmed the appealed judgment in toto on 20 January 1993.00. the titles of the 2 parcels of land in question were transferred to Anacleto. on 1 April 1985. DBP entered into a Deed of Conditional Sale involving the same parcels of land with Anacleto Nool as vendee. the petition before the Supreme Court. totaling P56. including interest and surcharges. Contract of repurchase arising out of a contract of sale where the seller does not have title not valid A contract of repurchase arising out of a contract of sale where the seller did not have any title to the prope rty “sold” is not valid. certified that the 1-year redemption period (from 16 March 1982 up to 15 March 1983) and that the mortgagors’ right of redemption was not exercised within this period. Isabela. 1997. Nool v. that within the period of redemption.000. Hence. the action had not been barred by prescription. for a total price of P100. A void contract cannot give rise to a valid one A void contract cannot give rise to a valid one. 3. 24 July 1997) Nool v. not binding and considered validly withdrawn by the defendants for want of consideration. Mallorca. and upon payment of the balance of P14.R. declaring the private writing to be an option to sell. and affirmed the assailed decision of the Court of Appeals. still had the right to redeem the said properties. Isabela). then there is also nothing to repurchase.00 of which price was paid to Conchita. less than 10 years had elapsed. Hence. the plaintiffs contacted Anacleto Nool for the latter to redeem the foreclosed properties from DBP. The Supreme Court denied the petition. through negotiated sale. Subsequently. the mortgage was foreclosed.” is applicable only to valid and enforceable contracts.00 per annum or at P2. Panganiban (J): 4 concur Facts: One lot formerly owned by Victorio Nool (TCT T-74950) has an area of 1 hectare.
” 6. the contract of repurchase is also inoperative and by the same analogy. the buyer can as a consequence acquire no more than what the seller can legally transfer. provides that “an accepted unilateral promise to buy or sell a determinate thing for a price certain is binding upon the promissor if the promise is supported by a consideration distinct from the price.’” 10. such contract may be deemed to be inoperative and may thus fall.” In the present case. In this light. the Court did not cite its basis for ruling that a “sale is null and void” where the sellers “we re no longer the owners” of the property. and not from petitioners. Right to repurchase presupposes a valid contract of sale One “repurchases” only what one has previously sold. the buyer acquires no better title to the goods than the seller had. Thus. Article 1479 of the Civil Code. In other words. not in a subsequent instrument In Villarica v. Arguendo. when seller is no longer the owner. Moreover. 7. it becomes an accep ted unilateral promise to sell. 9. As petitioners “sold” nothing. CA (29 November 1968). because when the sale is made without such an agreement. it cannot bind private respondents.dependent on the validity of the contract of sale. delivery of ownership is no longer possible. 5. Sale. Such a situation (where the sellers were no longer owners) does not appear to be one of the void contracts enumerated in Article 1409 of the Civil Code.” Here.” No one can give what he does not have — nono dat quod non habet. No one can give what he does not have. 8. unless the owner of the goods is by his condu ct precluded from denying the seller’s authority to sell. the contract of repurchase that the parties entered into presupposes that petitioners could repurchase the property that they “sold” to private respondents. teaches us that “a person can sell only what he owns or is authorized to sell. still petitioners do not thereby acquire a right to repurchase the property. Further. without agreement to repurchase. Undisputedly. Accordingly. Nono dat quod non habet. Scenario where the Contract of repurchase distinct from that of sale. void. In that scenario. Clarification of “sale of property. and who does not sell them under authority or with consent of the owner.” Jurisprudence. vs. as the buyers themselves have already acquired title and delivery thereof from the rightful owner. with the obligation to comply with the provisions of Article 1616 and other stipulations which may have been agreed upon. Contract of repurchase inoperative thus void Article 1505 of the Civil Code provides that “where goods are sold by a person who is not the owner thereof. as an independent contract. In the present case. but is a right reserved by the vendor in the same instrument of sale as one of the stipulations of the contract. the Civil Code itself recognizes a sale where the goods are to be “acquired by the seller after the perfection of the contract of sale. Conventional redemption. those which contemplates an impossible service Article 1459 of the Civil Code provides that “the vendor must have a right to transfer the ownership thereof *object of the s ale] at the time it is delivered. Void contracts (Article 1409 ). and any right thereafter granted the vendor by the vendee in a separate instrument cannot be a right of repurchase but some other right (like the option to buy). the contract of repurchase ceases to be a “right to repurchase” ancillary and incidental to the contract of sale. et al. by analogy. Compliance with Article 1616 and other agreed stipulations Article 1601 of the Civil Code provides that “conventional redemption shall take place when the vendor reserves the right to repurchase the thing sold. on the other hand. the Court ruled that the right of repurchase is not a right granted the vendor by the vendee is a subsequent instrument. it follows that they can also “repurchase” nothing. the alleged written contract of repurchase is bereft of any consideration distinct from the price. null and void”. provided that he acquires title to the property at time of delivery In the case of Dignos v.” clearly implying that a sale is possible even if the seller was not the owner at the time of sale. (1927) the Court ruled that “an agreement to repurchase becomes a promise to sell when made after the sale. the DBP. the right to repurchase presupposes a valid contract of sale between the same parties. the purchaser acquires the thing sold Page 49 of 87 . Icasiano. however. Petitions still do not acquire a right to repurchase the property. Right of repurchase a right granted by vendor in the same instrument of sale. 4. Thus. provided he acquires title to the property later on. Once the instrument of absolute sale is executed. it is itself void. absolute In Ramos. rather. et al. the vendor can no longer reserve the right to repurchase. the principal contract of sale and the auxiliary contract of repurchase are both void. The sellers can no longer deliver the object of the sale to the buyers. CA. under item 5 of Article 1409 of the Civil Code: “Those which contemplate an impossible service. 11. Unilateral promise to pay only binding if supported by consideration distinct from price Assuming arguendo that the contract of repurchase is separate and distinct from the contract of sale and is not affected by the nullity of the latter. Sale possible even if o wner is not owner at time of sale. there is no allegation at all that petitioners were authorized by DBP to sell the property to the private respondents. private respondents acquired title to the property from DBP.
1 took no part Facts: On 16 January 1940. The deed states that the land was sold to Villaflor on 22 June 1937. The latter’s tolerance ceased upon their counterclaim and demand on the former to vacate. 15. Arguendo. a parcel of agricultural land (planted to abaca and corn). 9 October 1997) Villaflor v.” Th us. for the petitioners’ possession and cultivation of the two hectares are anchored on private respondents’ tolerance. On 15 February 1940. was merely a promise to sell. more or less. 12. Validity of a contract cannot be acquired through estoppel The private respondents cannot be estopped from raising the defense of nullity of contract.absolutely. Claudio Otero. in a Deed of Absolute Sale sold to Villaflor. within a period of 5 years from the date of conveyance. CA [G. Piencenaves inherited said property form his parents and was in adverse possession of such without interruption for more than 50 years. On the same day. Action/Defense for the declaration of an inexistent contract does not prescribe. Villaflor has been in possession and occupation of the same.” 13. which must be governed by Article 1479 of the Civil Code which provides that “a promise to buy and sell a determina te thing for a price certain is reciprocally demandable. governed by Article 1479 The Option to Repurchase executed by private respondent in the present case. 14. An accepted unilateral promise to buy or to sell a determinate thing for a price certain is binding upon the promissor if the promise is supported by a consideration distinct from the price. Petitioners required to return sum of P30. CA (GR 95694. were all siblings and heirs qualified to repurchase the two parcels of land under Section 119 of the Public Land Act which pr ovides that “(e)very conveyance of land acquired under the free patent or homestead provisions. the restoration o f what has been given is in order.” It is a well -settled doctrine that “as between parties to a contract. as absolute owner already of the object. Both deed state the same details or circumstances as that of Piencenaves’. Article 1410 of the Civil Code mandates that “the action or defense for the declaration of the inexistence of a contract does not prescribe. and if he afterwards grants the vendor the right to repurchase. October 9. Cirilo Piencenaves. when proper. No. Interest runs from the time tolerance ceased upon counterclaim Interest to the amount will run only from the time of private respondents’ demand for the return of this amount in their counterclaim. The properties were already owned by an heir of the homestead grantee and the rationale of the provision to keep homestead lands within the family of the grantee was thus fulfilled. Section 119 of Public Land Act The brothers Victorino and Francisco Noel. sold to Vicente Villafor.000.” Thus. more or less. Hence. believing that indeed petitioners could sell the two parcels of land in question.” 16. it is immaterial that private respondents initially acted to implement the contract of sale. specially in this case where they acted in good faith. It is basic that “every person who through a n act of performance by another. containing an area of 20 hectares. believing in good faith that the same was valid. containing an area of 24 hectares.00 under the void contract of sale may not be enforced. more or less. Hence. In that case the vendor has not reserved to himself the right to repurchase. or any other means. together with Conchita Nool and Anacleto Nool. acquires or comes into possession of something at the expense of the latter without just or legal ground. Since they cannot legally give title to what they “sold. there was no more right of repurchase that his sister Conchita or brothers Victorino and Francisco could exercise. 1997. in a Deed of Absolute Sale sold to Villaflor a parcel of agricultural land (planted to corn). Panganiban (J): 3 concur. Option to repurchase a promise to sell. Petitioners are the ones who have an obligation to return what they unduly and improperly received by reason of the invalid contract of sale. shall be subject to repurchase by the applicant. 25. containing an area of 18 hectares. Before the sale of said property.] Third Division. and since then until the present time. it is a new contract entered into by the purchaser. 95694. in a Deed of Absolute Sale sold to Villaflor. if a void contract has already “been performed. shall return the same. validity cannot be given to it by estoppel if it is prohibited by law or it is against public policy. in a Deed of Absolute Sale. it is indisputable that Anacleto Nool already repurchased from DBP the contested properties.000 with interest and to pay rent The balance of P14. Hermogenes Patete. a parcel of agricultural land (planted with abaca). more or less.” Assuming the ap plicability of this statutory provision to the present case. a parcel of agricultural land (planted to Abaca) containing an area of 50 hectares.R. Fermin Bocobo. his widow or legal heirs.” they cannot keep the money paid for the object of the sale. their right to posses and cultivate the land ipso facto ceased. It is not within the competence of any citizen to barter away what public policy by law seeks to preserve. Villaflor v. A contract void at inception cannot be validated by ratification or prescription and certainly cannot be binding on or enforceable against private respondents. but no formal document was then executed. Page 50 of 87 .
On 2 December 1948.000 hectares more or less. 5491. Likewise. 5410. 5490. In a formal protest dated 31 January 1974 which Villaflor filed with the Bureau of Lands. 5849. and containing 100 coconut trees. Villaflor tendered an equal bid. On 27 November 1973. Villafor wrote a letter to Nasipit Lumber. On 24 July 1950.00 in the Deed and the consideration in the Agreement to Sell were duly proven. Nasipit Lumber filed a Sales Application over the 2 parcels of land.” in favor on Nasipit Lumber. The 6-year period within which to file an action on an oral contract per Article 1145 (1) of the Civil Code expired in 1972. Branch III. provided that said constructions and improvements become the property of the lessor at the end of the lease without obligation on the part of the latter for expenses incurred in the construction of the same. the Report by the public land inspector (District Land Office. This application was also numbered V-807.00 per annum to cover the annual rental of house and building sites for 33 houses or buildings. in a letter of Nasipit Lumber dated 22 February 1950 addressed to the Director of Lands. reminding the latter of their verbal agreement in 1955. dismissed the complaint on the grounds that: (1) petitioner admitted the due execution and genuineness of the contract and was estopped from proving its nullity. the parties agreed that Nasipit Lumber shall continue to occupy the property not anymore in concept of lessee but as prospective owners. Nasipit Lumber was declared the lawful owner and actual physical possessor of the 2 parcels of land (containing a total Page 51 of 87 . Lourdes D.000. as amended. divided into lots 5411. Nasipit Lumber offered the highest bid of P41. in Butuan) contained an endorsement of the said officer recommending rejection of the Sales Application of Villaflor for having leased the property to another even before he had acquired transmissible rights thereto. Recovery of Possession (of two parcels of land subject of the contract). the then CFI Agusan del Norte and Butuan City. 5492. XI or IX of CA 141 (The Public Lands Act). denominated as a “Deed of Relinquishment of Rights. Parcel 1 contains an area of 112. deposited the equivalent of 10% of the bid price and then paid the assessment in full. on 16 August 1950. divided into lots 5412. 5855. and its application was entered in the record as Sales Entry V-407. a parcel of land.. but the action was filed only on 6 January 1978.000 that was to be reimbursed to the former representing part of the purchase price of the land. 5859. containing an area of 2 hectares. 5409. but since an applicant under CA 141. for a period of 5 years (from 1 June 1946) at a rental of P200. On 28 January 1983. The lease agreement allowed the lessee to sublease the premises to any person.On 8 November 1946. and the expenses incurred in the publication of the Notice of Sale. On 8 August 1977. and to build and construct additional houses with the condition the lessee shall pay to the lessor the amount of 50 centavos per month for every house and building. the value of the improvements Villaflor introduced thereon. the tract of public lands. 5850. in light of his difficulty to develop the same as Villaflor has moved to Manila. together with all the improvements existing thereon. 5854. more or less. (2) the verbal lease agreements were unenforceable under Article 1403 (2)(e) of the Civil Code. that since June 1946. and ordered the dismissal of Villaflor’s protest. and that the Sales Application of Villaflor should be given favorable consideration. and that therefore. and 5852. Villaflor. claiming that the company has not paid him P5. and 300 cacao trees. 5488. he died. the Director of Lands found that the payment of the amount of P5. but the new set of corporate officers refused to recognize Villaflor’s claim. Villaflor filed a complaint in the trial court for “Declaration of Nullity of Contract (Deed of Relinquishmen t of Rights). is allowed to equal the bid of the highest bidder. On 6 July 1978. in an “Agreement to Sell” Villaflor conveyed to Nasipit Lumber.000. to be substituted as petitioner. It ruled that there was prescription and/or laches because the alleged verbal lease ended in 1966. to purchase under the provisions of Chapter V. From said day. Villaflor leased 2 hectares inside the land to the company. in consideration of the amount of P5. 5851. 5860. The trial court ordered his widow. and (3) his causes of action were barred by extinctive prescription and/or laches. On 7 December 1948. Villaflor and Nasipit Lumber executed an “Agreement. Villaflor filed Sales Application V-807 with the Bureau of Lands. he informed the Bureau Director that he was already occupying the property when the Bureau’s Agusan River Valley Subdivision Project was inaugurated. and containing abaca. firm or corporation. 5857. but with reference to the S ales Application filed with the Bureau of Land. coconuts and thirty houses of mixed materials belonging to the Nasipit Lumber Company. Parcel 2 contains an area of 48. Villaflor leased to Nasipit Lumber Co. that the property was formerly claimed as private property. On 31 December 1949. productive.” confirming the Agreement to Sell of 7 July 1948. In a letter of Villaflor dated 23 January 1950. addressed to the Bureau of Lands. claimant and occupant of the land. 5853. fruit trees. Villaflor executed a document. Paragraph 6 of the Application. the property was segregated or excluded from disposition because of the claim of private ownership. On 7 July 1948. Manila. and Damages” at about th e same time that he appealed the decision of the Minister of Natural Resources to the Office of the President. and 5399.00 as provided in the Deed of Relinquishment of Rights dated 16 August 1950. Inc. Bureau of Lands. On 17 August 1950 the Director of Lands issued an “Order of Award” in favor of Nasipit Lumber. he protested the Sales Application of Nasipit Lumber. 5855. covering an area of 140 hectares. After trial in due course. states: ‘I understand that this application conveys no right to occupy the land prior to its approval. Pursuant thereto. 2 parcels of land. On 16 August 1950. and I recognize that t he land covered by the same is of public domain and any and all rights I may have with respect thereto by virtue of continuous occupation and cultivation are hereby relinquished to the Government. the scheduled date of auction of the property covered by the Sales Application. that it has no other interest on the land.000 more or less.00 per hectare. 5858. 5413. the corporation informed the Bureau that it recognized Villaflor as the real owner.
Finding of fact by administrative agency accorded great respect Reliance by the trial and the appellate courts on the factual findings of the Director of Lands and the Minister of Natural Resources is not misplaced. In Concerned Officials of the Metropolitan Waterworks and Sewerage System vs. 4. The findings of fact of an administrative agency must be respected as long as they are supported by substantial evidence. the Director of Lands shall have direct executive control of the survey. thus. Doctrine of primary jurisdiction. petitioner’s heirs filed the petition for review dated 7 December 1990.area of 160 hectares). Bingson Encarnacion. 71 Phil 69. The Agreements to Sell Real Rights and the Deed of Relinquishment of Rights over the 2 parcels were likewise declared binding between the parties.” On reconsideration. The Supreme Court has recognized that the Director of Lands is a quasi-judicial officer who passes on issues of mixed facts and law (Ortua vs. rendered judgment against them via the assailed Decision dated 27 September 1990 finding petitioner’s prayers — (1) for the declaration of nullity of the deed of relinquishment. Doctrine of primary jurisdiction. also known as the Public Land Act. may apply even to questions which are judicial character It has been the jurisprudential trend to apply the doctrine to cases involving matters that demand the special competence of administrative agencies even if the question invol ved is also judicial in character. 5. however. the jurisdiction over which is initially lodged with an administrative body of special competence. Court of Appeals. lease. i. their findings of fact in that regard are generally accorded great respect. the Court reinstated the petition. Doctrine of primary jurisdiction. The Supreme Court dismissed the petition. Primary jurisdiction of director of lands and minister or natural resources regarding identity of disputed land and qualification of awardee of a sales patent The primary jurisdiction of the director of lands and the minister of natural resources over the issues regarding the identity of the disputed land and the qualification of an awardee of a sales patent is established by Sections 3 and 4 of CA 141. they are in a better position to pass judgment thereon. 6. In a Resolution dated 23 June 1991. if not finality.” Sections 3 and 4 of the Public Land Law mean that the Secretary of Agriculture and Natural Resources shall be the final arbiter on questions of fact in public land conflicts (Heirs of Varela vs. Interpretation of contracts and determination of private rights no longer uniquely judicial function One thrust of the multiplication of administrative agencies is that the interpretation of contracts and the determination of private rights thereunder is no longer a uniquely judicial function. 2. exercisable only by our regular courts. the Court denied this petition “for being late. Julian vs. the court cannot arrogate unto itself the authority to resolve a controversy. It applies “where a claim is originally cognizable in the courts. Aquino. classification. who shall act under his immediate control. Apostol. Court does not interfere if question is within jurisdiction of an administrative tribunal Underlying the rulings of the trial and appellate courts is the doctrine of primary jurisdiction. and comes into play whenever enforcement of the claim requires the resolution of issues which. by the courts. in recognition of the primary jurisdiction of the administrative agency. have been placed within the special competence of an administrative body. Section 3 of said act provides that “the Secretary o f Agriculture and Commerce (now Secretary of Natural Resources) shall be the executive officer charged with carrying out the provisions of this Act through the Director of Lands. 1. cases In Machete vs. with double costs against Villaflor. Vasquez. The heirs of petitioner appealed to the Court of Appeals which. even if such evidence might not be overwhelming or even Page 52 of 87 . 52 Phil 442).e. it behooves the courts to stand aside even when they apparently have statutory power to proceed. the Court upheld the primary jurisdiction of the Department of Agrarian Reform Adjudicatory Board (DARAB) in an agrarian dispute over the payment of back rentals under a leasehold contract.” Section 4 provides that “subject to said control. the Court recognized that the MWSS was in the best position to evaluate and to decide which bid for a waterworks project was compatible with its development plan. Not satisfied. sale or any other form of concession or disposition and management of the lands of the public domain. and his decision as to questions of fact shall be conclusive when approved by the Secretary of Agriculture and Commerce. (2) for the eviction of private respondent from the property and (3) for the declaration of petitioner’s heirs as owners — to be without basis. By reason of the special knowledge and expertise of said administrative agencies over matters falling under their jurisdiction.. experience and services of the administrative tribunal to determine technical and intricate matters of fact.” 3. the judicial process is suspended pending referral of such issues to the administrative body for its view. courts cannot and will not resolve a controversy involving a question which is within the jurisdiction of an administrative tribunal. their successors and assigns. In the present case. under a regulatory scheme. Because these issues preclude prior judicial determination. 59 Phil 440). In cases where the doctrine of primary jurisdiction is clearly applicable. the questions on the identity of the land in dispute and the factual qualification of private respondent as an awardee of a sales application require a technical determination by the Bureau of Lands as the administrative agency with the expertise to determine such matters. in such case. especially where the question demands the exercise of sound administrative discretion requiring the special knowledge.
