Coronel v.
CA to sell the said property exclusively to the prospective buyer upon
Facts:
The case arose from a complaint for specific performance filed by private
respondent Alcaraz against petitioners to consummate the sale of a
parcel of land in Quezon City.
On January 19, 1985, petitioners executed a “Receipt of Down Payment”
of P50,000 in favor of plaintiff Ramona Alcaraz, binding themselves to
transfer the ownership of the land in their name from their deceased
father, afterwhich the balance of P1,190,000 shall be paid in full by
Alcaraz. On February 6, 1985, the property was transferred to
petitioners. On February 18, 1985, petitioners sold the property to
Mabanag. For this reason, Concepcion, Ramona’s mother, filed an action
for specific performance.
Issue:
Whether the contract between petitioners and private respondent was
that of a conditional sale or a mere contract to sell
Held:
Sale, by its very nature, is a consensual contract because it is perfected
by mere consent. The essential elements of a contract of sale are the
following: a) Consent or meeting of the minds, that is, consent to transfer
ownership in exchange for the price; b) Determinate subject matter; and
c) Price certain in money or its equivalent.
Under this definition, a Contract to Sell may not be considered as a
Contract of Sale because the first essential element is lacking. In a
contract to sell, the prospective seller explicity reserves the transfer of
title to the prospective buyer, meaning, the prospective seller does not
as yet agree or consent to transfer ownership of the property subject of
the contract to sell until the happening of an event, which for present
purposes we shall take as the full payment of the purchase price. What
the seller agrees or obliges himself to do is to fulfill his promise to sell the
subject property when the entire amount of the purchase price is
delivered to him. In other words the full payment of the purchase price
partakes of a suspensive condition, the non-fulfillment of which prevents
the obligation to sell from arising and thus, ownership is retained by the
prospective seller without further remedies by the prospective buyer. A
contract to sell may thus be defined as a bilateral contract whereby the
prospective seller, while expressly reserving the ownership of the subject
property despite delivery thereof to the prospective buyer, binds himself
The agreement could not have been a contract to sell because the sellers
fulfillment of the condition agreed upon, that is, full payment of the
purchase price.
A contract to sell may not even be considered as a conditional contract
of sale where the seller may likewise reserve title to the property subject
of the sale until the fulfillment of a suspensive condition, because in a
conditional contract of sale, the first element of consent is present,
although it is conditioned upon the happening of a contingent event
which may or may not occur. If the suspensive condition is not fulfilled,
the perfection of the contract of sale is completely abated. However, if
the suspensive condition is fulfilled, the contract of sale is thereby
perfected, such that if there had already been previous delivery of the
property subject of the sale to the buyer, ownership thereto
automatically transfers to the buyer by operation of law without any
further act having to be performed by the seller. In a contract to sell,
upon the fulfillment of the suspensive condition which is the full
payment of the purchase price, ownership will not automatically transfer
to the buyer although the property may have been previously delivered
to him. The prospective seller still has to convey title to the prospective
buyer by entering into a contract of absolute sale.
It is essential to distinguish between a contract to sell and a conditional
contract of sale specially in cases where the subject property is sold by
the owner not to the party the seller contracted with, but to a third
person, as in the case at bench. In a contract to sell, there being no
previous sale of the property, a third person buying such property
despite the fulfillment of the suspensive condition such as the full
payment of the purchase price, for instance, cannot be deemed a buyer
in bad faith and the prospective buyer cannot seek the relief of
reconveyance of the property. There is no double sale in such case. Title
to the property will transfer to the buyer after registration because there
is no defect in the owner-seller's title per se, but the latter, of course,
may be used for damages by the intending buyer.
In a conditional contract of sale, however, upon the fulfillment of the
suspensive condition, the sale becomes absolute and this will definitely
affect the seller's title thereto. In fact, if there had been previous delivery
of the subject property, the seller's ownership or title to the property is
automatically transferred to the buyer such that, the seller will no longer
have any title to transfer to any third person. Such second buyer of the
property who may have had actual or constructive knowledge of such
defect in the seller's title, or at least was charged with the obligation to
discover such defect, cannot be a registrant in good faith. Such second
buyer cannot defeat the first buyer's title. In case a title is issued to the
second buyer, the first buyer may seek reconveyance of the property
subject of the sale.
herein made no express reservation of ownership or title to the subject
parcel of land. Furthermore, the circumstance which prevented the
parties from entering into an absolute contract of sale pertained to the
sellers themselves (the certificate of title was not in their names) and not
the full payment of the purchase price. Under the established facts and
circumstances of the case, the Court may safely presume that, had the
certificate of title been in the names of petitioners-sellers at that time,
there would have been no reason why an absolute contract of sale could
not have been executed and consummated right there and then.
