You are on page 1of 10

Philippine Lawin Bus Co., v.

Court of Appeals
G.R. No. 130972, January 23, 2002
Private respondent Advance Capital Corporation, a licensed lending investor, extended a
loan to herein petitioner Philippine Lawin Bus Company (Lawin) in the amount of 8 million pesos
payable within one year. To guarantee the payment of such loan, Philippine Lawin Bus Co.
executed a Deed of Chattel Mortgage of their 9 buses and a promissory note.
Petitioner Lawin failed to pay the aforementioned loan and was declared in default. As
aresult of such failure, Advance Credit Corporation foreclosed the mortagaged buses. Lawin filed
a writ of preliminary injunction to prevent the foreclosure of the buses.
Petitioner Lawin contends that the nine mortgaged buses must not be foreclosed because
there was already an arrangement between Lawin and Advance as to the full settlement of the loan
obligation and this is through the sale of the nine buses, in which proceeds of such will be credited
against the loan of the petitioner. The RTC ruled in favor of Lawin and declared that the foreclosure
was null and void. Upon appeal to the Court of Appeals, it reversed RTC’s decision. Aggrieved,
Petitioner elevated the case to the Supreme Court and argued that foreclosure is null and void
because there was already dacion en pago.
Whether there was dacion en pago between the parties upon the surrender or transfer of the
mortgaged buses to the respondent.
No. The Court held that there was no dacion en pago that took place between the parties.
In dacion en pago, property is alienated to the creditor in satisfaction of a debt in money.
It is the delivery and transmission of ownership of a thing by the debtor to the creditor as an
accepted equivalent of the performance of the obligation. It extinguishes the obligation to the
extent of the value of a thing delivered unless the party otherwise agrees.
Accordingly, the Civil Code provides that law on sales shall govern an agreement of dacion
en pago as the undertaking really partakes the nature of sale that is because the creditor is really
buying the thing or property of the debtor, payment for which is to be charge against the debtor’s
debt. As such, the elements of a contract of sale, namely: consent, object and consideration must
all be present.
In this case, there was no meeting of minds between the Lawin and Advance whether the
loan of the petitioners would be extinguished by dacion en pago. It was also shown that the act of
surrendering the mortgaged buses to Advance Credit Corporation was only for the purpose of
taking custody for the purpose of selling. Clearly, no dacion en pago was ever accomplished.
Filinvest Credit Corporation vs. Court of Appeals and Jose Sy Bang and Iluminada Tan Sy
G.R. No. 82508, September 29, 1989
Private respondent Jose and Iluminada Sy Bang were engaged in a business of selling
gravel produced from crushed rocks and used for construction purposes. Due to the increase in
production, they asked Mr. Ruben Mercurio’s help to find a rock crusher that will suffice their
need for production. Mr Mercurio referred Rizal Consolidated Corporation, a company who sold
the rock crusher in question to private respondents.
The rock crusher was inspected by Jose’s brother and after which they manifested their
desire to buy the machinery. However, a problem arose when they saw the price tag of such
machinery which price tag indicates that the rock crusher is being sold for 550,000 pesos. As a
result, private respondents asked for financial assistance with Filinvest.
Filinvest agreed to extend assistance on certain conditions and one of which is that they
will lease it and after the period of two years machineries will now be owned by the private
respondents. The latter agreed and the said machinery was purchased and leased. Months after, the
private respondents expected performance of the machinery was not achieved. They asked
Filinvest to make some adjustments in the contract but the latter did not respond which prompted
the private respondent to rescind the contract.
RTC ruled in favor of the respondent. CA also affirmed RTC’s decision.
Whether or not it is a contract of lease with option to purchase or a contract of sale on
It is a contract of sale on installments. According to the court, the nomenclature of the
agreement shows that it is a sale on installment. It is apparent that the intent of the parties to the
subject contract is for the so-called rentals to be the installment payments and upon the completion
of payments, the rock crusher would become the property of the private respondents.
Domingo v. Court of Appeals
G.R. No. 127540, October 17, 2001
Paulina Rigonon owned three (3) parcels of land including the residential house and
improvents thereon, which she allegedly sold to Spouses Felix and Concepcion Rigonon who
happens to be her distant relative.
Spouses Rigonon filed a complaint for reinvindicacion against herein petitioner alleging
that they have illegally entered and possess the land through stealth, force and intimidation.