The fact. Such an intention is not apparent in the agreements. No public land can be acquired by private persons without any grant. The records show that Villaflor had applied for the purchase of lands in question with this Office (Sales Application V-807) on 2 December 948. therefore. at most. It is incumbent on the petitioner to show that the resolution of the factual issues by the administrative agency and/or by the trial court falls under any of the exceptions. Exception to the rule The rule that factual findings of an administrative agency are accorded respect and even finality by courts admits of exceptions. that the agreement to sell (7 December 1948) did not absolutely transfer ownership of the land to private respondent. Otherwise. L-20241. 7. 1972.. Generally. Lack of Technical description does not prove that the findings lacked substantial evidence The lack of technical description did not prove that the finding of the Director of Lands lacked substantial evidence. Property admitted to be public. cannot now be claimed otherwise The provision of the law is specific that public lands can only be acquired in the manner provided for therein and not otherwise (Sec. does not show that the agreement was simulated. as one who expects to buy it. including its real estate tax declarations. the interpretation which will make it valid and effectual should be adopted. all of its acts prior thereof. to which the application was submitted. for the purpose of deception. provides that. Director of Lands. is as clear as daylight. There is a condition in the sales application to the effect that he recognizes that the land covered by the same is of public domain and any and all rights he may have with respect thereto by virtue of continuous occupation and cultivation are relinquished to the Government of which Villaflor is very much aware. characterized its possessions of the land as that of a “sales applicant”. et al. unless alienated It is a basic assumption of public policy that lands of whatever classification belong to the state. 12. their validity. And consequently. (Lee Hong Hok. and do not tally with. in a contract of sale. express or implied from the government. The evidence adduced by petitioner to establish his claim of ownership over the subject area consists of deeds of absolute sale executed in his favor. 9. L-25914. vs. It also appears that Villaflor had paid for the publication fees appurtenant to the sale of the land. This is true also in assessing factual findings of lower courts. as amended). vs. Unless alienated in accordance with law. No. which is a conjunct of Article 1371. gives the vendor only the right to sue for collection. Public land. It would be a height of absurdity for Villaflor to be buying that which is owned by him if his claim of private ownership thereof is to be believed. In this light. but has not as yet done so. this Court will not disturb such findings. the payment of the last installment of the consideration mentioned in the Agreement. He had fully paid the purchase price thereof. 1974.preponderant. payment of the price is a resolutory condition and the remedy of the seller is to exact fulfillment or. it is not difficult to understand that the legal basis urged by petitioner does not support his allegation that the contracts to sell and the deed of relinquishment are simulated and fictitious. CA. Lands belong to the state. The area in dispute is not the private property of the petitioner. if the instrument is susceptible of two or more interpretations. i. 10. 61 SCRA 152). Article 1373. However. Such conditions did not affect the perfection of the contract or prove simulation. March 21. et al. in order to produce. in case of a substantial breach. 13. an examination of the technical descriptions of the tracts of land subject of the deeds of sale will disclose that said parcels are not identical to. (Palawan Agricultural and Industrial Co. 11. 141. to rescind the Page 53 of 87 .e. not negating. not negating. November 22. which gave rise to a corresponding obligation on the part of the private respondent. December 27. their validity The rule on the interpretation of contracts (Article 1371) is used in affirming. 48 SCRA 379). (Santiago vs.. the appearance of a juridical act which does not exist or is different from that which was really executed. Nonpayment of the consideration does not prove simulation Nonpayment. Simulation not existing in the present case Simulation occurs when an apparent contract is a declaration of a fictitious will. de los Santos. Public land. on the other hand. In his sales application. This is formidable evidence as it amounts to an admission against interest.. 11. L-30389. Rule on the interpretation of contracts is used in affirming. petitioner expressly admitted that said property was public land. its owner. it retains its rights over the same as dominus. the area in controversy. The intent to sell. and is not. Finding of fact by administrative agency accorded great respect . It is not the task of an appellate court to weigh once more the evidence submitted before the administrative body and to substitute its own judgment for that of the administrative agency in respect of sufficiency of evidence. He participated in the public auction where he was declared the successful bidder. Filing of sales application acknowledges that the land is not the private property of the applicant As such sales applicant manifestly acknowledged that he does not own the land and that the same is a public land under the administration of the Bureau of Lands. 8. 44 SCRA 15). It is indispensable then that there be showing of title from the state or any other mode of acquisition recognized by law. Inc. 14. 1972. David. Petitioner’s delivery of the Certificate of Ownership and execution of the deed of absolute sale were suspensive conditions. deliberately made by agreement of the parties.
Prohibition of 1973 Constitution against the holding of public alienable lands by corporation not retroactive In Ayog vs. Vested rights have to be respected. was the direct grantee of the disputed land. cannot deny (16 C. because by then. Farrales. Rule 131. the records do not show that private respondent was not so authorized under its charter. cited in Balboa vs. he was referred to as sales applicant-assignor. The demand letters dated January 2 and 5. Page 54 of 87 .. which in right reason and natural justice should be protected against arbitrary State action. In paragraph number 4. In the heading of the order. 122. however. he relinquished his rights to the land subject of the award to private respondent. sensitive to inherent and irrefragable individual rights. It is the privilege to enjoy property legally vested. Section 1. 192 At. he had already relinquished his rights to the disputed land in favor of private respondent. states that each party must prove his or her own affirmative allegations. the Court ruled that. Inc. Jr. 498. Furthermore. 20. adduced in evidence by petitioner. Cusi. 1974. and reinstatement of applications — are of executive and administrative nature. to enforce contracts.J. 170 Fed. 15. but merely an event which prevents the vendor’s obligation to convey title from acquiring binding force. Although nonpayment is a negative fact which need not be proved. Requirement for a sales application under CA 141 The requirements for a sales application under the Public Land Act are: (1) the possession of the qualifications required by said Act (under Section 29) and (2) the lack of the disqualifications mentioned therein (under Sections 121. from acquiring public land. 19. A state may not impair vested rights by legislative enactment. rejection. the powers of the Secretary of Agriculture and Natural Resources regarding the disposition of public lands — including the approval.024 hectares. 1989. Due process prohibits annihilation of vested rights The due process clause prohibits the annihilation of vested rights. do not include the judicial power to decide controversies arising from disagreements in civil or contractual relations between the litigants. However. 502). 18. the order stated that. Action for prohibition is barred by the doctrine of vested rights in constitutional law. asserts the affirmative of an issue and remains there until the termination of the action. the burden of proof in any cause rested upon the party who. the Court ruled that the constitutional prohibition of the 1973 Constitution against the holding of alienable lands of the public domain by corporations had no retroactive effect and could not prevail over a vested right to the land. Lack of Notice of the Award not a suppression of evidence The lack of notice for petitioner (not listed as one of the parties to furnished a copy by the Director of Lands) can be easily explained. 20. Determination of qualification of applicant included in the powers to dispose public lands In Espinosa vs. Petitioner showed the existence of the obligation with the presentation of the contracts. No. or an innately just and imperative right which an enlightened free society. 5. 17. not payment arising from the contract to sell. 21. Note 71. (Such powers. Section 121 of the Act pertains to acquisitions of public land by a corporation from a grantee: The private respondent. as determined by the pleadings or the nature of the case. by law. not the petitioner. It could not be abrogated by the new Constitution. Blount. were for the payment of back rentals. Generally. this order was in fact available to petitioner and had been referred to by him since 31 January 1974 when he filed his protest with the Bureau of Lands. the determination of whether private respondent is qualified to become an awardee of public land under CA 141 by sales application is included therein. From such date. or by a change in the constitution of the State. the term “vested right” expresses the concept of present fixed interest. 15. Sections 122 and 123 disqualify corporations. and 123). Rosenthal. Section 2. and enjoy the rights of property conferred by existing law or some right or interest in property which has become fixed and established and is no longer open to doubt or controversy (Downs vs. by the enactment or by the subsequent repeal of a municipal ordinance. Burden of proof rests upon the party who asserts the affirmative of an issue Prior to the amendment of the rules on evidence on March 14. the failure to give petitioner a copy of the notice of the award cannot be considered as suppression of evidence. failure to pay is not even a breach. Considering these facts. 51 Phil. 2nd 587). Thus. Article XIII of the 1935 Constitution allowed private corporations to purchase public agricultural lands not exceeding 1.contract under Article 1191 of the Civil Code. Petitioner was not entitled to said notice of award from the Director of Lands. on 16 August 1950. the party seeking payment is still required to prove the existence of the debt and the fact that it is already due. citing Pennsylvania Greyhound Lines. vs. but did not present any evidence that he demanded payment from private respondent. damages to improvements and reimbursement of acquisition costs and realty taxes. except in a legitimate exercise of the police power. the sales application was considered to be a matter between the Bureau of Lands and private respondent only. 16. Makalintal.S. which are not authorized by their charter.) Consequently. 1174. Vested right A right is vested when the right to enjoyment has become the property of some particular person or persons as a present interest.
On 16 February 1984. Gaudencia Zarraga. the Register of Deeds of Laguna. first cousins of the Loyolas) her share in Lot 115-A. or partnership which fall under any of the following categories shall be given due course and issued patents. 2000. LRC [GLRO] Record 8374. the sheriff executed the corresponding deed of reconveyance to Gaudencia. Romana. however. Laguna. s. the Secretary of Justice held that as soon as the applicant had fulfilled the construction or cultivation requirements and has fully paid the purchase price. 115734. Price 26. associations. Victorina and Cecilia were substituted by Ruben. On 24 August 1980. Quisumbing (J): 3 concur. nearly 3 years before the death of Gaudencia while GR 59529 was still pending before the Supreme Court. Romualdo elevated the decision to the Court of Appeals and later the Supreme Court.R. Implementation of DOJ Opinion 64. Candelaria. Mariano predeceased his sister who died single.000. Victorina Zarraga vda. IV. Purificacion. docketed as Civil Case B-2194. providing that sales application of private individuals covering areas in excess of 24 hectares and those of corporations. Teresita and Vicente Loyola as plaintiffs. the then Secretary of Agriculture and Natural Resources issued a memorandum. On 23 July 1984. series of 1976. before the Constitution took effect.22. cultivation requirements of law were complied with as shown by investigation reports submitted prior to 17 January 1973. CA (GR 115734. Estrella Zarraga) and the heirs of Jose Zarraga Aurora. Guillermo.). On said date. all surnamed Zarraga. 1973. the Secretary of Justice held that where the cultivation requirements were fulfilled before the new Constitution took effect but the full payment of the price was completed after 17 January 1973.” Romualdo. issued in favor of private respondents. Roberto. on the basis of the sale on 24 August 1980 by Gaudencia to them. was among the vendees. unmarried and childless. The property was subject of Civil Case B-1094 before the then CFI Laguna (Branch 1. Lucia. Roberto. et al. to wit: Sales application for fishponds and for agricultural purposes (SFA. for the purpose of annulling the sale and the TCT. In Opinion 185. had fully complied with all his obligations under the Public Land Act in order to entitle him to a sales patent.1 for P34. Angeles. Estrella. Opinions of the Secretary of Justice In Opinion 64.] Second Division. Loyola v. Lauriano. Romualdo Zarraga was the plaintiff in Civil Case B-1094. the Secretary of Justice held that where the applicant. Lorenzo. Gaudencia allegedly sold to the children of Mariano Zarraga (Nieves. The sale was evidenced by a notarized document denominated as “Bilihang Tuluyan ng Kalahati (1/2) ng Isang Lagay na Lupa. TCT T-32007) was originally owned in common by the siblings Mariano and Gaudencia Zarraga.00. Cecilia died on 4 August 1990. Sales application for fishponds and for agricultural use Implementing Opinion 64. who inherited it from their father. TCT T-116067. Executive construction given great respect A contemporaneous construction of the constitutional prohibition by a high executive official carries great weight and should be accorded much respect. and containing 753 sq. The trial court decided Civil Case B-1094 in favor of the defendants. entitled to a sales patent. and purchase price was fully paid. the applicant was. Marita. Rosario. series of 1973. The defendants were his siblings: Nieves. In Opinion 140. It is a correct interpretation of section 11 of Article XIV.m. as well as his aunt. The children of Mariano Zarraga and the heirs of Jose Zarraga (private respondents) filed a motion for execution. located in Poblacion. Victor. Jose. CA [G. without offspring on 5 August 1983. 23. with the RTC of Biñan. Romana. Calamba Branch. while Civil Case B-2194 was pending with the trial court. The trial court rendered judgment in favor of Page 55 of 87 . land was surveyed and survey returns already submitted to the Director of Lands for verification and approval. Vested interest in sales application. the petitioner in GR 59529. et al. Nicadro. The decision in Civil Case B-1094 became final. dated 18 February 1974. he should be deemed to have acquired by purchase the particular tract of land and to him the area limitation in the new Constitution would not apply. Victorina and Cecilia filed a complaint. Guillermo. de Loyola and Cecilia Zarraga. series of 1974. Laguna. On 31 January 1985. February 23. Ronaldo. the land covered thereby was awarded. a portion of Lot 115-A described on Plan Psd-55228. v. and Ariel Zarraga. Romualdo. The petition (GR 59529) was denied by the Court on 17 March 1982. Binan. Purificacion. Gaudencia was adjudged owner of the 1/2 portion of Lot 115-A1. 3 February 2000) Loyola v. and Jose. are sisters of Gaudencia and Mariano. Spouses Romualdo Zarraga. at the age of 97. Angeles. there would seem to be no legal or equitable justification for refusing to issue or release the sales patent. Flora. Victorina died on 18 October 1989. No. Gaudencia. SA and IGPSA) wherein prior to 17 January 1973.. 1 on leave Facts: A parcel of land (Lot 115-A-1 of subdivision plan [LRC] Psd-32117. 24. nevertheless.
Article 1311 of the Civil Code clearly covers this situation. Contracts binding only upon parties executing them Contracts are binding only upon the parties who execute them. the petition for review on certiorari. Applied to contracts. the appellate court reversed the trial court (CA-GR CV 36090). This is contrary to the requisite of simulation that the apparent contract was not really meant to produce any legal effect. but must be both alleged and proved. However. requisites The requisites for simulation are: (a) an outward declaration of will different from the will of the parties. Hence. Even if curiously Romualdo. was the one who questioned Gaudencia’s ownership in Civil Case B-1094. in a simulated contract. 1993. intelligently. and (c) the purpose is to deceive third persons. The parties clearly intended to be bound by the contract of sale. deliberately made by agreement of the parties. Jose Zarraga alive when the sale took place Petitioners charge that one of the vendees. 1. Jose Zarraga. and affirmed the assailed decision of the Court of Appeals. For a contract to be annulled on the ground of fraud. the presumption is in favor of validity and regularity. On appeal. and thus. He was still alive on 24 August 1980. Romana testified that Romualdo really had no knowledge of the transaction and he was included as a buyer of the land only because he was a brother. Person not incapacitated to contract merely because of advanced age or due to physical infimities A person is not incapacitated to contract merely because of advanced years or by reason of physical infirmities. The notary public who interviewed her. an intention they did not deny.” Characteristic of simulation is that the apparent contrac t is not really desired or intended to produce legal effect or in any way alter the juridical situation of the parties. and fairly protecting his property rights. petitioners show no proof that Gaudencia had lost control of her mental faculties at the time of the sale. Fraud is never presumed Fraud is never presumed. 5. (b) the false appearance must have been intended by mutual agreement. the allegations of fraud was unsupported. with clear and convincing evidence. ordering the Register of Deeds of Laguna to cancel TCT T-116087 and to issue another one in favor of the plaintiffs and the defendants as co-owners and legal heirs of the late Gaudencia. is he considered incapacitated. However. was already dead at the time of the sale. Only when such age or infirmities impair his mental faculties to such extent as to prevent him from properly. petitioners are estopped from questioning the regularity of the execution of the deed. with costs against petitioners. dismissing the petitioner’s claim for moral and exemplary damages.complainants. one of those included as buyer in the deed of sale. he was a stranger and not a party to it. the parties have no intention to be bound by the contract. and dismissing the defendants’ counterclaim for lack of merit. the petitioners (as substitute parties for Victorina and Cecilia. the execution of the deed was suspect. In the present case. In the present case. ordering the defendants to reconvey and deliver the possession of the shares of the plaintiff on the subject property. perusal of the questioned deed shows that the sale of the property would convert the coowners to vendors and vendees. a clear alteration of the juridical relationships. 7. Simulation. 3. the notary public testified that he interviewed Gaudencia prior to preparing the deed of sale. Presumption of regularity of notarized document A notarized document carries the evidentiary weight conferred upon it with respect to its due execution. In the present case. By their failure to overcome this presumption. Simulation defined Simulation is “the declaration of a fictitious will. it must be shown that the vendor never gave consent to its execution. the petitioners allege that since the notary public who prepared and acknowledged the questioned Bilihan did not personally know Gaudencia. that private transactions have been fair and regular. for the purposes of deception. In the present case. none of these are present in the assailed transaction. in order to produce. said person is bound. On September 15. In the present case. 6. The Supreme Court denied the petition. and on 31 August 1993. which was denied on 6 June 1994. the appearances of a juridical act which does not exist or is different what that which was really executed. In the present case Romualdo had no knowledge of the sale. and documents acknowledged before a notary public have in their favor the presumption of regularity. Further. If a competent person has assented to a contract freely and fairly. the original plaintiffs) filed a motion for reconsideration. ordering the defendants to pay P20. when the sale took place. the records reveal that Jose died on 29 July 1981. There also is a disputable presumption. 2. declaring the simulated deed of absolute sale as well as the issuance of the corresponding TCT null and void. testified that when he talked to Page 56 of 87 . and the presumption stands that the contract Gaudencia entered into was fair and regular. 4.000 as attorney’s fees and cost of suit.
Article 1337 Article 1337 of the Civil Code provides that “there i s undue influence when a person takes improper advantage of his power over the will of another. not suitable for development into a housing project. argument. Confidential or fiduciary relationship In the absence of a confidential or fiduciary relationship between the parties. In the present case. family. the relationship must reflect a dominant. In the present case. 8. or debility of body. the law does not presume that one person exercised undue influence upon the other. Grounds of simulated sale and inadequacy of the price not reconcilable Petitioners seem to be unsure whether they are assailing the sale of Lot 115-A-1 for being absolutely simulated or for inadequacy of the price. nurse and invalid.Gaudencia before preparing the deed of sale. Hongkong and Shanghai Bank (15 Phil. or by appeal to the affections is not prohibited either in law or morals. if sufficient intelligence remains. however. circumstances considered. Elements Undue influence depends upon the circumstances of each case and not on bare academic rules. 11. Kapunan (J): 3 concur. with the opportunity to use that superiority to the other’s disadvantage. (b) the fact that improper influence was exerted. or was ignorant or in financial distress. By virtue of such authority. (c) submission to the overwhelming effect of such unlawful conduct. sickness. Benguet to National Housing Authority (NHA) to be utilized and developed as a housing project. and other relations between the parties. parent and child. located in Tuba. In the present case. Petitioners failed to show that Romana used her aunt’s reliance upon her to take advantage or dominate her and dictate that she sell her land. Included ar e those of attorney and client. absent any proof that Romana exerted undue influence. the NHA Board passed Resolution 1632 approving the acquisition of said lands. Undue influence defined. 27. 14. depriving the latter of a reasonable freedom of choice. a person and his confidential adviser. 1999. CA (GR 120465. In Martinez v. Solicitation. argument. An issue which was neither averred in the complaint nor raised in the court below. member of a church or sect and spiritual adviser. 120465. spiritual. it was held that solicitation. These two grounds are irreconcilable. and is not obnoxious even in courts of equity. Uy v. and persuasion are not undue influence. Issue cannot be raised for the first time on appeal Lesion was not an issue raised before the lower courts. or debility of body Undue influence is not to be inferred from age. 13. guardian and ward. the transaction could not be a “simulated sale.867 million.R. To do so would be offensive to the basic rules of fair play. 9 September 1999) Uy v. Tadiangan. The following circumstances shall be considered: confidential. 12. Undue influence cannot be inferred from age. To prove a confidential relationship from which undue influence may arise. 252 ). If there exists an actual consideration for transfer evidenced by the alleged act of sale. CA [G. On 14 February 1989. petitioners never rebutted the testimony of the notary public that he observed Gaudencia still alert and sharp. argument. importunity. For undue influence to be established to justify the cancellation of an instrument. overmastering influence which controls over the dependent person.] First Division. that Gaudencia looked after Romana in her old age is not sufficient to show that the relationship was confidential. physician and patient.8231 hectares. at the cost of P23. Undue influence case-to-case basis. (59 SCRA 15 ).” 9. no matter how inadequate it be. with an area of 31. she answered correctly and he was convinced that Gaudencia was mentally fit and knew what she was doing. only 5 were paid for by the NHA because of the report it received from the Land Geosciences Bureau of the Department of Environment and Natural Resources (DENR) that the remaining area is located at an active landslide area and therefore. importunity. sickness. and persuasion not undue influence In Bañez v. Of the 8 parcels of land. which allows one to dominate the other. No. cannot be raised for the first time on appeal. A contract is not to be set aside merely because one party used these means to obtain the consent of the other. Page 57 of 87 . or the fact that the person alleged to have been unduly influenced was suffering from mental weakness. September 9. that influence obtained by persuasion. 10. or whenever a confidential relationship exists as a fact. pursuant to which the parties executed a series of Deeds of Absolute Sale covering the subject lands. three elements must be present: (a) a person who can be influenced.” No reversible error was thus committed by the Court of Appeals in refusing to annul the questioned sale for alleged inadequacy of the price. A confidential or fiduciary relationship may include any relation between persons. they offered to sell the lands. 1 on leave Facts: William Uy and Rodel Roxas are agents authorized to sell 8 parcels of land by the owners thereof. Court of Appeals. the presumption is that she did not.
