G.R. No.

132305      December 4, 2001

LABAGALA vs. SANTIAGO

FACTS:

Jose T. Santiago owned a parcel of land in Manila. However, his sisters sued him for
recovery of 2/3 share of the land alleging that he had fraudulently registered it in his name.
The trial court decided in favor of his sisters.
Jose died intestate. His sisters then filed a complaint before the RTC for recovery of the 1/3
portion of said property which was in the possession of Ida C. Labagala (who claimed to be
Ida C. Santiago, the daughter of Jose).

The trial court ruled in favor of Labagala. According to the trial court, the said deed
constitutes a valid donation. Even if it were not, petitioner would still be entitled to Jose's
1/3 portion of the property as Jose's daughter.

When appealed, the Court of Appeals (CA) reversed the decision of the trial court. It took
into account that Ida was born of different parents, as indicated her birth certificate.

ISSUES:

1. WON respondents may impugn petitioner's filiation in this action for recovery of
title and possession.

2. WON petitioner is entitled to Jose's 1/3 portion of the property he co-owned with
respondents, through succession, sale, or donation.

HELD:

The Court AFFIRMED the decision of the CA.

On Issue No. 1

Yes.

Article 263 refers to an action to impugn the legitimacy of a child, to assert and prove that a
person is not a man's child by his wife. However, the present respondents are asserting not
merely that petitioner is not a legitimate child of Jose, but that she is not a child of Jose at
all.
A baptismal certificate, a private document, is not conclusive proof of filiation. Use of a
family name certainly does not establish pedigree. Thus, she cannot inherit from him
through intestate succession.
On Issue No. 2

No.

The Court ruled that there is no valid sale in this case. Jose did not have the right to transfer
ownership of the entire property to petitioner since 2/3 thereof belonged to his sisters.
Petitioner could not have given her consent to the contract, being a minor at the time.
Consent of the contracting parties is among the essential requisites of a contract, including
one of sale, absent which there can be no valid contract. Moreover, petitioner admittedly
did not pay any centavo for the property which makes the sale void. Article 1471 of the
Civil Code provides that if the price is simulated, the sale is void, but the act may be shown
to have been in reality a donation, or some other act or contract.

Neither may the purported deed of sale be a valid deed of donation. Even assuming that the
deed is genuine, it cannot be a valid donation. It lacks the acceptance of the donee required
by Art. 725 of the Civil Code. Being a minor, the acceptance of the donation should have
been made by her father or mother or her legal representative pursuant to Art. 741 of the
same Code. No one of those mentioned in the law accepted the donation for Ida.

PARAGAS VS HEIRS OF DOMINADOR BALACANO

FACTS

Gregorio Balacano was married to Lorenza Sumigcay has two parcel of land located in Santiago City.
They had three children namely Domingo, Catalino and Alfredo, all surnamed Balacano.Gregorio was
admitted at the hospital for liver cirrhosis, confined until his death on July 19, 1996. Lorenza died on
December 1991. Gregorio purportedly sold on July 22, 1996 a portion of Lot consisting of 15, 925 sqm
and the whole of of Lot 1175-F to the Spouses Paragas for a total consideration of P500,000.00.
Domingo’s children (Dominic, Rodoldo, Nanette and Cyric) all surnamed Balacano filed a complaint for
the annulment of sale and partition against Catalino and the Spouses Paragas. They claimed that their
grandfather (Gregorio) could not have appeared before the notary public on July 22, 1996 at Santiago
City because he was confined at the Veterans Hospital in Quezon City and at the time of the execution of
the sale, Gregorio was seriously ill, in fact dying at that time.

Issue: 1. WON Gregorio give an intelligent consent to the sale of Lots 1175-E and 1175-F when he signed
the deed of sale.

2. WON the deed of Sale purportedly executed by the peti ti oners and the late Gregorio
Balacano was null and void.

Rulings:
1. No. It is not disputed that when Gregorio signed the deed of sale, Gregorio was seriously ill, as
he in fact died a week after the deed’s signing. Gregorio died of complications caused by
cirrhosis of the liver. Gregorio;s death was neither sudden nor immediate; he fought at least a
month-long battle against the disease until he succumbed to death on July 22, 1996. Given that
Gregorio purportedly executed a deed during the last stages of hi battle agsint his disease, we
seriously doubt whether Gregorio could have read, or fully understood, the contents of the
documents he signed or of the consequences of his act.

2.Yes. The irregular and invalid notarization of the deed is a falsity that raises doubts on the
regularity of the transaction itself. While the deed was indeed signed on July 18, 1996 at
Bayombong, Nueva Viscaya, the deed states otherwise, as it shows that the deed was executed
on July 22, 1996 at Santiago City. Why such falsity was committed, and the circumstances under
which this falsity committed, speaks volume about the regularity and the validity of the sale. Art
24 of Civil Code tells us that in all contractual property or other relations, when one of the
parties is at disadvantage on account of his moral dependence, ignorance, indigence, mental
weakness, tender age or other handicap, the courts must be vigilant for his protection. Based on
the foregoing, Gregorio’s consent to the sale of the lots was absent making the contact null and
void.

Domingo vs. CA G.R. No. 127540 October 17, 2001 Ponente: J. Quisimbing FACTS: Subject parcels of land
were previously owned by Paulina Rigonan. She allegedly sold them to the spouses Rigonan in 1965,
who claim to be her relatives. Petitioners, however, alleged that they are the closest surviving relatives
of Paulina and they inherited the lots from her when she died in 1966. The private respondents filed a
complaint for reivindicacion in the RTC claiming that they were the owners of the parcels of land
through the deed of sale executed by Paulina, and that they had been in continuous possession of the
subject properties and had introduced permanent improvements thereon. They also claim that the
petitioners entered the properties illegally, and refused to leave them when asked to do so. The
petitioners contested that such deed was void for being spurious as well as lacking consideration. The
lower court rendered judgment in favor of the private respondents by virtue of intestate succession and
stating that the deed of absolute sale was fake and void. The CA reversed the decision. ISSUE: Whether
or not the sale was valid despite the lack of consideration. HELD: No. The sale was null and void ab initio
due to lack of consideration, being grossly and shockingly inadequate. Consideration is the why of a
contract, the essential reason which moves the contracting parties to enter into the contract. On record,
there is unrebutted testimony that Paulina as landowner was financially well off. She loaned money to
several people. We see no apparent and compelling reason for her to sell the subject parcels of land
with a house and warehouse at a meager price of P850 only. Moreover, there was no receipt to show
that said price was paid to and received by her. The private respondents did not prove the due
execution of the deed of sale. When the Register of Deeds was subpoenaed to produce the deed, no
original typewritten but only a carbon copy was presented to the trial court. Although the Court of
Appeals calls it a "duplicate original," the deed contained filled in blanks and alterations. None of the
witnesses directly testified to prove positively and convincingly Paulina's execution of the original deed
of sale. The carbon copy did not bear her signature, but only her alleged thumbprint. It was also learned
that Paulina was incapacitated at the time of the alleged execution of the deed of sale. The general rule
is that a person is not incompetent to contract merely because of advanced years or by reason of
physical infirmities. However, when such age or infirmities have impaired the mental faculties so as to
prevent the person from properly, intelligently, and firmly protecting her property rights then she is
undeniably incapacitated. The unrebutted testimony of Zosima Domingo shows that at the time of the
alleged execution of the deed, Paulina was already incapacitated physically and mentally. She narrated
that Paulina played with her waste and urinated in bed. Given these circumstances, there is in our view
sufficient reason to seriously doubt that she consented to the sale of and the price for her parcels of
land. Moreover, there is no receipt to show that said price was paid to and received by her

ANTONIO MEDINA, petitioner

VS.

COLLECTOR OF INTERNAL REVENUE AND THE COURT OF TAX APPEALS, respondents

G.R. No. L-15113

January 28, 1961

FACTS:

About May 20, 1944, petitioning taxpayer Antonio Medina married Antonia Rodriguez. Both spouses had
neither property nor business of their own. Antonio later acquired forest concessions in Isabela. From
1946 to 1948, the logs cut and removed from his concessions were sold in Manila through his agent,
Mariano Osorio. In 1949, Antonia, the petitioner’s wife, engaged in lumber business, and on 1952
petitioner sold to her almost all the logs produced. Antonia, in turn, sold the logs in Manila through the
same agent. Upon assessment of their taxes, the Collector of Internal Revenue considered the sale from
Antonio to Antonia as null and void, thus, an additional tax of P4,533.54 was assessed. The spouses
protested the assessment claiming that they had a prenuptial agreement of complete separation of
properties.

ISSUE:

Whether or not the sale between Antonio and Antonia was valid

RULING:

Article 1490. The husband and the wife cannot sell property to each other, except:

(1) When a separation of property was agreed upon in the marriage settlements; or
(2) When there has been a judicial separation of property under article 191. (1458a)
The validity of the prenuptial agreement was declared by court null because of material inconsistencies:
First, at the time of marriage, the petitioner and his wife had neither property nor business of their own, as
to have urged them to enter into the supposed property agreement. Second, the spouses’ testimony that
the separation of property agreement was recorded in the Registry of Property 3 months before the
marriage, is absurd, since a pre-nuptial agreement could not be effective before marriage is celebrated.
Third, despite their insistence that the agreement contract exists, the spouses did not act in accordance
with its alleged covenants; but that even during their taxable years, the ownership, usufruct, and
administration of their properties and business were in the husband. Fourth, the Day Book of the Register
of Deeds, did not show that the document in question was among those recorded therein.

The sale from Antonio to Antonia was null because it is expressly prohibited in the Article 1490 of the
Civil Code.

DECISION:

WHEREFORE, the decision appealed from is affirmed, with costs against the petitioner. Contracts
violative of the provisions of Article 1490 of the Civil Code are null and void.

G.R. No. L-57499 June 22, 1984

CALIMLIM- CANULLAS vs. FORTUN

FACTS:

Petitioner Mercedes Calimlim-Canullas was married to Fernando Canullas. They have children and
lived in the residential land in question which Fernando inherited the land after his father died.

Years after, Fernando abandoned his family and was living with private respondent Corazon. (Both
were convicted of concubinage in a judgment rendered the Court of First Instance which has
become final during the pendency of this petition.)

Fernado sold the said inherited land with the house thereon to Corazon. Unable to take possession
of the said property, Corazon filed a complaint for quieting of title and damages against Mercedes.

However, Mercedes claimed that the sale of the land, with the house and improvements, was null
and void because they are conjugal properties and she had not given her consent.

Respondent Court (Fortun as judge) principally declared Corazon as the lawful owner of the land in
question and 1/2 of the house erected on said land.

Upon reconsideration prayed for by Mercedes, respondent Court amended its decision and resolved
that indeed Corazon was the true and lawful owner of the land but declared the sale of the conjugal
house and improvements null and void.
ISSUES:

1. WON the construction of a conjugal house on the exclusive property of the husband ipso
facto gave the land the character of conjugal property.

2. WON the sale of the lot together with the house and improvements thereon was valid.

HELD:

On Issue No. 1

No.

Second paragraph of Article 158 of the Civil Code reads: Buildings constructed at the expense of the
partnership during the marriage on land belonging to one of the spouses also pertain to the
partnership, but the value of the land shall be reimbursed to the spouse who owns the same.

The Court ruled that 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.

The spouse owning the lot becomes a creditor of the conjugal partnership for the value of the lot,
which value would be reimbursed at the liquidation of the conjugal partnership.

On Issue No. 2

No.

Article 1409 of the Civil Code states inter alia that: contracts whose cause, object, or purpose is
contrary to law, morals, good customs, public order, or public policy are void and inexistent from
the very beginning.

Article 1352 also provides that: "Contracts without cause, or with unlawful cause, produce no effect
whatsoever. The cause is unlawful if it is contrary to law, morals, good customs, public order, or
public policy."

