Case Law Analysis 4

Case 4-1

G.R. No. L-15113 dated January 28, 1961

ANTONIO MEDINA vs. COLLECTOR OF INTERNAL REVENUE and THE COURT OF TAX APPEALS

Ht432tp://www.lawphil.net/judjuris/juri1961/jan1961/gr_l-15113_1961.html

Discussion Questions:

Distinguish the two types of incapacity to enter into a contract of sale.

 The law recognizes three categories of individuals who lack the capacity to contract: minors,
individuals with psychological disabilities, and intoxicated persons. If anyone from these
categories enters into a contract, the agreement might be considered "voidable" by them. This
protects the party who lacks capacity from being forced to go through with a deal that takes
advantage of his or her lack of savvy.

Is the sale between husband and wife valid? Why? Explain the rationale of the rule.

 No, Contracts violative of the provisions of Article 1490 of the Civil Code are null and void (Uy
Sui Pin v. Cantollas, 70 Phil. 55; Uy Coque v. Sioca, 45 Phil., 43), and the sales made by the
petitioner to his wife being void, the sales made by the latter are deemed the original sales
subject to tax.

It appears that at the time of the marriage between petitioner and his wife, they neither had
any property nor business of their own, as to have really urged them to enter into the supposed
property agreement. Secondly, the testimony that the separation of property agreement was
recorded in the Registry of Property three months before the marriage, is patently absurd, since
such a prenuptial agreement could not be effective before marriage is celebrated, and would
automatically be cancelled if the union was called off. In the third place, despite their insistence
on the existence of the ante nuptial contract, the couple, strangely enough, did not act in
accordance with its alleged covenants. It was not until July of 1954 that he alleged, for the first
time, the existence of the supposed property separation agreement. Finally, the Day Book of the
Register of Deeds on which the agreement would have been entered, had it really been
registered as petitioner insists, and which book was among those saved from the ravages of the
war, did not show that the document in question was among those recorded therein.

The wife is authorized to engage in business and for the incidents that flow therefrom when she
so engages therein. But the transactions permitted are those entered into with strangers, and
do not constitute exceptions to the prohibitory provisions of Article 1490 against sales between
spouses.

Contracts violative of the provisions of Article 1490 of the Civil Code are null and void. Being void
transactions, the sales made by the petitioner to his wife were correctly disregarded by the Collector in
his tax assessments that considered as the taxable sales those made by the wife through the spouses'
common agent, Mariano Osorio. In upholding that stand, the Court below committed no error.

Discuss the exception to the above rule.

 The foregoing findings notwithstanding, the petitioner argues that the prohibition to sell
expressed under Article 1490 of the Civil Code has no application to the sales made by said
petitioner to his wife, because said transactions are contemplated and allowed by the provisions
of Articles 7 and 10 of the Code of Commerce. But said provisions merely state, under certain
conditions, a presumption that the wife is authorized to engage in business and for the incidents
that flew therefrom when she so engages therein. But the transactions permitted are those
entered into with strangers, and do not constitute exceptions to the prohibitory provisions of
Article 1490 against sales between spouses

Discuss why the prenuptial agreement of the husband and wife was considered fictitious, simulated,
and not bona fide.

 Relying mainly on testimonial evidence that before their marriage, he and his wife executed and
recorded a pre-nuptial agreement for a regime of complete separation of property, and that all
trace of the document was lost on account of the war, petitioner imputes lack of basis for the
tax court’s factual findings that no agreement of complete separation of property was ever
executed by and between the spouses before their marriage. We do not think so. Aside from the
material inconsistencies in the testimony of petitioner’s witnesses pointed out by the trial court,
the circumstantial evidence is against petitioner’s claim. Thus, it appears that at the time of the
marriage between the petitioner and his wife, they neither had any property nor business of
their own, as to have really urged them to enter into the supposed property agreement.
Secondly, the testimony that the separation of property agreement was recorded in the Registry
of Property three months before the marriage, is patently absurd, since such a pre-nuptial
agreement could not be effective before marriage is celebrated, and would automatically be
cancelled if the union was called off.