Petitioner, on the other hand, contends that the alleged Deed of Sale was void for lack of
consideration and Paulina Rigonon could have not sold the land to the Spouses at 850 pesos, an
amount lower than the actual price. They contend that Paulina is of advance age and senile when
she allegedly sold the property to herein spouses. RTC favored the petitioner, however, upon
appeal to the Court of Appeals, it reversed the decision of RTC and ruled in favor of Spouses
Rigonon. Hence, this petition.
Whether or not Paulina has legal capacity to sell the land to the spouses Rigonon.
No. The general rule is that a person is not incompetent to contract merely because of his
advance years or by reason of physical infirmities. However, when such age and/or infirmities
impaired the mental faculties so as to prevent the person from properly, intelligently and firmly
protect her property rights then she is undeniably incapacitated.
In this case, there is an unrebutted testimony that at the time of the execution of the deed
of sale, Paulina was already incapacitated physical and mentally. It can be recalled that Zosima
Domingo testified that Paulina was playing with her waste and doing acts which a mentally stable
person may not do. Clearly, it is of the court’s judgement that Paulina cannot seriously consented
to the sale of the land in question. Therefore, Paulina has no legal capacity to sell such.
Antonio Medina v. Collector of Internal Revenue and Court of Tax Appeals
G.R. No. L-15113, January 28, 1961
In 1944, Spouses Antonio and Antonia Medina had no business or property. Later,
however, they acquired several concessions in San Mariano, Isabela. From 1946-1948, logs were
cut and removed from the property of petitioner Medina and were sold to different persons in
Manila through his agent, Mariano Osorio.
In 1949, Antonia Medina was engaged in a business of lumber dealing. As a consequence,
petitioner Medina sold the logs to his wife, and the latter later sold it in Manila through Osorio.
The Collector of Internal Revenue, after due investigation found out that the sale made by
herein petitioner to his wife was illegal and contrary to the provisions of the law and therefore the
original taxable sale is that of the sale effected by petitioner’s wife.
Petitioner appealed to the Court of Tax Appeals but it just affirmed the decision of the
Collector of Internal Revenue.
Whether or not the sale made by the petitioner to his wife was valid.
No. Under Article 1490 of the Civil Code, it provides that spouses are prohibited by law
from selling any property under a community system.
In this case, there is no doubt that the prohibition applies to spouses Medina. Also, it cannot
be said that such prohibition will not apply on the basis that they have an prenuptial agreement of
complete separation of property. As clearly stated in the facts, the spouses neither have a property
before their marriage. Therefore, the Court is correct in ruling that sales of logs made by the
petitioner to his wife is null and void and cannot be considered as a basis of imposing the taxable
Cornelia Matabuena v. Petronila Cervantes
G.R. No. L-28771, March 31, 1971
Felix Matabuena executed a Deed of Donation in favor of his common-law wife, Petronila
Cervantes, herein respondent. Several years later, Felix died intestate. As a result, the sister of
Felix filed an action for declaration of nullity of the Deed of Donation as such was made during
the common-law relationship of Felix and Petronila, which, as per the law, is prohibited.
Respondent, on the other hand, contends that such was valid since the donation was made before
their marriage in 1962.
The Regional Trial Court ruled in favor of Petronila Cervantes and declared that such deed
was valid for it was executed before Felix and Petronila’s marriage and therefore does not fall
within the ambit of the prohibitions of the law.
Whether the ban on donation between spouses during the marriage applies to common-law
Yes. While Article 133 of the Civil Code provides that donation between spouses during
the marriage are prohibited and are considered null and void, policy consideration dictates that
same prohibition also applies to common-law spouses. The reason behind this is to prevent undue
influence and improper pressure upon the donor caused by the stronger spouse.
In this case, notwithstanding the prohibition, Petronila is still entitled to one-half of the
inheritance since it cannot be doubted that their relationship was legitimated by their marriage on
March 1962.
Mercedes Calilim-Canullas v. Hon. Judge Fortun and Corazon Daguines
G.R. No. L-57499, June 22, 1984
Petitioner Mercedes and Fernando Canullas were married and have five children. They
lived in a residential land to which Fernando inherited from his late father. In 1978, Fernando
abandoned his family and lived with private respondent Corazon Daguines.
In 1980, Fernando sold his land including the residential house to Corazon Daguines.