In the case at bar, 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. It was subversive of the stability of the family, a basic social institution which
public policy cherishes and protects. Hence, the Court ruled that the sale is null and void being
contrary to morals and public policy.

Additionally, the law emphatically prohibits the spouses (also include couples living as husband
and wife without benefit of marriage) from selling and donating property to each other during
marriage subject to certain exceptions. Such prohibitions were also designed to prevent the
exercise of undue influence by one spouse over the other, as well as to protect the institution of
marriage, which is the cornerstone of family law.
Heirs of Ignacia Aguilar-Reyes vs Mijares

Facts:

The controversy stemmed from a dispute over Lot No. 4349-B-2. Registered in the name of
Spouses Vicente Reyes and Ignacia Aguilar-Reyes. Said lot and the apartments build thereon
were part of the spouses’ conjugal properties having been purchased using conjugal funds fro,
their garments business. Vicente and Ignacia were married in 1960 but have been separated de
facto since 1974. Sometime in 1984, Ignacia learned that on March 1,1983, Vicente sold Lot.
No. 4349-N-2 to respondent spouses Cipriano and Florentina Mijares . On August 9,1984,
Ignacia through her counsel , sent a letter to respondent spouses demanding the return of her
share in the lot. Pending appeal, Ignacia died and was substituted by her compulsory heirs.
Spouses Mijares claimed that they are buyers in good faith.

Issue: Whether the sale is void.

Ruling: Yes, the husband could nor alienate or encumber any conjugal real property without the
consent, express or implied, of the wife, otherwise the contract is voidable. Indeed , in several
cases it has been ruled that alienation or encumbrance by the husband is void. This is
consistent with the provision of the Civil code which the wife could within 10 years from the
questioned transaction may seek its annulment.

GUIANG VS. CA

G.R. No. 125172, June 26, 1998

DOCTRINE: The sale of a conjugal property requires the consent of both the husband and the wife. The
absence of the consent of one renders the sale null and void, while the vitiation thereof makes it merely
voidable. Only in the latter case can ratification cure the defect.

FACTS:

Private respondent Gilda Corpuz and Judie Corpuz are legally married spouses. They have three children, namely:
Junie (18 years old), Harriet (17), and Jodie (15). The couple bought a 421 sq. meter lot in Koronadal, South
Cotabato from Manuel Callejo through a conditional deed of sale. The consideration was payable in installment. In
1988, the couple sold one-half portion of their Lot to petitioner-spouses Antonio and Luzviminda Guiang. Since
then, Guiang occupied the one-half portion and built their house thereon. They are thus adjoining neighbors of the
Corpuzes. Gilda Corpuz left for Manila to look for work abroad. Unfortunately, she became a victim of an
unscrupulous illegal recruiter. She was not able to go abroad. She stayed for sometime in Manila. After his wife's
departure for Manila, Judie Corpuz seldom went home to the conjugal dwelling. He stayed most of the time at his
place of work. Harriet Corpuz learned that her father intended to sell the remaining one-half portion including their
house to Guiangs. She wrote a letter to her mother. Gilda Corpuz replied that she was objecting to the sale. Harriet,
however, did not inform her father about this; but instead gave the letter to Luzviminda Guiang so that she would
advise her father. However, in the absence of his wife Gilda, Judie Corpuz pushed through the sale. He sold to
Luzviminda Guiang thru a "Deed of Transfer of Rights" remaining one-half portion of their lot and the house. Gilda
returned home. She found her children staying with other households. Only Junie was staying in their house. Harriet
and Joji were with Mr. Panes. Gilda gathered her children together and stayed at their house. Her husband was
nowhere to be found. She was informed by her children that their father had a wife already. For staying in their
house sold by her husband, spouses Guiang complained before the Barangay authorities for trespassing. The parties
thereat signed a document for amicable settlement stating that Gilda Corpuz and her three children must leave
voluntarily the house without any charge. Thereafter, Gilda approached the Barangay Captain for the annulment of
the settlement. Annulment not having been made, they stayed put in her house and lot. Spouses Guiang filed a
motion for execution of the amicable settlement with the MTC. However, Private Respondent Gilda Corpuz filed a
Complaint against her husband Judie Corpuz and Petitioner-Spouses Antonio and Luzviminda Guiang. The said
Complaint sought the declaration of a Deed of Transfer of Right, which involved the conjugal property, null and
void. The trial court ruled in favor of private respondent. CA affirmed.

ISSUE:

WON the assailed Deed of Transfer of Rights was validly executed.

HELD:

NO Petitioners insist that the questioned Deed was validly executed by the parties in good faith and for valuable
consideration. The absence of private respondent's consent merely rendered the Deed voidable under Article 1390 of
the Civil Code. The provision in par. 2, refers to contracts visited by vices of consent, i.e., contracts which were
entered into by a person whose consent was obtained and vitiated through mistake, violence, intimidation, undue
influence or fraud. In this instance, private respondent's consent to the contract of sale of their conjugal property was
totally inexistent or absent. The contract falls within the ambit of Article 124 of the Family Code, which provides
that "...In the absence of such authority or consent, the disposition or encumbrance shall be void..." Furthermore, it
must be noted that the fraud and the

VIRGINIA A. PEREZ, petitioner, 
vs.
COURT OF APPEALS and BF LIFEMAN INSURANCE CORPORATION, respondents.

G.R. No. 112329 January 28, 2000

YNARES-SANTIAGO, J.

Facts: Primitivo Perez has been isured with the BF Lifeman Insurance Corporation since 1980 for
P20,000. Sometime in 1987, Rodolfo Lalog, an agent of BF, convinced him to apply for additional
insurance coverage of P50, 000. Perez accomplished the application form and passed the required
medical exam. He also paid P2,075 to Lalog for premium.
On Nov. 25, 1987, perez died while riding a banca which capsized during a storm. During this time his
application papers for the additional insurance coverage was still in the office of BF.

Without knowing that Perez died, BF approved Perez’s application and issued the corresponding policy
for P50,000.

Virginia Perez, his wife, claimed the benefits of the insurance policy for her deceased husband but she
was only able to obtain P40,000 under the first insurance policy. BF refused to pay the proceeds
amounting to P150,000 under the additional policy coverage of P50,000 because they maintain that such
policy had not been perfected.

On Sept. 21, 1990, BF filed a complaint against Mrs. Perez seeking recission and declaration of nullity of
the insurance contract in question. Mrs. Perez file a counterclaim for the collection of P150,000 plus
damages.

Issue: Whether or not there was a consummated contract of insurance between Perez and BF.

Held: No. An essential requisite of a valid contract is consent. Consent must be manifested by the
meeting of the offer and acceptance upon the thing and the cause which are to constitute the contract.

The offer must be certain and the acceptance absolute. When Perez filed the application , it was subject
to the acceptance of BF. The perfection was also further conditioned upon 1) issuance of the policy; 2)
payment of the premium and; 3) the delivery to and acceptance by the applicant in good health.

The delivery and acceptance by the applicant was a suspensive condition which was not fulfilled
inasmuch as the applicant was already dead at the time the policy was issued. The non-fulfillment of the
condition resulted in the non-perfection of the contract.

An application for insurance is merely an offer which requires the overt act of the insurer for it to ripen to a
contract. Delay in acting on the application does not constitute acceptance even though the insured has
forwarded his first premium with his application. Delay, in this case, does not constitute gross negligence
because the application was granted within the normal processing time.

WHEREFORE, the decision rendered by the Court of Appeals in CA-G.R. CV No. 35529 is AFFIRMED
insofar as it declared Insurance Policy No. 056300 for P50,000.00 issued by BF Lifeman Insurance
Corporation of no force and effect and hence null an d void. No costs.

Abalos vs Macatangay Jr.

Facts:
Spouses Arturo and Esther Abalos are registered owners of a parcel of land in Makati City. On June 2, 1988, armed with
purportedly Special Power of Attorney (SPA) issued by his wife, Arturo executed a Receipt and Memorandum of Agreement
(RMOA) in favor of the respondent binding himself to sell the subject property to the latter and not to offer the same to other
party within 30 days from date. Arturo acknowledged the receipt of P5,000, which will be deducted from the total agreed price
of the subject property amounting to P1,300,000. Seemingly, a marital squabble was brewing between the spouses. Esther
executed a SPA appointing her sister to act in her behalf in connection the transfer of the property to the respondent.

On November 16, 1989, respondent sent a letter to the spouses informing the latter of his willingness to
pay the agreed purchase price and thereafter. On that very same day, Esther executed a Contract to Sell to the extent of her
conjugal interest and obligated herself to surrender the possession of the property and to execute a deed of absolute sale upon
full payment.
Respondent sent a letter dated December 7, 1989 informing the spouses that he had already prepared a check to cover the
remaining unpaid balance of the purchase price and reiterated his demand to the latter to fulfill their obligation. However, the
spouses failed o deliver the land causing the respondent to file a complaint for specific performance.

The RTC dismissed the case and ruled that the SPA ostensibly issued by Esther in favor of her husband
was void, as it was falsified. Thus, the latter has no authority to sell the property.

CA Reversed the ruling and said that the SPA in favor of Arturo, assuming that it was void, cannot affect the transaction
between Ester and respondent. It was by virtue of the SPA executed by Esther appointing her sister in her behalf which binds
Esther to sell the property to the respondent.

Issue:
WON there was a perfected contract of sale executed between the petitioner and respondent.

Held:

No.

Contracts, in general, require the presence of three essential elements: (1) consent of the contracting parties; (2) object certain
which is the subject matter of the contract; and (3) cause of the obligation which is established.

The nullity of the RMOA as a contract of sale emanates not only from lack of Esther’s consent thereto but also from want of
consideration and absence of respondent’s signature thereon. The congruence of the wills of the spouses is essential for the
valid disposition of conjugal property. Where the conveyance is contained in the same document which bears the conformity of
both husband and wife, there could be no question on the validity of the transaction. But when there are 2 documents on
which the signatures of the spouses separately appear, textual concordance of the documents is indispensable. Hence, in this
case where the wife’s putative consent to the sale of conjugal property appears in a separate document which does not,
however, contain the same terms and conditions as in the first document signed by the husband, a valid transaction could not
have arisen.

The interest of each spouse is limited to the net remainder or "remanente liquido" (haber ganancial) resulting from the
liquidation of the affairs of the partnership after its dissolution. Thus, the right of the husband or wife to one-half of the
conjugal assets does not vest until the dissolution and liquidation of the conjugal partnership, or after dissolution of the
marriage.

Significantly, the Family Code provides that the administration of the conjugal partnership is now a joint undertaking of the
husband and the wife. In the event that one spouse is incapacitated or otherwise unable to participate in the administration of
the conjugal partnership, the other spouse may assume sole powers of administration. However, the power of administration
does not include the power to dispose or encumber property belonging to the conjugal partnership. In all instances, law
requires the written consent of the other spouse, or authority of the court for the disposition or encumbrance of conjugal
partnership property without which, the disposition or encumbrance shall be void.

In a contract of sale, the seller must consent to transfer the ownership in exchange for the price, the subject matter must be
determinate, and the price must be certain in money or its equivalent. In this case, there was no contract of sale rather a
perfected contract of option was entered into by Arturo and respondent. An option merely grants a privilege to buy or sell
within the agreed time and purchase price.