Rule 3. Section 372 (1) of the Restatement of the Law on Agency Section 372 (1) of the Restatement of the Law on Agency *Agent as Owner of Contract Right+ declares that “Unless otherwise agreed. in an action upon that contract must. has the right sought to be enforced. he must be the person to whom the proceeds of the action shall belong.” within the meaning of the rule. it was held that the rule requiring every action to be prosecuted in the name of the real party-in-interest recognizes the assignments of rights of action and also recognizes that when one has a right of action assigned to him he is then the real party in interest and may maintain an action upon such claim or right. provides that “Contracts take effect only between the parties. he may demand its fulfillment provided he communicated his acceptance to the obligor before its revocation. Assignment of rights In McMicking vs. through Resolution 2394. although not a promisee. Real party-in-interest defined. Rules of Court). 6. that petitioners are the heirs of their principals. except in case where the rights and obligations arising from the contract are not transmissible by their nature. means material interest. or by provision of law. The purpose is to require the plaintiff to be the real party in interest. the action was properly dismissed (Ferrer vs. Neither has there been any allegation. much less proof. Rule 3 of the Rules of Court requires that every action must be prosecuted and defended in the name of the real party-in-interest. either as plaintiff or defendant. Banco Español-Filipino. It held that since there was “sufficient justifiable basis” in cancelling the sale. they only render some service or do something in representation or on behalf of their principals. Agent-transferee. the RTC rendered a decision declaring the cancellation of the contract to be justified. After trial. 3. 60 SCRA 406 .255 million. Upon appeal by petitioners. an agent who has or who acquires an interest in a contract which he makes on behalf of his principal can. They are mere agents of the owners of the land subject of the sale. in other words.225 million to the landowners as daños perjuicios. not the real parties-ininterest in the action before the trial court. may bring an action founded on a contract made for his principal. Article 1311 of the Civil Code Article 1311 of the Civil Code. in his own behalf. 105 Phil. Marcelo vs.” 7. petitioners seek relief from the Supreme Court. 1. as distinguished from mere interest in the question involved. Agents rendering service in behalf of parties do not render them parties to the contract of sale Petitioners are not parties to the contract of sale between their principals and NHA. as an assignee of such contract. If a contract should contain some stipulation in favor of a third person. The Court of Appeals also noted that petitioners were mere attorneys-in-fact and. 1175) because the rule is that every action must be prosecuted in the name of the real parties-in-interest (Section 2. “it saw no reason” for the awa rd of damages. subsequently offered the amount of P1. Action to be prosecuted in the name of a party whose right is sought to be enforced Section 2. Section 372 (1) explained One who has made a contract on behalf of another may become an assignee of the contract and bring suit against the other Page 58 of 87 . The real party-in-interest is the party who stands to be benefited or injured by the judgment or the party entitled to the avails of the suit. the NHA issued Resolution 2352 cancelling the sale over the 3 parcels of land. 5. and heirs. As agents. The trial court nevertheless awarded damages to plaintiffs in the sum of P1. The Supreme Court denied the petition. 2. generally. or. their assigns.On 22 November 1991. Thus. or a mere incidental interest. or by stipulation. (as in our present action) and not in the name of his principal. “Interest. the real parties-in-interest. maintain such action thereon as might a transferee having a similar interest. Since a contract may be violated only by the parties thereto as against each other. On 9 March 1992. The rendering of such service did not make them parties to the contracts of sale executed in behalf of the latter. and to prevent actions by persons who have no interest in the result of the same. The NHA. Their motion for reconsideration having been denied. The contracting parties must have clearly and deliberately conferred a favor upon a third person. the same amount initially offered by NHA to petitioners as damages. Villamor. the Court of Appeals reversed the decision of the trial court and entered a new one dismissing the complaint. either be parties to said contract. an interest in the i ssue and to be affected by the decree. therefore. petitioners Uy and Roxas filed before the RTC Quezon City a Complaint for Damages against NHA and its General Manager Robert Balao. by the substantive law. de Leon.” 4. an agent. A mere incidental benefit or interest of a person is not sufficient. Action brought by an attorney-in-fact in his name and not in the name of his principal dismissed Where the action is brought by an attorney-in-fact of a land owner in his name. Cases construing the real party-in-interest provision can be more easily understood if it is borne in mind that the true meaning of real party-in-interest may be summarized as follows: An action shall be prosecuted in the name of the party who.
an obligation that they fulfilled. This power to sue is not affected by a settlement between the principal and the obligor if the latter has notice of the agent’s interest. it was held that “granting that appellant had the authority to sell the property. As petitioners are not parties. If the agent has settled with his principal with the understanding that he is to collect the claim against the obligor by way of reimbursing himself for his advances and commissions. in case one of the obligors should not comply with what is incumbent upon him. even after he has chosen fulfillment. it did not have the right to do so for the other parties to the contract.” Further. they do not. under the statutes which permit the real party in interest to sue. resolution. possess the right they seek to enforce.party to it. although there is no formal assignment. citing Section 372 (2) above. of their obligation. He may also seek rescission. the NHA did not rescind the contract. Cancellation based on the negation of cause The cancellation was based on the negation of the cause arising from the realization that the lands. Indeed. it does not appear that petitioners are beneficiari es of a stipulation pour autrui under the second paragraph of Article 1311 of the Civil Code. An agent who is not a promisee cannot maintain an action at law against a purchaser merely because he is entitled to have his compensation or advances paid out of the purchase price before payment to the principal. any decision rendered would be pointless since the same would not bind the real parties-in-interest. the same did not make the buyer liable for the commission she claimed. from this fact alone. with the payment of damages in either case. did not commit any breach. He has an irrevocable power to sue in his principal’s name. assignees. he may. by agreement with the principal. 13. heirs. more accurately. The power to rescind. Court of Appeals. he ca n maintain an action in his own name. the owner of the property and the one who promised to give her a commission should be the one liable to pay the same and to whom the claim should have been directed. the agent is in the position of an assignee who is the beneficial owner of the chose in action. he can maintain an action in his own name. the vendors. In such a case. 11. have a right to receive payment and out of the proceeds to reimburse himself for advances and commissions before turning the balance over to the principal. he has an irrevocable power to sue in his principal’s name and. under substantive law. there is no stipulation in any of the Deeds of Absolute Sale “cle arly and deliberately” conferring a favor to any third person. is given to the injured party. denied the claim of a real estate broker to recover his alleged commission against the purchaser in an agreement to purchase property. were not suitable for housing. Failure to obtain commissions due non-performance of contract does not entitle petitioners to file action against NHA In Hopkins vs. Even though the agent has not settled with his principal. much less a substantial breach. And. Section 372 (2) of the Restatement of the Law on Agency Section 372 (2) of the Restatement of the Law on Agency (Second) provides that “An agent does not have such an interest in a contract as to entitle him to maintain an action at law upon it in his own name merely because he is entitled to a portion of the proceeds as compensation for making it or because he is liable for its breach. The injured party may choose between the fulfillment and the rescission of the obligation.” Similarly. The NHA did not suffer any injury by the performance thereof. Article 1191 states that “the power to rescind obligations is implied in reciprocal ones. Their obligation was merely to deliver the parcels of land to the NHA. that petitioners d id not obtain their commissions or recoup their advances because of the non-performance of the contract did not entitle them to file the action below against NHA. The customs of business or the course of conduct between the principal and the agent may indicate that an agent who ordinarily has merely a security interest is a transferee of the principal’s rights under the contract and as such is permitted to bring suit. of a party to an obligation under Article 1191 is predicated on a breach of faith by the other party that violates the reciprocity between them. either in an action on the contract or otherwise. they have not est ablished any agreement granting them “the right to receive payment and out of the proceeds to reimburse themselves for advances and commissions before turning the balance over to the principals. 9. Decision pointless if petitioners are not real parties-in-interest Petitioners not being the real parties-in-interest. 12. An agent entitled to receive a commission from his principal upon the performance of a contract which he has made on his principal’s account does not. While they alleged that they made advances and that they suffered loss of commissions. In Goduco vs. if the latter should become impossible. At most. Cancellation of contract in present case not rescission under Article 1191 The right of rescission or. 8.” The fact that an agent who makes a contract f or his principal will gain or suffer loss by the performance or nonperformance of the contract by the principal or by the other party thereto does not entitle him to maintain an action on his own behalf against the other party for its breach. therefore. have any claim against the other party for breach of the contract. I ndeed. or beneficiaries of a stipulation pour autrui under the contracts of sale. the Supreme Court of Arkansas. Ives.” In the present case. Petitioners not assignees Petitioners have not shown that they are assignees of their principals to the subject contracts. under statutes which permit the real party in interest to sue. Page 59 of 87 . the agent is in the position of a transferee of the whole claim for security. as any other transferee. which were the object of the sale. in the present case. 10.
they were made to believe by Maximo Mapalo and the attorney who acted as notary public who “translated” the document. and 4 December 1946. However. These clay particles when saturated have some swelling characteristics which is dangerous for any civil structures especially mass housing development. such as in this case. pp. Standard Penetration Test (SPT) must be carried out to give an estimate of the degree of compaction (the relative density) of the slide deposit and also the bearing capacity of the soil materials. There are more areas of less sloping ground apparently habitable.” The same view is held by the Supreme Court of Spain. when the motive predetermines the cause. out of love and affection for Maximo Mapalo. Mapalo [G. Report of Land Geosciences Bureau is sufficient basis for the cancellation of the sale The findings contained in the report of the Land Geosciences Bureau dated 15 July 1991 sufficient basis for the cancellation of the sale. The report stated that “In Tadiangan. simple illiterate farmers. Cause. For example. the motive was the cause for its being a party to the sale. Assessment preliminary only insofar as to the ascertainment of geological attributes. Bengzon JP (J): 10 concur Facts: Spouses Miguel Mapalo and Candida Quiba. Requisites of contract NHA was justified in cancelling the contract. decided to donate the eastern half of the land to him. L-21489 and L-21628. direct and proximate reason which justifies the creation of an obligation through the will of the contracting parties.ms. which is the particular reason of a contracting party which does not affect the other party. 17.14. Preventive physical mitigation methods such as surface and subsurface drainage and regrading of the slope must be done in the area” mean only that further tests are required to determine the “degree of compaction. i. 1966. however. The spouses-owners. Although the document of sale stated a consideration of P500. The realization of the mistake as regards the quality of the land resulted in the negation of the motive/cause thus rendering the contract inexistent. 28. Court of Appeals. a deed of absolute sale over the entire land in his favor. they would not be entitled to any award of damages. the spouses did not receive anything Page 60 of 87 .” and the “vulnerability of the area to landslides. and (3) Cause of the obligation which is established. it is clear that NHA would not have entered into the contract were the lands not suitable for housing. May 19. Pangasinan (OCT 46503). a party’s motives for entering into the contract do not affect the contract. The motive of the NHA. Motives ordinarily affects the contract. motive thus may be regarded as the cause Ordinarily. assignees or beneficiaries to the contract of sale. Tuba. It is only in this sense that the assessment was “preliminary. unless if it predetermines the cause. (2) Object certain which is the subject matter of the contract. it is the acquisition of the land.R. 15. The site is underlain by thick slide deposits (4-45m) consisting of huge conglomerate boulders mixed with silty clay materials. while maintaining the distinction and upholding the inoperativeness of the motives of the parties to determine the validity of the contract. On the part of the NHA. on the other hand. Their signature thereto were procured by fraud. Article 1318 of the Civil Code states that “There is no contract unless the following requisites concur: (1) Consent of the contracting parties. OCT 46503 was delivered. 641-642). should be distinguished from motive. they were deceived into signing. The cause is the immediate. in a contract of sale of a piece of land. For the vendee.” “the bearing capacity of the soil materials. 8.” sinc e the tests already conducted were inadequate to ascertain such geological attributes. holding that the motive may be regarded as causa when it predetermines the purpose of the contract. expressly excepts from the rule those contracts that are conditioned upon the attainment of the motives of either party. residential land in Manaoag. therefore. as the cancellation of the contract is justified. Mapalo v. Petitioners not entitled to damages Assuming that petitioners are parties. Distinguished from motive Cause is the essential reason which moves the contracting parties to enter into it. As a result. the cause of the vendor in entering into the contract is to obtain the price.635 sq. otherwise conclusive The portion stating that “there is a need to conduct further geottechnical [sic] studies in the NHA property. which is the essential reason for the contract. Mapalo (GR L-21489 and L-21628. the housing site is situated in an area of moderate top ography. In Liguez vs. 16.e. 19 May 1966) [ haystack ] Mapalo v. that the same was a deed of donation in Maximo’s favor covering ½ (the eastern half) of their land. on 15 October 1936. No. Cause defined. Another thing to consider is the vulnerability of the area to landslides and other mass movements due to thick soil cover. brother of Miguel who was about to get married.” 18. the motive may be regarded as the cause. were registered owners of a 1. in its decisions of 4 Februar y 1941. 19.] En Banc. Vendee justified in canceling contract. In the present case. is to use said lands for housing. The quality of the land was an implied condition for the NHA to enter into the contract. it was noted that “Manresa himself (Vol.
and ordering Maximo Mapalo and the Narcisos to pay the costs. 4. for a contract to exist at all. and. he sold for P2. Requisites Under the Civil Code. They asked for reconveyance to them of the western portion of the land and issuance of a TCT in their names as to said portion. From said decision of the Court of Appeals. Old Civil Code. and (3) cause or consideration. 2. not void ab initio. it being their stand that they had donated and freely given said half of their land to Maximo Mapalo. 3. the Mapalo spouses are not claiming the same. And since they did not appeal from the decision of the trial court finding that there was a valid and effective donation of the eastern portion of their land in favor of Maximo Mapalo. Maximo Mapalo. the statement of a false consideration renders the contract voidable.of value for the land. Finding of the lower court as to the donation not assailed and thus is final As regards the eastern portion of the land. Following the execution of the document the spouses immediately built a fence of permanent structure in the middle of their land segregating the eastern portion from its western portion. is that contracts without a cause or consideration produce no effect whatsoever. unless it is proven that it is supported by another real and licit consideration. registered the deed of sale in his favor and obtained in his name TCT 12829 over the entire land. Said fence still exists. either old or the new.00. declaring TCT 12829 issued to Maximo Mapalo as regards the western portion of the land null and void and without legal force as well as TCT 11350 subsequently issued to the Narcisos. ordering the Mapalo spouses and the Narcisos to have the land subdivided by a competent land surveyor. both against Maximo Mapalo and the Narcisos.500. The CFI and the CA are therefore unanimous that the spouses Mapalo and Quiba were definitely the victims of fraud. Contracts without a cause void Under the Civil Code. And it is further provided by the Old Civil Code that the action for annulment of a contract on the ground of falsity of consideration shall last 4 years. seeking cancellation of the TCT of the Narcisos as to the western half of the land.000. plus the costs . Petronila. and rendered another affirming in toto the judgment of the CFI. the same pronouncement has become final as to them. validity or efficacy of said donation as to said eastern portion. on 15 March 1938. rendering it no longer proper herein to examine the existence. The sale to the Narcisos was in turn registered on 5 November 1951 and TCT 11350 was issued for the whole land in their names. the expenses of which to be borne out by the parties pro-rata. for damages. The attorney’s misbehavior was the subject of an investigation but its result does not appear on record. 13 years later. be it the old or the new. Contracts with false consideration voidable. Said court rendered judgment on 18 January 1961 dismissing the complaint in Civil Case 11991. the Court of Appeals reversed the Judgment of the CFI. ordering the Register of Deed to issue in lieu of TCT 11350 two new titles upon completion of the subdivision plan (one in favor of the Mapalo spouses for the western portion. therefore. the Mapalo spouses appealed to the Court. 5. 1. The Mapalo spouses filed their answer with a counterclaim on 17 March 1952. In addition. The spouses have always been in continued possession over the western half of the land up to the present. It was only on prescription that they lost in the Court of Appeals. within 4 years from notice of the fraud. The Narcisos took possession only of the eastern portion of the land in 1951. on the grounds that their signatures to the deed of sale of 1936 were procured by fraud and that the Narcisos were buyers in bad faith.00 said entire land in favor Evaristo. three essential requisites must concur: (1) consent. Contract. (2) object. with attorneys’ fees on appeal in favor of the Mapalo Spouses in the amount of P1. the term to run from the date of the consummation of the contract. Pacifico and Miguel Narciso. the same was voidable. solely on the ground that the consent of the Mapalo spouses to the deed of sale of 1936 having been obtained by fraud. Unknown to them. and for rentals. It reckoned said notice of the fraud from the date of registration of the sale on 15 March 1938. The Supreme Court reversed and set aside the decision of the Court of Appeals. on 20 October 1951. Eastern half donated. It was brought against the Mapalo spouses as well as against Floro Guieb and Rosalia Mapalo Guieb who had a house on the western part of the land with the consent of the spouses Mapalo and Quiba. On 7 February 1952 the Narcisos filed suit in the CFI Pangasinan (Civil Case 11991) to be declared owners of the entire land. declaring the deed as that of donation only over the eastern half portion of the land. False consideration a real consideration but not the one stated in the document Page 61 of 87 . The Narcisos appealed to the Court of Appeals. had long prescribed. Prescription of voidable contracts Under the Old Civil Code. the Mapalo spouses filed on 16 December 1957 their own complaint in the CFI Pangasinan (Civil Case U-133) against the the Narcisos and Maximo Mapalo. and one for the Narcisos covering the eastern half). In its decision on 28 May 1963. the action to annul the same. and as null and void with respect to the western half portion thereof. after the sale in their favor was made. They asked that the deeds of sale of 1936 and of 1951 over the land in question declared null and void as to the western half of said land. for possession of its western portion. Judge Amado Santiago of the CFI Pangasinan located in the municipality of Urdaneta the two cases jointly.
According to Manresa. that is. vs. as well as the several facts and circumstances appreciated by the trial court as supporting the Mapalo spouses’ case. 206. and 13 C. Contract null and void if without cause or consideration The ruling of the Court in Ocejo Perez & Co. Oceio Perez v.000. 372-373. 9. 1961. contract without cause. Relova (J): 5 concur. Volume IV. 6. 982. (Art. Moreover.) While it i s true that this is a new provision of the New Civil Code. II. is squarely applicable herein.” it thus sustained — barring only its ruling on prescription — the judgment and findings of the trial court.. Perdido (97 Phil. thus. it is nevertheless a principle recognized since Tipton vs. Cortez vs. No consideration does not mean false consideration for Article 1276 to be applied Where there was in fact no consideration.R. p. This. Civil Right. Further. Pacifico Narciso admitted in his testimony that when they bought the property. October 8. Narcisos not purchasers in good faith It has been positively shown by the undisputed testimony of Candida Quiba that Pacifico Narciso and Evaristo Narciso stayed for some days on the western side of the land until their house was removed in 1940 by the spouses Mapalo. New Civil Code. 29. as the parties in the cases are neighbors (except Maximo Mapalo). 49 OG 980. the statement of one in the deed will not suffice to bring it under the rule of Article 1276 of the Old Civil Code as stating a false consideration.. including that of bad faith on the part of the Narcisos in purchasing the land in question. it was ruled that a contract of purchase and sale is null and void and produces no effect whatsoever where the same is without cause or consideration in that the purchase price which appears thereon as paid has in fact never been paid by the purchaser to the vendor. 8 October 1985) Ong v. The Supreme Court thus do not see the need to further remand the case to the Court of Appeals for a ruling on the point in the event that the 1936 contract is held to be inexistent as regards the western portion of the land. the appealed decision called have been upheld under Article 1332 of Ci vil Code and the following authorities: Ayola vs. and that without it they are null. Civil Code Volume VIII. August 8. 8. but the first is false in fact. Also. Pacifico Narciso when presented as a rebuttal and sub-rebuttal witness categorically declared that before buying the land in question he went to the house of spouses Mapalo and asked them if they will permit Maximo Mapalo to sell the property. that in multitude of laws that declare it.] First Division. Void contract incurable and cannot be subject of prescription The inexistence of a contract is permanent and incurable and cannot be the subject of prescription. Inc. what is meant by a contract that states a false consideration is one that has in fact a real consideration but the same is not the one stated in the document. The nonexistence is perpetual and irreplaceable not being able to be object of confirmation nor prescription. 67) that ‘mere a lapse of time cannot give efficacy to contracts that are null and void’.00 as prayed for in the counterclaim. in his reason. Miguel Mapalo was still in the premises in question (western part) which he is occupying and his house is still standing thereon. 18118-R. it is clear that the Narcisos were aware of the extent of the interest of Maximo Mapalo over the land before and after the execution of the deed of sale. Bad faith justifies award of attorney’s fees In view of the Narcisos’ bad faith under the circumstances we deem it just and equitable to award. 12. 1 concur in result Page 62 of 87 .18451-R. although it appears to be real. 10. Only a disturbed man would contract without cause. such contract would be ‘inexistent’ and ‘the action or defense for declaration’ of such inexistence ‘does not prescribe’. although illicit is real. 11. 51 OG 1434. Flores (40 Phil. Ong [G. Velasco (6 Phil. 42-43 *1932+). In that case. CA. Ong (GR L-67888. As held in Eugenio vs. it is precise that such is real and not supposed. in the amount of P1. Ong v.) 7. it was stated that “under the existing classification. not only as a doctrine undoubtedly of scientific law. 41. 354]). Laberinto. attorneys’ fees on appeal. vol.” (Sanchez Roman. it can only be conceived that a disturbed man would. the Narcisos may be considered in value but certainly not as purchasers in good faith.” *Manres a. Under the situation. 921). Castilllo vs. No. For the same reason of the necessity of inspection of cause in the contract. False cause vitiates consent and annuls contract (Sanchez Roman) The inspection of cause in the contract is necessary. No need to remand case to trial court as facts of trial court sustained by Court of Appeals As the Court of Appeals declared that “on the merits. CA-G. L-67888. December 20. 1985.R. p. as it pretends or appears. Valderrama Lumber Manufacturers Ca. No. (“The difference between simulation and the contract with fraudulent intention (purpose). 1435. Flores applies. Cortez. J. Trasporte Beltran. 1410. but also of old laws of Castile. The falsification of the cause vitiates the consent and annuls the contract. 1961. in the Mapalo spouses’ fav or.