What is clearly established by the plain language of the subject document
is that when the said "Receipt of Down Payment" was prepared and
signed by petitioners Romeo A. Coronel, et al., the parties had agreed to
a conditional contract of sale, consummation of which is subject only to
the successful transfer of the certificate of title from the name of
petitioners' father, Constancio P. Coronel, to their names.
The provision on double sale presumes title or ownership to pass to the
first buyer, the exceptions being: (a) when the second buyer, in good
faith, registers the sale ahead of the first buyer, and (b) should there be
no inscription by either of the two buyers, when the second buyer, in
good faith, acquires possession of the property ahead of the first buyer.
Unless, the second buyer satisfies these requirements, title or ownership
will not transfer to him to the prejudice of the first buyer. In a case of
double sale, what finds relevance and materiality is not whether or not
the second buyer was a buyer in good faith but whether or not said
second buyer registers such second sale in good faith, that is, without
knowledge of any defect in the title of the property sold. If a vendee in a
double sale registers that sale after he has acquired knowledge that
there was a previous sale of the same property to a third party or that
another person claims said property in a pervious sale, the registration
will constitute a registration in bad faith and will not confer upon him any
right.
Dizon vs CA
FACTS:1. Respondent Overland Express Lines, Inc.entered into a contract of lease
with an optionto buy with the petitioners involving 1,755.80square meter parcel
of land situated in Diliman,Quezon City. The term of the lease was for
1year. Respondent was granted an option topurchase for the amount of 3,000
per squaremeter.2. respondent failed to pay the increased rentaland petitioners
filed an action for ejectment.3. MTC ordered respondent to vacate
theleased premises and pay representing rentalsand or damages for
reasonable compensationfor the use and occupation of the premisesduring the
illegal detainer.4. Respondent filed for a petition praying forthe issuance of
a restraining order enjoining theenforcement of the judgement and lack
of its jurisdiction.5. RTC rendered to dismissed the case while CAuphold the
jurisdiction in the ejectment case. Itwas also concluded that there was a
perfectedcontract of sale between the parties on theleased premises and the
pursuant to the optionto buy agreement. respondent acquired therights
of a vendee in contract of sale.
Issue:Whether or not there is a perfected contract ofsale between the parties.
Held:The contract of sale is perfected at the momentthere is a meeting of minds
upon the thingwhich is the object of the contract and upon theprice. From
that moment, parties reciprocallydemand performance. Thus, the elements of acontract
are consent, object, and price inmoney or its equivalent. It bears stressing
thatthe absence of any these elements negates theexistence of a
perfected contract of sale. Sale isa consensual contract who alleges it must
showits existence by competent proof.Respodent gave 300,000 to petitioners on
theerroneous presumption that he said amountperfected a contract of sale pursuant to
thecontract of lease with option to buy. There wasno valid consent by the
petitioners on thesupposed sale entered by Dizon, as petitionersagent. As provided
in New civil code, there wasno showing that petitioners consented to theact of Dizon nor
authoried her to act on theirbehalf.respondent should have done wasascertain
the extent of authority of Dizon.Respondent cannot seek relief on the
supposedagency.Wherefore, petitioners are ordered to
refund torespondent the amount of 300,000 which theyreceived through Dizon
Manila metal corp vs pnb
 ART. 1482. Whenever earnest money is given in a contract of sale, it
shall be considered as part of the price and as proof of the perfection
of the contract
 The deposit of P725,000 was accepted by PNB on the condition that
the purchase price is still subject to the approval of the PNB Board
 Absent proof of the concurrence of all the essential elements of a
contract of sale, the giving of earnest money cannot establish the
existence of a perfected contract of sale.
Cavite Development Bank Vs. Lim
Issue: WON there was a valid sale.
Held: NO.
In this case, the sale by CDB to Lim of the property mortgaged in 1983 by
Rodolfo Guansing must, therefore, be deemed a nullity for CDB did not
have a valid title to the said property. To be sure, CDB never acquired a
valid title to the property because the foreclosure sale, by virtue of
which, the property had been awarded to CDB as highest bidder, is
likewise void since the mortgagor was not the owner of the property
foreclosed.
A foreclosure sale, though essentially a "forced sale," is still a sale in
accordance with Art. 1458 of the Civil Code, under which the mortgagor
in default, the forced seller, becomes obliged to transfer the ownership
of the thing sold to the highest bidder who, in turn, is obliged to pay
therefor the bid price in money or its equivalent. Being a sale, the rule
that the seller must be the owner of the thing sold also applies in a
foreclosure sale. This is the reason Art. 2085 of the Civil Code, in
providing for the essential requisites of the contract of mortgage and
pledge, requires, among other things, that the mortgagor or pledgor be
the absolute owner of the thing pledged or mortgaged, in anticipation of
a possible foreclosure sale should the mortgagor default in the payment
of the loan.