EARNEST and OPTION MONEY

A perfected contract of option does not result in the perfection of the sale. It is only when the option is
exercised may a sale be perfected. The P5,000 paid by respondent is viewed not as earnest money but
merely an option money. RMOA signifies a unilateral offer of Arturo to sell the property to respondent
and does not impose the respondent an obligation to buy the said property, as in fact, the agreement does not even bear the
respondent's signature. Further, it is crystal clear that the intent of Arturo was to only to grant the respondent a privilege to
buy the property within the specified period. There is nothing in the RMOA which indicates that Arturo agreed to transfer the
ownership of the land which is an essential element in the contract of sale.
Milagros Manongsong vs. FelomenaJumaquio Estimo
G. R. No. 136773. June 25, 2003
FACTS:
Allegedly, AgatonaGuevarra (“Guevarra”) inherited a property from Justina Navarro, which is now under
possession of the heirs of Guevarra. Guevarra had six children, one of them is Vicente Lopez, the father
of petitioner Milagros Lopez Manongsong (“Manongsong”). The respondents, the Jumaquio sisters and
Leoncia Lopez claimed that the property was actually sold to them by Justina Navarro prior to her death.
The respondents presented deed of sale dated October 11, 1957. Milagros and CarlitoManongsong
(“petitioners”) filed a Complaint on June 19, 1992 praying for the partition and award to them of an area
equivalent to one-fifth (1/5), by right of representation. The RTC ruled that the conveyance made by
Justina Navarro is subject to nullity because the property conveyed had a conjugal character and that
AgatonaGuevarra as her compulsory heir should have the legal right to participate with the distribution
of the estate under question to the exclusion of others. The Deed of Sale did not at all provide for the
reserved legitime or the heirs, and, therefore it has no force and effect against AgatonaGuevarra and
should be declared a nullity ab initio.

ISSUE:
Whether or not the rights of the compulsory heirs were impaired by the alleged sale of the property by
Justina.

RULING:
No. The Kasulatan, being a document acknowledged before a notary public, is a public document and
prima facie evidence of its authenticity and due execution. There is no basis for the trial court’s
declaration that the sale embodied in the Kasulatan deprived the compulsory heirs of Guevarra of their
legitimes. As opposed to a disposition inter vivos by lucrative or gratuitous title, a valid sale for valuable
consideration does not diminish the estate of the seller. When the disposition is for valuable
consideration, there is no diminution of the estate but merely a substitution of values, that is, the
property sold is replaced by the equivalent monetary consideration. The Property was sold in 1957 for
P250.00.

The trial court’s conclusion that the Property was conjugal, hence the sale is void ab initio was not based
on evidence, but rather on a misapprehension of Article 160 of the Civil Code, which provides: “All
property of the marriage is presumed to belong to the conjugal partnership; unless it be proved that it
pertains exclusively to the husband or to the wife.” The presumption under Article 160 of the Civil Code
applies only when there is proof that the property was acquired during the marriage. Proof of
acquisition during the marriage is an essential condition for the operation of the presumption in favor of
the conjugal partnership. There was no evidence presented to establish that Navarro acquired the
Property during her marriage.

Rafael Arsenio S. Dizon, v. CTA and CIR

G.R. No. 140944; April 30, 2008
FACTS:
Jose P. Fernandez died in November 7, 1987. Thereafter, a petition for the probate of his will was filed.
The probate court appointed Atty. Rafael Arsenio P. Dizon as administrator of the Estate of Jose
Fernandez.

An estate tax return was filed later on which showed ZERO estate tax liability. BIR thereafter issued a
deficiency estate tax assessment, demanding payment of Php 66.97 million as deficiency estate tax. This
was subsequently reduced by CTA to Php 37.42 million. The CA affirmed the CTA’s ruling, hence, the
instant petition.

The petitioner claims that in as much as the valid claims of creditors against the Estate are in excess of
the gross estate, no estate tax was due. On the other hand, respondents argue that since the claims of
the Estate’s creditors have been condoned, such claims may no longer be deducted from the gross
estate of the decedent.

ISSUE:
Whether the actual claims of creditors may be fully allowed as deductions from the gross estate of Jose
despite the fact that the said claims were reduced or condoned through compromise agreements
entered into by the Estate with its creditors

HELD:
YES. Following the US Supreme Court’s ruling in Ithaca Trust Co. v. United States, the Court held that
post-death developments are not material in determining the amount of deduction. This is because
estate tax is a tax imposed on the act of transferring property by will or intestacy and, because the act
on which the tax is levied occurs at a discrete time, i.e., the instance of death, the net value of the
property transferred should be ascertained, as nearly as possible, as of the that time. This is the date-of-
death valuation rule.

The Court, in adopting the date-of-death valuation principle, explained that: First. There is no law, nor
do we discern any legislative intent in our tax laws, which disregards the date-of-death valuation
principle and particularly provides that post-death developments must be considered in determining the
net value of the estate. It bears emphasis that tax burdens are not to be imposed, nor presumed to be
imposed, beyond what the statute expressly and clearly imports, tax statutes being construed
strictissimi juris against the government. Second. Such construction finds relevance and consistency in
our Rules on Special Proceedings wherein the term "claims" required to be presented against a
decedent's estate is generally construed to mean debts or demands of a pecuniary nature which could
have been enforced against the deceased in his lifetime, or liability contracted by the deceased before
his death. Therefore, the claims existing at the time of death are significant to, and should be made the
basis of, the determination of allowable deductions.
CORNELIA MATABUENA vs. PETRONILA CERVANTES
 L-2877 (38 SCRA 284) March 31, 1971
FACTS:

In 1956, herein appellant’s brother Felix Matabuena donated a piece of lot to his
common-law spouse, herein appellee Petronila Cervantes. Felix and Petronila got
married only in 1962 or six years after the deed of donation was executed. Five months
later, or September 13, 1962, Felix died. Thereafter, appellant Cornelia Matabuena, by
reason of being the only sister and nearest collateral relative of the deceased, filed a
claim over the property, by virtue of a an affidavit of self-adjudication executed by her
in1962, had the land declared in her name and paid the estate and inheritance taxes
thereon. The lower court of Sorsogon declared that the donation was valid inasmuch as
it was made at the time when Felix and Petronila were not yet spouses, rendering
Article 133 of the Civil Code inapplicable.

ISSUE:

Whether or not the ban on donation between spouses during a marriage applies
to a common-law relationship.

HELD:

While Article 133 of the Civil Code considers as void a donation between the
spouses during marriage, policy consideration of the most exigent character as well as
the dictates of morality requires that the same prohibition should apply to a common-law
relationship.

As stated in Buenaventura vs. Bautista (50 OG 3679, 1954), if the policy of the
law is to prohibit donations in favor of the other consort and his descendants because of
fear of undue and improper pressure and influence upon the donor, then there is every
reason to apply the same prohibitive policy to persons living together as husband and
wife without the benefit of nuptials.

The lack of validity of the donation by the deceased to appellee does not
necessarily result in appellant having exclusive right to the disputed property. As a
widow, Cervantes is entitled to one-half of the inheritance, and the surviving sister to the
other half.

Article 1001, Civil Code: Should brothers and sisters or their children survive with
the widow or widower, the latter shall be entitled to one-half of the inheritance and the
brothers and sisters or their children to the other half.

Olaguer v. Parungganan and Locsin 2007

FACTS: Olaguer was executive Vice President of Businessday Corporation. He was the owner of 60,000 shares of
stock worth 600,000 pesos.Olaguer, along with accused Locsin and Joaquin were active in opposing the Marcos
dictatorship. Anticipating the possibility that Olaguer would be arrested and detained by the military, Locsin,
Joaquin, and Hector Hofilena had an unwritten agreement that in the event that Olaguer was arrested, they would
support Olaguer’s family by continued payment of his salary.

May 26, 1979 - Olaguer executed a Special Power of Attorney appointing as his attorneys-in-fact Locsin, Joaquin
and Hofilena for the purpose of transferring petitioner’s shares of stock with Business day.

The SPA read:

EDUARDO B. OLAGUER, of legal age . . . appoint RAUL L. LOCSIN, ENRIQUE M. JOAQUIN, and HECTOR
HOFILEÑA . . . to be my true and lawful attorneys-in-fact, for me and in my name, place and stead, in the event of
my absence or incapacity . . . to wit:

1. For me and in my stead to attend and vote my stock at any stockholders’ meeting of the Businessday Group of
Companies . . .

2. To sell, assign, transfer, endorse and deliver, for such price . . . any and all shares of stock now held.

Dec. 24, 1979 – Olaguer was arrested by military for alleged arson. Upon knowing the detention, Locsin tried to sell
Olaguer’s shares of stock. Since he couldn’t find any buyers, he bought the shares for himself.

Locsin paid Olaguer installments of 10,000 pesos every 15th and 30th of the month to pay for the total sum of
600,000 pesos. After receiving a total of 600,000, the payments stopped.Jan 16, 1986 – Olaguer was released from
detention.

ISSUE:
WON there was a perfected contract of sale between petitioner and Locsin over the shares.

Held:
YES. Contract of Sale is valid. Petitioner’s claims regarding the meanings of the words absence and incapacity in
his Special Power of Attorney would result to absurd and impossible legal situations.

Olaguer has to be a minor or insane for that SPA to have function. Since the said SPA executed by Olaguer gave
powers to the respondents to actually dispose of his share, he cannot therefore assail such now. And even if the said
contract is assailable, it was already ratified by the reception of the amount 600,000 by Olaguer‘s wife and in-laws
from 1980-198

DISTAJO v COURT OF APPEALS

G.R. No. 112954, August 25, 2000 | P: PARDO, J.

FACTS:
During her lifetime, Iluminada Abiertas designated one of her sons, Rufo Distajo to be the
administrator of her parcels of land denoted as Lot nos. 1018, 1046, 1047, and 1057 in Capiz.
She sold a portion of Lot. No. 1018 to her other children, the other properties to her son, Rufo.

When Iluminada died in 1971, her other children and the petitioner (the son of Rizaldo), filed a
complaint for recovery of possession and ownership which the RTC dismissed for lack of cause
of action, laches and prescription. The parties appealed to the CA.

The Court of Appeals dismissed the plaintiff’s complaint for lack of cause of action except for a
portion of the lot prayed for (Lot. No. 1018). Ricardo filed a motion for reconsideration which
the CA denied.

ISSUE:

Whether the prohibition under the Civil Code for an administrator from acquiring properties
under his administration absolute.

HELD:

NO. Under paragraph (2) of Article 1491 of the Civil Code, the prohibition against agents
purchasing property in theirs for sale or management is not absolute. It does not apply if the
principal consents to the sale of the property in the hands of the agent or administrator. In this
case, the deeds of sale signed by Iluminada Abiertas shows that she gave consent to the sale of
the properties in favor of her son, Rufo, who was the administrator of the properties. Thus, the
consent of the principal removes the transaction out of the proportion contained in Article
1491 (2).

The Court affirmed the decision of the CA.

Rubias vs Batiller (1973)

Facts:
Francisco Militante claimed that he owned a parcel 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 the application for registration. Militante
 appealed to the Court of Appeals. Pending that appeal, he sold to Rubias (his son-in-law and a
lawyer) the land.The CA rendered a decision, dismissing the application for registration.Rubias
filed a Forcible Entry and Detainer case against Batiller.
In that case, the court held that Rubias has no cause of action because the property in dispute
which Rubias allegedly bought from Militante was the subject matter of a land case, in which
case Rubias was the counsel on record of Militante himself. It thus falls under Article 1491 of
the Civil Code. (Hence, this appeal.)

Issue: Whether the sale of the land is prohibited under Article 1491.
Held: 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 lawyesr, 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.

Issue: Legal effect of a sale falling under Article 1491?