Unable to take possession of the land and the residential house, Corazon filed a petition for quieting
of title and damages against Mercedes. However, the latter resisted and contends that the
residential house was part of the conjugal property and therefore cannot be sold without his
consent; and that she had not given her consent to the sale, therefore, the sale is null and void.
RTC declared Daguines as the lawful owner. CA affirmed the decision. Hence, this
Whether or not the sale made by Fernando to Corazon was valid.
No. Accordingly under the Civil Code, “Buildings constructed at the expense of the
partnership during the marriage on land belonging to one of the spouses also pertain to conjugal
partnership but the value of the land shall be reimbursed to the spouse who owns the same.”
In this case, the land originally belongs to Fernando, but since buldings and improvements
are made in such land during his marriage with Mercedes, the land including the residential house
forms part of the conjugal property of Mercedes and Fernando. Consequently, such property under
the conjugal partnership cannot be sold or alienated without the consent of the other spouse. The
foregoing circumstances considered, it follows that Fernando could not have alienated the house
and lot to Daguines, since Mercedes had not given her consent to the sale. Hence, sale was null
and void.
Domingo Rubias v. Isaias Batiller
G.R. No. L-35702, May 29, 1973
Francisco Militante claimed that he owned aparcel of land located in Iloilo. He filed with
the CFI of Iloilo an application for the registration of title of the land. This was opposed by the
Director of Lands, the Director of Forestry, and other oppositors. The case was docked as a land
case, and after trial the court dismissed he application for registration. Militante appealed to the
Court of Appeals.
Pending that appeal, he sold to Rubias, his son-in-law and his lawyer in the registration
case, the land. The CA rendered a decision, dismissing the application for registration. Rubias,
claiming to be the lawful owner, filed a Forcible Entry and Detainer case against Batiller.
Batiller opposed the claim of herein petitioner Rubias and claim that the latter cannot
possess nor purchase the land for it falls under the ambit of Article 1491 of the Civil Code which
prohibitis a lawyer from acquiring or purchasing the property and rights in litigation.
The Regional Trial Court ruled in favor of Isaias Batiller, herein rsspondent and declared
that the sale was void and prohibited. Hence, this appeal.
Whether or not the sale of land is prohibited under Article 1491.
Yes. Article 1491 says that “The following persons cannot acquire any purchase, even at a
public or judicial auction, either in person or through the mediation of another…. (5) Justices,
judges, prosecuting attorneys, clerks of superior and inferior courts, and other officers and
employees connected with the administration of justice, the property and rights in litigation or
levied upon an execution before the court within whose jurisdiction or territory they exercise their
respective functions; this prohibition includes the act of acquiring by assignment and shall apply
to lawyers, 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.”
The present case clearly falls under this, especially since the case was still pending appeal
when the sale was made and petitioner Rubias was Francisco Militante’s lawyer in the pending
case or appeal. Such being the case, the sale of the land made by Militante to Rubias is null and
The Philippine Trust Company v. Socorro Roldan
G.R. No. L-8477, May 31, 1956
Mariano Bernardino, a minor, acquired 17 parcels of land from his deceased father. In view
of his minority, Socorro Roldan, herein respondent and minor’s step-mother, was appointed to be
his legal guardin.
During her guardianship, she filed a motion asking for authority to sell the 17 parcels of
land to Dr. Fidel C. Ramos, his brother-in-law for the sum of 14,700 pesos. Motion was granted.
Socorro sold the land to Dr. Ramos, which was later on sold to Socorro, and sold the four remaining
parcels to Emilio Cruz.
Philippine Trust Company replaced Socorro as guardian of Mariano Bernardino and filed
a petition in the Regional Trial Court of Manila for annulment of the sale made by Socorro on the
ground that such sale was a prohibited sale under the Civil Code. The Regional Trial Court favored
Socorro Roldan. Hence, this petition.
Whether or not the sale made by Socorro to Dr. Fidel C. Ramos and Emilio Cruz was valid.
Remembering the general doctrine that guardianship is a trust of the highest order, 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 ward’s property we have no hesitation to
declare that in this case, in the eyes of the law, Socorro Roldan took by purchase her ward’s parcels
thru Dr. Ramos. Moreover, even if there was no previous agreement between her and Dr. Ramos
to effect that sale, the stubborn fact remains that she acquired her protégé’s property and that she
really planned to get them for herself, which can be traced from the very short time of the two
sales (one week).