There is, however, a situation where, despite the fact that the mortgagor
is not the owner of the mortgaged property, his title being fraudulent,
the mortgage contract and any foreclosure sale arising therefrom are
given effect by reason of public policy. This is the doctrine of "the
mortgagee in good faith" based on the rule that all persons dealing with
property covered by a Torrens Certificate of Title, as buyers or
mortgagees, are not required to go beyond what appears on the face of
the title. The public interest in upholding the indefeasibility of a
certificate of title, as evidence of the lawful ownership of the land or of
any encumbrance thereon, protects a buyer or mortgagee who, in good
faith, relied upon what appears on the face of the certificate of title.
This principle is cited by petitioners in claiming that, as a mortgagee
bank, it is not required to make a detailed investigation of the history of
the title of the property given as security before accepting a mortgage.
We are not convinced, however, that under the circumstances of this
case, CDB can be considered a mortgagee in good faith. While petitioners
are not expected to conduct an exhaustive investigation on the history
of the mortgagor's title, they cannot be excused from the duty of
exercising the due diligence required of banking institutions. In Tomas v.
Tomas, we noted that it is standard practice for banks, before approving
a loan, to send representatives to the premises of the land offered as
collateral and to investigate who are real owners thereof, noting that
banks are expected to exercise more care and prudence than private
individuals in their dealings, even those involving registered lands, for
their business is affected with public interest.
Spouses Buenaventura v. Court of Appeals
G.R. No. 126376. November 20, 2003
Petitioners do not have any legal interest over the properties subject of
the Deeds of Sale. As the appellate court stated, petitioners’ right to their
parents’ properties is merely inchoate and vests only upon their parents’
death. While still living, the parents of petitioners are free to dispose of
their properties. In their overzealousness to safeguard their future
legitime, petitioners forget that theoretically, the sale of the lots to their
siblings does not affect the value of their parents’ estate. While the sale
of the lots reduced the estate, cash of equivalent value replaced the
lots taken from the estate.
Fule v. CA
Facts:
Gregorio Fule, a banker and a jeweller, offered to sell his parcel of land
to Dr. Cruz in exchange for P40,000 and a diamond earring owned by the
latter. A deed of absolute sale was prepared by Atty. Belarmino, and on
the same day Fule went to the bank with Dichoso and Mendoza, and Dr.
Cruz arrived shortly thereafter. Dr. Cruz got the earrings from her safety
deposit box and handed it to Fule who, when asked if those were alright,
nodded and took the earrings. Two hours after, Fule complained that the
earrings were fake. He files a complaint to declare the sale null and void
on the ground of fraud and deceit.
Issue:
Whether the sale should be nullified on the ground of fraud
Held:
A contract of sale is perfected at the moment there is a meeting of the
minds upon the thing which is the object of the contract and upon the
price. Being consensual, a contract of sale has the force of law between
the contracting parties and they are expected to abide in good faith by
their respective contractual commitments. It is evident from the facts of
the case that there was a meeting of the minds between petitioner and
Dr. Cruz. As such, they are bound by the contract unless there are
reasons or circumstances that warrant its nullification.
Contracts that are voidable or annullable, even though there may have
been no damage to the contracting parties are: (1) those where one of
the parties is incapable of giving consent to a contract; and (2) those
where the consent is vitiated by mistake, violence, intimidation, undue
influence or fraud. The records, however, are bare of any evidence
manifesting that private respondents employed such insidious words or
machinations to entice petitioner into entering the contract of barter. It
was in fact petitioner who resorted to machinations to convince Dr. Cruz
to exchange her jewelry for the Tanay property.
Furthermore, petitioner was afforded the reasonable opportunity
required in Article 1584 of the Civil Code within which to examine the
jewelry as he in fact accepted them when asked by Dr. Cruz if he was
satisfied with the same. By taking the jewelry outside the bank,
petitioner executed an act which was more consistent with his exercise
of ownership over it. This gains credence when it is borne in mind that
he himself had earlier delivered the Tanay property to Dr. Cruz by affixing
his signature to the contract of sale. That after two hours he later claimed
that the jewelry was not the one he intended in exchange for his Tanay
property, could not sever the juridical tie that now bound him and Dr.
Cruz. The nature and value of the thing he had taken preclude its return
after that supervening period within which anything could have
happened, not excluding the alteration of the jewelry or its being
switched with an inferior kind.
Ownership over the parcel of land and the pair of emerald-cut diamond
earrings had been transferred to Dr. Cruz and petitioner, respectively,
upon the actual and constructive delivery thereof. Said contract of sale
being absolute in nature, title passed to the vendee upon delivery of the
thing sold since there was no stipulation in the contract that title to the
property sold has been reserved in the seller until full payment of the
price or that the vendor has the right to unilaterally resolve the contract
the moment the buyer fails to pay within a fixed period.