Held: NULL AND VOID.CANNOT BE RATIFIED.
Manresa considered such prohibited acquisitions (which fell under the Spanish Civil Code) as
merely voidable because the Spanish Code did not recognize nullity. But our Civil Code does recognize
the absolute nullity of contracts “whose cause, object or purpose is contract to law, morals, good
customs, public order or public policy” or which are “expressly prohibited or declared void by law” and
declares such contracts “inexistent and void from the beginning.” The nullity of such prohibited
contracts is definite and permanent, and cannot be cured by ratification.
The public interest and public policy remain paramount and do not permit of compromise or
ratification. In this aspect, the permanent disqualification of public and judicial officers and lawyers
grounded on public policy differs from the first three cases of guardians agents and administrators
(under Art 1491). As to their transactions, it has been opined that they may be “ratified” by means of
and in “the form of a new contract, in which case its validity shall be determined only by the
circumstances at the time of execution of such new contract.” In those cases, the object which was
illegal at the time of the first contract may have already become lawful at the time of the ratification
or second contract, or the intent, or the service which was impossible. The ratification or second
contract would then be valid from its execution; however, it does not retroact to the date of the first
contract.
Decision affirmed.

Schmid and Oberly, Inc. v. RJL Martinez Fishing Corp.

G.R. No. 75198
October 18, 1988

Facts:

There was a misapprehension of facts in the RTC and CA, so SC reopened the facts again. (SC facts na ni).

RJL Martinez Fishing Corp (RJL Martinez) is engaged in deep-sea fishing, and in the course of its business needed
electrical generators for the operation of its business.It then negotiated with Schmid & Oberly (Schmid) who is
engaged in the business of selling electric generators of different brands. The two parties had two different
transactions. The first transaction resulted in the sale of 3 Nagata generators which came from Schmid’s stockroom.
Schmid invoiced the said sale.

The second transaction involves 12 Nagata generators which give rise to the controversy. As RJL Martinez was
canvassing for generators, Schmid gave the former a quotation for 12 Nagata generators. The parties agreed that the
mode of payment would be through an irrevocable letter of credit in favor of Nagata, Co. (the manufacturer of the
generators).

Accordingly, on November 20,1975, SCHMID transmitted to NAGATA CO. an order for the twelve (12) generators to
be shipped directly to RJL MARTINEZ. NAGATA CO. thereafter sent RJL MARTINEZ the bill of lading and its own
invoice and, in accordance with the order, shipped the generators directly to RJL MARTINEZ. The invoice states that
"one (1) case of 'NAGATA' AC Generators" consisting of twelve sets was—bought by order and for account risk of
Messrs. RJL Martinez Fishing Corporation.

For its efforts, SCHMID received from NAGATA CO. a commission of $1,752.00 for the sale of the twelve generators
to RJL MARTINEZ.

All fifteen (15) generators subject of the two transactions burned out after continuous use. RJL MARTINEZ informed
SCHMID about this development. In turn, SCHMID brought the matter to the attention of NAGATA CO. In July 1976,
NAGATA CO. sent two technical representatives who made an ocular inspection and conducted tests on some of the
burned out generators, which by then had been delivered to the premises of SCHMID. It was found out that the
description of the generators (in the quotation and invoice) was 5 KVA, but the generators turned out to be actually
only 4 KVA.

SCHMID replaced the three (3) generators subject of the first sale with generators of a different brand. As for the 12
others, Nagata, Co. only repaired 3, while the remaining 9 remained unrepaired. As a result, RJL Martinez sued
Schmid.

In its defense, Schmid refuses liability on the account that it was not the seller for the 12 generators.

Both the trial court and the Court of Appeals upheld the contention of RJL MARTINEZ that SCHMID was the vendor
in the second transaction and was liable under its warranty. Accordingly, the courts a quo rendered judgment in favor
of RJL MARTINEZ. Hence, the instant recourse to this Court.

Issue: WON the second transaction between RJL Martinez and Schmid was a sale, or Schmid was merely an indent
(broker/ intermediary) of RJL Martinez and Nagata, Co.

Held: SCHMID was merely an indentor, not a vendor in the second transaction.

Nature of Sale

At the outset, it must be understood that a contract is what the law defines it to be, considering its essential elements,
and not what it is caged by the contracting parties.

It has been said that the essence of the contract of sale is transfer of title or agreement to transfer it for a price paid
or promised. If such transfer puts the transferee in the attitude or position of an owner and makes him liable to the
transferor as a debtor for the agreed price, and not merely as an agent who must account for the proceeds of a
resale, the transaction is, a sale.
What is an Indentor:

On the other hand, there is no statutory definition of "indent" in this jurisdiction. However, the Rules and Regulations
to Implement Presidential Decree No. 1789 (the Omnibus Investments Code) lumps "indentors" together with
"commercial brokers" and "commission merchants" in this manner:

... A foreign firm which does business through the middlemen acting in their own names, such as
indentors, commercial brokers or commission merchants, shall not be deemed doing business in
the Philippines. But such indentors, commercial brokers or commission merchants shall be the
ones deemed to be doing business in the Philippines.

Therefore, an indentor is a middlemen in the same class as commercial brokers and commission merchants. To get
an Idea of what an indentor is, a look at the definition of those in his class may prove helpful.

A broker is generally defined as one who is engaged, for others, on a commission, negotiating contracts relative to
property with the custody of which he has no concern; the negotiator between other parties, never acting in his own
name but in the name of those who employed him; he is strictly a middleman and for some purpose the agent of both
parties. 

A broker is one whose occupation it is to bring parties together to bargain, or to bargain for them, in matters of trade,
commerce or navigation.

Judge Storey, in his work on Agency, defines a broker as an agent employed to make bargains and contracts
between other persons, in matters of trade, commerce or navigation, for compensation commonly called brokerage. 

Commission Merchant:

A commission merchant is one engaged in the purchase or sale for another of personal property which, for this
purpose, is placed in his possession and at his disposal. He maintains a relation not only with his principal and the
purchasers or vendors, but also with the property which is subject matter of the transaction.

Thus, the chief feature of a commercial broker and a commercial merchant is that in effecting a sale, they are merely
intermediaries or middle-men, and act in a certain sense as the agent of both parties to the transaction.

Indent Relationships

Webster defines an indent as "a purchase order for goods especially when sent from a foreign country. It would
appear that there are three parties to an indent transaction, namely, the buyer, the indentor, and the supplier who is
usually a non-resident manufacturer residing in the country where the goods are to be bought. An indentor may
therefore be best described as one who, for compensation, acts as a middleman in bringing about a purchase and
sale of goods between a foreign supplier and a local purchaser.

In the case at bar:

The evidences show that RJL Martinez admitted that Schmid was merely an indent for the purchase of the 12
generators. The evidence also show that RJL MARTINEZ paid directly NAGATA CO, for the generators, and that the
latter company itself invoiced the sale, and shipped the generators directly to the former. The only participation of
SCHMID was to act as an intermediary or middleman between NAGATA CO. and RJL MARTINEZ, by procuring an
order from RJL MARTINEZ and forwarding the same to NAGATA CO. for which the company received a commission
from NAGATA CO.

The above transaction is significantly different from the first transaction wherein SCHMID delivered the goods from its
own stock (which it had itself imported from NAGATA CO.), issued its own invoice, and collected payment directly
from the purchaser.

RJL Martinez still insists that Schmid was a seller, and not a mere broker because when the latter was informed of
the defects, it acted immediately, provided tools, labor, and equipment to resolve the matter. The SC however said
that: no indentor will just fold its hands when a client complains about the goods it has bought upon the indentor's
mediation. In its desire to promote the product of the seller and to retain the goodwill of the buyer, a prudent indentor
desirous of maintaining his business would have to act considerably towards his clients. Note that in contrast to its
act of replacing the three (3) generators subject of the first transaction, SCHMID did not replace any of the twelve
(12) generators, but merely rendered assistance to both RJL TINES and NAGATA CO. so that the latter could repair
the defective generators.

Liability for Warranty

However, even as SCHMID was merely an indentor, there was nothing to prevent it from voluntarily warranting that
twelve (12) generators subject of the second transaction are free from any hidden defects. In other words, SCHMID
may be held answerable for some other contractual obligation, if indeed it had so bound itself. As stated above, an
indentor is to some extent an agent of both the vendor and the vendee. As such agent, therefore, he may expressly
obligate himself to undertake the obligations of his principal.

In this case however, there was no express agreement between the parties that Schmid warrants in anyway the
condition of the generators, hence the court did not make the latter liable for any warranty.

PHIL, TRUST CO. v. ROLDAN

FACTS:
Mariano Bernardo, a minor, inherited, among others, 17 parcels of land from his deceased father.
Soccoro Roldan was appointed as his guardian. Soccoro sought and was granted authority to sell the lots
to her brother-in-law Ramos for P 14,700.00. Very shortly after, Ramos sold back to Soccoro the same
properties for P 15,000.00. She then sold 4 parcels to Emilio Cruz. Phil. Trust Co. replaced Soccoro as
guardian and sought to annul all the aforesaid sales.

ISSUE:
W/N the sale to Ramos was valid

HELD:
Guardianship is a trust of the highest order. In this case, for all intents and purposes, it was as if Soccoro
herself purchased the properties of her ward. This falls w/in the prohibition under Art. 1459 of the Civil
Code. She indirectly sold the properties to herself. The same applies even though there was no actual
malice or collusion proven. Since the sale to Soccoro was null and void, it only follows that the sales
made by Soccoro to Cruz were likewise void. One cannot sell what is not his property.

Soccoro tried to correct the problem by allowing Mariano to re-purchase the said properties for P
15,000.00. However, the child would still be at a losing end because it would not entitle him to the fruits
of the property during the time when he was not in possession thereof. The SC thus, ordered the sales
annulled.

GAN TINGCO vs PABINGUIT

FACTS: Candida Acabo was the owner of six parcels of land, all situated in the municipality of Jimalalud, Oriental Negros. These lands were
sold on June 12, 1911 by Candida Acabo, to one Gan Tingco. But the purchaser Gan Tingco was unable to take possession of the six parcels of
land sold him by Acabo, for they were in the possession of Silvino Pabinguit, who alleges certain rights therein. He claims to have purchased
them from Faustino Abad. Abad had become the owner through purchase from Henry Gardner.
Prior to the purchase made by Garnder, a judgment has been rendered against Ancabo as a result of the complaint filed by Silvestre Basaltos.
Because of Ancabo’s failure to comply, her fixtures and other chattels were levied upon the order of Gardner being the justice of peace.
Public auction sale was executed and Gardner appeared to be the highest bidder and was the purchaser of Candida Acabo's lands and carabaos
sold at public auction held in the barrio of Martelo, Municipality of Tayasan on March 20, 1907.
As Gardner subsequently learned that he was forbidden to purchase, he sold what he had purchased to Faustino Abad, Candida Acabo's son.
On June 19, 1907, Faustino Abad, for the sum of P375 sold to Silvino Pabinguit six parcels of land.

The Court of First Instance of Oriental NEgros rendered judgment in behalf of the plaintiff, Gan Tingco, declaring him the owner of the lands
described in the complaint, and ordered the defendant, Silvino Pabinguit, to restore the plaintiff to their possession. ibrary

The defendant appealed, with the right to a review of the evidence. The appeal was heard by this court, it having been brought it by bill of
exceptions.
The appellant alleges that the trial court erred in holding that, notwithstanding the sale of the lands in question at public auction, Candida Acabo
did not cease to be the owner of these properties, because there were certain irregularities and defects in the said auction.

ISSUE: WON Candida Acabo did not cease to be the owner of the properties despite certain irregularities and defects in the said auction.

HELD: The trial court was impressed by the circumstance that in the public auction the purchaser was the justice of the peace himself. This, in
the judge's opinion, was unauthorized, because article 1459, No. 5, of the Civil Code, prohibits judges from acquring by purchase, even at pub;ic
or judicial sale, either in person or by an agent, any property or rights litigated in the court in the jurisdiction or territory within which they
exercise their respective duties; this prohibition includes taking of property by assignment.