(Samanilla vs. Rule 131. IAC promulgated its Decision affirming the appealed judgment and held that the Quitclaim Deed is a conveyance of property with a valid cause or consideration. New Civil Code) This presumption cannot be overcome by a simple assertion of lack of consideration especially when the contract itself states that consideration was given. Alfredo Ong. Sandra Maruzzo. thereafter.. Hence. through her guardian ad litem Alfredo Ong. with costs against Imelda Ong. Thus. Article 741 of the Civil Code provides that the requirement of the acceptance of the donation in favor of minor by parents of legal representatives applies only to onerous and conditional donations where the donation may have to assume certain charges or burdens (Article 726. vs. Rex Ong Jimenez. situated in Makati. the parties filed their responsive memoranda and submitted the case for decision. her heirs and assigns. Sandra Maruzzo. then a minor. being a minor. On 20 June 1983. Imelda Ong appealed to the Intermediate Appellate Court. Imelda Ong for and in consideration of P1 and other valuable considerations. 3. the party alleging lack of consideration has the burden of proving such allegation. One of the disputable presumptions is that there is a sufficient cause of the contract (Section 5. Imelda Ong revoked the aforesaid Deed of Quitclaim and.G. 53). filed with the RTC Makati an action against Imelda Ong. Sandra Maruzzo. The execution of a deed purporting to convey ownership of a realty is in itself prima facie evidence of the existence of a valuable consideration. Caballero. 1.. To overcome the presumption of consideration the alleged lack of consideration must be shown by preponderance of evidence in a proper action. Imelda Ong claimed that the Quitclaim Deed is null and void inasmuch as it is equivalent to a Deed of Donation. 45 O. the petition for review on certiorari. filed an Omnibus Motion informing this Court that she has reached the age of majority as evidenced by her Birth Certificate and she prays that she be substituted as private respondent in place of her guardian ad litem. title. On 15 March 1985. the trial court rendered judgment in favor of Maruzzo and held that the Quitclaim Deed is equivalent to a Deed of Sale and. released. (CA). Execution of deed a prima facie evidence of existence of valuable consideration Although the cause is not stated in the contract it is presumed that it is existing unless the debtor proves the contrary (Article 1354 of the Civil Code). assignor’s liberality may be sufficient cause for a valid contract It is not unusual in deeds of conveyance adhering to the Anglo-Saxon practice of stating that the consideration given is the sum of P1.Facts: On 25 February 1976. Moreover. Further. It is a legal presumption of sufficient cause or consideration supporting a contract even if such cause is not stated therein (Article 1354. assuming that said consideration of P1 is Page 63 of 87 . and the same has been reduced into a public instrument with all due formalities and solemnities. CA-40 O. Upon admission of the documents involved. Supreme Court ruled in Kapunan vs. (Caballero. et al. On 12 December 1983. On 19 November 1980. a Quitclaim Deed whereby she transferred. On 15 April 1985. The acceptance by a legal guardian of a simple or pure donation does not seem to be necessary (Perez vs. In simple and pure donation. Rules of Court). through her representative. to petitioner Imelda Ong.G. 4. a portion of lot 10 Block 18 of PSD-13288 LCR (GLRC) Record 2029. 2536). the cause or consideration is not P1 alone but also the other valuable considerations. there was a valid conveyance in favor of the latter. 432). executed in favor of Sandra Maruzzo. Cajucom. The Quitclaim in question does not impose any condition. 889) that the donation to an incapacitated donee does not need the acceptance by the lawful representative if said donation does not contain any condition. 107 Phil. Cause not stated in contract is presumed existing unless proven to the contrary. hence. On 20 June 1984. interest and participation in 1/2 undivided portion of a parcel of land (Lot 10B of the subdivision plan (LRC) Psd-157841. et al. et al. Civil Code). acceptance of which by the donee is necessary to give it validity. it is averred that the donee. had no legal personality and therefore incapable of accepting the donation. containing 125 square meters. through her guardian ad litem Alfredo Ong. Bad faith and inadequacy of monetary consideration does not render conveyance inexistent. on 20 January 1982 donated the whole property to her son. Consideration or cause is not P1 alone but also other valuable considerations The subject deed reveals that the conveyance of the 1/2 undivided portion of the property was for and in consideration of P1 and the other valuable considerations paid by Sandra Maruzzo. Acceptance by legal representatives of minor applies to onerous and conditional donations Granting that the Quitclaim deed is a donation. the Court issued a resolution granting the same. that the consideration is P1 which is clearly stated in the deed itself. all her rights. for the recovery of ownership/possession and nullification of the Deed of Donation over the portion belonging to her and for accounting. assigned and forever quitclaimed to Sandra Maruzzo. that the apparent inadequacy is of no moment since it is the usual practice in deeds of conveyance to place a nominal amount although there is a more valuable consideration given. The Supreme Court affirmed the appealed decision of the IAC. (r). although the actual consideration may have been much more. the formal acceptance is not important for the donor requires no right to be protected and the donee neither undertakes to do anything nor assumes any obligation. Stated differently. 2. Casilan and CA (109 Phil. Calingo.
and to pay the costs. of a decedent. of Hilario Mateum. at the pre-trial the parties agreed that the controversy be limited to the 10 parcels subject of the questioned sales. adver ting with approval to the Trial Court’s reliance on the Armentia ruling which. Although the complaint originally sought recovery of all the 29 parcels of land left by Mateum. with a cause that did not exist at the time of the Page 64 of 87 . had presented their evidence. It is asserted by the Bagtas.al. that he remained the declared owner thereof and that the tax payments thereon continued to be paid in his name.ms.’s evidence of alleged fraud was insufficient. this circumstance. e t. Article 1409. registered with the Registry of Deeds for the Province of Cavite 2 deeds of sale purportedly executed by Mateum in their favor covering 10 parcels of land. 10 of which are involved in the case. 9 were assessed for purposes of taxation at values aggregating P10. not forced heirs. that court affirmed. The record does not disclose the assessed value of the tenth parcel. covering 5 other parcels. Cavite. could not legally question the disposition made by said deceased during his life time. et. both courts saw as denying. died on 11 March 1964. Of the 10 parcels which remained in litigation. not forced heirs. Mateum left no will. but denied by Retonil. al. et. 10 August 1989) Bagnas v.al. 30. of whom Isaac. for the assignor’s liberality may be sufficient cause for a valid contract (Article 1350. Mateum continued in the possession of the lands purportedly conveyed until his death. fraudulent or falsified. al. as mere collateral relatives of Hilario Mateum had no right to impugn the latter’s disposition of his properties by means of th e questioned conveyances and submitting. Patriarca.al. that said sales notwithstanding. alternatively. and an estate consisting of 29 parcels of land in Kawit and Imus. et.R. seeking annulment of the deeds of sale as fictitious. that Bagtas. CA [G. 27 SCRA 484). regardless of whether. Claiming ownership pro indiviso of the lands subject of the deeds by virtue of being intestate heirs of Hilario Mateum. filed a motion for dismissal — in effect. and ordered them to return to Bagtas. no debts.al. Nambayan. single. may have obtained over the properties subject of said transfers. and each recited the reconsideration of the sale to be P1. commenced suit against Retonil. Teofilo Encarnacion and Jose B. services rendered and to be rendered for Mateum’s benefit. et. his first cousins. Retonil.al. and Agatona Encarnacion. Cavite. Retonil. a contract concerning an object certain entered into with a cause and with the consent of the contracting parties(See Morales Development v. Encarnacion. were able to secure title in their favor over 3 of the 10 parcels of land conveyed thereby.. August 10. does not necessarily justify the inference that the vendees were not purchasers in good faith and for value.suspicious. Void contracts: Cause not existing at time of transaction and contract without or with false cause (where no hidden cause is proved) Under the Civil Code of the Philippines. Narvasa (J): 4 concur Facts: Hilario Mateum of Kawit. Civil Code).al.500. in the CFI Cavite. as a matter of objective reality. bad faith and inadequacy of the monetary consideration do not rende r a conveyance inexistent. both. additionally. to collaterals. and declared the questioned transfers void and of no force or effect.. which has an area of 1. The Court ordered the annulment of such certificates of title Retonil. et.al. denied the allegations. accounting of the fruits thereof and damages. Rosa L. Retonil. CA. 38498. and the other was dated 4 March 1963. No.al. and the Trial Court ordered the exclusion of the 19 other parcels from the action.al. it would appear. Bagtas et. to account to the latter for the fruits thereof during the period of their possession. antedating Mateum’s death by more than a year. without ascendants or descendants. as mere collateral relatives. said dispositions were valid or not. 1989. Bagtas. The Trial Court granted the motion to dismiss. is not crucial. No damages. themselves collateral relatives of Mateum though more remote in degree. Both deeds were in Tagalog. alone. On 22 May 1964. et. however..00. The Supreme Court reversed the appealed Decision of the Court of Appeals. were the nearest. possession of all the properties involved in the action. to the Court of Appeals. Contracts.al. Indeed. holding on the authority of Armentia vs. et. et. et. that no evidence of fraud tainting said transfers had been presented. attorney’s fees or litigation expenses were awarded. Bagnas v. One deed was dated 6 February 1963 and covered 5 parcels of land. Silvestre.. After Bagtas. Neither does this inference warrant the conclusion that the sales were null and void ab initio. et. the right to impugn the latter’s dispositions inter vivos of his property.al. therefore. Maximina. and that Bagtas. save for the English descriptions of the lands conveyed under one of them. without exception. Whatever the truth. prayed for recovery of ownership and possession of said lands. and Sixto Bagtas. Retonil. CA (GR 38498. as donations void for want of acceptance embodied in a public instrument.443 sq. and survived only by collateral relatives. On 3 April 1964. On appeal by Bagtas.al. 1. the fact that the deeds of sale each stated a consideration of only P1 not being in itself evidence of fraud or simulation. although valid until annulled. whereas fraud or bad faith may render either rescissible or voidable.] First Division. paragraph 3. there being no evidence thereof before the Court.al. et. et. or. a demurrer to the evidence — reasserting the defense set up in their answer that Bagtas. what is not disputed is that on the strength of the deeds of sale. et.
inadequacy of consideration does not imply total want of consideration. Ana. i. The same is true of contracts stating a false cause (consideration) unless the persons interested in upholding the contract should prove that there is another true and lawful consideration therefor. the vendees. disproportion between the stipulated price in each deed of P1 plus unspecified and unquantilled services and the undisputably valuable real estate allegedly sold (worth at least P10. without any alternative true or lawful cause presented. and that the action was based on fraud vitiating said conveyance. That ruling is not extendible to transfers which. Property subject of void contract does not leave patrimony of transferor and recoverable by the heirs or the estate administrator The heirs intestate have legal standing to contest the conveyance made by the deceased if the same were made without any consideration. at worst. but on the premise that the property never leaves the estate of the transferor and is transmitted upon his death to heirs. 4. must be made and accepted in a public instrument. not to say enormous. If afterwards the transferor dies the property descends to his heirs.transaction are in existent and void from the beginning. The fact that the law as it is now (during the time of Armentia) no longer deems contracts with a false cause. Donations of immovable property must be made and accepted in a public document. al. and without regard to the manner in which they are called to the succession. makes the contract. False cause without hidden cause now not merely voidable. Armentia case. or with a false. 3. such property would passed to the transferor’s hairs intestate and be. 787 and Solis vs. being minors. it is well-known. Armentia case. are notoriously low indicators of actual value) plainly and unquestionably demonstrates that they state a false and fictitious consideration. cause is that conveyances of property affected with such a vice cannot operate to divest and transfer ownership. not void ab initio. that there has been no such acceptance which they claim is not required. Such an action is not founded on fraud. renders contract void Upon the consideration alone that the apparent gross. Thus. Armentia only ruled that transfers made by a decedent in his lifetime. inexistent (”nulo”) unless it is shown that they are supported by another true and lawful cause or consideration. does not apply to transfers which are void for lack or falsity of consideration As a precedent. Page 65 of 87 . but void ab initio. Effect of the change in the juridical status of contracts based on false cause A logical consequence of that change is the juridical status of contracts without. 2. who would labor under no incapacity to maintain the action from the mere fact that they may be only collateral relatives and bound neither principally or subsidiarily under the deed / contract of conveyance.. merely voidable. the Court finds both said deeds. 10. Conveyance merely annullable as action based on fraud vitiating conveyance In Armentia. insofar as they purport to be sales.00 going only by assessments for tax purposes which. or for a false and fictitious consideration. which renders the contract merely voidable. a fact uncontroverted by the case’s plaintiff. Sta. recoverable by them or by the Administrator of the transferor’s estate. 50 Phil. If therefore the contract has no causa or consideration. False and fictitious consideration. in essence the plaintiffs’ cas e is bottomed on fraud. Armentia case applies to voidable contracts obtained or made fraudulently.500. only annullable by the m. 6. (Article 1353). 5. 7. not void ab initio. 536) as outrightly erroneous. those rulings undoubtedly read and applied correctly the law extant in their time: Article 1276 of the Civil Code of 1889 under which the statement of a false cause in a contract rendered it voidable only. the Concepcion and Solis rulings (Concepcion vs. Liberality as cause denied The validity of the conveyances cannot be defended on the theory that their true causa is the liberality of the transferor and they may be considered in reality donations. upon the latter’s death without a testament. and it is not denied by Retonil. Armentia ruling clarified Concepcion and Solis rulings. Further. not merely voidable. and no other true and lawful cause having been shown. even if unimpugned.e. cannot be posthumously impugned by collateral relatives succeeding to his estate who are not principally or subsidiarily bound by such transfers. said heirs may bring an action to recover the property from the purported transferee. Chua Pua Hermanos. Also. 87 Phil. the purported acts of Marta Armentia after the sale did not indicate that the said sale was void from the beginning. though made under closely similar circumstances. The court found that Marta Armentia executed the document. but declares them void. et. the Court determined that the conveyance questioned was merely annullable. Moreover. are void ab initio for lack or falsity of consideration. On the contrary. because the law also prescribes that donations of immovable property. or which are absolutely simulated or fictitious. and is not to be construed as rejecting. Intestate heirs have legal standing. to be valid. which are voidable for having been fraudulently made or obtained. but void ab initio The Armentia ruling does not reject. or the causa is false and fictitious (and no true hidden causa is proved) the property allegedly conveyed never really leaves the patrimony of the transferor.
Mate filed a motion to reconsider the decision but it was denied.400. CA [G. She requested Mate to cede to Tan his 3 lots in Tacloban City in order to placate him. it is Josie who will provide the money for the redemption of the properties with her own funds. on 29 August 1994 (CA-GR CV 28225-26). et.al.00 in his account at the UCPB and the other check for P420. it follows as a necessary consequence and conformably to the concurring opinion in Armentia. et..400. that the properties purportedly conveyed remained part of the estate of Hilario Mateum.] Second Division.00 in his account at MetroBank preparatory to the redemption of his properties. To protect his interest. et. Effect Retonil.00. although it would appear in the document that Mate is the vendor. have only themselves to blame for the lack of proof that might have saved the questioned transfers from the taint of invalidity as being fictitious and without licit cause. et. 21 May 1998) [ haystack ] Mate v. But even on a contrary assumption. The appellate court. Thereupon. he immediately rejected it as he owed Tan nothing and he was under no obligation to convey to him his properties. the properties will be repurchased within 6 months or on or before 4 April 1987. Immediately thereafter Mate prepared the Deed of Sale with Right to Repurchase and after it has been signed and notarized.432. present. Mate returned to Tacloban City and filed Criminal Cases 8310 and 8312 against her for violation of BP 22 but the cases were later archived as the accused (Josie) could not be found as she went into hiding. et. to offer evidence of existent. and future. the movant loses the right to present evidence in his behalf. Mate vs. Demurrer to evidence. On hearing Josie’s proposal .. with costs against Mate.al.al. being mere collateral relatives of the deceased transferor.400. that burden was shifted to Retonil. initially had the burden of showing that the transfers lacked such consideration as they alleged in their complaint. sister and brother issued to Tan amounting to P4.11. and positing that Bagnas. Both of them were dishonored by the drawee bank for having been drawn against a closed account. of the character and value of the services. May 21.000. her mother.e. Burden of proof in the existence of a valid and licit contract Retonil. Realizing that he was swindled. with which the Court fully agrees. Josie explained to him that he was in no danger of losing his properties as he will merely execute a simulated document transferring them to Tan but they will be redeemed by her with her own funds. On 14 January 1987. to be brief. he sent Josie a telegram about her checks and when she failed to respond.al. they gambled their right to adduce evidence on a dismissal in the Trial Court and lost. and thus recoverable The transfers in question being void.000. said transfers notwithstanding. al. After a long discussion. Properties remained as part of estate of Mateum. issued him 2 BPI checks both postdated 15 December 1986.00 supposedly for the selling price and the other was for P420. Rey and Inocencio Tan went to the residence of Fernando Mate at Tacloban City.000. proof.000. past.067. were without right to the conveyances in question.000. whose status as such is not challenged. affirmed the decision with modification that Mate is ordered to pay Tan the sum of P140. to assure Mate that she will redeem the properties. et. subject to the conditions that the amount to be stated in the document is P1. Josie who is a cousin of Mate’s wife solicited his help to stave off her and her family’s prosecution by Tan for violation of BP 22 on account of the rubber checks that she.’s evidence and upon the thesis that the latter. Page 66 of 87 . Furthermore.00 with interest thereon at 5% a month.R. it was given to Tan together with the titles of the properties and the latter did not register the transaction in the Register of Deeds as agreed upon. The onus of showing the existence of valid and licit consideration for the questioned conveyances rested on Retonil. et. et. Martinez (J): 4 concur Facts: On 6 October 1986 Josefina R. One check was for P1. Josie. et. he agreed to execute a fictitious deed of sale with right to repurchase covering his 3 lots.al.al. Mate v. his lots were not for sale. Nos. the petition for review. In effect. Mate deposited the check for P1. 13. Rey and Tan) for Annulment of Contract with Damages. it being the rule that when a dismissal thus obtained is reversed on appeal. CA (GR 120724-25. But during the trial the RTC court asked Tan to file an action for consolidation of ownership of the properties subject of the sale and pursuant thereto he filed Civil Case 7587 that was consolidated with the case he filed earlier which were later decided jointly by the trial court in favor of Tan and was subsequently appealed to the Court of Appeals. Lack of proof that could have saved transfers from taint of invalidity.00 corresponding to the interests for 6 months. 1998. 12. presented the deeds which they claimed showed that defect on their face and it became the duty of Retonil. lawful consideration. and the titles to the properties will be delivered to Tan but the sale will not be registered in the Register of Deeds and annotated on the titles. Hence. he filed Civil Case 7396 of the RTC Leyte (Branch VII. recoverable by his intestate heirs. i. 120724-25. constituting — according to the very terms of said transfers the principal consideration therefor..al. opting to rely on a demurrer to Bagtas. Josie was declared in default and the case proceeded against Tan. when Bagnas. he went to Manila to look for her but she could not be found.000 for and as attorney’s fees. Bagtas. al. 31.
Apparently. Tan would not have agreed to waive prosecution of Josie. The filing of the criminal cases was a tacit admission by petitioner that there was a consideration of the pacto de retro sale. Mate a lawyer Tan did not employ any devious scheme to make the former sign the deed of sale. August 24.4M purchase price from Tan. 2. Josie gave Mate a postdated check in the amount of P1. When he drafted the pacto de retro document. a lawyer. with the CFI Manila. By allowing his titles to be in possession of Tan for a period of 6 months. she 9then 78 years old) signed 9 deeds of sale in favor of Salvacion. Wh en Josie’s checks bounced. In turn. a spinster who retired as division superintendent of public schools at 65 in 1961. as evidenced by his filing criminal cases against Josie when the two checks bounced. he gave occasion for the damage caused by virtue of the deed of sale with right to repurchase which he prepared and signed. accounting of the rentals and damages. Contracts A contract is a contract. 643). Aseneta.00 from her which impelled him to execute such contract. 5. The deed of sale for the Paco property was signed in the office of the Quezon City registry of deeds. Mate secured from her another check for P420. and a niece named Salvacion. Mate knew that he was bound by the deed of sale with right to repurchase. 1 reserved vote Facts: Clemencia A. Mate’s cause of action was to file criminal actions aga inst Josie under BP 22. Mate.200. Aquino (J): 4 concur. Consideration exist in the Deed of Sale with Right to Repurchase (Sale with Pacto de Retro) To ensure that he could repurchase his lots.000. While Mate did not receive the P1. 3. Once agreed upon. Tan waived his right to collect from Josie by virtue of the pacto de retro sale. he should have repurchased his lots with his own money. 1. Maninang. Agustin and Salvacion) which purportedly was sold to Salvacion for P26. 69.400. the daughter of her sister Flora. Proper cause of action is BP 22 against Josie. Aseneta. Mate has no one to blame but himself for his misfortune. One deed of sale concerned the said Paco property (166 sq. 4. Clemencia testified and denied having “received even one centavo” o f the price of P26. Singson v. 6 April 1974.000. On a single date.The Supreme Court affirmed the decision of the Court of Appeals dated 29 August 1994. Bernardo. 32. Tan incurred no false pretense. and denied due course to the petition for review for lack of merit. Quezon City. m. being his cousin. the child of her sister Gloria. In May 1975. it was Mate’s greed for a huge profit that impelled him to accede to the scheme of Josie even if he knew it was a dangerous undertaking. She legally adopted Bernardo in 1961. should have known that the transaction was fraught with risks since Josie and family had a checkered history of issuing worthless checks. The notary public stated that he did not see Salvacion Page 67 of 87 . but also his receipt of P420. Isabela Sawmill (88 SCRA 633. he sued not only Josie but also Tan for annulment of contract on the ground of lack of consideration and false pretenses on their part. where the Court said that “where one or two innocent persons must suffer.000.R. 1 took no part. Isabela Sawmill does not apply Mate’s reliance on the doctrine in Singson vs. much less the P92. filed an action for reconveyance of the Paco property. the one who made it possible for the wrong to be done should be the one to bear the resulting loss. But had Mate not agreed to the arrangement.000. which he did. 1984. and provided all the essential elements are present. Mate got a check of P1. It is thus plain that consideration existed at the time of the execution of the deed of sale with right of repurchase.000).000. as guardian of Clemencia. Instead.00 from Josie. Ladanga v.4M to ensure that the latter would not lose his two lots. The total price involved in the 9 deeds of sale and in the 10th sale executed on 8 November 1974 was P92. No basis to file an action to annul the pacto de retro sale. he threw caution to the winds forgetting that prudence might have been the better course of action. had a nephew named Bernardo S. he had in his possession a postdated check of Josie in an equivalent amount precisely to repurchase the 2 lots on or before the 6th month. Thus. He is not an innocent person. there is the equitable maxim that between two innocent parties.00. Filing of criminal case a tacit admission that there is consideration of the pacto de retro sale There is absolutely no basis for Mate to file a complaint against Tan and Josie to annul the pacto de retro sale on the ground of lack of consideration. lot located at 1238 Sison Street Paco Manila and administered by the Ladanga spouses. invoking his failure to encash the two checks. It is not only Mate’s kindness to Josefina. No. a dentist with whom Clemencia had lived for more than 30 years in Kamuning. L-55999. CA [G. This testimony was corroborated by Soledad L. As a matter of fact. it is valid and binding between the parties. that person who gave occasion for the damages to be caused must bear consequences” is misplaced. CA (GR-L 55999m 24 August 1984) Spouses Ladanga v. Clemencia was not mentally incompetent but she was placed under guardianship because she was an easy prey for exploitation and deceit.] Second Division. for various real properties.