Case 4-2

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

MERCEDES CALIMLIM- CANULLAS vs. HON. WILLELMO FORTUN and CORAZON DAGUINES

http://www.lawphil.net/judjuris/juri1984/jun1984/gr_l57499_1984.html

Discussion Questions

Is the prohibition on Article 1490 applicable to common law spouses? Give the rationale behind the
prohibition

 No, The contract of sale was null and void for being contrary to morals and public policy. The
sale was made by the husband in favor of a concubine after he had abandoned his family and
left the conjugal home where his wife and children lived and from whence they derived their
support. That sale was subversive of the stability of the family, a basic social institution which
 public policy cherishes and protects (Article 216, Civil Code). 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."

Why is donation between spouses during marriage is prohibited? Explain the rationale of the rule.

 The law emphatically prohibits the spouses from selling property to each other subject to
certain exceptions. Similarly, donations between spouses during marriage are prohibited. And
this is so because if transfers or conveyances between spouses were allowed during marriage,
that would destroy the system of conjugal partnership, a basic policy in civil law. It was 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. The prohibitions
apply to a couple living as husband and wife without benefit of marriage, otherwise, "the
condition of those who incurred guilt would turn out to be better than those in legal union."
Those provisions are dictated by public interest and their criterion must be imposed upon the
will of the parties. That was the ruling in Buenaventura v. Bautista, also penned by Justice JBL
Reyes (CA) 50 O.G. 3679, and cited in Matabuena v. Cervantes, 38 SCRA 284 (1971).

To prohibit donations in favor of the other consort and his descendants because of fear of
undue influence and improper pressure upon the donor, a prejudice deeply rooted in our
ancient law then there is every reason to apply the same prohibitive policy to persons living
together as husband and wife without benefit of nuptials. For it is not to be doubted that assent
to such irregular connection for thirty years bespeaks greater influence of one party over the
other, so that the danger that the law seeks to avoid is correspondingly increased’. Moreover, as
pointed out by Ulpian, ‘It would not be just that such donations should subsist, lest the
conditions of those who incurred guilt should turn out to be better. So long as marriage remains
the cornerstone of our family law, reason and morality alike demand that the disabilities
attached to marriage should likewise attach to concubinage
 Case 4-3

G.R. No. L-68838 dated March 11, 1991

FLORENCIO FABILLO et. al. vs. THE HONORABLE INTERMEDIATE APPELLATE COURT et. al.

http://www.lawphil.net/judjuris/juri1991/mar1991/gr_l_68838_1991.html

Discussion Questions:

Is the contract between a lawyer and his client stipulating a contingent fee is not covered by said
prohibition under Article 1491 (5) of the Civil Code? Explain.

Explain the rationale behind the prohibition under Article 1491 (5).

 Yes, the contract between a lawyer and his client stipulating contingent fee is not covered by
said prohibition under Article 1491 (5).
 The contract of services did not violate said provision of law. Article 1491 of the Civil Code,
specifically paragraph 5 thereof, prohibits lawyers from acquiring by purchase even at a public
or judicial auction, properties and rights which are the objects of litigation in which they may
take part by virtue of their profession. The said prohibition, however, applies only if the sale or
assignment of the property takes place during the pendency of the litigation involving the
client’s property.
 Hence, a contract between a lawyer and his client stipulating a contingent fee is not covered by
said prohibition under Article 1491 (5) of the Civil Code because the payment of said fee is not
made during the pendency of the litigation but only after judgment has been rendered in the
case handled by the lawyer. In fact, under the 1988 Code of Professional Responsibility, a lawyer
may have a lien over funds and property of his client and may apply so much thereof as may be
necessary to satisfy his lawful fees and disbursements.
 As long as the lawyer does not exert undue influence on his client, that no fraud is committed or
imposition applied, or that the compensation is clearly not excessive as to amount to extortion,
a contract for contingent fee is valid and enforceable. Moreover, contingent fees were impliedly
sanctioned by No. 13 of the Canons of Professional Ethics which governed lawyer-client
relationships when the contract of services was entered into between the Fabillo spouses and
Murillo.
 Case 4-4

G.R. No. L-31606 March 28, 1983

DONATO REYES YAP et. al. vs. HON. EZEKIEL S. GRAGEDA, et. al.

http://www.lawphil.net/judjuris/juri1983/mar1983/gr_l_31606_1983.html

Discussion Questions:

Are foreigners allowed to own real properties in the Philippines? Explain and cite legal basis.