The appellant alleges that the property purchased by justice of the peace Gardner was not the subject of litigation in the justice court; that the
action was to recover a certain sum of money, and that he had ordered the property sold on execution.chanroblesvirtualawlibrary chanrobles

This raises, therefore, a question as to the true meaning of paragraph 5 of article 1459 of the Civil Code. law library

The Ley de Bases, in accordance with which the Civil Code was enacted, provides as follows, in Base  No. 26:

The forms, requirements and conditions of each particular contract shall be determined and defined subject to the general list of obligations and
their effects, with the understanding that the legislation in force and the legal principles evolved therefrom by judicial decisions, etc., etc., shall
serve as basis.

One of the bodies of law which conastitute the legislation now in force in the Novisima Recopilacion. In Law 4, Title 14, Book 5 of the same is
found the following provision: "We order that in public auctions held by direction of our alcaldes, neither the latter nor any person whomsoever
in their name shall bid in anything sold at such public auctions." The word alcaldes means judges. The caption of Title 14 is " Alcaldes or
Provincial Judges," and the entire title deals with the exercise of judicial jurisdiction. Prior to the enactment of the Civil Code, the Penal Code
was also in force. Article 400 of the latter prohinits, under penalty, any judge from taking part, either directly, or indirectly, in any operation of
exchange, trade or porfit with respect to things not the product of his own property, within the territory over which he exercises jurisdiction.
Judging from the legal oprecedents on which the Civil Code is based, it would not seem too much to conclude that the said article of the Civil
Code does not make any distinction between property in litigation. In effect, it appears to be as delicate a matter for a judge to take part in the sale
of property that had been the subject of ligitgation in his court, as to intervene in auction of property which, though not directly litigated in his
court, is nevertheless levied upon and sold as the result of a writ of execution issued by him. What the law intends to avoid is the improper
interference with an interest of a judge in a thing levied upon and sold by his order. virtual law library
If under the law Gardner was prohibited from acquiring the ownership of Acabo's lands, then he could not have transmitted to Faustino Abad the
right of ownership that he did not possess; nor could Abad, to whom this alleged ownership had not been transmitte, have conveyed the same to
Pabinguit. What Gardner should have done in view of the fact that the sale, as he finally acknowledged, was void, was to claim the price that had
been deposited in court, and the justice of the peace of Guijulngan should have declared the auction void and have ordered a new sale to be held,
besides correcting the errors that had been committed in the proceedings. To the reasons already stated, there is to be added the additional one,
with respect to the sale made by Faustino Abad to Silvino Pabinguit, that Abad was a minor at the time - a circumstance that deprived him of
capacity to sell (Civil Code, art. 1263). Abad had no ownership to transmit to anyone and, besides, he had no personality to enable him to contract
by himself, on account of his lack of legal age.
This court finds no reason whatever why it should not affirm the judgment appealed from.

MACARIOLA VS. ASUNCION

114 SCRA 77

FACTS:
1. Judge Elias Asuncion was the presiding Judge in Civil Case No. 3010 for partition.
2. Among the parties thereto was Bernardita R. Macariola.
3. On June 8, 1863 respondent Judge rendered a decision, which became final for lack of an
appeal.
4. On October 16, 1963 a project of partition was submitted to Judge Asuncion which he
approved in an Order dated October 23, 1963, later amended on November 11, 1963.
5. On March 6, 1965, a portion of lot 1184-E, one of the properties subject to partition under
Civil Case No. 3010, was acquired by purchase by respondent Macariola and his wife, who
were major stockholders of Traders Manufacturing and Fishing Industries Inc.,
6. Bernardita Macariola thus charged Judge Asuncion of the CFI of Leyte, now Associate
Justice of the Court of Appeals “with acts unbecoming of a judge.”
7. Macariola alleged that Asuncion violated , among others, Art. 1491, par. 5 of the New Civil
Code and Article 14 of the Code of Commerce.

ISSUE:
Is the actuation of Judge Asuncion in acquiring by purchase a portion of property in a Civil
Case previously handled by him an act unbecoming of a Judge?

HELD:
Article 1491 , par. 5 of the New Civil Code applies only to the sale or assignment of the
property which is the subject of litigation to the persons disqualified therein. The Supreme
Court held that for the prohibition to operate, the sale or assignment must take place during
the pendency of the litigation involving the property.

In the case at bar, when respondent Judge purchased on March 6, 1965 a portion of lot 1184-
E, the decision in Civil Case No. 3010 which he rendered on June 8, 1963 was already final
because none of the parties filed an appeal within the reglementary period hence, the lot in
question was no longer subject of litigation. Moreover at the time of the sale on March 6,
1965, respondent’s order date October 23, 1963 and the amended order dated November 11,
1963 approving the October 16, 1963 project of partition made pursuant to the June 8, 1963
decision, had long been final for there was no appeal from said orders.

Furthermore, respondent Judge did not buy the lot in question on March 6, 1965 directly
from the plaintiffs in Civil Case No. 3010 but from Dr. Arcadio Galapon who earlier purchased
on July 31, 1964 Lot 1184-E from three of the plaintiffs after the finality of the decision in Civil
Case No. 3010.

Consequently, the sale of a portion of Lot 1184-E to respondent Judge having taken place
over one year after the finality of the decision in Civil Case No. 3010 as well as the two orders
approving the project of partition, and not during the pendency of the litigation, there was
no violation of paragraph 5, Article 1491 of the New Civil Code.

Upon the transfer of sovereignty from Spain to the United States and later on from the
United States to the Republic of the Philippines, Art. 14 of the Code of Commerce must be
deemed to have been abrogated because where there is a change of sovereignty , the
political laws of the former sovereign , whether compatible or not with those of the new
sovereign, are automatically abrogated, unless they are expressly re-enacted by affirmative
act of the new sovereign.

LAWYERS

VALENCIA V. CABANTING April 26, 1991

Facts:
 In 1933, petitioner Paulino Valencia and his wife Romana allegedly bout a parcel of land, where they
built their residential house from a certain Serapia Raymundo, an heir of Pedro Raymundo, the
original owner of the parcel of land.
 However, they failed to register the sale or secure a transfer certificate of title in their names.
 Then, a conference was held in the house of Atty. Jovellanos to settle the dispute between Serapia and
the Sps. Valencia.
 As a result, Serapia was willing to relinquish her ownership if the Valencias could show documents
evidencing ownership.
 Paulino presented a deed of sale written in Ilocano. Serapia claimed that the deed covered a different
property. Thus, the parties were not able to settle their differences.
 Assisted by Atty. Cabanting, Serapia filed a complaint against Paulino for the recovery of possession
with damages.
 The Valencias, on the other hand, engaged the services of Atty. Antiniw, who advised them to present
a notarized deed of sale instead of the document in Ilocano.
 For the amount of P200 paid by Paulino to Atty. Antiniw, the latter paid a person who would
forge the signature of the alleged vendor.
 The Pangasinan CFI favored Serapia.
 While the petition was of appeal, Serapia sold 40 sq. m. to Atty. Jovellanos and the remaining was
also sold to her counsel, Atty. Cabanting.

ISSUE: WON Atty. Cabanting purchased the subject property in violation of Art. 1491, NCC.

HELD: YES!
 Art. 1491, NCC, prohibiting the sale to counsel concerned, applies only while the litigation is
pending.
o A thing is said to be in litigation not only if it there is some contest or litigation over it in
court, but also from the moment that it becomes to the judicial action of the judge.
 In the case at bar, while it is true that Atty. Cabanting purchased the lot after finality of judgment,
there was still a certiorari proceeding.
o In certiora ri proceedings, the appellate court may either grant or dismiss the petition.
o Thus, it is not safe to conclude, for purposes under Art. 1491, NCC, that litigation has
terminated when the judgment of the trial court become final while certiorari connected
therewith is still in progress.
 Thus, the purchase of the property by Atty. Cabanting in this case constitutes malpractice in
violation of Art. 1491, NCC and the Canons of Professional Ethics.

 The sale in favor of Atty. Jovellanos does not constitute malpractice. There was no attorney-client
relationship bet. Serapia and Atty. Jovellanos – the latter did not take part as counsel in the Civil Case.
 Atty. Antiniw committed falsification of a deed of sale.

LAWYERS

DEL ROSARIO V. MILLADO

Facts:

 One Eladio Tibursio, now deceased, claimed title to a tract of land of about 430 ha. in Diliman,
Quezon City.
 That said parts of land were the object of two ejectment cases of the City Court of Quezon City
against La Paz Mesina Vda. De Pascual, one of the heirs of the said deceased.
 One of the two ejectment cases was filed by herein petitioner Florentino del Rosario, and the
other one was by Leonor Sta. Clara.
 Before the institution of the said cases, one Conrado Baluyot, who claimed to be another heir of
Eladio Tibursio, offered to allow respondent to construct a house on part of said land, in
consideration of his professional services in defense of the claim of the Tiburcio’s.
o That should Atty. Millado succeed in securing a decision favorable to the Tiburcio’s, he
could buy the land on which his house was built by paying the current value thereof.
  Meanwhile, Mrs. Pascual, who occupied another lot in the same block, knew that Atty. Millado
was in possession of lots 4 and 5 and had constructed thereon a house by agreement with Baluyot.
 Mrs. Pacual, who claimed interest in the whole Block E-102, asked Atty. Millado to be her
counsel in said ejectment cases.
o After filing the answer of Mrs. Pascual, as defendant in the said 2 cases, Atty. Millado
ceased to be her counsel therein.

ISSUE: WON Atty. Millado violated Art. 1491 of the Civil Code.

HELD: NO.

 The provisions of the Civil Code and of the Canons of Legal Ethics prohibit the purchase by
lawyers of any interest in the subject matter of the litigation in which they participated by reason
of their profession.
 However, in this case, petitioner has not established a violation of such injunction.
 The records show that respondent’s alleged interest in said lots was acquired before he intervened
as counsel for Mrs. Pascual in the ejectment cases against her.
 Moreover, said interest of Atty. Millado is not necessarily inconsistent with that oof his
aforementioned client.
THE DIRECTOR OF LANDS, petitioner, vs. SILVERETRA ABABA, ET AL.,
claimants, JUAN LARRAZABAL, MARTA C. DE LARRAZABAL, MAXIMO
ABAROQUEZ and ANASTACIA CABIGAS, petitioners-appellants, ALBERTO
FERNANDEZ, adverse claimant-appellee.
G.R. No. L-26096 February 27, 1979

FACTS: The adverse claimant Atty. Fernandez was retained as counsel by petitioner
(Abarquez) in a civil a case for the annulment of a contract of sale with right of
repurchase and for the recovery of the land which was the subject matter thereof.
Unable to compensate his lawyer whom he also retained for his appeal, the petitioner
executed a document whereby he obliged himself to give to his lawyer ½ of whatever he
might recover from Lots 5600 and 5602 should the appeal prosper.

The real property sought to be recovered was actually the share of petitioner in Lots
5600 and 5602 which were part of the estate of his deceased parents and which were
partitioned among the heirs, which included petitioner and his sister.

The case having been resolved and title having been issued to petitioner, adverse
claimant waited for petitioner to comply with his obligation under the document executed
by him by delivering the ½ portion of the said parcels of land. Petitioner refused to
comply with his obligation and instead offered to sell the whole parcels of land to
spouses Larrazabal. Then, adverse claimant immediately took steps to protect his
interest by filing a motion to annotate his attorney’s lien and by notifying the prospective
buyers of his claim over the ½ portion of the parcels of land.

The motion was granted. The annotation of adverse claim appeared on the new transfer
certificate of title. This adverse claim became the subject of cancellation proceedings
filed by petitioner-spouses. The trial court resolved the case in favor of the adverse
claimant. On appeal, petitioners contended that a contract for a contingent fee violates
Article 1491 because it involves an assignment of a property subject of litigation.

ISSUE: WON the contract for a contingent fee as basis of the interest of Atty.
Fernandez is prohibited by Article 1491 of the Civil Code.