The will was presented for probate. 4. She allegedly bequeathed her properties in a holographic will dated 23 November 1973 to Doctor Maninang. CA [G. Mapalo vs. They were not able to prove the payment of that amount. 74 SCRA 83. Mapalo. Garanciang vs. 5. as contemplated in section 4. 979. vs. which appears therein as paid. 1996. 98 Phil. L-22351. 1976. 1. The spouses appealed to the Supreme Court. Pepsi-Cola Bottling Co. Perez & Co. On 5 October 1979. 28 SCRA 229). 1979 Ed.hand any money to Clemencia for the purported sale when the deed was signed in the registry of deeds. 123 Phil. Sale inexistent and cannot be considered consummated A contract of sale is void and produces no effect whatsoever where the price. 921). Bustos and Escaler. Ocejo. Heirs of Catalina Roque. has in fact never been paid by the purchaser to the vendor (Meneses Vda. No evidence of intention of vendor to donate the property Clemencia did not intended to donate the Paco property to the Ladangas. August 28. and the Roque children with 1/10 share each). the decision became final and executory. Only legal issues may be raised in a review of the decision of the appellate court As a rule.. Civil Case 109032). Pronove at Pasig. Bernardo had the right to institute the instant action. ordering the partition of the properties. Severa and Osmundo Roque. Balatbat v.000 as moral and exemplary damages and attorney’s fees and to render to Bernardo an accounting of the rentals of the property from 6 April 1974. Feliciano. Without costs. Aurelio (as surviving spouse) was entitled to ½ share pro-indiviso of the conjugal property (i. The testate case was consolidated with the intestate proceeding filed by Bernardo in the sala of Judge Ricardo L. p. He appointed Bernardo as administrator in the intestate case. L-25777. only important legal issues. Roque filed a complaint for partition against his children Corazon. with the corresponding entry of judgment made 29 March 1979. 125 Phil. and Alberto de los Santos before the CFI Manila (Branch IX. Moreover. and ordered the spouses to pay Clemencia’s estate P21. Burden of proof Clemencia herself testified that the price of P26. ordered the register of deeds to issue a new title to Clemencia. Bernardo’s capacity to sue Bernardo was Clemencia’s adopted son. He dismissed the testate case. thus the sale was fictitious. the burden of the evidence shifted to the Ladanga spouses. 1969.R. the trial court rendered a decision in favor of Aurelio. Page 68 of 87 . May 21. 6.] Second division. the Court of Appeals affirmed the decision of the CFI. It seemed that the Ladangas abused Clemencia’s confidence and defrauded her of properties with a market value of P393.000 was not paid to her. Garanciang. Cruzado vs. 2. Syllabus. tacitly approved the action brought in her behalf. Her testimony and the notary’s testimony destroyed any presumption that the sale was fair and regular and for a true consideration. 34 Phil. 33. Clemencia’s own signature in the deed brought about the mess within which she was entangled. On appeal. The Supreme Court affirmed the judgment of the Appellate Court with the modification that the adjudication for moral and exemplary damages is discarded.25 when she was already 78 years old. CA (GR 109410. No. 475. 28 August 1996) Balatbat v. de Catindig vs. and thus. Clemencia. Void contract in the absence of price being paid. that when Maria Mesina died on 28 August 1966. by testifying in this cas e. 432. On 29 March 1979. The Roque children were declared in default and Aurelio presented evidence ex-parte. Rule 45 of the Rules of Court. 109410. with out pronouncement as to costs. November 26. Borromeo. leaving no debt. In that will she disinherited Bernardo. the Register of Deeds of Manila issued TCT 135671 (with Aurelio Roque having 6/10 share. Award of moral damages not sanctioned The moral damages awarded by the trial court is not sanctioned by articles 2217 to 2220 of the Civil C ode. Such a sale is inexistent and cannot be considered consummated (Borromeo vs. 3. Flores and Bas. 987. 701). house and lot) and that Aurelio and his 4 children were entitled to 1/5 share pro-indiviso each of the ½ share pro-indiviso forming the estate of Maria Mesina. and dismissing Aurelio’s claim for moral. The present case does not fall within any of the exceptions to that rule (2 Moran’s Comments on the Rules of Court. 88.559. may be raised in a review of the Appellate Court’s decision. as well as the house that was constructed thereon. Aurelio A. holding that Aurelio and his wife Maria Mesina acquired the lot (TCT 51330) during their conjugal union. 17. Rizal. Torres Jr (J): 4 concur Facts: On 15 June 1977.e. The trial court declared void the sale of the Paco property. Ramos vs. 40 Phil. On 2 June 1979. Clemencia died on 21 May 1977 at the age of 80. exemplary and actual damages and attorney’s fees.
On 22 March 1993.” The corresponding writ of possession was issued on 20 September 1982. the Court dismissed Aurelio complaint for rescission of the deed of sale and declared that the sale dated 1 April 1980. On 3 March 1987. Corazon.000. with costs against Aurelio. Aurelio sold his 6/10 share in TCT 135671 to spouses Aurora Tuazon-Repuyan and Jose Repuyan as evidenced by a “Deed of Absolute Sale. spouses Repuyan filed their answer with counterclaim. to partition and subdivide the land covered by TCT 135671. On 9 December 1988. ordering the Deputy Clerk of the court to sign the deed of absolute sale for and in behalf of Roque children pursuant to Section 10.00. Dissatisfied. It must be noted that Balatbat filed a motion for intervention in that case but did not file her complaint in intervention. valid and enforceable. Severa and Osmundo Roque and Clara Balatbat. as valid and enforceable. The Repuyans and the Balatbats submitted their memoranda on 13 November 1989 and 23 November 1989. the decision became final and executory.000 as costs of litigation. and title issued in the name of the buyer hence. On 5 September 1980.000. Feliciano. On 27 January 1989. Aurelio Roque filed a complaint for “Rescission of Contract” against spouses Repuyan before the then CFI Manila (Branch IV. ms. Considering further that the spouses suffered damages since they were forced to litigate unnecessarily. ” On 20 August 1980. Hence.000 for attomey’s fees and P5. other than vendor or any other person or persons privy to or claiming any rights or interest under it.000. Sta. Clara Balatbat filed a motion for the issuance of a writ of possession which was granted by the trial court on 14 September 1982 “subject. the trial court issued an order in Civil Case 109032 (Partition case) dated 2 February 1982. 1 April 1980 sale consummated.00 balance is payable only after the property covered by TCT 135671 has been partitioned and subdivided. No appeal having been made. the P45. 2. However. The Supreme Court dismissed the petition for review for lack of merit. On 20 May 1982. and ordering Balatbat to pay the Repuyans the amount of P10. In Callejon Sulu.000 purchase price for the 84 sq. valid and enforceable The sale dated 1 April 1980 in favor the Repuyan spouses is consummated. Clara Balatbat filed a motion to intervene in Civil Case 134131 which was granted as per court’s resolution of 21 October 1982. Devoid of any stipulation that “ownership in the thing shall not pass to the purchaser until he has fully paid the price”. and to aggregate therefrom a portion equivalent to 6/10 thereof. On 15 April 1986. the petition for review pursuant to Rule 45 of the Revised Rules of Court.0 0 of the purchase price. however. In a decision dated 15 April 1986 of the RTC Manila (Branch IV.” On 21 July 1980.000. Cruz. and declaring the Deed of Absolute Sale dated 1 April 1980 as valid and enforceable and Aurelio is. 1. A deed of absolute sale was executed on 4 February 1982 between Aurelio. affirming the judgment appealed from with modification deleting the awards of P10. to valid rights and interest of third persons over the same portion thereof. The complaint is grounded on spouses Repuyan’s failure to pay the balance of P45. Rule 39 of the Rules of Court. 1 April 1980 Deed of Sale devoid of stipulation withholding ownership of thing until full payment. ownership in the thing shall pass from the vendor to the vendee upon actual or constructive delivery of the thing sold even if the purchase price has not yet been fully paid. the trial court rendered a decision dismissing the complaint.00 with a downpayment of P5. and to pay the costs of the suit.000. and cause the same to be titled in the name of spouses Repuyan. Aurora Tuazon Repuyan caused the annotation of her affidavit of adverse claim on the TCT 135671. respectively. the vendor cannot demand payment of the balance unless and until the property has been subdivided and titled in the name of the Repuyan spouses. Page 69 of 87 . Civil Case 88-47176) against Jose and Aurora Repuyan. the latter to pay Aurelio the sum of P45.000 as costs of litigation. the RTC Manila rendered a decision dismissing the complaint. and after which. attorney’s fees in the amount of P5. by way of their counterclaim. Aurelio is hereby ordered to pay the spouses the sum of P15. Civil Case 134131). On 14 April 1982.000. the Court of Appeals denied Balatbat’s motion for reconsideration. Balatbat and her husband filed a complaint for delivery of the owners duplicate copy of TCT 135671 before the RTC Manila (Branch 24. On 2 August 1990.000.00. married to Alejandro Balatbat. Clara Balatbat failed to file her complaint in intervention. in order to effect the partition of the property involved in the case (P100.00 as moral damages.000.00 to be paid after the partition and subdivision of the property. finding that the Balatbats were not able to establish their cause of action against the Repuyans and have no right to the reliefs demanded in the complaint. “claiming that she bought 6/10 portion of the property from Aurelio Roque for the amount of P50. without pronouncement as to costs. Civil Case 134131). not merely executory for the reason that there was no delivery of the subject property and that consideration/price was not fully paid.00 and the balance of P45.000 as attorney’s fees. Manila is reasonable and fair. P5. spouses Repuyan filed their answer with affirmative defenses and compulsory counterclaim. and that opportunities have been given to the children to sign the deed voluntarily). Ownership pass upon delivery of thing sold even if purchase price not fully paid The terms and conditions of the “Deed of Sale” dated 1 April 1980. as he is hereby ordered.On 1 April 1980. In the meantime. Balatbat filed an appeal before the Court of Appeals (CA-GR CV 29994) which rendered decision on 12 August 1992. hence. Balatbat filed a notice of lis pendens in Civil Case 109032 before the Register of Deeds of Manila.
The annotation of the adverse claim on TCT 135671 in the Registry of Property is sufficient compliance as mandated by law and serves notice to the whole world. 28 4. Non-payment only creates a right to demand the fulfillment of the obligation or to rescind the contract. filed a notice of lis pendens only on 2 February 1982. Necessity of public document merely for convenience. 5. Accordingly. perfected by mere consent of the parties. Ownership vests in person who acquired the immovable property in good faith and who first recorded it in the Registry of Property. 6. Subsequently. provided there is good faith. the ownership shall be transferred to the person who may have first taken possession thereof in good faith. transfers the ownership from the vendor to the vendee. the Repuyan spouses who first caused the annotation of the adverse claim in good faith shall have a better right over Balatbat. on 4 February 1982.” Article 154 4 of the Civil Code provides that in case of double sale of an immovable property. Non-payment in a contract of sale merely creates right to demand fulfillment of obligation or rescission of contract. the execution thereof shall be equivalent to the delivery of the thing which is the object of the contract. who may thereafter exercise the rights of an owner over the same. the Repuyan spouses caused the annotation of an adverse claim on the title of the subject property denominated as Entry 5627/T-135671 on 21 July 1980. the ownership shall belong to the person acquiring it who in good faith first recorded it in the Registry of Property. to the person who presents the oldest title. other than vendor or any other person or persons privy to or claiming any rights to interest under it. Possession of public instrument of the land accords buyer rights of ownership Article 1498 of the Civil Code provides that — when the sale is made through a public instrument. 9. provided there is good faith. to the person who present the oldest title. In the present case. possession of the public instrument of the land is sufficient to accord him the rights of ownership. represented by the Clerk of Court pursuant to Section 10. Present case is a double sale The present case is a case of double sale contemplated under Article 1544 of the New Civil Code. Annotation of adverse claim sufficient In an instance of a double sale of an immovable property. for which the vendor may exercise his legal remedies. Article 1544. Contract of sale consensual. the ownership shall vests in the person acquiring it who in good faith first recorded it in the Registry of Property. to the person who in good faith was first in possession. In the present case. ownership shall be transferred (1) to the person acquiring it who in good faith first recorded it in the Registry of Property. and (3) in default thereof. Non-payment does not render sale null and void for lack of consideration A contract of sale being consensual. Delivery of the thing bought or payment of the price is not necessary for the perfection of the contract. if from the deed the contrary does not appear or cannot be inferred. cause the ownership to revest to the seller unless the bilateral contract of sale is first rescinded or resolved pursuant to Article 1191 of the New Civil Code. It is not a requirement for the validity of a contract of sale of a parcel of land that this be embodied in a public instrument. and failure of the vendee to pay the price after the execution of the contract does not make the sale null and void for lack of consideration but results at most in default on the part of the vendee.3. Double sale Article 1544 of the New Civil Code provides that “if the same thing should have been sold to different vendees. either actual or constructive. Thus. Should it be movable property. Possession of Balatbat merely provisionary The physical possession of Balatbat by virtue of a writ of possession issued by the trial court on 20 September 1982 is “subject to the valid rights and interest of third persons over the same portion thereof. With respect to the non-delivery of the possession of the subject property to the private respondent.” Page 70 of 87 . 7. In the present case. in law. 8. if it should be movable property. vendor Roque delivered the owner’s certificate of title to the Repuyan spouses. the ownership shall pertain to the person who in good faith was first in the possession and in the absence thereof. It is not necessary that vendee be physically present at every square inch of the land bought by him. Should there be no inscription. The execution of the public instrument. suffice it to say that ownership of the thing sold is acquired only from the time of delivery thereof. on the other hand. 10. not for validity or enforceability. and not for validity or enforceability of a contract of sale The provision of Article 1358 on the necessity of a public document is only for convenience. (2) in default thereof. delivery of a parcel of land may be done by placing the vendee in control and possession of the land (real) or by embodying the sale in a public instrument (constructive). it is perfected by the mere consent of the parties. the same lot was sold again by vendor Aurelio Roque (6/10) and his children (4/10). Aurelio Roque sold 6/10 portion of his share in TCT 135671 to the Repuyan spouses on 1 April 1980. Ownership of a thing sold acquired from time of actual or constructive delivery. Rule 39 of the Rules of Court. Balatbat. without actual delivery of the thing. Article 1191 The failure of the buyer to make good the price does not.
else oldest title As between two purchasers. Carmen Cari-an and Fredisminda Carian were likewise fully compensated for their individual shares. respectively. Due diligence in the purchase of real estate required to allege good faith It is incumbent upon the vendee of the property to ask for the del ivery of the owner’s duplicate copy of the title from the vendor. Nombre’s heirs include his nephews and grandnephews. by the due date. Nelly Chua vda. said contract of sale being effective only upon the approval of said CFI in Himamaylan. 34. 119777. 1997. CA (GR 119777. the vendees. and that in the event the vendees fail and/or omit to pay the balance of said purchase price on 31 May 1979 and the cancellation of said Contract of Sale is made thereby.. et. Heirs of Escanlar v. October 23. Even in default of the first registrant or first in possession. lease. The latter was declared as Victoriana’s heir in the estate proceedings for Nombre and his wife (Special Proceeding 7 -7279).948 sq. first in possession. 1 on leave Facts: Spouses Guillermo Nombre and Victoriana Cari-an died without issue in 1924 and 1938.350 sq. and children. Romero (J): 3 concur. said heirs received at least 12 installments from them after May 1979. In the complaint for rescission filed by Aurelio Roque on 20 August 1980. Gross negligence equvalent to intentional wrong Balatbat had nobody to blame but herself in dealing with the disputed property for failure to inquire or discover a flaw in the title to the property. the spouses who acquired the subject property in good faith and for valuable consideration established a superior right as against Balatbat. If Balatbat did investigate before buying the land on 4 February 1982. First registrant. 2 parcels of land. Interests and Participation in favor of Pedro Escanlar and Francisco Holgado ½ portion pro-indiviso of Lot 1616 and 1617 of the Kabankalan Cadastre. sell. v. pursuant to the order of the CFI Negros Occidental (Branch VI) Hiimamaylan. 13. tangible fact that can be seen or touched. No. October 23. Generosa Martinez. CA [G. thus.ms. the sum of P50.00) shall be paid on or before May 1979 in a Deed of Agreement executed by the parties on the same day confirming and affirming the Deed of Sale of 15 September 1978. al. respectively. However. Leonardo Cari -an passed away. amounting to P55. formed part of the estate of Nombre and Cari-an. were also adjudged as heirs by representation to Victoriana’s estate. hence. denominated as Lot 1616 and 1617 of the Kabankalan Cadastre with an area of 29. No. Escanlar and Holgado were unable to pay the Cari-an heirs’ individual shares. interests and participation over said land. Rodolfo. 1997. as his heirs. They stipulated that the balance of the purchase price (P225. his wife. has a preferred right over the other who has not registered his title even if the latter is in actual possession of the immovable property. that pending complete payment thereof. After Gregorio died in 1971. Victoriana Cari-an was succeeded by her late brother’s son. nor mortgage the rights.] Holgado. she should have known that there was a pending case and an annotation of adverse claim was made in the title of the property before the Register of Deeds and she could have discovered that the subject property was already sold to the Repuyan spouses. One who purchases real estate with knowledge of a defect or lack of title in his vendor cannot claim that he has acquired title thereto in good faith as against the true owner of the land or of an interest therein. Carmen. or the want of it is not a visible.R. which shall be deposited with the Municipal Treasurer of Himamaylan. Balatbat not a buyer in good faith Balatbat cannot be considered as a buyer in good faith. Negros Occidental. and 460. Escanlar and Holgado.000. de Cari-an and minor son Leonell. Good faith. the decision was rendered adversely against her.11. 14. leaving his widow. pertaining to the ½ portion pro-indiviso of the late Victoriana Cari-an in consideration of P275.000 to be paid to the heirs except the share of the minor Leonell Cari-an. it is axiomatic that — culpa lata dolo aequiparatur — gross negligence is equivalent to intentional wrong. Gregorio Cari-an’s heirs executed the Deed of Sale of Rights.000. per receipts given in evidence. Rodolfo Cari-an was fully paid by 21 June 1979. the Repuyan spouses have presented the oldest title. the vendees are not to assign. the one who has registered the sale in his favor.00 each.00 shall be deemed as damages thereof to vendors. Generosa Martinez. On 15 September 1978.000. but rather a state or condition of mind which can only be judged of by actual or fancied tokens or signs. Gregorio Cari -an. v.al. 120690. 23 October 1997) Heirs of Escanlar. 12. The minor Leonell’s share was Page 71 of 87 . Balatbat filed a motion for intervention on 20 May 1982 but did not file her complaint in intervention.ms. were concurrently the lessees of the lots referred to. A purchaser of a valued piece of property cannot just close his eyes to facts which should put a reasonable man upon his guard and then claim that he acted in good faith and under the belief that there were no defect in the title of the vendor. Thus. et. CA [G. and the same rule must be applied to one who has knowledge of facts which should have put him upon such inquiry and investigation as might be necessary to acquaint him with the defects in the title of his vendor.] Third division. Leonardo and Fredisminda Cari-an.R.
000 as moral damages. the consolidated petitions for review. On 18 December 1991. the vendor-heirs.200. claims and interests over any of those properties of the estate which cannot be properly and legally ventilated and resolved by the court in the same intestate proceedings. having been paid. On 20 April 1983.00 and turned over possession of both lots to the latter.000. Escanlar and Holgado raised the case to the Court of Appeals (CA-GR CV 39975). declared the 23 September 1982 Deed of Sale in favor of spouses Chua as legal. The Cari-ans instituted a case for cancellation of sale against Escanlar and Holgado on 3 November 1982. ordered spouses Jayme to pay spouses Chua the sum of P157. The Jaymes in turn. which was approved by the probate court. Consequently. executed by the heirs in favor of Escanlar and Holgado. including the Cari-ans. and that the court approval of the sale to the Chuas was subject to their existing claim over said properties. A week later. were included in the civil case as fourth-party defendants. interests and participation and because the Cari-ans were not fully paid. the trial court approved the Chuas’ motion to file a fourth-party complaint against the spouses Jayme. the trial court resolved the case in favor of the cancellation of the 15 September 1978 sale as it was not approved by the probate court as required by the contested deed of sale of rights. they suffered materially from uncollected rentals. the Cari-ans. Page 72 of 87 . Escanlar and Holgado also sold their rights and interests in the subject parcels of land (Lots 1616 and 1617) to Edwin Jayme for P735. Holgado and spouses Jayme to immediately vacate Lots 1616 and 1617. Hence. i.deposited with the RTC on 7 September 1982. interests and participation is a contract to sell because it shall become effective only upon approval by the probate court and upon full payment of the purchase price.551. On 10 September 1981. Escanlar and Holgado moved to intervene in the probate proceedings of Nombre and Cari-an as the buyers of the Cari-ans’ share in Lots 1616 and 1617. the sale made on 21 September 1982 to the Chuas. Being former lessees. The court also declared the amount of P50. The trial court allowed a third-party complaint against the spouses Chua on 7 January 1986 where Escanlar and Holgado alleged that the Cari-ans conspired with the Chuas when they executed the second sale on 21 September 1982 and that the latter sale is illegal and of no effect. On 3 December 1984.00 in cash and goods. the case is considered terminated and the intestate estate of Guillermo Nombre and Victoriana Cari-an is closed. Escanlar and Holgado continued in possession of Lots 1616 and 1617. filed a motion for approval of sale of hereditary rights. Meanwhile.000 as forfeited in favor of the heirs but ordering the heirs to return to Escanlar and Holgado the amounts they received after 31 May 1979 and the amount of P35.850.218. Their motion for reconsideration was denied by the appellate court on 3 April 1995. and to pay the costs. Escanlar and spouses Jayme to pay in solidum the amount of P100.000 as rentals for the Riceland and P3.00.75 deposited with the Treasurer of Himamaylan. the RTC Himamaylan which took cognizance of Special Proceeding 7-7279 (Intestate Estate of Guillermo Nombre and Victoriana Cari-an) had rendered its decision on 30 October 1987. On 28 April 1988. they continued to pay rent based on their lease contract. executed by Escanlar and Holgado in favor of spouses Jayme. Spouses Chua countered that they did not know of the earlier sale of ½ portion of the subject lots to Escanlar and Holgado. the court declared the 15 September 1978 Deed of Sale. Thus. ordered Holgado. and likewise the sale of leasehold rights. and that by reason of the illegal occupation of Lots 1616 and 1617 by the Jaymes. ordered Escanlar. and likewise the Deed of Agreement of the same date.000 as attorney’s fees to spouses Chua. On 16 September 1982.e. the 20 April 1983 Deed of sale. On 21 September 1982. filed on 10 November 1981. had no right to resell the subject lots.000. in addition to some heirs of Guillermo Nombre. The probate court concluded that since all the properties of the estate were disposed of or sold by the declared heirs of both spouses.” The certificates of title over the 8 lots sold by the heirs of Nombre and Cari -an were later issued in the name of the spouses Chua. Spouses Chua alleged that the Jaymes refused to vacate said lots despite repeated demands. valid and enforceable subject to the burdens of the estate. and thus found it unnecessary to resolve the Motion for Subrogation of movants Escanlar and Holgado in view of the proceeding’s summary nature and the probate court’s lack of jurisdiction upon the validity of sale of rights of the Nombre and Cari-an heirs to third parties. was opposed by the Cari-ans on 5 January 1982. the Deed of Sale executed by the heirs of Nombre and Cari-an in favor of the spouses Chua. that the Chuas were purchasers in bad faith. P30. were declared null and void and of no effect. The appellate court affirmed the decision of the trial court on 17 February 1995 and held that the questioned deed of sale of rights. Their motion for approval of the 15 September 1978 sale before the same court.000 as rentals for the fishpond from October 1985 to 24 July 1989 plus rentals from the latter date until the property is delivered to the spouses Chua. the probate court approved the 21 September 1982 sale “without prejudice to whatever rights. Both parties claimed damages. was upheld. Interestingly. They complained of the latter’s failure to pay the balance of the purchase price by 31 May 1979 and alleged that they only received a total of P132. the probate court approved a motion filed by the heirs of Cari-an and Nombre to sell their respective shares in the estate. Escanlar and Holgado replied that the Cari-ans. sold their shares in 8 parcels of land including Lots 1616 and 1617 to the spouses Ney Sarrosa Chua and Paquito Chua for P1.