While it is true that the amount of P40,000.00 forming part of the
consideration was still payable to petitioner, its nonpayment by Dr. Cruz
is not a sufficient cause to invalidate the contract or bar the transfer of
ownership and possession of the things exchanged considering the fact
that their contract is silent as to when it becomes due and demandable.
BIAN STEEL CORPORATION, petitioner, vs. HON. COURT OF APPEALS,
MYLENE C. GARCIA and MYLA C. GARCIA, respondents.
The Garcias claim they acquired the subject property by means of a
deed of sale with assumption of mortgage dated June 29, 1998, meaning,
they purchased the property ahead of the inscription of the levy on
attachment thereon on July 27, 1998. But, even if consensual, not all
contracts of sale became automatically and immediately
effective.[15] In Ramos vs. Court of Appeals[16] we held:
In sales with assumption of mortgage, the assumption of mortgage is a
condition precedent to the sellers consent and therefore, without
approval of the mortgagee, the sale is not perfected.
Apart therefrom, notwithstanding the approval of the sale by mortgagee
FEBTC (BPI), there was yet another step the Garcias had to take and it
was the registration of the sale from the Ngs to them. Insofar as third
persons are concerned, what validly transfers or conveys a person's
interest in real property is the registration of the deed.[17]
Thus, when the Garcias bought the property on June 29, 1998, it
was, at that point, no more than a private transaction between them and
the Ngs. It needed to be registered before it could become binding on all
third parties, including BSC. It turned out that the Garcias registered it
only on August 12, 1998, after FEBTC (now BPI) approved the sale. It was
too late by then because, on July 27, 1998, the levy in favor of BSC,
pursuant to the preliminary attachment ordered by the Manila RTC, had
already been annotated on the original title on file with the Registry of
Deeds. This registration of levy (or notice, in laymans language) now
became binding on the whole world, including the Garcias. The rights
which had already accrued in favor of BSC by virtue of the levy on
attachment over the property were never adversely affected by the
unregistered transfer from the spouses Ng to the Garcias.
We sympathize with the Garcias but, had they only bothered to
check first with the Register of Deeds of Quezon City before buying the
property as a prudent buyer would have done they would have seen the
warning about BSCs superior rights over it. This alone should have been
sufficient reason for them to back out of the deal.
It is doctrinal that a levy on attachment, duly registered, has
preference over a prior unregistered sale and, even if the prior
unregistered sale is subsequently registered before the sale on execution
but after the levy is made, the validity of the execution sale should be
upheld because it retroacts to the date of levy. The priority enjoyed by
the levy on attachment extends, with full force and effect, to the buyer
at the auction sale conducted by virtue of such levy.[18] The sale between
the spouses Ng and the Garcias was undoubtedly a valid transaction
between them. However, in view of the prior levy on attachment on the
same property, the Garcias took the property subject to the
attachment. The Garcias, in buying registered land, stood exactly in the
shoes of their vendors, the Ngs, and their title ipso facto became subject
to the incidents or results of the pending litigation[19] between the Ngs
and BSC.
Even the alleged lack of actual and personal knowledge of the
existence of the levy on attachment over the subject property by the
Garcias cannot be sustained by this Court on the ground that one who
deals with registered land is charged with notice of the burdens on the
property which are duly noted on the certificate of title. On this specific
point, we are concerned not with actual or personal knowledge but
constructive notice through registration in the Registry of Deeds.
Otherwise stated, what we should follow is the annotation (or lack
thereof) on the original title on file with the Registry of Deeds, not on the
duplicate title in the hands of the private parties.
When a conveyance has been properl
Gaite v. Fonacier
Facts:
Gaite was appointed by Fonacier as attorney-in-fact to contract any party
for the exploration and development of mining claims. Gaite executed a
deed of assignment in favor of a single proprietorship owned by him. For
some reasons, Fonacier revoked the agency, which was acceded to by
Gaite, subject to certain conditions, one of which being the transfer of
ores extracted from the mineral claims for P75,000, of which P10,000 has
already been paid upon signing of the agreement and the balance to be
paid from the first letter of credit for the first local sale of the iron ores.
To secure payment, Fonacier delivered a surety agreement with Larap
Mines and some of its stockholders, and another one with Far Eastern
Insurance. When the second surety agreement expired with no sale
being made on the ores, Gaite demanded the P65,000 balance.
Defendants contended that the payment was subject to the condition
that the ores will be sold.