Hence, from the legal and equitable stand points, these three sales should not be sustained.
The first two for being prohibited sale under the law and the third because Socorro could not pass
no title to Emilio Cruz, as she has no authority.
Paulino Valencia v. Atty. Arsenio Cabanting
A.M. No. 1302, 1391, and 1543
Paulino Valencia and his spouse bought a parcel of land from Serapia Raymundo, heir of
Pedro Raymundo. In 1968, a conference was held in Atty. Jovellano’s residence to settle the
dispute between them, however, no settlement was made. As a consequence, Serapia, through Atty.
Cabanting, herein respondent, filed a complaint against Paulino Valencia for the recovery of
possession with damages. Valencias, on the other hand, engaged the services of Atty. Antiniw who
advised them to present a notarized deed of sale. Atty. Antiniw was given money to falsify the
signature of Serapia, the alleged vendor.
The RTC ruled in favor of Serapia. However, while the appeal was pending, Serapia sold
the land to Atty. Jovellanos and Atty. Cabanting. Upon learning such sale, Paulino Valencia filed
a disbarment case against the two lawyers alleging that their purchase of the said land was void
and violates the Civil Code and the Code of Professional Responsibility.
Whether or not the sale of the land by Serapia to Atty. Jovellano and Atty. Cabanting is
prohibited. Is it null and void?
Under Article 1491 of the New Civil Code: The following persons cannot acquire by
purchase, even at a public of judicial auction, either in person or through the mediation of another:
xxx xxx xxx
(5) . . . this prohibition includes the act of acquiring by assignment and shall apply
to lawyers, with respect to the property and rights which may be the object of any litigation
in which they make take part by virtue of their profession.
Public policy prohibits the transactions in view of the fiduciary relationship involved. It is
intended to curtail any undue influence of the lawyer upon his client. Greed may get the better of
the sentiments of loyalty and disinterestedness. Any violation of this prohibition would constitute
malpractice. Art. 1491, prohibiting the sale to the counsel concerned, applies only while the
litigation is pending.
In the case at bar, while it is true that Atty. Arsenio Fer. Cabanting purchased the lot
after finality of judgment, there was still a pending certiorari proceeding.Hence, it is not safe to
conclude, for purposes under Art. 1491 that the litigation has terminated when the judgment of the
trial court become final while a certiorari connected therewith is still in progress. Thus, purchase
of the property by Atty. Cabanting in this case constitutes malpractice in violation of Art. 1491
and the Canons of Professional Ethics. Clearly, this malpractice is a ground for suspension. The
sale in favor of Atty. Jovellanos does not constitute malpractice. There was no attorney-client
relationship between Serapia and Atty. Jovellanos, considering that the latter did not take part as
counsel in the pending case.
Luis Pichel v. Prudencio Alonzo
G.R. No. L-36902, January 30, 1982
Prudencio Alonzo was awarded by the government of a parcel of land. However, in 1965,
the award was cancelled. Meanwhile in 1968, Alonzo sold the fruits of the coconut trees to herein
petitioner, Luis Pichel. In 1972, award of the land to Alonzo was reinstated. Thereafter, Pichel
harvested the fruits for the first time. The RTC ruled that the deed of sale was null and void for
being a prohibited encumberance under RA 477.
Whether or not the deed of sale executed by Alonzo in favor of Pichel was a prohibited
encumberance under RA 477.
Under R.A. No. 477 is not prohibited from alienating or disposing of the natural and/or
industrial fruits of the land awarded to him. What the law expressly disallows is the encumbrance
or alienation of the land itself or any of the permanent improvements thereon. Permanent
improvements on a parcel of land are things incorporated or attached to the property in a fixed
manner, naturally or artificially. They include whatever is built, planted or sown on the land which
is characterized by fixity, immutability or immovability.
In this case, while coconut trees are permanent improvements of a land, their nuts are
natural or industrial fruits which are meant to be gathered or severed from the trees, to be used,
enjoyed, sold or otherwise disposed of by the owner of the land. Herein respondents, as the grantee
of Lot No. 21 from the Government, had the right and prerogative to sell the coconut fruits of the
trees growing on the property. In fact, such sale made by the respondent is in accordance with
purpose of the Act which is to assist the awardees to make good and productive use of the land
awarded to them, not only to enable them to improve their standard of living, but likewise to help
provide for the annual payments to the government of the purchase of the lots awarded to them.