Inc. The 15 September 1978 Deed of Sale of Rights. The contract’s validity was not affected for in the words of the stipulation. ownership is retained by the seller and is not to pass until the full payment of the price. the non-payment of the price is a resolutory condition which extinguishes the transaction that. reversed and set aside the decision of the Court of Appeals under review. such as that in Luzon Brokerage Co. the result is a valid contract. Upon sale to them of the rights. Contract to sell vs. 3. existed and discharges the obligations created thereunder. to extrajudicially terminate the operation of the contract. each heir. however. for a time. absent a proviso that title to the property sold is reserved in the vendor until full payment of the purchase price nor a stipulation giving the vendor the right to unilaterally rescind the contract the moment the vendee fails to pay within a fixed period. no contract can arise. Contracts. Inc. not in concept of lessees anymore but as owners now through symbolic delivery known as traditio brevi manu. although a deed of conditional sale is denominated as such. 6. But the effect of the alienation with Page 73 of 87 .The Supreme Court granted the petitions. To illustrate. Under Article 1477 of the Civil Code. The remedy of an unpaid seller in a contract of sale is to seek either specific performance or rescission. remanded the case to the RTC Negros Occidental (Branch 61) for Escanlar and Holgado and the Cari-ans or their successors-in-interest to determine exactly which ½ portion of Lots 1616 and 1617 will be owned by each party.000. object certain which is the subject matter of the contract and cause of the obligation which is established. interests and participation as to ½ portion pro indiviso of the 2 subject lots is a contract of sale for the reasons that (1) the sellers did not reserve unto themselves the ownership of the property until full payment of the unpaid balance of P225. being a co-owner.00. “this Contract of Sale of rights. Conversely. The probate court’s approval is necessary for the validity of any disposition of the decedent’s estate. Such payment is a positive suspensive condition. the ownership of the thing sold is acquired by the vendee upon actual or constructive delivery thereof. the failure of which is not a breach of contract but simply an event that prevented the obligation of the vendor to convey title from acquiring binding force. by its nature. (2) there is no stipulation giving the sellers the right to unilaterally rescind the contract the moment the buyer fails to pay within the fixed period. they remained in possession. where all are present. upholding the power of promisors under contracts to sell in case of failure of the other party to complete payment. 1. Court of Appeals. Deed of conditional sale In contracts to sell. v. 7. 5. even if it did not bear the stamp of approval of the probate court. 2. Maritime Building Co. the Court declared that it is within the jurisdiction of the probate court to approve the sale of properties of a deceased person by his prospective heirs before final adjudication. Traditio brevi manu Prior to the sale.. interests and participations shall become effective only upon the approval by the Honorable Court.. Escanlar were in possession of the subject property as lessees. Distinction with contracts of sale and contract to sell with reserved title The distinction between contracts of sale and contracts to sell with reserved title has been recognized by the Court in repeated decisions. Non-payment of price in a contract of sale. In Dillena v. at the option of Escanlar and Holgado. 8. the lack of which will not. It must be recalled that during the period of indivision of a decedent’s estate. and directed the trial court to order the issuance of the corresponding certificates of title in the name of the respective parties and to resolve the matter of rental payments of the land not delivered to the Chua spouses subject to the rates specified by the Court with legal interest from date of demand. Interests and Participation a contract of sale The 15 September 1978 sale of rights. interests and participation as to the ½ portion pro indiviso. Requisites Under Article 1318 of the Civil Code. Need of probate court’s approval exists where specific properties of the estate are sold and not when ideal and indivisible shares of an heir are disposed of The need for approval by the probate court exists only where specific properties of the estate are sold and not when only ideal and indivisible shares of an heir are disposed of. merely its effectivity Some parties introduce various kinds of restrictions or modalities. has full ownership of his part and may therefore alienate it. refuse the conveyance.” Only the effectivity and not the validi ty of the contract is affected. 4. affect the validity of the contract. Remedies In a contract of sale. the Deed of Sale is a valid one. In the present case. However . reference to judicial approval cannot adversely affect the substantive rights of the heirs to dispose of their ideal share in the coheirship and/or co-ownership among the heirs. it shall be declared a deed of absolute sale. the essential requisites of a contract are: consent of the contracting parties. Delivery effected for the 15 September 1978 deed of sale. and retain the sums of installments already received where such rights are expressly provided for. Absent one of the above. Modalities and restrictions do not affect validity of the contract.
The receipts presented in evidence show that Generosa Martinez was paid P45. Continued payment of lease indicate vendees did not take undue advantage of the Cari-an heirs Escanlar and Holgado. Nelly Chua vda. only proves that they respected the contract and did not take undue advantage of the heirs of Nombre and Cari-an who benefited from the lease. de Cari-an is also absent.00. accepted and received delayed payments of installments beyond the period stipulated. There is thus no ground to rescind the contract of sale because of non-payment. in continuing to pay the rent for the parcels of land they allegedly bought until 1986 in compliance with their lease contract. After the demand. She even admits that all the receipts were taken by Escanlar. the Cari-ans were indeed paid the balance of the purchase price. her claims regarding the actual amount of the installments paid to her and her kin are quite vague and unsupported by competent evidence. interests and participation in Lots 1616 and 1617. 13. the sellers gave the buyers until May 1979 to pay the balance of the purchase price. in the absence of proof on the contrary. which lack is of their own making. When the sellers. Rodolfo Cari-an. 1979.00 on June 21. Sellers estopped As the sellers. the pertinent contractual stipulation (requiring court approval) should be considered as the law between the parties. However. contrary to the findings of the lower court that such act admits that the purchase price was not fully paid the Cari-ans. P11. the sellers in effect waived and are now estopped from exercising said right to rescind. Rescission of a sale of real property. In the present case. Fredisminda insists that she signed a receipt for full payment without receiving the money therefor and admits that she did not object to the computation.respect to the co-owners shall be limited to the portion which may be allotted to him in the division upon the termination of the co-ownership. Fredisminda admits that her mother and her sister signed their individual receipts of full payment on their own and not in her presence. But the contemporaneous and subsequent acts of the parties reveal that the original objective of the parties was to give effect to the deed of sale even without court approval. even though it may have been stipulated that upon failure to pay the price at the time agreed upon the rescission of the contract shall of right take place. Evidence does not prove Escanlar and Holgado were unable to complete payments Despite all her claims. instead of availing of their right to rescind. the former made no judicial demand for rescission of the contract nor did they execute any notarial act demanding the same. even after the expiration of the period. Consequently. Contractual stipulations considered law between parties. The Cari-ans did not seek judicial relief until late 1982 or three years later. de Cari-an. (2) the requisite approval was virtually rendered impossible by the Cari-ans because they opposed the motion for approval of the sale filed by Escanlar and Holgado. they could legally sell the same without the approval of the probate court. Thus. must have been of the belief that the controversial stipulation was a legal requirement for the validity of the sale.334. Vendee may pay beyond due date as long as there is no judicial or notarial demand for rescission With respect to rescission of a sale of real property. upon the expiration of the period to pay. when the Cari-ans sold their rights. P45. as in fact they paid several installments to the sellers which the latter accepted. Fredisminda’s testimony fails to convince the Court that the heirs were not fully compensated by Escanlar and Holgado. despite having accepted installments therefor belatedly. It is incredible that a mature woman like Fredisminda Cari-an. 12. would sign a receipt for money she did not receive. as required under Article 1592. and sued the latter for the cancellation of that sale. Hereditary rights in an estate validly sold without need of court approval Hereditary rights in an estate can be validly sold without need of court approval. Receipt and acceptance of the numerous installments on the balance of the purchase price by the Cari-ans. and leaving Escanlar and Holgado in possession of Lots 1616 and 1617 reveal their intention to effect the mutual transmission of rights and obligations. the vendee may pay. 9.00. Furthermore.500.218. a long as no demand for rescission of the contract has been made upon him either judicially or by a notarial act. the buyers could lawfully make payments even after the May 1979 deadline.” In the present case. 14. 10. After the latter failed to pay installments due. It should be stressed that Escanlar and Holgado purchased the hereditary shares solely of the Page 74 of 87 . although the period to pay the balance of the purchase price expired in May 1979.625. such act cannot but be construed as a waiver of the right to rescind. Exception: contemporaneous acts of parties As a general rule. the Cari-ans should not be allowed to cancel their first transaction with Escanlar and Holgado because of lack of approval by the probate court. Supporting testimony from her co-heirs and siblings Carmen Cari-an. made no move to rescind but continued accepting late payments.00 and the sum of P34. Whoever crafted the document of conveyance. and the buyers were in arrears.625. Acceptance of payment beyond due date a waiver to right to rescind.00 was consigned in court for the minor Leonell Cari-an. 11. Having provided the obstacle and the justification for the stipulated approval not to be granted. the court may not grant him a new term. Carmen Carian. Article 1592 of the Civil Code governs. The provides that “in the sale of immovable property. P47. the presence of two factors militate against this conclusion: (1) the evident intention of the parties appears to be contrary to the mandatory character of said stipulation. Rodolfo Cari-an and Nelly Chua vda.
00 per hectare. that a contract therefor was drawn and by virtue of which.06 with legal interests thereon from 8 January 1952.474 sq. the Cari-ans are entitled to half of Lots 1616 and 1617 (14. Padilla (J): 10 concur Facts: On 6 May 1955. the total demand set forth in complaint against Apostol is for P34. 18. and that Apostol failed to pay a balance account of P18.00 per 1. as their successors-in-interest. There being no exact apportionment of the shares of each heir and no competent proof that the heirs received unequal shares in the disposition of the estate. The complaint further avers that Apostol submitted the best bid with the Bureau of Prisons for the purchase of 3 million board feet of logs at P88.00 per cavan.R. that Apostol. or if they were even going to be awarded shares in said lots.10 leaving a balance obligation of P15. All told. January 31. 15. including Lots 1616 and 1617. The Judge (Magno Gatmaitan) denied the motion for intervention and Page 75 of 87 . Thus it is not certain how much the Cari-ans were entitled to with respect to the two lots. from 1982 to 1986. The complaint alleges that Apostol submitted the highest bid in the amount of P450. then the president of the corporation but without the knowledge or consent of the stockholders thereof. that upon discovery of Apostol’s act. 35.015. from 1986-1989 (and succeeding years). Republic v. of Lot 1616 and 230. It must be noted that the probate court desisted from awarding the individual shares of each heir because all the properties belonging to the estate had already been sold. Consequently.] En Banc. L-10141. Philippine Resources Development (GR L-10141.00 per cavan. On 19 July 1955. rental payment of P10.000. Apostol interposed payment as a defense and sought the dismissal of the complaint. P175. appending to its motion. rental payment of P3.878. Specific or designated portions of land were not involved. or half interest in each property in the estate The Cari-ans are the sole heirs by representation of Victoriana Cari-an who was indisputably entitled to half of the estate.ms. Escanlar and Holgado.675 sq. to the spouses Chua is valid except to the extent of what was sold to Escanlar and Holgado in the 15 September 1978 conveyance. as well as pay rents thereon. Thus. No. that a contract was executed between the Director of Prisons and Apostol pursuant to which contract Apostol obtained deliveries of logs valued at P65.827.000. 1987-1988. P200. More particularly.57.Cari-ans and not the entire lot. Manila. 16. Apostol paid only P691. and 1989 and succeeding years. [G. moved to intervene.49. own said half of the subject lots and ought to deliver the possession of the other half. that of said account. In his answer. the corporation took steps to recover said goods by demanding from the Bureau of Prisons the return thereof.ms. of Lot 1617). Philippine Development Corp. the Philippine Resources Development Corp.000. For the riceland (Lot 1616) — 15 cavans per hectare per year. The protracted proceedings which have undoubtedly left the property under a cloud and the parties involved in a state of uncertainty compels the Supreme Court to resolve it definitively. 187. the complaint in intervention of even date. 31 January 1958) Republic v. it can be assumed that the heirs of Victoriana Cari-an collectively are entitled to half of each property in the estate.000 board feet. disposed of said goods by delivering the same to the Bureau of Prisons in an attempt to settle his personal debts with the latter entity. a complaint with the CFI Manila (Civil Case 26166). Subsequent sale of 8 parcels of land to spouses Chua is valid except to the extent of what was sold to Escanlar and Holgado on 15 September 1978 It must be emphasized that what was sold to Escanlar and Holgado was only the Cari-an’s hereditary shares in Lots 1616 and 1617 being held pro indiviso by them and is thus a valid conveyance only of said ideal shares.830. to the spouses Chua but only if the former (Escanlar and Holgado) remained in possession thereof. The Empire Insurance Company was included in the complaint having executed a performance bond of P10. Need for the Supreme Court to resolve case definitively The proceedings surrounding the estate of Nombre and Cari-an having attained finality for nearly a decade since. 1958. the corporation sought leave to intervene in Civil Case 26166. Apostol obtained goods from the Bureau of Prisons valued P15. Intestate proceedings final and cannot be re-opened. and that upon the refusal of the Bureau to return said goods. the Republic of the Philippines in representation of the Bureau of Prisons instituted against Macario Apostol and the Empire Insurance Co. The complaint recites that for sometime prior to Apostol’s transactions the corporate had some goods deposited in a warehouse at 1201 Herran.00 in favor of Apostol. Cari-an heirs (and successor-in-interest) entitled to half of the estate.00 per cavan. 17.00 per hectare.00 per ton for the purchase of 100 tons of Palawan Almaciga from the Bureau of Prisons.59. the subsequent sale of 8 parcels of land.00. Rate of rentals The rate of rental payments to be made were given in evidence by Ney Sarrosa Chua in her unrebutted testimony on 24 July 1989: For the fishpond (Lot 1617) — From 1982 up to 1986. P125. the same cannot be re-opened.
round bars and G. bars and pipes is true. black sheets. plates. As the Court of Appeals was satisfied that counsel was duly authorized by his client to file the complaint-in-intervention and to appear in its behalf. would vitally affect the rights not only of the original parties but also of the corporation. On 12 December 1955 the Court of Appeals set aside the order denying the motion to intervene and ordered the trial court to admit the corporation’s complaint-in-intervention. In the present case. the corporation filed a petition for a writ of certiorari with the Court of Appeals by. plates. material. Intervenor has legal capacity as it stands to be adversely affected by the judgment of the court It is true that the very subject matter of the original case is a sum of money. sheets. the unpaid balance of the purchase price of logs and almaciga bought by him from the Bureau of Prisons. The Supreme Court affirmed the judgment under review.thereby issued an order to this effect on 23 July 1955. In view of these considerations. had been unanimously adopted by the stockholders of the corporation. Lower court has discretion to allow or disapprove a motion for intervention.I. The conclusion is inescapable that the corporation possesses a legal interest in the matter in litigation and that such interest is of an actual. certainly the corporation would be affected adversely if its claim of ownership of such sheets. M. but considering that the resolution of the issues raised in and joined by the pleadings in the main case.S. the authority of corporation’s counsel is presumed. However. 4. pipes claimed by the corporation to belong to it and delivered to the Bureau of Prisons by Apostol in payment of his account is sufficient payment therefor.I. that far from unduly delaying or prejudicing the adjudication of the rights of the original parties or bringing about confusion in the original case. The motion to intervene should be given due course. 2. with costs against Macario Apostol. the claim of the counsel for the petitioner that a resolution to proceed against Apostol. Withal. As counsel’s authority to appear for the corporation was never questioned in the CFI. On 3 September 1955. M. 63 Phil.I. Corporation has separate personality from president or stockholder. has not been refuted. the court shall consider whether or not the intervention will unduly delay or prejudice the adjudication of the rights of the original parties and whether or not the intervenor’s rights may be fully protected in a separate proceeding. 3. Principle Section 3 of Rule 13 of the Rules of Court endows the lower court with discretion to allow or disapprove a motion for intervention (Santarromana et al. 456). it becomes enormously plain in the event the judge decides to credit Macario Apostol with the value of the goods delivered by the latter to the Bureau of Prisons. On 9 January 1956 the Government filed a petition under Rule 46 to review the judgment rendered by the appellate court (CA-GR 15767-R) with the Supreme Court. the same article provides that the purchaser may pay “a price certain in money or its equivalent. whereas the intervenor seeks to recover ownership and possession of G. round bars and G. besides preventing an abhorrent multiplicity of suits.” which means that payment of the price need not be in money. plates. sheets. Whether the G. It was only in the Court of Appeals where his authority to appear was questioned. is for the Court to pass upon and decide after hearing all the parties in the case. Power to sue lodged in the board of directors and not the president Page 76 of 87 .S. Authority of corporate counsel presumed By virtue of Section 20 of Rule 127. vs.I. the admission of the complaint in intervention would help clarify the vital issue of the true and real ownership of the materials involved.” citing article 1458 of the new Civil Code. that the materials purportedly belonging to the corporation have been assessed and evaluated and their price equivalent in terms of money have been determined. black sheets. but it is likewise true as borne out by the records. the corporation stands to be adversely affected by such judgment. 1. A motion for the reconsideration of said order was filed by the corporation and the same was likewise denied on 18 August 1955. the resolution of the Court of Appeals should not be disturbed. Article 1458 admits purchaser may pay a price certain in money or its equivalent The Government argues that “Price is always paid in terms of money and the supposed payment being in kind. it is no payment at all. because the action brought in the CFI Manila against Macario Apostol and the Empire Insurance Company (Civil Case 26166) is just for the collection from the defendant Apostol of a sum of money. The Government contends that the intervenor has no legal interest in the matter in litigation. and that said materials for whatever price they have been assessed. and that in the exercise of such discretion. without pronouncement as to costs. it is to be presumed that he was properly authorized to file the complaint-in intervention and appear for his client. It cannot be said that the counsel is acting merely in an individual capacity without the benefit of a corporate act authorizing him to bring suit. have been assigned by Apostol as tokens of payment of his private debts with the Bureau of Prisons. pipes that it claims it owns — an intervention which would change a personal action into one ad rem and would unduly delay the disposition of the case. Barrios. the corporation is positively authorized to file a separate action against any of all the respondents. Should the trial court hold that it is as to credit Apostol with the value or price of the materials delivered by him. 5. direct and immediate nature as to entitle the corporation to intervene.
He also caused the construction of roads. property. 36. Manuel alleged that he used the loan to implement the Agreement. he entered into a contract with an engineering firm for the building of 60 low-cost housing units and actually even set up a model house on one of the subdivision lots. the proceeds of which were used for the survey Page 77 of 87 . Reconsideration was denied by the Court of Appeals through its Resolution of 5 March 1998. who then had it registered in his name. 2. with costs against Antonia and Emeteria.R. He further claimed that the subdivision project failed because Antonia and Emeteria and their relatives had separately caused the annotations of adverse claims on the title to the land. 9 December 1999) Torres v. Antonia and Emeteria filed a criminal case for estafa against Manuel and his wife. was later dismissed by the trial court in an Order dated 6 September 1982. 1. they filed the present civil case which. December 9. It has the right to bring suit to safeguard its interests and ordinarily. Furthermore. No. in addition to his industry.000. it is endowed with a personality distinct and separate from that of its president or stockholders.” They add that Manuel used the loan not for the development of the s ubdivision. Hence. Manuel obtained from Equitable Bank a loan of P40. By mortgaging the property. the contract manifested the intention of the parties to form a partnership. Counsel as a stockholder and director of the corporation may sue in its behalf and file the complaint-in-intervention in the proper court. Universal Umbrella Company. Clearly. Antonia and Emeteria transferred the title to the land to facilitate its use in the name of Manuel.Philippine Resource Corporation is a duly organized corporation with offices at the Samanillo Building and that as such. the amount needed for general expenses and other costs. with the intention of dividing the profits among themselves. On the other hand. while Manuel would give. Likewise. the appellate court remanded the case for further proceedings. CA [G. the president. or industry to a common fund. the petition for review on certiorari. The Supreme Court denied the petition and affirmed the challenged decision. Manuel caused the subject land to be mortgaged. Antonia and Emeteria would contribute property to the partnership in the form of land which was to be developed into a subdivision. Despite his requests. however. The project did not push through. but in furtherance of his own company. under the circumstance. On appeal. and his wife Pacita R. The power of a corporation to sue and be sued in any court is lodged in the board of directors which exercises its corporate powers. Parties implemented contract. 134559. Antonia and Emeteria alleged that the project failed because of “Manuel’s lack of funds or means and skills. However. the fact that counsel is the secretary-treasurer of the corporation and a member of the board of directors.] Third division. the RTC Cebu City (Civil Case R-21208) issued its assailed Decision. All 3 of them also agreed to share the proceeds from the sale of the subdivided lots. such right properly devolves upon the other officers of the corporation as said right is sought to be exercised against the president himself who is the very object of the intended suit. who were however acquitted. curbs and gutters. and that the other members of the board.” In the present case. and not in the president. Apostol.000 which. 1999. Panganiban (J): 4 concur Facts: Sisters Antonia Torres and Emeteria Baring entered into a “joint venture agreement” with Manuel Torres for the development of a parcel of land into a subdivision. Partners may contribute not only money or property but also industry The parties implemented the contract. namely. Partnership exists A reading of the terms embodied in the Agreement indubitably shows the existence of a partnership pursuant to Article 1767 of the Civil Code. a single stockholder under such circumtances may sue in behalf of the corporation. upon Manuel’s motion. 6. which provides that “By the contract of partnership two or more persons bind themselves to contribute money. and the land was subsequently foreclosed by the bank. He did all of these for a total expense of P85. Thereafter. Counsel is the secretary-treasurer of the corporation Granting that counsel has not been actually authorized by the board of directors to appear for and in behalf of the corporation. Thereafter. he was able to effect the survey and the subdivision of the lots. which eventually scared away prospective buyers. Antonia and Emeteria refused to cause the clearing of the claims. under the Joint Venture Agreement. Macario Apostol. they executed a Deed of Sale covering the said parcel of land in favor of Manuel. such right is exercised at the instance of the president. Pursuant to the contract.On the other hand. was to be used for the development of the subdivision. which was affirmed by the CA on 5 March 1998 (CA-GR CV 42378). thereby forcing him to give up on the project. With the said amount. who should normally initiate the action to protect the corporate properties and interests are the ones to be adversely affected thereby. CA (GR 134559. Torres v. the income from the said project would be divided according to the stipulated percentage. He secured the Lapu Lapu City Council’s approval of the subdivision project which he advertised in a local newspaper.