Issue:
(1) Whether the sale is conditional or one with a period
(2) Whether there were insufficient tons of ores
Held:
(1) The shipment or local sale of the iron ore is not a condition precedent
(or suspensive) to the payment of the balance of P65,000.00, but was
only a suspensive period or term. What characterizes a conditional
obligation is the fact that its efficacy or obligatory force (as distinguished
from its demandability) is subordinated to the happening of a future and
uncertain event; so that if the suspensive condition does not take place,
the parties would stand as if the conditional obligation had never existed.
A contract of sale is normally commutative and onerous: not only does
each one of the parties assume a correlative obligation (the seller to
deliver and transfer ownership of the thing sold and the buyer to pay the
price),but each party anticipates performance by the other from the very
start. While in a sale the obligation of one party can be lawfully
subordinated to an uncertain event, so that the other understands that
he assumes the risk of receiving nothing for what he gives (as in the case
of a sale of hopes or expectations,emptio spei), it is not in the usual
course of business to do so; hence, the contingent character of the
obligation must clearly appear. Nothing is found in the record to
evidence that Gaite desired or assumed to run the risk of losing his right
over the ore without getting paid for it, or that Fonacier understood that
Gaite assumed any such risk. This is proved by the fact that Gaite insisted
on a bond a to guarantee payment of the P65,000.00, an not only upon
a bond by Fonacier, the Larap Mines & Smelting Co., and the company's
stockholders, but also on one by a surety company; and the fact that
appellants did put up such bonds indicates that they admitted the
definite existence of their obligation to pay the balance of P65,000.00.
The appellant have forfeited the right court below that the appellants
have forfeited the right to compel Gaite to wait for the sale of the ore
before receiving payment of the balance of P65,000.00, because of their
failure to renew the bond of the Far Eastern Surety Company or else
replace it with an equivalent guarantee. The expiration of the bonding
company's undertaking on December 8, 1955 substantially reduced the
security of the vendor's rights as creditor for the unpaid P65,000.00, a
security that Gaite considered essential and upon which he had insisted
when he executed the deed of sale of the ore to Fonacier.
(2) The sale between the parties is a sale of a specific mass or iron ore
because no provision was made in their contract for the measuring or
weighing of the ore sold in order to complete or perfect the sale, nor was
the price of P75,000,00 agreed upon by the parties based upon any such
measurement.(see Art. 1480, second par., New Civil Code). The subject
matter of the sale is, therefore, a determinate object, the mass, and not
the actual number of units or tons contained therein, so that all that was
required of the seller Gaite was to deliver in good faith to his buyer all of
the ore found in the mass, notwithstanding that the quantity delivered is
less than the amount estimated by them.
ALCANTARA-DAUS v. SPOUSES DE LEON
G.R. No. 149750 June 16, 2003
FACTS:
Spouses De Leon are the owners of a parcel of land situated in the
Municipality of San Manuel, Pangasinan with an area of Four Thousand
Two Hundred Twelve square meters more or less. Respondent Hermoso
De Leon inherited the said lot from his father Marcelino De Leon by virtue
of a Deed of Extra-Judicial Partition. Said lot is covered by Original
Certificate of Title No. 22134 of the Land Records of Pangasinan.
Sometime 1960s, Spouses De Leon engaged the services of the late Atty.
Florencio Juan to take care of the documents of their properties. They
were asked to sign voluminous documents by the latter. After the death
of Atty. Juan, some documents surfaced and most revealed that their
properties had been conveyed by sale or quitclaim to Hermoso’s
brothers and sisters, to Atty. Juan and his sisters, when in truth and in
fact, no such conveyances were ever intended by them. Furthermore,
respondent found out that his signature in the Deed of Extra-judicial
Partition with Quitclaim made in favor of Rodolfo de Leon was forged.
They discovered that the land in question was sold by Rodolfo de Leon
to Aurora Alcantara
Spouses De Leon demanded the annulment of the document and re-
conveyance but defendants refused. Petitioner, Aurora Alcantara-Daus
averred that she bought the land in question in good faith and for value
on December 1975 and that she has been in continuous, public, peaceful,
open possession over the same and has been appropriating the produce
thereof without objection from anyone.
The RTC of Urdaneta, Pangasinan rendered its Decision in favor of herein
petitioner. It ruled that respondents’ claim was barred by laches,
because more than 18 years had passed since the land was sold. It
further ruled that since it was a notarial document, the Deed of
Extrajudicial Partition in favor of Rodolfo de Leon was presumptively
authentic.
ISSUES:
Whether or not the Deed of Absolute executed by Rodolfo De Leon over
the land in question in favor of petitioner was perfected and binding
upon the parties therein?
Whether or not the evidentiary weight of the Deed of Extrajudicial
Partition with Quitclaim, executed by respondent Hermoso de Leon,
Perlita de Leon and Carlota de Leon in favor of Rodolfo de Leon was
overcome by more than a preponderance of evidence of respondents?