HELD: NO. The contention is without merit. Article 1491 prohibits only the sale or
assignment between the lawyer and his client of property which is the subject of
litigation. For the prohibition to operate, the sale or assignment of the property
must take place during the pendency of the litigation involving the property.

Likewise, under American Law, the prohibition does not apply to “cases where after
completion of litigation the lawyer accepts on account of his fee and interest in the
assets realized by the litigation. There is clear distinction between such cases and one
in which the lawyer speculates on the outcome of the matter in which he is employed.

Further, a contract for a contingent fee is not covered by Article 1491 because the
transfer or assignment of the property in litigation takes effect only after the finality of a
favorable judgment. In the instant case, the attorney’s fees of Atty. Fernandez,
consisting of ½ of whatever the petitioner might recover from his share in the lots in
question is contingent upon the success of the appeal. Hence, the payment of the
attorney’s fees, that is, the transfer or assignment of ½ of the property in litigation will
take place only if the appeal prospers. Therefore, the transfer actually takes effect after
the finality of a favorable judgment rendered on appeal and not during the pendency of
litigation involving the property in question. Consequently, the contract for a contingent
fee is not covered by Article 1491 of the Civil Code.

LAWYERS

DE LAIG V. CA

Facts:

 Petre Galero obtained from the Bureau of Lands a Homestead Patent covering 219, 949 sq. m. of
land located at Labo, Camarines Norte.
 On June 25, 1940, Galero sold the land to a Mario Escuta for P300.
 Escuta also sold the same land to Florencio Caramoan.

 Through a proper court action, Petre Galero with Atty. Benito Laig, the deceased husband of
herein petitioner Rosarion Vda. De Laig as counsel, recovered the subject land after the court was
convinced that the alienation violated Sec. 118 of the Public Land Act.

 Later on, a deed of sale was executed by Galero as vendo in favor of Atty. Benito Laig as vendee.

 Galero sold to Atty. Laig the subject land with its improvements for P1,600 plus Atty.’s fees due
to Atty. De Laig for his legal services as counsel for Galero.

ISSUE: WON the sale between Galero and Atty. De Laig was made in violation of Art. 1491, CC.

HELD: NO.

 The property in question was no longer the subject of litigation.

 The sale was made after the reconveyance case has been decided and which decision has become
final.
LAWYERS

FABILLO V. IAC

 Juliana Fabillo, in her last will and testament dated Aug. 16, 1957, bequeathed to her brother, Florencio, a
house and lot in San Salvador, Palo, Leyte and to his husband Gregorio D. Brioso a piece of land in
Pugahanay, Palo, Leyte.
 After Justina’s death, Florencio filed a petition for the probate of said will.
 Florencio sought the assistance of Atty. Alfredo M. Murillo in recovering the San Salvador property.
 Florencio and Murillo entered into a contract, stipulating therein that Murillo shall represent Florencio in
the conclusion of the two cases, and in consideration of Murillo’s legal services, he shall be paid, in case
of success 40% of what he may acquire from the favorable judgment.
o In case that the properties are sold, mortgaged or leased, Murillo shall be entitled to 40% of the
purchase price, proceeds of the mortgage, or rentals, respectively.
 Pursuant to the said contract, Murillo filed a civil case against Gregorio D. Brioso to recover the San
Salvador property. However, the case was terminated when the parties entered into a compromise
agreement declaring Florencio as the lawful owner of not only the San Salvador property but also of the
parcel of land located at Pugahanay.
 As a result, Murillo proceeded to implement the contract of services between him and Florencio by taking
possession and exercising rights of ownership over 40% of said properties.
 In 1966, Florencio claimed exclusive right of ownership over the two properties and refused to give to
Murillo his share of the properties.
 Murillo filed in the CFI a complaint for ownership of the parcel of land.

ISSUE: WON THE CONTRACT OF SERVICES VIOLATED THE PROVISION OF ART. 1491, NCC.

HELD: NO! The contract of services did not violate Art. 1491, NCC.

 The said prohibition applies only if the sale or assignment of the property takes place during the pendency
of the litigation involving the client’s property.
 Thus, the contract between the a lawyer and a client stipulating a contingent fee is not covered by said
prohibition under Art. 1491(5), CC because the payment of said fee is not made during the pendency of
the litigation but only after the judgment was rendered final.
 As long as the lawyer did not exert undue influence on his client, that no fraud is committed or implication
applied, or that the compensation is clearly not excessive as to amount to extortion, a contract for
contingent fee is valid and enforceable.

 However, the Court disagrees that the contingent fee stipulated by the partiesis 40% of the properties
subject of the litigation.
o A careful scrutiny of the contract shows that the parties intended 40% of the value of the
properties as Murillo’s contingent fee.
o This is borne out by the stipulation that “in case of success of any or both cases,” Murillo
shall be paid “the sum equivalent to 40% of whatever benefit” Fasbillo would derive from
favorable judgments.
 Moreover, the herein contract was vague with respect to a situation wherein the properties are neither sold,
mortgaged nor leased because Murillo is allowed “to have the option of occupying or leasing to any
interested party 40% of the house and lot”.
o Had the parties intended that Murillo should be the lawful owner of 40% of the properties, it would
have been stipulated in the contract considering that the Fabillos would part with actual portions of
their properties and cede the same to Murillo.
 The ambiguity of said provision should be resolved against Murillo as it was him pwho drafted the
contract.
 o This is in consonance with the rule of interpretation that, in construing a contract of professional
services between a lawyer and a client, a construction as would be more favorable to the client should
be adopted even if it would prejudice the lawyer.

TICKLER: Void and Inexistent Contracts, Definition and Classes

G.R. No. L-65594 July 9, 1986

MAHARLIKA PUBLISHING CORPORATION, ANGELA CALICA, ADOLFO CALICA and the HEIRS OF THE
LATE PIO CALICA, petitioners, 
vs.
SPOUSES LUZ R. TAGLE and EDILBERTO TAGLE and the GOVERNMENT SERVICE INSURANCE SYSTEM
and the HONORABLE INTERMEDIATE APPELLATE COURT, respondents.

DOCTRINE:

Under Article 1475 of the Civil Code, states 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 reciprocally demand performance, subject to the law governing the form of
contracts. "

FACTS

The Respondent, Government Service Insurance System (GSIS) owned a parcel of land with a building
and printing equipment in Paco, Manila. The land was sold to Maharlika in a Conditional Contract of Sale
with the stipulation that if Maharlika failed to pay monthly installments in 90 days, the GSIS would
automatically cancel the contract. Because Maharlika failed to pay several monthly installments, GSIS
demanded that Maharlika vacate the premises. Even though Maharlika refused to do so, the GSIS
published an advertisement inviting the public to bid in a public auction.

A day before the scheduled bidding, Adolfo Calica, the President of Maharlika, gave the GSIS head office
2 checks worth 11,000 and a proposal for a compromise agreement. The GSIS General Manager Roman
Cruz gave a not to Maharlika saying “Hold Bidding. Discuss with me.” However, the public bidding took
place as scheduled and the property was subsequently awarded to Luz Tagle, the wife of the GSIS
Retirement Division Chief. Maharlika demanded that the sale be considered null and void, as Mrs. Tagle
should have been disqualified from bidding for the GSIS property. RTC and CA both ruled that the Tagles
were entitled to the property and Maharlika should vacate the premises. Hence, this petition.

ISSUE

Whether or not the contract is perfected between the parties

HELD

Yes, there was an earlier contract to sell the same properties to the petitioners and the contract was
perfected and there had been partial compliance with its terms. The petitioners are not complete
strangers entering into a contract with respondent GSIS for the first time. The transaction now under
question in this case merely referred to the curing of certain defects which led to the cancellation of
the earlier contract by GSIS. The acceptance of the petitioners' letter-proposal by Mr. Roman Cruz, Jr.,
the person with authority to do so, and his order to his subordinates to stop the bidding so that they
could first discuss the matter with him, created an agreement of binding nature with the petitioners.
The decision and resolution of the Intermediate Appellate Court subject of the instant petition for
review on certiorari are hereby SET ASIDE. The conditional sale entered into between public
respondent GSIS and private respondents Luz and Edilberto Tagle is declared NULL and VOID for being
contrary to public policy. The prayer of petitioners for the repurchase of the subject property in an
amount equal to the amount offered by private respondents and to retain ownership and possession
of the disputed property is GRANTED

CUI VS CUI

FACTS: Jesus and Antonio are the legitimate children of Don Mariano Cui and Doña Antonia Perales
who died intestate in 1939. Jesus alleged that during the marriage of Don Mariano and Dona Antonia,
their parents acquired certain properties in the City of Cebu, namely, Lots Nos. 2312, 2313 and 2319.
Upon the death of their mother, the properties were placed under the administration of their dad.

that while the latter was 84 years of age, Antonio by means of deceit, secured the transfer to themselves
the said lots without any pecuniary consideration; that in the deed of sale executed on March 8, 1946,
Rosario Cui appeared as one of the vendees, but on learning of this fact she subsequently renounced her
rights under the sale and returned her portion to Don Mariano Cui by executing a deed of resale in his
favor on October 11, 1946; that defendants, fraudulently and with the desire of enriching themselves
unjustly at the expense of their father, Don Mariano Cui, and of their brothers and co-heirs, secured a
loan of P130,000 from the Rehabilitation properties, and with the loan thus obtained, defendants
constructed thereon an apartment building of strong materials consisting of 14 doors, valued at
approximately P130,000 and another building on the same parcels of land, which buildings were leased to
some Chinese commercial firms a monthly rental of P7,600, which defendants have collected and will
continue to collect to the prejudice of the plaintiffs;

Jesus alleged that the sale should be invalidated so far as the portion of the property sold to Antonio Cui
is concerned, for the reason that when that sale was effected, Antonio was then acting as the agent or
administrator of the properties of Don Mariano Cui.

Jesus lays stress on the power of attorney Exhibit L which was executed by Don Mariano in favor of
Antonio Cui on March 2, 1946, wherein the former has constituted the latter as his "true and lawful
attorney" to perform in his name and that of the intestate heirs of Doña Antonia Perales.

ISSUE: WON the sale of the property to Antonio was valid.

HELD: YES.

While under article 1459 of the old Civil Code an agent or administrator is disqualified from purchasing
property in his hands for sale or management, and, in this case, the property in question was sold to
Antonio Cui while he was already the agent or administrator of the properties of Don Mariano Cui, we
however believe that this question cannot now be raised or invoked.

The prohibition of the law is contained in article 1459 of the old Civil Code, but this prohibition has
already been removed. Under the provisions of article 1491, section 2, of the new Civil Code, an agent
may now buy property placed in his hands for sale or administration, provided that the principal gives his
consent thereto. While the new Code came into effect only on August 30, 1950, however, since this is a
right that is declared for the first time, the same may be given retroactive effect if no vested or acquired
right is impaired (Article 2253, new Civil Code). During the lifetime Don Mariano, and particularly on
March 8, 1946, the herein appellants could not claim any vested or acquired right in these properties, for,
as heirs, the most they had was a mere expentancy. We may, therefore, invoke now this practical and
liberal provision of our new Civil Code even if the sale had taken place before its effectivity.

MACARIOLA VS ASUNCION

FACTS: A complaint for partition was filed by Sinforosa R. Bales, Luz R. Bakunawa, Anacorita Reyes,
Ruperto Reyes, Adela Reyes, and Priscilla Reyes against P Macariola concerning the properties left by
their father, Francisco Reyes. Judge Asuncion ruled in favor of Sinforosa et. al.The decision in civil case
3010 became final for lack of an appeal, and on October 16, 1963, a project of partition was submitted to
Judge Asuncion. Notwithstanding the fact that the project of partition was not signed by the parties
themselves, Judge Asuncion approved it.