Give instances wherein a foreigner / alien may owned real properties.

 As a general rule, ownership of any land in the Philippines is exclusive and limited only
to Filipino citizens. This is enshrined in the 1987 Philippine Constitution. The
Constitution provides: “Save in cases of hereditary succession, no private lands shall be
transferred or conveyed except to individuals, corporations, or associations qualified to
acquire or hold lands of the public domain.” (Article XII, Section 7), However, there are
several exceptions that would allow foreigners to own land or acquire real estate
property in the Philippines.

 Exceptions allowing foreigners to acquire land in the Philippines

1. Property was acquired prior to the 1935 Constitution;

2. Property was acquired through hereditary succession, with the foreigner being a
legal or natural heir;

3. Purchase of a unit or units in a condominium project, subject to 40% foreign

ownership limit in the condominium corporation;

4. Purchase of land by a domestic corporation, subject to 40% foreign ownership rule;

5. Purchase by a foreigner married to a Filipino;

6. Purchase by a foreigner who was originally natural-born Filipino, subject to

limitations set by the law.

 In the case at bar, There should be no question that the sale of the land in
question in 1939 was inexistent and void from the beginning because it was
a contract executed against the mandatory provision of the 1935
Constitution, which is an expression of public policy to conserve lands for
 the Filipinos. But the factual set-up had changed. The litigated property is
now in the hands of a naturalized Filipino. It is no longer owned by a
disqualified vendee. Petitioner as a naturalized citizen, was constitutionally
qualified to own the subject property. There would be no more public policy
to be served in allowing respondent Rico to recover the land as it is already
in the hands of a qualified person.
 The Supreme Court reiterated this general rule in a recent case (Borromeo
vs. Descallar, G.R. No. 159310, 24 February 2009). The Court also reiterated
the consistent ruling that if land is invalidly transferred to an alien who
subsequently becomes a Filipino citizen or transfers it to a Filipino, the flaw.

What do you mean by pari delicto? Is this principle applicable in the instant case? Explain.

 No, The Principle is not applicable in the instant case.

 The principle of pari delicto provides that when two parties are equally at
fault, the law leaves them as they are and denies recovery by either one of
them. Indeed, one who seeks equity and justice must come to court with
clean hands. However, in the present case, petitioners were not able to
establish that respondents are also at fault. Thus, the principle of pari
delicto cannot apply.

 In any case, the application of the pari delicto principle is not absolute, as
there are exceptions to its application. One of these exceptions is where the
application of the pari delicto rule would violate well-established public
policy. The prevention of lawlessness and the maintenance of peace and
order are established public policies. In the instant case, to deny
respondents relief on the ground of pari delicto would put a premium on
the illegal act of petitioners in taking from respondents what the former
claim to be rightfully theirs.

Case 4-5

G.R. No. 102909 dated September 6, 1993

SPOUSES VICENTE and LOURDES PINGOL vs. HON. COURT OF APPEALS and HEIRS OF FRANCISCO N.
DONASCO, namely: MELINDA D. PELAYO, MARIETTA D. SINGSON, MYRNA D. CUEVAS, NATIVIDAD D.
PELAYO, YOLANDA D. CACERES and MARY DONASCO

http://www.lawphil.net/judjuris/juri1993/sep1993/gr_102909_1993.html
Discussion Questions:

Give the legal basis / reasons of the Supreme Court when it held that the contract is a Deed of Absolute
Sale. What are bases for such conclusion?