HELD:
First Issue:
NO. It is during the delivery that the law requires the seller to have the
right to transfer ownership of the thing sold. In general, a perfected
contract of sale cannot be challenged on the ground of the seller’s non-
ownership of the thing sold at the time of the perfection of the contract.
Further, even after the contract of sale has been perfected between the
parties, its consummation by delivery is yet another matter. It is through
tradition or delivery that the buyer acquires the real right of ownership
over the thing sold.
Undisputed is the fact that at the time of the sale, Rodolfo De Leon was
not the owner of the land he delivered to petitioner. Thus, the
consummation of the contract and the consequent transfer of ownership
would depend on whether he subsequently acquired ownership of the
land in accordance with Article 1434 of the Civil Code. Therefore, we
need to resolve the issue of the authenticity and the due execution of
the Extrajudicial Partition and Quitclaim in his favor.
Acap v. CA
Facts:
Felixberto Oruma sold his inherited land to Cosme Pido, which land is
rented by petitioner Teodoro Acap. When Cosme died intestate, his heirs
executed a “Declaration of Heirship and Waiver of Rights” in favor of
private respondent Edy delos Reyes. Respondent informed petitioner of
his claim over the land, and petitioner paid the rental to him in 1982.
However in subsequent years, petitioner refused to pay the rental, which
prompted respondent to file a complaint for the recovery of possession
and damages. Petitioner averred that he continues to recognize Pido as
the owner of the land, and that he will pay the accumulated rentals to
Pido’s widow upon her return from abroad. The lower court ruled in
favor of private respondent.
Issues:
(1) Whether the “Declaration of Heirship and Waiver of Rights” is a
recognized mode of acquiring ownership by private respondent
(2) Whether the said document can be considered a deed of sale in favor
of private respondent
Ker and Co., LTD vs Lingad
GR No. L-20871 April 30, 1971
Facts:
CIR assessed the sum of P20,272.33 as the commercial broker’s
percentage tax, surcharge, and compromise penalty against Ker & Co.
Ker and Co. requested for the cancellation of the assessment and filed a
petition for review with the Court of Tax Appeals. The CTA ruled that Ker
and Co is liable as a commercial broker. Ker has a contract with US
rubber. Ker is the distributor of the said company. Ker was precluded
from disposing the products elsewhere unless there has been a written
consent from the company. The prices, discounts, terms of payment,
terms of delivery and other conditions of sale were subject to change in
the discretion of the Company.
Issue:
Whether the relationship of Ker and Co and US rubber was that of a
vendor- vendee or principal-broker
Ruling:
The relationship of Ker and Co and US rubber was that of a principal-
broker/ agency. Ker and Co is only an agent of the US rubber because it
can dispose of the products of the Company only to certain persons or
entities and within stipulated limits, unless excepted by the contract or
by the Rubber Company, it merely receives, accepts and/or holds upon
consignment the products, which remain properties of the latter
company, every effort shall be made by petitioner to promote in every
way the sale of the products and that sales made by petitioner are
subject to approval by the company. Since the company retained
ownership of the goods, even as it delivered possession unto the dealer
for resale to customers, the price and terms of which were subject to the
company’s control, the relationship between the company and the
dealer is one of agency.Milagros Manongsong v. 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.
VDA. DE JAYME VS. CA
390 SCRA 380
2002 October 4
FACTS: On January 8, 1973, the spouses Graciano and Mamerta Jayme
entered into a Contract of Lease with George Neri, president of Airland
Motors Corporation (now Cebu Asiancars Inc.), covering one-half of Lot
2700 owned and registered to the former. The lease was for twenty (20)
years. The terms and conditions of the lease contract stipulated that
Cebu Asiancars Inc. may use the leased premises as a collateral to secure
payment of a loan which Asiancars may obtain from any bank, provided
that the proceeds of the loan shall be used solely for the construction of
a building which, upon the termination of the lease or the voluntary
surrender of the leased premises before the expiration of the contract,
shall automatically become the property of the Jayme spouses (the
lessors).
In October 1977, Asiancars obtained a loan of P6,000,000 from the
Metropolitan Bank and Trust Company. The entire Lot 2700 was offered
as one of several properties given as collateral for the loan. As
mortgagors, the spouses signed a Deed of Real Estate Mortgage dated
November 21, 1977 in favor of MBTC. It stated that the deed was to
secure the payment of a loan obtained by Asiancars from the bank.
Meeting financial difficulties and incurring an outstanding balance on the
loan, Asiancars conveyed ownership of the building on the leased
premises to MBTC, by way of "dacion en pago." The building was valued
at P980,000 and the amount was applied as partial payment for the loan.