One of the properties in the project of partition was Lot 1184 which was subdivided into 5 lots. Lot 1184
was sold to Dr. Arcadio Galapon on July 31, 1964. On March 6, 1965, Dr. Galapon sold a portion of Lot
1184-E to Judge Asuncion and his wife. Subsequently, Sps Asuncion and Sps Galapon conveyed their
respective shares and interest to “The Traders Manufacturing and Fishing Industries Inc." at the time of
the sale, Judge Asuncion was one of its stockholder, with Judge Asuncion as the President and his wife
as the secretary.

Complainant Bernardita R. Macariola filed on August 9, 1968 the instant complaint alleging R Judge
Asuncion violated Article 1491, paragraph 5, of the New Civil Code in acquiring by purchase a portion of
Lot No. 1184-E which was one of those properties involved in Civil Case No. 3010 decided by him

ISSUE: WON Judge Asuncion violated Article 1491(5) of the NCC

HELD:NO.

Article 1491. The following persons cannot acquire by purchase, even at a public or judicial action, either
in person or through the mediation of another: xxx xxx xxx

(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 [emphasis supplied].

The prohibition in the aforesaid Article applies only to the sale or assignment of the property which is the
subject of litigation to the persons disqualified therein. For the prohibition to operate, the sale or
assignment of the property must take place during the pendency of the litigation involving the property"

In the case at bar, when the respondent Judge purchased on March 6, 1965 a portion of Lot 1184-E, the
decision in Civil Case No. 3010 which he rendered on June 8, 1963 was already final because none of
the parties therein filed an appeal within the reglementary period; hence, the lot in question was no longer
subject of the litigation. Moreover, at the time of the sale on March 6, 1965, respondent's order dated
October 23, 1963 and the amended order dated November 11, 1963 approving the October 16, 1963
project of partition made pursuant to the June 8, 1963 decision, had long become final for there was no
appeal from said orders.

Furthermore, respondent Judge did not buy the lot in question on March 6, 1965 directly from the plaintiffs
in Civil Case No. 3010 but from Dr. Arcadio Galapon who earlier purchased on July 31, 1964 Lot 1184-E
from three of the plaintiffs, namely, Priscilla Reyes, Adela Reyes, and Luz R. Bakunawa after the finality
of the decision in Civil Case No. 3010. It may be recalled that Lot 1184 or more specifically one-half
thereof was adjudicated in equal shares to Priscilla Reyes, Adela Reyes, Luz Bakunawa, Ruperto Reyes
and Anacorita Reyes in the project of partition, and the same was subdivided into five lots denominated
as Lot 1184-A to 1184-E. As aforestated, Lot 1184-E was sold on July 31, 1964 to Dr. Galapon for which
he was issued TCT No. 2338 by the Register of Deeds of Tacloban City, and on March 6, 1965 he sold a
portion of said lot to respondent Judge and his wife who declared the same for taxation purposes only.
The subsequent sale on August 31, 1966 by spouses Asuncion and spouses Galapon of their respective
shares and interest in said Lot 1184-E to the Traders Manufacturing and Fishing Industries, Inc., in which
respondent was the president and his wife was the secretary, took place long after the finality of the
decision in Civil Case No. 3010 and of the subsequent two aforesaid orders therein approving the project
of partition.

While it appears that complainant herein filed on or about November 9 or 11, 1968 an action seeking to
annul the project of partition and the two orders approving the same, as well as the partition of the estate
and the subsequent conveyances, the same, however, is of no moment.

The fact remains that respondent Judge purchased on March 6, 1965 a portion of Lot 1184-E from Dr.
Arcadio Galapon; hence, after the finality of the decision which he rendered on June 8, 1963 in Civil Case
No. 3010 and his two questioned orders dated October 23, 1963 and November 11, 1963. Therefore, the
property was no longer subject of litigation.

FEDERICO N. RAMOS VS PATRICIO A. NGASEO

FACTS:

Ramos went to Atty. Ngaseo to engage his services as counsel in a case involving a piece of land. After
the Court of Appeals rendered a favorable judgment ordering the land to be returned to Ramos and his
siblings (such decision having been final and executor), Atty. Ngaseo sent a demand letter to Ramos
asking for the delivery of a piece of land which the complainant allegedly promised as payment for
respondent’s appearance fee.
As a result, Ramos filed before the IBP a complaint charging Atty. Ngaseo of violation of the CPR for
demanding the delivery of a parcel of land, which was the subject of litigation. The IBP found Atty.
Ngaseo guilty. Atty. Ngaseo argues that he did not violate Article 1491 CC because when he demanded
the delivery of the piece of land, the case has been terminated, when the appellate court ordered the
return of the land to the family of Ramos.

ISSUE:

Whether or not Atty. Ngaseo violated Art. 1491 CC.

HELD: NO.

Under Par. (5), Art. 1491 of the Civil Code, lawyers are prohibited from acquiring either by
purchase or assignment the property or rights involved which are the object of litigation in which they
intervene by virtue of their public/judicial sales. The article provides:

Article 1491. The following persons cannot acquire by purchase, even at a public or judicial action, either
in person or through the mediation of another: xxx xxx xxx

(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 prohibition in the aforesaid Article applies only to the sale or assignment of the property which is the
subject of litigation to the persons disqualified therein. WE have already ruled that "... for the prohibition to
operate, the sale or assignment of the property must take place during the pendency of the litigation
involving the property."

Since such prohibition applies only if the sale or assignment of the property takes place during the
pendency of the litigation involving the client’s property. Consequently, where the property is acquired
after the termination of the case, as in the instant case, no violation of paragraph 5, article 1491 of Civil
Code attatches.

In the instant case, there was no actual acquisition of the property in litigation since the
respondent only made a written demand for its delivery, which the complainant refused to comply. Mere
demand for delivery of the litigated property does not cause the transfer of ownership, hence, not a
prohibited transaction within the contemplation of Article 1491.

Note: (Rationale for prohibition: Public policy disallows the transactions in view of the fiduciary
relationship involved)

BERNARDITA R. MACARIOLA vs. HONORABLE ELIAS B. ASUNCION,

FACTS:

Civil Case No. 3010 of the Court of First Instance of Leyte was a complaint for partition filed by Sinforosa
R. Bales, Luz R. Bakunawa, Anacorita Reyes, Ruperto Reyes, Adela Reyes, and Priscilla Reyes,
plaintiffs, against Bernardita R. Macariola, defendant, concerning the properties left by the deceased
Francisco Reyes, the common father of the plaintiff and defendant.

On June 8, 1963, a decision was rendered by respondent Judge Asuncion in Civil Case 3010 which
became final for lack of an appeal, and on October 16, 1963, a project of partition was submitted to Judge
Asuncion.

One of the properties mentioned in the project of partition was Lot 1184 and when the project of partition
was approved by the trial court the adjudicatees caused Lot 1184 to be subdivided into five lots
denominated as Lot 1184-A to 1184-E. Lot 1184-E was sold on July 31, 1964 to Dr. Arcadio Galapon. On
March 6, 1965, Dr. Arcadio Galapon and his wife Sold a portion of Lot 1184-E to Judge Asuncion and his
wife, Victoria S. Asuncion. On August 31, 1966, spouses Asuncion and spouses Galapon conveyed their
respective shares and interest in Lot 1184-E to "The Traders Manufacturing and Fishing Industries Inc."
with Judge Asuncion as the President and Mrs. Asuncion as the secretary.

Macariola filed on August 9, 1968 the instant complaint dated August 6, 1968 alleging that respondent
Judge Asuncion violated Article 1491, paragraph 5, of the New Civil Code in acquiring by purchase a
portion of Lot No. 1184-E which was one of those properties involved in Civil Case No. 3010 decided by
him.
ISSUE:

Whether or not the actuation of Judge Asuncion in acquiring by purchase a portion of property in a Civil
Case previously handled by him violated the prohibition under the Civil Code?

HELD: NO.

There is no merit in the contention of Macariola that respondent Judge Elias B. Asuncion violated Article
1491, paragraph 5, of the New Civil Code in acquiring by purchase a portion of Lot No. 1184-E which was
one of those properties involved in Civil Case No. 3010. 'That Article provides:

Article 1491. The following persons cannot acquire by purchase, even at a public or judicial action, either
in person or through the mediation of another: xxx xxx xxx

(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 prohibition in the aforesaid Article applies only to the sale or assignment of the property which is the
subject of litigation to the persons disqualified therein. WE have already ruled that "... for the prohibition to
operate, the sale or assignment of the property must take place during the pendency of the litigation
involving the property."

In the case at bar, when the respondent Judge purchased on March 6, 1965 a portion of Lot 1184-E, the
decision in Civil Case No. 3010 which he rendered on June 8, 1963 was already final because none of
the parties therein filed an appeal within the reglementary period; hence, the lot in question was no longer
subject of the litigation. Moreover, at the time of the sale on March 6, 1965, respondent's order dated
October 23, 1963 and the amended order dated November 11, 1963 approving the October 16, 1963
project of partition made pursuant to the June 8, 1963 decision, had long become final for there was no
appeal from said orders.

Furthermore, respondent Judge did not buy the lot in question on

March 6, 1965 directly from the plaintiffs in Civil Case No. 3010 but from Dr. Arcadio Galapon who earlier
purchased on July 31, 1964 Lot 1184-E from three of the plaintiffs, namely, Priscilla Reyes, Adela Reyes,
and Luz R. Bakunawa after the finality of the decision in Civil Case No. 3010. It may be recalled that Lot
1184 or more specifically one-half thereof was adjudicated in equal shares to Priscilla Reyes,

Adela Reyes, Luz Bakunawa, Ruperto Reyes and Anacorita Reyes in the project of partition, and the
same was subdivided into five lots denominated as Lot 1184-A to 1184-E. As aforestated, Lot 1184-E was
sold on July 31, 1964 to Dr. Galapon for which he was issued TCT No. 2338 by the Register of Deeds of
Tacloban City, and on March 6, 1965 he sold a portion of said lot to respondent Judge and his wife who
declared the same for taxation purposes only. The subsequent sale on August 31, 1966 by spouses
Asuncion and spouses Galapon of their respective shares and interest in said Lot 1184-E to the Traders
Manufacturing and Fishing Industries, Inc., in which respondent was the president and his wife was the
secretary, took place long after thefinality of the decision in Civil Case No. 3010 and of the subsequent
two aforesaid orders therein approving the project of partition.

The fact remains that respondent Judge purchased on March 6, 1965 a portion of Lot 1184-E from Dr.
Arcadio Galapon; hence, after the finality of the decision which he rendered on June 8, 1963 in Civil Case
No. 3010 and his two questioned orders dated October 23, 1963 and November 11, 1963. Therefore, the
property was no longer subject of litigation.

Consequently, the sale of a portion of Lot 1184-E to respondent Judge having taken place over one year
after the finality of the decision in Civil Case No. 3010 as well as the two orders approving the project of
partition, and not during the pendency of the litigation, there was no violation of paragraph 5, Article 1491
of the New Civil Code.

Finally, while it is true that respondent Judge did not violate paragraph 5, Article 1491 of the New Civil
Code in acquiring by purchase a portion of Lot 1184-E which was in litigation in his court, it was, however,
improper for him to have acquired the same.

In conclusion, while respondent Judge Asuncion, now Associate Justice of the Court of Appeals, did not
violate any law in acquiring by purchase a parcel of land which was in litigation in his court and in
engaging in business by joining a private corporation during his incumbency as judge of the Court of First
Instance of Leyte, he should be reminded to be more discreet in his private and business activities,
because his conduct as a member of the Judiciary must not only be characterized with propriety but must
always be above suspicion.
GAN TINGCO vs PABINGUIT

FACTS: Candida Acabo was the owner of six parcels of land, all situated in the municipality of Jimalalud,
Oriental Negros. These lands were sold on June 12, 1911 by Candida Acabo, to one Gan Tingco. But the
purchaser Gan Tingco was unable to take possession of the six parcels of land sold him by Acabo, for
they were in the possession of Silvino Pabinguit, who alleges certain rights therein. He claims to have
purchased them from Faustino Abad. Abad had become the owner through purchase from Henry
Gardner.