How can the Seller recover ownership of the property after delivery has been made? Cite legal basis.

Give distinction between contract of sale and contract to sell.

Case 4-6

G.R. No. 109966. May 31, 1999

ELISCO TOOL MANUFACTURING CORPORATION vs. COURT OF APPEALS, ROLANDO LANTAN, and RINA
LANTAN

http://sc.judiciary.gov.ph/jurisprudence/1999/may99/109966.htm

Discussion Questions:

Is the contract entered into a Lease Agreement with option to buy or a sale on installments? Explain.

Give an example of a transaction falling under Article 1485.

What are the remedies available to a buyer under the Recto Law?

Are these remedies cumulative or alternative? Is there an exception? Explain.

Case 4-7

G.R. No. L-24732 April 30, 1968

PIO SIAN MELLIZA vs. CITY OF ILOILO, UNIVERSITY OF THE PHILIPPINES and THE COURT APPEALS

http://www.lawphil.net/judjuris/juri1968/apr1968/gr_l-24732_1968.html
Discussion Questions:

When is a thing sold considered as determinate? Cite legal basis.

In the instant case, was the thing sold determinate? Explain with legal basis

Why is the reason behind the rule that thing sold must be determinate?

Case No. 4-8

TANAY RECREATION CENTER AND DEVELOPMENT CORP. vs. CATALINA MATIENZO FAUSTO* and
ANUNCIACION FAUSTO PACUNAYEN

G.R. No. 140182. April 12, 2005

http://www.lawphil.net/judjuris/juri2005/apr2005/gr_140182_2005.html

Discussion Questions:

What is right of first refusal? As discussed in the case, give the concepts and interpretation of the right
of first refusal.

What is the remedy in case of violation of right of first refusal?

What is the status of the contract of sale entered into in violation of the right of first refusal? Discuss.

What is the nature of a contract of lease?

In the instant case, was there a violation of the right of first refusal? Explain.
Case No. 4-9

SPS. ALFREDO R. EDRADA and ROSELLA L. EDRADA vs. CARMENCITA RAMOS, SPS. EDUARDO RAMOS

G.R. No. 154413 August 31, 2005

http://www.lawphil.net/judjuris/juri2005/aug2005/gr_154413_2005.html

Discussion Questions:

In the instant case, was the contract of sale perfected? Discuss.

Is the manner of payment or terms of payment of the price vital to the perfection of a contract of sale?
Discuss?

Case No. 4-10

ASUNCION ATILANO et. al. vs. LADISLAO ATILANO et. al.

G.R. No. L-22487 May 21, 1969

http://www.lawphil.net/judjuris/juri1969/may1969/gr_l-22487_1969.html

Discussion Questions:

In the instant case, was there a mistake in the contract of sale? Discuss.

What there a valid contract of sale executed by the parties?

What is the remedy available to the parties? Discuss.

Differentiate the remedy of reformation from the remedy of rescission.

Case No. 4-11

LUIS PICHEL vs. PRUDENCIO ALONZO

G.R. No. L-36902 January 30, 1982

http://www.lawphil.net/judjuris/juri1982/jan1982/gr_l_36902_1982.html

Discussion Questions:

In the instant case, what is the nature of the contract entered into, contract of lease or contract of
lease? Discuss.

Gives examples of things having potential existence, which could become valid object of a contract of
sale.

Explain the rationale why things having potential existence could be an object of a contract of sale.

Give essential difference between a contract of sale and a lease of things.

Case No. 4-12

PHILIPPINE FREE PRESS, INC. vs. COURT OF APPEALS (12th Division) and LIWAYWAY PUBLISHING, INC.

G.R. No. 132864 October 24, 2005

http://www.lawphil.net/judjuris/juri2005/oct2005/gr_132864_2005.html

Discussion Questions:

In the instant case, was the consent of the seller vitiated? Discuss.

Give the legal consequence of gross inadequacy of price in a contract of sale. Cite legal basis.

How did the court determine the adequacy or inadequacy of the price in the instant case? What pieces
of evidence were presented? Discuss.