There still remained a balance of P2,942,449.66, which Asiancars failed
to pay. Eventually, MBTC extrajudicially foreclosed the mortgage.
A public auction was held on February 4, 1981. MBTC was the highest
bidder for P1,067,344.35. A certificate of sale was issued and was
registered with the Register of Deeds on February 23, 1981. Meanwhile,
Graciano Jayme died, survived by his widow Mamerta and their children.
As a result of the foreclosure, Graciano’s heirs filed a civil complaint, in
January of 1982, for Annulment of Contract with Damages with Prayer
for Issuance of Preliminary Injunction, against respondent Asiancars, its
officers and incorporators and MBTC. Later, in 1999, Mamerta Jayme
also passed away.
The trial court ruled that the REM is valid and binding upon the Jaymes.
The CA affirmed with modifications. Both the trial and appellate courts
found that no fraud attended the execution of the deed of mortgage. The
Motion for Reconsideration was denied.

ISSUE: Whether or not the dacion en pago by Asiancars in favor of MBTC
is valid and binding despite the stipulation in the lease contract that
ownership of the building will vest on the Jaymes at the termination of
the lease.
RULING: YES. The alienation of the building by Asiancars in favor of MBTC
for the partial satisfaction of its indebtedness is valid.
The ownership of the building had been effectively in the name of the
lessee-mortgagor (Asiancars), though with the provision that said
ownership be transferred to the Jaymes upon termination of the lease or
the voluntary surrender of the premises. The lease was constituted on
January 8, 1973 and was to expire 20 years thereafter, or on January 8,
1993. The alienation via dacion en pago was made by Asiancars to MBTC
on December 18, 1980, during the subsistence of the lease. At this point,
the mortgagor, Asiancars, could validly exercise rights of ownership,
including the right to alienate it, as it did to MBTC.
Dacion en pago is the delivery and transmission of ownership of a thing
by the debtor to the creditor as an accepted equivalent of the
performance of the obligation. It is a special mode of payment where the
debtor offers another thing to the creditor who accepts it as equivalent
of payment of an outstanding debt. The undertaking really partakes in
one sense of the nature of sale, that is the creditor is really buying the
thing or property of the debtor, payment for which is to be charged
against
the debtor’s debt. As such, the essential elements of a contract of sale,
namely, consent, object certain, and cause or consideration must be
present. In its modern concept, what actually takes place in dacion en
pago is an objective novation of the obligation where the thing offered
as an accepted equivalent of the performance of an obligation is
considered as the object of the contract of sale, while the debt is
considered as the purchase price. In any case, common consent is an
essential prerequisite, be it sale or novation, to have the effect of totally
extinguishing the debt or obligation. Private respondent MBTC is ordered
to pay petitioners rentals in the total amount of P602,083.33, with six (6)
percent interest per annum until fully paid.
SONNY LO vs KJS ECO-FORMWORK SYSTEM PHIL, INC.
Facts:
Lo, doing business under the name San’s Enterprises, ordered scaffolding
equipments from KJS worth P540,425.80. Lo paid a downpayment of
P150,000 and the balance was to be paid in 10 monthly installments.
KJS delivered the scaffoldings to Lo, who paid the first two installments.
However, his business encountered financial difficulties and he was
unable to settle his obligation despite oral and written demands.
Lo and KJS executed a Deed of Assignment, whereby Lo assigned to KJS
his receivables in the amount of P335,462.14 from Jomero Realty
Corporation. The agreement also stipulated: “The ASSIGNOR further
agrees and stipulates as aforesaid that the said ASSIGNOR, his heirs,
executors, administrators, or assigns, shall and will at times hereafter, at
the request of said ASSIGNEE, its successors or assigns, at his cost and
expense, execute and do all such further acts and deeds as shall be
reasonably necessary to effectually enable said ASSIGNEE to recover
whatever collectibles said ASSIGNOR has in accordance with the true
intent and meaning of these presents.”
When KJS tried to collect the said credit from Jomero, it refused to honor
the Deed of Assignment because it claimed that Lo was also indebted to
it. KJS sent a letter to Lo demanding payment but he refused claiming
that his obligation had been extinguished when they executed the Deed
of Assignment.
KJS filed an action for recovery of a sum of money against Lo with the
RTC, which dismissed the complaint on the ground that the assignment
of credit extinguished the obligation. However, the CA held that the Deed
of Assignment did not extinguish the obligation of Lo.
Issue: W/N the Deed of Assignment extinguished Lo’s obligation.
Held:
NO, he failed to comply with his warranty. In dacion en pago as a special
mode of payment, the debtor offers another thing to the creditor who
accepts it as equivalent of payment of an outstanding debt. The
undertaking really partakes in one sense of the nature of sale – the
creditor is really buying the thing or property of the debtor, payment for
which is to be charged against the debtor’s debt.