Prior to the purchase made by Garnder, a judgment has been rendered against Ancabo as a result of the
complaint filed by Silvestre Basaltos. Because of Ancabo‘s failure to comply, her fixtures and other
chattels were levied upon the order of Gardner being the justice of peace.

Public auction sale was executed and Gardner appeared to be the highest bidder and was the purchaser
of Candida Acabo's lands and carabaos sold at public auction held in the barrio of Martelo, Municipality of
Tayasan on March 20, 1907.

As Gardner subsequently learned that he was forbidden to purchase, he sold what he had purchased to
Faustino Abad, Candida Acabo's son.

On June 19, 1907, Faustino Abad, for the sum of P375 sold to Silvino Pabinguit six parcels of land.

The Court of First Instance of Oriental NEgros rendered judgment in behalf of the plaintiff, Gan Tingco,
declaring him the owner of the lands described in the complaint, and ordered the defendant, Silvino
Pabinguit, to restore the plaintiff to their possession.

The defendant appealed, with the right to a review of the evidence.

The appeal was heard by this court, it having been brought it by bill of exceptions.

The appellant alleges that the trial court erred in holding that, notwithstanding the sale of the lands in
question at public auction, Candida Acabo did not cease to be the owner of these properties, because
there were certain irregularities and defects in the said auction.
ISSUE: WON Candida Acabo did not cease to be the owner of the properties despite certain irregularities
and defects in the said auction.

HELD: The trial court was impressed by the circumstance that in the public auction the purchaser was the
justice of the peace himself. This, in the judge's opinion, was unauthorized, because article 1459, No. 5,
of the Civil Code, prohibits judges from acquring by purchase, even at pub;ic or judicial sale, either in
person or by an agent, any property or rights litigated in the court in the jurisdiction or territory within
which they exercise their respective duties; this prohibition includes taking of property by assignment.

The appellant alleges that the property purchased by justice of the peace Gardner was not the subject of
litigation in the justice court; that the action was to recover a certain sum of money, and that he had
ordered the property sold on execution.

This raises, therefore, a question as to the true meaning of paragraph 5 of article 1459 of the Civil Code.
law library

The Ley de Bases, in accordance with which the Civil Code was enacted, provides as follows, in Base
No. 26:

The forms, requirements and conditions of each particular contract shall be determined and defined
subject to the general list of obligations and their effects, with the understanding that the legislation in
force and the legal principles evolved therefrom by judicial decisions, etc., etc., shall serve as basis.

One of the bodies of law which conastitute the legislation now in force in the Novisima Recopilacion. In
Law 4, Title 14, Book 5 of the same is found the following provision: "We order that in public auctions held
by direction of our alcaldes, neither the latter nor any person whomsoever in their name shall bid in
anything sold at such public auctions." The word alcaldes means judges. The caption of Title 14 is "
Alcaldes or Provincial Judges," and the entire title deals with the exercise of judicial jurisdiction. Prior to
the enactment of the Civil Code, the Penal Code was also in force. Article 400 of the latter prohibits,
under penalty, any judge from taking part, either directly, or indirectly, in any operation of exchange, trade
or porfit with respect to things not the product of his own property, within the territory over which he
exercises jurisdiction. Judging from the legal precedents on which the Civil Code is based, it would not
seem too much to conclude that the said article of the Civil Code does not make any distinction between
property in litigation. In effect, it appears to be as delicate a matter for a judge to take part in the sale of
property that had been the subject of ligitgation in his court, as to intervene in auction of property which,
though not directly litigated in his court, is nevertheless levied upon and sold as the result of a writ of
execution issued by him. What the law intends to avoid is the improper interference with an interest of a
judge in a thing levied upon and sold by his order.
If under the law Gardner was prohibited from acquiring the ownership of Acabo's lands, then he could not
have transmitted to Faustino Abad the right of ownership that he did not possess; nor could Abad, to
whom this alleged ownership had not been transmitte, have conveyed the same to Pabinguit. What
Gardner should have done in view of the fact that the sale, as he finally acknowledged, was void, was to
claim the price that had been deposited in court, and the justice of the peace of Guijulngan should have
declared the auction void and haveordered a new sale to be held, besides correcting the errors that had
been committed in the proceedings. To the reasons already stated, there is to be added the additional
one, with respect to the sale made by Faustino Abad to Silvino Pabinguit, that Abad was a minor at the

time - a circumstance that deprived him of capacity to sell (Civil Code,art. 1263). Abad had no ownership
to transmit to anyone and, besides, he had no personality to enable him to contract by himself, on
account of his lack of legal age.This court finds no reason whatever why it should not affirm the judgment
appealed from.

LEON SIBAL , plaintiff-appellant,vs.EMILIANO J. VALDEZ ET AL., defendants. VS.

EMILIANO J. VALDEZ, appellee.

Facts: As a first cause of action the plaintiff alleged that the defendant Vitaliano Mamawal, deputy sheriff
of the Province of Tarlac, by virtue of a writ of execution issued by the Court of First Instance of
Pampanga, attached and sold to the defendant Emiliano J. Valdez the sugar cane planted by the plaintiff
and his tenants on seven parcels of land described in the complaint in the third paragraph of the first
cause of action; that within one year from the date of the attachment and sale the plaintiff offered to
redeem said sugar cane and tendered to the defendant Valdez the amount sufficient to cover the price
paid by the latter, the interest thereon and any assessments or taxes which he may have paid thereon
after the purchase, and the interest corresponding thereto and that Valdez refused to accept the money
and to return the sugar cane to the plaintiff.

Plaintiff prayed that a writ of preliminary injunction be issued against the defendant Emiliano J. Valdez his
attorneys and agents.The preliminary injunction was granted The defendant Emiliano J. Valdez, in his
amended answer, denied generally and specifically each and every allegation of the complaint and step
up the following defenses:

(a) That the sugar cane in question had the nature of

personal property and was not, therefore, subject to

redemption; The defendant Emiliano J. Valdez filed a counter-claim.

Issue: Whether or not the sugar cane in question had the nature of personal property.

HELD: The sugar cane in question had the nature of personal property.

CIVIL CODE, JURISPRUDENCE

The first question raised by the appeal is, whether the sugar cane in question is personal or real property.
It is contended that sugar cane comes under the classification of real property as "ungathered products"
in paragraph 2 of article 334 of the Civil Code. Said paragraph 2 of article 334 enumerates as real
property the following: Trees, plants, and ungathered products, while they are

annexed to the land or form an integral part of any immovable property." That article, however, has
received in recent years an interpretation by the Tribunal Supremo de España, which holds that, under
certain conditions, growing crops may be considered as personal property. (Decision of March 18, 1904,
vol. 97, Civil Jurisprudence of Spain.)

However, from the discussion of Manresa it appears (1) that, under Spanish authorities, pending fruits
and ungathered products may be sold and transferred as personal property; (2) that the Supreme Court of
Spain, in a case of ejectment of a lessee of an agricultural land, held that the lessee was entitled to gather
the products corresponding to the agricultural year, because said fruits did not go with the land but
belonged separately to the lessee; and (3) that under the Spanish Mortgage Law of 1909, as amended,
the mortgage of a piece of land does not include the fruits and products existing thereon, unless the
contract expressly provides otherwise.

An examination of the decisions of the Supreme Court of

Louisiana may give us some light on the question which we are discussing. Article 465 of the Civil Code
of Louisiana, which corresponds to paragraph 2 of article 334 of our Civil Code, provides:

"Standing crops and the fruits of trees not gathered, and trees before they are cut down, are likewise
immovable, and are considered as part of the land to which they are attached."

The Supreme Court of Louisiana having occasion to interpret that provision, held that in some cases
"standing crops" may be considered

and dealt with as personal property. In the case of Lumber Co. vs. Sheriff and Tax Collector (106 La.,
418) the Supreme Court said:
"True, by article 465 of the Civil Code it is provided that 'standing crops and the fruits of trees not
gathered and trees before they are cut down . . . are considered as part of the land to which they are
attached, but the immovability provided for is only one in abstracto and without reference to rights on or to
the crop acquired by others than the owners of the property to which the crop is attached. . . .

The existence of a right on the growing crop is a mobilization by anticipation, a gathering as it were in
advance, rendering the crop movable quoad the right acquired therein. Our jurisprudence recognizes the
possible mobilization of the growing crop."

From an examination of the reports and codes of the

State of California and other states we find that the settle doctrine followed in said states in connection
with the attachment of property and execution of judgment is, that growing crops raised by yearly labor
and cultivation are considered personal property.

Mr. Mechem says that a valid sale may be made of a thing, which though not yet actually in existence, is
reasonably certain to come into existence as the natural increment or usual incident of something already
in existence, and then belonging to the vendor, and then title will vest in the buyer the moment the thing
comes into existence.

Things of this nature are said to have a potential existence. A man may sell property of which he is
potentially and not actually possessed. He may make a valid sale of the wine that a vineyard is expected
to produce; or the gain a field may grow in a given time; or the milk a cow may yield during the coming
year; or the wool that shall thereafter grow upon sheep; or what may be taken at the next cast of a
fisherman's net; or fruits to grow; or young animals not yet in existence; or the good will of a trade and the
like. The thing sold, however, must be specific and identified. They must be also owned at the time by the
vendor. (Hull vs. Hull, 48 Conn., 250

[40 Am. Rep., 165].)

It is contended on the part of the appellee that paragraph 2 of article 334 of the Civil Code has been
modified by section 450 of the Code of Civil Procedure as well as by Act No. 1508, the Chattel Mortgage
Law.

Said section 450 enumerates the property of a judgment debtor which may be subjected to execution.
The pertinent portion of said section reads as follows: "All goods, chattels, moneys, and other property,
both real and personal, * * * shall be liable to execution. Said section 450 and most of the other sections
of the Code of Civil Procedure relating to the execution of judgment were taken from the Code of

Civil Procedure of California. The Supreme Court of California, under section 688 of the Code of Civil
Procedure of that state (Pomeroy, p. 424) has held, without variation, that growing crops were personal
property and subject to execution.

CHATTEL MORTGAGE

Act No. 1508, the Chattel Mortgage Law, fully recognized that growing crops are personal property.
Section 2 of said Act provides: "All personal property shall be subject to mortgage, agreeably to the
provisions of this Act, and a mortgage executed in pursuance thereof shall be termed a chattel mortgage."
Section 7 in part provides: "If growing crops be mortgaged the mortgage may contain an agreement
stipulating that the mortgagor binds himself properly to tend, care for and protect the crop while growing.

It is clear from the foregoing provisions that Act No. 1508 was enacted on the assumption that "growing
crops" are personal property. This consideration tends to support the conclusion hereinbefore stated, that
paragraph 2 of article 334 of the Civil Code has been modified by section 450 of Act No. 190 and by Act
No. 1508 in the sense that

"ungathered products" as mentioned in said article of the Civil Code have the nature of personal property.
In other words, the phrase "personal property" should be understood to include "ungathered products.”

We may, therefore, conclude that paragraph 2 of article 334 of the Civil Code has been modified by
section 450 of the Code of Civil Procedure and by Act No. 1508, in the sense that, for the purpose of
attachment and execution, and for the purposes of the Chattel Mortgage Law, "ungathered products"
have the nature of personal

property. The lower court, therefore, committed no error in holding that the sugar cane in question was
personal property and, as such, was not subject to redemption.

NOTA BENE: In Sibal v. Valdez,10 the Court held that pending crops which have potential existence
may be the valid subject matter of sale,and may be dealt with separately from the land on which they
grow.