The land was in effect given to the partnership as Antonia’s and Emeteria’s participation therein. which was for the sale of the land without valid consideration. 8. more properly denominated as cause. Parties cannot adopt inconsistent positions in regard to a contract and courts will not tolerate. Present case does not prejudice third parties The lack of an inventory of real property will not ipso facto release the contracting partners from their respective obligations to each other arising from acts executed in accordance with their agreement. but in the expectation of profits from the subdivision project. nor was Manuel responsible therefore. 10. Page 78 of 87 .” The present case does not involve third parties who may be prejudiced. Antonia and Emeteria failed to give any reason why the Court should disregard the factual findings of the appellate court relieving him of fault. Joint Venture Agreement states consideration The Joint Venture Agreement clearly states that the consideration for the sale was the expectation of profits from the subdivision project. 4. “the execution of a public instrument would be useless if there is no invent ory of the property contributed. 6.” It is undisputed that Antonia and Emeteria are educated and are thus presumed to have understood the terms of the contract they voluntarily signed. Antonia and Emeteria have not alleged. that their petition constitutes one of the exceptions to this doctrine. the contract is declared void by the law when no such inventory is made. Contract binds party to stipulations and all necessary consequences thereof Under Article 1315 of the Civil Code. much less approve. a partner may contribute not only money or property. such as the prestation or promise of a thing or service by another. 5. In the present case. 9. such practice. Thus. and the fact that the terms of a contract turn out to be financially disadvantageous to them will not relieve them of their obligations therein. Manuel’s actions clearly belie Antonia’s and Emeteria’s contention that he made no contribution to the partnership. signed by the parties. and attached to the public instrument” was intended primarily to protect third persons. if an inventory of said property is not made. but also industry. they should have objected to it and insisted on the provisions they wanted. because without its designation and description. and their contribution cannot prejudice third persons. They cannot now disavow the relationship formed from such agreement due to their supposed misunderstanding of its terms. the cause of the contract of sale consisted not in the stated peso value of the land. it cannot be contended that the Joint Venture Agreement is void under Article 1422 of the Civil Code. In imputing the blame solely to him. They cannot in one breath deny the contract and in another recognize it.and the subdivision of the land. Factual issues cannot be resolved on a petition of review under Rule 45. Tolentino states that under the provision which is a complement of Article 1771. they cannot be subject to inscription in the Registry of Property. can take different forms. Thus. Nullity of partnership does not prevent courts from considering Joint Venture Agreement as an ordinary contract The alleged nullity of the partnership will not prevent courts from considering the Joint Venture Agreement an ordinary contract from which the parties’ rights and obligations to each other may be inferred and enforced. Parties cannot adopt inconsistent positions in regard to a contract Antonia and Emeteria invoke the allegedly void contract as basis for their claim that Manuel should pay them 60% of the value of the property. 7. but also to all necessary consequences thereof. Article 1773 providing that “a contract of partnershi p is void. are not entitled to damages. they would get 60% of the net profits. not to say shown. He developed the roads. Consideration or cause may take many forms Consideration. Damages not due Factual issues cannot be resolved in a petition for review under Rule 45. There was therefore a consideration for the sale. depending on what momentarily suits their purpose. Under Article 1767 of the Civil Code. Its first stipulation states that Antonia and Emeteria did not actually receive payment for the parcel of land sold to Manuel. as in the present case. Article 1773 must be interpreted in relation to Article 1771. for which the land was intended to be used. contracts bind the parties not only to what has been expressly stipulated. may be in keeping with good faith. according to their nature. usage and law. This will result in fraud to those who contract with the partnership in the belief [in] the efficacy of the guaranty in which the immovables may consist. Article 1315 provides that “Contracts are perfected by mere consent. The Court of Appeals held that the acts of Antonia and Emeteria did not cause the failure of the project. and from that moment the parties are bound not only to the fulfillment of what has been expressly stipulated but also to all the consequences which. should the venture come into fruition. 3. thus. If it was not in consonance with their expectations. Antonia and Emeteria acting in the expectation that. Antonia and Emeteria. Courts may not extricate parties from the necessary consequences of their acts Courts may not extricate parties from the necessary consequences of their acts. because it is the direct result of an earlier illegal contract. whenever immovable property is contributed thereto. the curbs and the gutters of the subdivision and entered into a contract to construct low-cost housing units on the property.
m. as an authorized sales executive of Toyota Shaw. They met Bernardo who then accomplished a printed Vehicle Sales Proposal (VSP) 928.970. He added that if he does not arrive in his hometown with the new car.. Toyota then gave Sosa the option to purchase the unit by paying the full purchase price in cash but Sosa refused.000.000 for Sosa’s transportation fare per trip in attending the hearing of the case. on 17 June 1989. 116650. BLT registration fee: P1. and for this Gilbert.] First Division. It also contains conditions of sales providing that the sale is subject to the availability of the unit. however. which Sosa signed with the reservation.000. that the Lite Ace was not delivered to Sosa because of the disapproval of B. signed the documents of Toyota and B. Gilbert. and that the stated price is subject to change without prior notice. that Bernardo. But even before the answer was made and received by Sosa. It ruled that the “Agreement between Mr.00.m. within 5 days from receipt.00 (downpayment: P53.000.715. that the model series of the vehicle is a “Lite Ace 1500″ described as “4 Dr minibus”. Toyota contends. the trial court rendered on 18 February 1992 a decision in favor of Sosa.000. Sosa’s counsel) demanding P1M representing interest and damages.m. Inc. that same day. Inc.00. Sosa and his son. checked and approved the VSP. Sosa and Popong Bernardo.A. Toyota did so on the very same day by issuing a Far East Bank check for the full amount of P100. wounded feelings and sleepless nights for which he ought to be compensated. Page 79 of 87 .). where he would celebrate his birthday on 19 June. was the latter’s agent and thus bound Toyota Shaw. Sosa asked that his downpayment be refunded. his family.A.137. May 23. So on 14 June 1989. insurance: P13. Finance pertaining to the application for financing. “without prejudice to our future claims for damages. Sosa from the Province (Marinduque) where the unit will be used on the 19 June.” was a valid perfected and contract of sale between Sosa and Toyota which bound Toyota to deliver the vehicle to Sosa.000 as moral damages. Sosa on 15 June 1989. CA [G. again. 1 on leave Facts: Sometime in June 1989.R. Bernardo informed them that the Lite Ace was being readied for delivery. he was told that there was an available unit. of the downpayment of P100.00. No. Bernardo told them that the car could not be delivered because it was acquired by a more influential person. and thus rendered judgment ordering Toyota Shaw to pay Sosa the sum of P75. on behalf of his father. upon arrival of Mr. 23 May 1995) [ haystack ] Toyota Shaw v.” Bernardo assured Sosa that a un it would be ready for pick up at 10:00 a. It further alleged that a particular unit had already been reversed and earmarked for Sosa but could not be released due to the uncertainty of payment of the balance of the purchase price. and to pay the cost of the suit. They met Popong Bernardo.O.000 as attorney’s fees plus P2. his home province.” to be financed by “B. Finance of the credit financing application of Sosa.230.00.00 plus interest from the time he paid it and the payment of damages with a warning that in case of Toyota’s failure to do so he would be constrained to take legal action.” with the initial cash outlay of P100. According to Sosa. that payment is by “installment.00. At 2:00 p.” Thereafter. will be released a yellow Lite Ace unit. as previously agreed upon but at 2:00 p.000 lawyer’s transportation fare per trip in attending to the hearing of the case.00 will be paid by Mr.A. went to the Toyota Shaw Boulevard. CA (GR 116650. the Sales Supervisor of Bernardo. P10. Luna L. The next day. and that the price prevailing and in effect at time of selling will apply. the receipt of which was shown by a check voucher of Toyota. Caballes. On 17 June (9:30 a. that the downpayment of P100. and further agreed with Sosa that Toyota acted in bad faith in selling to another the unit already reserved for him.. Service fee: P500.” stipulating that all necessary documents will be submitted to Toyota Shaw (Popong Bernardo) a week after. Bernardo called Gilbert to inform him that the vehicle would not be ready for pick up at 10:00 a. and accessories: P29. Sosa & Popong Bernardo of Toyota Shaw.A.00. that Luna Sosa proved his social standing in the community and suffered besmirched reputation.000 as exemplary damages. Sosa wanted to purchase a Toyota Lite Ace.00. Davide Jr (J): 3 concur.000. This document shows that the customer’s name is “Mr. a sales representative of Toyota. Bernardo then signed a document entitled “Agreements Between Mr. and that the Toyota Shaw. Sosa sent two letters to Toyota: one on 27 June 1989 demanding the refund.148. and a balikbayan guest would use it on 18 June 1989 to go Marinduque. Sosa and Gilbert went to Toyota to deliver the downpayment of P100. Finance. on which Gilbert signed under the subheading “conforme”. the latter filed on 20 November 1989 with the RTC Marinduque (Branch 38) a complaint against Toyota for damages under Articles 19 and 21 of the Civil Code in the total amount of P1. It was then a seller’s market and Sosa had difficulty finding a dealer with an available unit for sale. After waiting for about an hour.00) and the balance to be financed is P274. Luna Sosa” with home address at 2316 Guijo Street. 1995. Inc.000. CHMO fee: P2.000. and the other on 4 November 1989 (signed by M.. P30. The spaces provided for “delivery terms” were not filled-up. But upon contracting Toyota Shaw. It was also agreed upon by the parties that the balance of the purchase price would be paid by credit financing through B. P2.37.067.00.m. with a warning that legal action would be taken if payment wa s not made within 3 days. Toyota Shaw v. Metro Manila. Toyota’s counsel answered through as letter dated 27 November 1989 8 refusing to accede to the demands of Sosa.m. Pasig.00. Sosa and Gilbert met Bernardo at the latter’s office. Rodrigo Quirante. he would become a “laughing stock. After it became clear that the Lite Ace would not be delivered to him. Sosa emphasized to Bernardo that he needed the Lite Ace not later than 17 June 1989 because he. After trial on the issue agreed upon during the pre-trial session. United Parañaque II.
and the counterclaim therein. and the other to pay therefor a price certain in money or its equivalent. the Court of Appeals affirmed in toto the appealed decision. which is the period of negotiation and bargaining. or generation. Sosa was well aware from its title. chattel mortgages. From that moment. or by buying and selling contracts. 4. and (c) consummation or death. or agricultural enterprises.148. and thus knew that he was not dealing with Toyota but with Popong Bernardo and that the latter did not misrepresent that he had the authority to sell any Toyota vehicle.” not a contract of sale The “Agreements between Mr. But nothing was mentioned about the full purchase price and the manner the installments were to be paid. A contract of sale may be absolute or conditional. as “corporations or partnerships. leases. Inc. which is the fulfillment or performance of the terms agreed upon in the contract. except those regulated by the Central Bank of the Philippines. Effect Article 1475 of the Civil Code specifically provides when the contract of sale is deemed perfected. Sosa & Popong Bernardo of Toyota Shaw. Inc. Prudence and reasonable diligence in inquiring authority of agent Sosa knew that Bernardo was only a sales representative of Toyota and hence a mere agent of the latter. Inc. Finance. No obligation on the part of Toyota to transfer ownership of a determinate thing to Sosa and no correlative obligation on the part of the latter to pay therefor a price certain appears therein. the parties may reciprocally demand performance. which is the moment when the parties come to agree on the terms of the contract. In the present case.” executed on 4 June 1989. the “Agreements between Mr.” may be considered as part of the initial phase of the generation of negotiation stage of a contract sale. 3. Further. 7.00 while the balance to be paid on installment should be financed by B. No meeting of the minds The “Agreements between Mr.” shows the absence of a meeting of minds between Toyota and Sosa. written in bold letters. Sosa & Popong Bernardo of Toyota Shaw. Contract of sale. commercial. This is so because the agreement as to the manner of payment goes into the price such that a disagreement on the manner of payment is tantamount to a failure to agree on the price. or by leasing of Page 80 of 87 .Dissatisfied with the trial court’s judgment. Definitive price is an essential element in the formation of a binding and enforceable contract of sale A definite agreement on the manner of payment of the price is an essential element in the formation of a binding and enforceable contract of sale. 1. 5. the Insurance Commission and the and the Cooperatives Administration Office. Hence the petition for review by certiorari by Toyota Shaw.e. it could only refer to a sale on installment basis. or other evidence of indebtedness. In its decision promulgated on 29 July 1994. Kinds Article 1458 of the Civil Code defines a contract of sale as “By the contract of the sale one of the contracting parties obligates himself to transfer the ownership of and to deliver a determinate thing. Financing companies defined Financing companies are defined in Section 3(a) of RA 5980. The Supreme Court granted the petition. Three stages in the contract of sale There are three stages in the contract of sale. Inc.A Finance was acceptable to Toyota). Sosa & Popong Bernardo of Toyota Shaw. Toyota appealed to the Court of Appeals (CA-GR CV 40043). and dismissed the challenged decision of the Court of Appeals and that of Branch 38 of the Regional Trial Court of Marinduque. Contract of sale defined. A person dealing with an agent is put upon inquiry and must discover upon his peril t he authority of the agent. as the VSP executed the following day confirmed. subject to the provisions of the law governing the form of contracts. conception. 6. The provision on the downpayment of P100. “Agreement between Mr. The second phase of the generation or negotiation stage was the execution of the VSP (the downpayment of the purchase price was P53.00 made no specific reference to a sale. 2. is not a contract of sale. when perfected. It is assumed that B. Sosa did not even sign it. either by discounting or factoring commercial papers or accounts receivable. Definiteness as to the price is an essential element of a binding agreement to sell personal property. without pronouncement as to costs.A. It was incumbent upon Sosa to act with ordinary prudence and reasonable diligence to know the extent of Bernardo’s authority as an agent in respect of contracts to sell Toyota’s vehicles. (b) perfection of birth of the contract.000. i. as amended by PDs 1454 and 1793. which are primarily organized for the purpose of extending credit facilities to consumers and to industrial. Sosa & Popong Bernardo of Toyota Shaw. Neither logic nor recourse to one’s imagination can lead to the conclusion that su ch agreement is a perfected contract of sale. “The contract of sal e is perfected at the moment there is a meeting of minds upon the thing which is the object of the contract and upon the price. ending at the moment of agreement of the parties. 8. namely (a) preparation.
VSP mere proposal and did not create demandable right in favor of Sosa when it was aborted The VSP was a mere proposal which was aborted in lieu of subsequent events. 1 took no part Facts: A suit for specific performance filed by Lorenzo Velasco against the Magdalena Estate (Civil Case 7761) on the allegation that on 29 November 1962. 1 concurring with a dissent.A. Magdalena Estate refused to accept and that eventually it likewise refused to execute a formal deed of sale obviously agreed upon. a parcel of land with an area of 2. the equal monthly amortization of which was to be determined as soon as the P30. 29 June 1973) Velasco v. 2 dissents. 1 concurs with reservation. townmates.00 down payment had been completed.000.] First Division. appliances and other movable property. heavy equipment and industrial machinery. New Manila. (Lot 15. the VSP created no demandable right in favor of Sosa for the delivery of the vehicle to him. the legal reason for the award of attorney’s fees. he is likewise not entitled to exemplary damages. At the bottom of this claim is nothing but misplaced pride and ego.00 actual damages and P7. Sosa’ s version. L-31018. is contradicted by paragraph 7 of his complaint which states that Bernardo “for reasons known only to its representatives. 3 parties are thus involved: (1) the buyer who executes a note or notes for the unpaid balance of the price of the thing purchased on installment. 13.motor vehicles. as the creditor of the installment buyer. Velasco alleged that he was to give a down payment of P10. 39 corner 6th Street and Pacific Avenue. and relatives that he was buying a Toyota Lite Ace which they expected to see on his birthday. Plaintiff demanded for an explanation.059 sq.00 to complete the P30.00. Velasco v. in addition to moral. and sleepless nights when the van was not delivered. It was he who brought embarrassment upon himself by bragging about a thing which he did not own yet. The only ground upon which Sosa claimed moral damages is that since it was known to his friends. 38. Thus. 1973.000.000.00 to be followed by P20. Since B. Purpose of exemplary damages Since Sosa is not entitled to moral damages and there being no award for temperate. for the total purchase price of P100. Under Article 2229 of the Civil Code. no reason exists for such award. much less. (2) the seller who assigns the notes or discounts them with a financing company.000. Velasco demanded P25. When the latter refused. exemplary or corrective damages are imposed by way of example or correction for the public good.00 exemplary damages. or compensatory damages. 14. that the VSP was cancelled because the vehicle was delivered to another because of a more influential client. No meeting of minds as financing application was disapproved In a sale on installment basis which is financed by a financing company. Parties in a sale on installment basis financed by a financing company.000.A. to which the latter agreed to buy. shame. but nothing was given. CA [G. temperate. The van became the subject matter of talks during his celebration that he may not have paid for it. there was then no meeting of minds on the sale on installment basis.) located at No. liquidated. contractual relations with the Lorenzo Velasco Page 81 of 87 . Finance did not approve Sosa’s application. Toyota’s version of circumstances leading to non -release of vehicle more credible Toyota’s version that B. He should not have announced his plan to buy Toyota Lite Ace knowing that he might not be able to pay the full purchase price. Award of exemplary damages without basis. business and office machines and equipment.ms. and its non-delivery did not cause any legally indemnifiable injury.000.00. Finance disapproved Sosa’s application for which reason it suggested to Sosa that he pay the full purchase price is more credible. No.” 9.R.000. or compensatory damages.” 11. June 29. 10. Toyota cancelled the VSP and returned to him his P100. CA (GR L-31018.00. Thus. and this created an impression against his business standing and reputation created an impression against his business standing and reputation. Castro (J):3 concur. P2.00 and the balance of P70. 12. liquidated. Quezon City. he suffered humiliation. Magdalena Estate denied that it has had any direct-dealings. refus ed and/or failed to release the vehicle to the plaintiff .00 would be paid in installments. Psd-6129. and not only in the dispositiv e portion thereof. and (3) the financing company which is subrogated in the place of the seller. Award of moral damages without legal basis The award of moral damages is without legal basis.00 attorney’s fees. Block 7. Award of attorney’s fees without basis For attorney’s fees to be granted the court must explicitly state in the body of the decision. Velasco and the Magdalena Estate had entered into a contract of sale by virtue of which Magdalena Estate offered to sell Velasco.000. He further alleged that he paid the downpayment on 29 November 1962 (Receipt 207848) and that when on 8 January 1964 he tendered to the payment of the additional P20.000.000. No such explicit determination thereon was made in the bo dy of the decision of the trial court.000.
regarding the property in question, and contends that the alleged contract described in the document attached to the complaint is entirely unenforceable under the Statute of Frauds; that the truth of the matter is that a portion of the property in question was being leased by a certain Socorro Velasco who, on 29 November 1962, went to the office of Magdalena Estate indicated her desire to purchase the lot; that the latter indicated its willingness to sell the property to her at the price of P100,000.00 under the condition that a down payment of P30,000.00 be made, P20,000.00 of which was to be paid on 31 November 1962, and that the balance of P70,000.00 including interest at 9% per annum was to be paid on installments for a period of 10 years at the rate of P5,381.32 on June 30 and December of every year until the same shall have been fully paid; that on 29 November 1962, Socorro Velasco offered to pay P10,000.00 as initial payment instead of the agreed P20,000.00 but because the amount was short of the alleged P20,000.00 the same was accepted merely as deposit and upon request of Socorro Velasco the receipt was made in the name of her brother-in-law ,Lorenzo Velasco; that Socorro Velasco failed to complete the down payment of P30,000.00 and neither has she paid any installments on the balance of P70,000.00 up to the present time; that it was only on 8 January 1964 that Socorro Velasco tendered payment of P20,000.00, which offer Magdalena Estate refused to accept because it had considered the offer to sell rescinded on account of her failure to complete the down payment on or before 31 December 1962. On 3 November 1968, the CFI Quezon City rendered a decision, dismissing the complaint filed by Lorenzo and Socorro Velasco against the Magdalena Estate, Inc. for the purpose of compelling specific performance by Magdalena Estate of an alleged deed of sale of a parcel of residential land in favor of the Velascos. The basis for the dismissal of the complaint was that the alleged purchase and sale agreement “was not perfected.” On 18 November 1968, after the perfection of their appeal to the Court of Appeals, the Velascos received a notice from the said court requiring them to file their printed record on appeal within 60 days from receipt of said notice. This 60-day term was to expire on 17 January 1969. Allegedly on 15 January 1969, the Velascos allegedly sent to the CA and to counsel for Magdalena Estate, by registered mail allegedly deposited personally by its mailing clerk, one Juanito D. Quiachon, at the Makati Post Office, a “Motion For Extension of Time To File Printed Record on Appeal.” The extension of time was sought on the ground “of mechanical failures of the printing machines, and the voluminous printing job now pending with the Vera Printing Press.” On 10 February 1969, the Velascos filed their printed record on appeal in the CA. Thereafter, the Velascos received from Magdalena Estate a motion filed on 8 February 1969 praying for the dismissal of the appeal on the ground that the Velascos had failed to file their printed record on appeal on time. The CA, on 25 February 1969, denied the Magdalena Estate’s motion to dismiss, granted the Velasco’s motion for 30-day extension from 15 January 1969, and admitted the latter’s printed record on appeal. On 11 March 1969, Magdalena Estate prayed for a reconsideration of said resolution. The Velascos opposed the motion for reconsideration and submitted to the CA the registry receipts (0215 and 0216), both stamped 15 January 1969, which were issued by the receiving clerk of the registry section of the Makati Post Office covering the mails for the disputed motion for extension of time to file their printed record on appeal and the affidavit of its mailing clerk. After several other pleadings and manifestations relative to the motion for reconsideration and on 28 June 1969, the CA promulgated a resolution granting the motion for reconsideration and ordered Atty. Patrocinio Corpuz (Velasco’s counsel) to show cause within 10 days from notice why he should not be suspended from the practice of his profession for deceit, falsehood and violation of his sworn duty to the Court, and directed the Provincial Fiscal of Rizal to conduct the necessary investigation against Juanito D. Quiachon of the Salonga, Ordoñez, Yap, Sicat & Associates Law Office and Flaviano O. Malindog, a letter carrier at the Makati Post Office, and to file the appropriate criminal action against them (it appears that Malindog postmark the letters 15 January 1969 on 7 February 1969 at the request of Quiachon). On 5 September 1969, the CA promulgated another resolution, denying the motion for reconsideration of the Velascos but, at the same time, accepting as satisfactory the explanation of Atty. Corpuz why he should not be suspended from the practice of the legal profession. On 20 September 1969, the First Assistant Fiscal of Rizal notified the Court of Appeals that he had found a prima facie case against Malindog and would file the corresponding information for falsification of public documents against him, but dismissed the complaint against Quiachon for lack of sufficient evidence. A petition for certiorari and mandamus was filed by the Velascos against the resolution of the Court of Appeals dated 28 June 1969 in CA-GR 42376, which ordered the dismissal of the appeal interposed by them from a decision of the CFI Quezon City on the ground that they had failed seasonably to file their printed record on appeal. The Supreme Court denied the instant petition; without pronouncement as to costs. 1. Issues raised by Velascos; Some issues are subject of appeal on certiorari under Rule 45 rather than that of certiorari under Rule 65 The Velascos contend that the Court of Appeals acted without or in excess of jurisdiction, or with such whimsical and grave abuse of discretion as to amount to lack of jurisdiction, because (a) it declared that the motion for extension of time to file the printed record on appeal was not mailed on 15 January 1969, when, in fact, it was mailed on the said date as evidenced by the registry receipts and the post office stamp of the Makati Post Office; (b) it declared that the record on appeal was filed only on 10 February 1969, beyond the time authorized by the appellate court, when the truth is that the said date of filing was within
Page 82 of 87
the 30-day extension granted by it; (c) the adverse conclusions of the appellate court were not supported by the records of the case, because the said court ignored the affidavit of the mailing clerk of the petitioners’ counsel, the registry receipts and postmarked envelopes and, instead, chose to rely upon the affidavit of the mail carrier Malindog, which affidavit was prepared by counsel for Magdalena Estate at the affiant himself so declared at the preliminary investigation at the Fiscal’s office which absolved the Velascos’ counsel mailing clerk Quiachon from any criminal liability; (d) section 1, Rule 50 of the Rules of Cou rt, which enumerates the grounds upon which the Court of Appeals may dismiss an appeal, does not include as a ground the failure to file a printed record on appeal; (e) the said section does not state either that the mismailing of a motion to extend the time to file the printed record on appeal, assuming this to be the case, may be a basis for the dismissal of the appeal; (f) the Court of Appeals has no jurisdiction to revoke the extension of time to file the printed record on appeal it had granted to the petitioners based on a ground not specified in section 1, Rule 50 of the Rules of Court; and (g) the objection to an appeal may be waived as when the appellee has allowed the record on appeal to be printed and approved. Some of the objections raised by the Velascos to the questioned resolution of the Court of Appeals are obviously matters involving the correct construction of our rules of procedure and, consequently, are proper subjects of an appeal by way of certiorari under Rule 45 of the Rules of Court, rather than a special civil action for certiorari under Rule 65. The petitioners, however, have correctly appreciated the nature of its objections and have asked this Court to treat the instant petition as an appeal by way of certiorari under Rule 45 “in the ev ent that the Supreme Court should deem that an appeal is an adequate remedy” The nature of the present case permits a disquisition of both types of assignments. 2. Date stamped on receipts and envelopes; Henning and Caltex cases do not apply While it is true that stamped on the registry receipts 0215 and 0216 as well as on the envelopes covering the mails in question is the date 15 January 1969, this, by itself, does not establish an unrebuttable presumption of the fact or date of mailing. The Henning and Caltex cases are not in point because the specific adjective issue resolved in those cases was whether or not the date of mailing a pleading is to be considered as the date of its filing, The issue in the present case is whether or not the motion of the petitioners for extension of time to file the printed record on appeal was, in point of fact, mailed (and, therefore, filed) on 15 January 1969. 3. Certification of postmasters and Malindog’s sworn declaration believable; Malindog induced to issue false registry receipts for the Velasco’s counsel The certifications issued by the two postmasters of Makati, Rizal and the sworn declaration of the mail carrier Malindog describing how the said registry receipts came to be issued, are worthy of belief. It will be observed that the said certifications explain clearly and in detail how it was improbable that the registry receipts in question could have been issued to Velascos ’ counsel in the ordinary course of official business, while Malindog’s sworn statement, which constitutes a very grave adm ission against his own interest, provides ample basis for a finding that where official duty was not performed it was at the behest of a person interested in the Velascos’ side of the action below. That at the preliminary investigation at the Fiscal’s offi ce, Malindog failed to identify Quiachon as the person who induced him to issue falsified receipts, contrary to what he declared in his affidavit, is of no moment since the findings of the inquest fiscal as reflected in the information for falsification filed against Malindog indicate that someone did induce Malindog to make and issue false registry receipts to the counsel for the Velascos. 4. Right to appeal a statutory privilege and not a natural right nor a part of due process In Bello vs. Fernando, it was held that the right to appeal is not a natural right nor a part of due process; it is merely a statutory privilege. and may he exercised only in the manner provided by law. 5. Duty of appellant to file printed record on appeal with CA within 60 days from receipt of notice The Rules of Court expressly makes it the duty of an appellant to file a printed record on appeal with the Court of Appeals within 60 days from receipt of notice from the clerk of that court that the record on appeal approved by the trial court has already been received by the said court. Section 5 of Rule 46 (Duty of appellant upon receipt of notice) states that “It shall be the duty of the appellant within 15 days from the date of the notice referred to in the preceding section, to pay the clerk of the Court of Appeals the fee for the docketing of the appeal, and within 60 days from such notice to submit to the court 40 printed copies of the record on appeal, together with proof of service of 15 printed copies thereof upon the app ellee.” 6. Appellate court did not abuse its discretion After a careful study and appraisal of the pleadings, admissions and denials respectively adduced and made by the parties, it is clear that the Court of Appeals did not gravely abuse its discretion and did not act without or in excess of its jurisdiction. As the Velascos failed to comply with the duty to file the printed record on appeal within 60 days from receipt of notice which the Rules of Court enjoins, and considering that there was a deliberate effort on their part to mislead the said Court in granting them an extension of time within which to file their printed record on appeal, it stands to reason that the appellate court cannot be said to have abused its discretion or to have acted without or in excess of its jurisdiction in ordering the dismissal of their appeal.
Page 83 of 87
7. Jurisprudence replete with cases where Court dismissed appeal on grounds not mentioned specifically in Rule 50, Section 1 Jurisprudence is replete with cases in which this Court dismissed an appeal on grounds not mentioned specifically in Section 1, Rule 50 of the Rules of Court. (See, for example, De la Cruz vs. Blanco, 73 Phil. 596 (1942); Government of the Philippines vs. Court of Appeals. 108 Phil. 86 (1960); Ferinion vs. Sta. Romana, L-25521, February 28, 66, 16 SCRA 370, 375). 8. Motion for extension of period must be made before the expiration of the period to be extended Inasmuch as the motion for extension of the period to file the printed record on appeal was belatedly filed, then, it is as though the same were non-existent. In Baquiran vs. Court of Appeals, it was stated that “the motion for extension of the period for filing pleadings and papers in court must be made before the expiration of the period to be exte nded.” The soundness of this dictum in matters of procedure is self-evident. For, were the doctrine otherwise, the uncertainties that would follow when litigants are left to determine and redetermine for themselves whether to seek further redress in court forthwith or take their own sweet time will result in litigations becoming more unbearable than the very grievances they are intended to redress. 9. Objection to appeal not waived Magdalena Estate did file a motion in the Court of Appeals on 8 February 1969 praying for the dismissal of the appeal on the ground that up to the said date the Velascos had not yet filed their record on appeal and, therefore, must be considered to have abandoned their appeal. The objection to an appeal was thus not waived, con trary to Velasco’s argument that it was waived when the appellee allows the record on appeal to be printed and approved/ 10. No contract of sale perfected because the minds of the parties did not meet in regard to the manner of payment No contract of sale was perfected because the minds of the parties did not meet “in regard to the manner of payment.” The material averments contained in Velasco’s complaint themselves disclose a lack of complete “agreement in regard to the manner of payment” of the lot in question. The complaint states pertinently “that plaintiff and defendant further agreed that the total down payment shall be P30,000.00, including the P10,000.00 partial payment mentioned in paragraph 3 hereof, and that upon completion of the said down payment of P30,000.00, the balance of P70,000.00 shall be paid by the plaintiff to the defendant in 10 years from November 29, 1962; and that the time within which the full down payment of the P30,000.00 was to be completed was not specified by the parties but the defendant was duly compensated during the said time prior to completion of the down payment of P30,000.00 by way of lease rentals on the house existing thereon which was earlier leased by defendant to the plaintiff’s sister-in-law, Socorro J. Velasco, and which were duly paid to the defendant by checks drawn by plaintiff.” The Velascos themselves admit that they and Magdalena Estate still had to meet and agree on how and when the down payment and the installment payments were to be paid. Such being the situation, it cannot be said that a definite and firm sales agreement between the parties had been perfected over the lot in question. 11. Definite agreement on the matter of payment of purchase price an essential element to form binding and enforceable contract of sale A definite agreement on the manner of payment of the purchase price is an essential element in the formation of a binding and enforceable contract of sale. In the present case, the Velascos delivered to Magdalena Estate the sum of P10,000 as part of the downpayment that they had to pay cannot be considered as sufficient proof of the perfection of any purchase and sale agreement between the parties under article 1482 of the new Civil Code, as the Velascos themselves admit that some essential matter (the terms of payment) still had to be mutually covenanted.
Ereneta v. Bezore (GR L-29746, 26 November 1973)
Intestate Estate of Emilio Camon; Ereneta v. Bezore [G.R. No. L-29746. November 26, 1973.] First Division, Castro (J): 5 concur Facts: Emilio Camon was the lessee of the hacienda Rosario, located in Pontevedra, Negros Occidental, for the period from crop year 1940-41 to crop year 1960-61. ½ pro-indiviso of the said sugar plantation belonged to Ignatius Henry Bezore, Elwood Knickerbocker and Mary Irene Fallon McCormick (as their inheritance from the late Thomas Fallon), while the other half belonged to Petronila Alunan vda. de Sta. Romana, Amparo Sta. Romana and Alberta vda. de Hopon (as their inheritance from their mother Rosario Sta. Romana). Upon the death of Emilio Camon in 1967, his widow, Concepcion Ereñeta, filed a petition in the CFI Negros Occidental (Special Proceeding 8366) praying for the grant to her of letters of administration of the estate of the deceased Camon. The petition was granted. Thereafter, the court issued an order requiring all persons with money claims against the estate to file their claims within the period prescribed in the order.Thru their judicial administrator and counsel, Martiniano O. de la Cruz, Bezore, et al. filed a claim against the estate in the amounts of P62,065 as the money value of sugar allotments and allowances and P2,100 as
Page 84 of 87
the money value of palay and rentals, or a total of P64,165, appertaining to the claimants’ half -share in the hacienda. Bezore, et. al. and Ereneta are agreed that the late Emilio Camon appropriated for himself the amounts claimed. Bezore, et. al. had demanded payment of their claim from Emilio Camon when he was still alive, but Ereneta ignored the demands. At the trial, 3 documents were submitted in evidence by Ereneta, the authenticity of each of which is not controverted by Bezore, et.al.; i.e. (1) An “Agreement to Sell,” executed on 11 January 1961, whereby Bezore, et al., agreed to sell their ½ share in the hacienda Rosario to Amparo Sta. Romana and Alberta vda. de Hopon; (2) A “Release and Waiver of Claims,” executed on 12 January 961, whereby Amparo Sta. Romana and Alberta vda. de Hopon, for and in consideration of “their gratitude for the various services, financial and personal” extended to them by Emilio Camon, released him from “any and all claims that may have accrued pertaining to the 2/4 pro-indiviso share in Hacienda Rosario” owned by Bezore, et. al. who had bound themselves “to sell their share in the said Hacienda Rosario” to Amparo and Alberta, “including rights accrued or accruing,” and whereby Amparo and Alberta bound themselves “to waive in favor of Mr. Emilio Camon for his own use and benefit said rights accrued or accruing;” and (3) A “Deed of Sale,” executed on 4 August 1961, whereby Bezore, et al., for and in consideration of the sum of P78,000, to be paid in the manner stated in the instrument, sold, transferred and conveyed “all their rights, title, interest and partici pation, whether accrued or accruing in their 2/4 pro-indiviso share” in the hacienda Rosario, “together with all the improvements existing thereon, including its sugar quota,” in favor of Amparo Sta. Romana and Alberta vda. de Hopon. On 20 July 1968, the lower court dismissed the claim, rejecting Bezore et.al’s contention that the sugar allotments and allowances, subject of their claim against the estate of Emilio Camon, were not included in the sale, and held that by the positive and categorical terms of the deed of sale, all benefits accrued and accruing to the appellants before 4 August 1961 were included in the sale. Bezore, et.al. filed a direct appeal with the Supreme Court. The Supreme Court affirmed the order of the lower court, at Bezore et. al.’s cost. 1. Right to accrued claims not waived in January 1961 At the time of the execution, on 12 January 1961, of the deed of “Release and Waiver of Claims,” Amparo Sta. Romana and Alberta vda. de Hopon could not release or waive accrued claims belonging to Bezore et..al, because the right that Amparo and Alberta then had was a mere promise by Bezore, et.al. to sell their share in the hacienda, not the right to the accrued claims. What was agreed to be sold in the future was different from what was purportedly waived; and even if the object in both contracts were the same, the waiver would still be invalid for it is essential that a right, in order that it may be validly waived, must be in existence at the time of the waiver. 2. Defect in waiver cured in August 1961; Bezore, et.al. parted with their accrued rights Whatever defect there was in the waiver was subsequently cured by the deed of sale of 4 August 1961 by virtue of which Bezore, et.al. sold not only their pro-indiviso half-share in the hacienda but also their accrued rights therein. It is immaterial that Emilio Camon was not the vendee since what mattered is that Bezore, et.al. parted with their accrued rights for a valuable consideration. 3. Question of fact not reviewable in direct appeal to Supreme Court Whether the vendees (Bezore etal) represented to Martiniano O. de la Cruz that the sugar quedans and palay were not included in the sale and that such was the intention of the parties, involves a question of fact which is not reviewable in a direct appeal to the Supreme Court. 4. “Accrued or accruing”; Literal meaning of contractual stipulations control if terms are clear The words “accrued or accruing’ in the deed of sale are not obscure and, as the lower court declared, are in fact positive an d categorical enough to include accrued allotments and allowances. Since the said words are not ambiguous, there is no need to interpret them. Article 1370 of the Civil Code provides that “if the terms of a contract are clear and leave no doubt upon the intention of the contracting parties, the literal meaning of its stipulations shall control.” 5. Inadequacy of cause does not of itself invalidates the contract That the consideration in the sale was “cheap” is not a ground for the infirmity of the sale. Inadequacy of cause in a contract does not of itself invalidate the contract. 6. Silence as to demand letters not admission of debt The silence of Camon with respect to the several demand letters sent to him was an admission of his debt, is without support or sanction in law of evidence. 7. No change in the juridical relationship between hacienda owners and Emilio Camon after the written contract of lease; Continued cultivation merely implied a new lease, did not convert into express trust There was no change in the juridical relationship between the hacienda owners and Emilio Camon when, after the expiration of their written contract of lease, he continued cultivating the hacienda during the crop years 1952-53 to 1960-61. The continuance in the cultivation, with the acquiescence of the owners, did not convert the original relationship into an express
Page 85 of 87
For the years 1953 to 1963. location by district. (CA Decision) Price in auction sale not grossly inadequate to be shocking to the conscience of court Noting that the 1961 assessment of the combined value of the two parcels of land is P16. approximate area. Revised Rules of Court) 2.500.” 9. the material averments in the petition are deemed admitted. not for the period of the original contract. The combined assessed value of the parcels of land is P16. De Gordon v. and unless a notice to the contrary by either party has previously been given. 8. the City Treasurer of Quezon City executed on 4 January 1966 a final deed of sale of said lands and the improvements thereon. Article 1670 of the Civil Code Article 1670 of the Civil Code provides that “if at the end of the contract the lessee should continue enjoying the thing lea sed for 15 days with the acquiescence of the lessor. (Section 2. with the same terms and conditions provided in the original contract.500 is less than the total assessed value of the land and the improvement thereon. Vda. upon warrant of a certified copy of the record of such delinquency. De Gordon (covered by TCT 12204 and 12205). advertised for sale the parcels of land to satisfy the taxes. lot and block number. by keeping a notice of sale posted at the main entrance on the City Hall and in a public and conspicuous place in the district where the same is located and by publication of said notice once a week for 3 weeks in the “Daily Mirror”. 40. penalty and costs. Duazo filed a petition for consolidation of ownership. Rule 9. Fiduciary relationship an essential characteristic of trust. having found the sale to have been conducted “under the direction and supervision of the City Treasurer of Quezon City after the proper procedure and legal formalities had been duly accomplished. id. street and street number of the property. Fiduciary relationship is an essential characteristic of trust. Later on.00 representing the tax. Hence. Upon the failure of the registered owner to redeem the parcels of land within the 1-year period prescribed by law. the parcels of land were sold to Rosario Duazo for the amount of P10. Vda. (CA Decision) Issue on the irregularity of public sale of parcels of land waived The opposition has not raised the issue of irregularity in the public sale of the two parcels of land in question.R.580. Teehankee (J): 4 concur. Without costs. said price cannot be considered so grossly inadequate as to be shocking to the conscience of the court. and that while the price of P10. except as to the period of the lease. Rule 9. the advertisement stating the amount of taxes and penalties due. November 23. it is understood that there is an implied new lease. The other terms of the original contract shall be revived. This defense is deemed waived. Said final deed of sale was also registered in the Office of the Register of Deeds of Quezon City on 18 January 1966. There is no basis for the claim that an express trust was created when Camon continued to cultivate the land after the expiration of the written contract of lease. (Section 1. No. The appellate court upheld the tax sale of the real properties at which Duazo acquired the same and her ownership upon vda.trust but merely implied a new lease over the property. time and place of sale. 1 took no part Facts: Two parcels of land belong to Restituta V. which writing is required in express trusts over immovables. penalties and costs for a period of 30 days prior to the sale on 3 December 1964. the taxes against said parcels of land remained unpaid. name of the taxpayer against whom the taxes are levied. and no written instrument has been pointed to as establishing an express trust. The public sale on 3 December 1964. a newspaper of general circulation in Quezon City. CA (GR L-37831. The certificate of sale executed by the City Treasurer was duly registered on 28 December 1964 in the office of the Register of Deeds of Quezon City. but for the time established in articles 1682 and 1687.] First Division. de Gordon v.) 3. L-37831.800. 1. (CA Decision) Material averments admitted The opposition *to Duazo’s petition for consolidation of ownership+ has not controverted by specific denials the material averments in the petition. 1981. The City Treasurer of Quezon City. CA [G. No express trust There is nothing in the record that evidence the creation of a fiduciary relationship between the lessors and the lessee after the expiration of their written contract of lease. and the residential house on the land is P45.” The Supreme Court affirmed the appellate court’s decision under review. 23 November 1981) Vda. de Gordon’s failure to redeem the same. Page 86 of 87 . inclusive.800 and the residential house on the land was assessed at P45. that the present value of the house would be much less considering the depreciation for over 10 years.580.
500. ” 8. such does not follow when the law gives to the owner the right to redeem. but it is a necessary means of insuring the prompt collection of taxes so essential to the life of the Government”. that the price of P10. inadequacy of price should not be material. Court of Appeals. 988). Page 87 of 87 . it becomes a mandatory duty of the provincial treasurer to issue in favor of the purchaser a final deed of sale. Macaraeg. because the judgment debtor may reacquire the property or also sell his right to redeem and thus recover the loss he claims to have suffered by reason of the price obtained at the auction sale. Coronel. De Gordon had not sought to exercise her alleged right of redemption or make an actual tender thereof.500. it was held that “while in ordinary sales for reasons of equity a transaction may be invalidated on the ground of inadequacy of price. Abarca: Price inadequate to shock conscience of court In Director of Lands vs. Inadequacy of price an advantage in relation to owner’s right to redeem Mere inadequacy of the price alone is not sufficient ground to annul the public sale. as when a sale is made at public auction. Abarca (61 Phil. alleged gross inadequacy of price is not material “when the law g ives the owner the right to redeem as when a sale is made at public auction. Laws on tax sales for delinquent taxes necessary as taxes essential to life of Government As stressed in Tajonera vs. Commonwealth Act 502 which provides in section 31 thereof for a 1-year redemption period.00 is so inadequate as to be shocking to the conscience of the court. or when such inadequacy shocks one’s conscience as to justify the courts to interfere. Gross inadequacy of purchase price not material if owner has right to redeem As held in Velasquez vs. 9.000. 5. 70). It cannot be said.00 has no factual basis. Vda. Quezon City Charter (CA 502).” 6. In the present case. In the present case. The special law covering Quezon City necessarily prevails over the general law. unlike in ordinary sale. controlling on length of redemption period. upon the theory that the lesser the price the easier it is for the owner to effect the redemption. The finding of the lower court that the house and land in question have a fair market value of not less than P200.00 is about 1/6 of the total assessed value of the two parcels of land in question and the residential house thereon. not RA 1275. 378) In Velasquez vs. And so it was aptly said: ‘When there is the right to redeem. Coronel (5 SCRA 985. (CA Decision) Mere inadequacy of price not ground to annul public sale.25 as so inadequate to shock the conscience of the court because the assessed value of the property in question was P60. (CA Decision) Public Sale governed by Section 40 of CA 470 The public sale is governed by Section 40 of Commonwealth Act 470 which gives the delinquent taxpayer a period of 1 year from the date of the sale within which to repurchase the property sold. the same did not reach her or it must have escaped her mind considering her age. since the filing of Duazo’s brief in 1974. Coronel) 7. the Supreme Court considered the price of P877. In case the delinquent taxpayer does not repurchase the property sold within the period of 1 year from the date of the sale.4. Special law prevails over general law The period for redemption is not the 2-year period provided in RA 1275. (CA Decision) Director of Lands v. (Velasquez vs. upon the theory that the lesser the price the easier it is for the owner to effect the redemption. therefore. The assessed value of the land was more than 60 times the price paid at the auction sale. since the specific law governing tax sales of properties in Quezon City is the Quezon City Charter. (Barrozo vs.” 10.000. the law governing tax sales for delinquent taxes may be “harsh and drastic. 83 Phil. No lack of personal notice of tax sale The alleged lack of personal notice of the tax sale is negated by her own averments in her own opposition filed in the lower court a quo that “the Oppositor in the petition is a woman 80 years of age. the price of P10. She was not aware of the aucti on sale conducted by the City Treasurer of Quezon City on 3 December 1964 or if there was any notice sent to her.00.
This action might not be possible to undo. Are you sure you want to continue?
We've moved you to where you read on your other device.
Get the full title to continue reading from where you left off, or restart the preview.