The assignment of credit, which is in the nature of a sale of personal
property, produced the effects of a dation in payment, which may
extinguish the obligation. However, as in any other contract of sale, the
vendor or assignor is bound by certain warranties. Paragraph 1 of Article
1628 of the Civil Code provides: The vendor in good faith shall be
responsible for the existence and legality of the credit at the time of the
sale, unless it should have been sold as doubtful; but not for the solvency
of the debtor, unless it has been so expressly stipulated or unless the
insolvency was prior to the sale and of common knowledge.
Lo, as assignor, is bound to warrant the existence and legality of the
credit at the time of the sale or assignment. When Jomero claimed that
it was no longer indebted to Lo since the latter also had an unpaid
obligation to it, it essentially meant that its obligation to Lo has been
extinguished by compensation. As a result, KJS alleged the non-existence
of the credit and asserted its claim to Lo’s warranty under the
assignment. Lo was therefore required to make good its warranty and
pay the obligation.
Furthermore, Lo breached his obligation under the Deed of Assignment
as he did not “execute and do all such further acts and deeds as shall be
reasonably necessary to effectually enable said ASSIGNEE to recover
whatever collectibles said ASSIGNOR has in accordance with the true
intent and meaning of these presents.” By warranting the existence of
the credit, Lo should have ensured its performance in case it is found to
be inexistent. He should be held liable to pay to KJS the amount of his
indebtedness
Inchausti vs Cromwell
20 Phil. 345 October 16, 1911
Facts:
Inchausti is engaged in the business of buying and selling wholesale
hemp on commission. It is customary to sell hemp in bales which are
made by compressing the loose fiber by means of presses, covering two
sides of the bale with matting, and fastening it by means of strips of
rattan; that the operation of bailing hemp is designated among
merchants by the word “prensaje.” In all sales of hemp by Inchausti, the
price is quoted to the buyer at so much per picul, no mention being made
of bailing. It is with the tacit understanding that the hemp will be
delivered in bales. The amount depends under the denomination of
“prensaje” or the baled hemp. CIR made demand in writing upon
Inchausti for the payment of the sum of P1,370.68 as a tax of one third
of one per cent on the sums of money mentioned as aggreagate sum
collected as prensaje or the baled hemp. Inchausti paid upon protest,
contending that the collected amount is illegal upon the ground that the
said charge does not constitute a part of the selling price of the hemp,
but is a charge made for the service of baling the hemp.
Issue:
Whether or not the baled hemp constitutes a contract of sale

Ruling:
Inchausti vs Cromwell
20 Phil. 345 October 16, 1911
Facts:
Inchausti is engaged in the business of buying and selling wholesale
hemp on commission. It is customary to sell hemp in bales which are
made by compressing the loose fiber by means of presses, covering two
sides of the bale with matting, and fastening it by means of strips of
rattan; that the operation of bailing hemp is designated among
merchants by the word “prensaje.” In all sales of hemp by Inchausti, the
price is quoted to the buyer at so much per picul, no mention being made
of bailing. It is with the tacit understanding that the hemp will be
delivered in bales. The amount depends under the denomination of
“prensaje” or the baled hemp. CIR made demand in writing upon
Inchausti for the payment of the sum of P1,370.68 as a tax of one third
of one per cent on the sums of money mentioned as aggreagate sum
collected as prensaje or the baled hemp. Inchausti paid upon protest,
contending that the collected amount is illegal upon the ground that the
said charge does not constitute a part of the selling price of the hemp,
but is a charge made for the service of baling the hemp.
Issue:
Whether or not the baled hemp constitutes a contract of sale
Ruling:
Yes, the baled hemp constitutes a contract of sale. In the case at bar, the
baled form before the agreement of sale were made and would have
been in existence even if none of the individual sales in question had
been consummated. The hemp, even if sold to someone else, will be sold
in bales. When a person stipulates for the future sale of articles which he
is habitually making, and which at the time are not made or finished, it is
essentially a contract of sale and not a contract for piece of work. It is
otherwise when the article is made pursuant to agreement. If the article
ordered by the purchaser is exactly such as the plaintiff makes and keeps
on hand for sale to anyone, and no change or modification of it is made
at the defendant’s request, it is a contract of sale, even though it may be
entirely made after, and in consequence of, the defendant’s order for it.
ENGINEERING AND MACHINERY CORP. VS. COURT OF APPEALS
G.R. No. 52267 January 24, 1996
Facts:
Almeda and Engineering signed a contract, wherein Engineering
undertook to fabricate, furnish and install the air-conditioning system in
the latter’s building along Buendia Avenue, Makati in consideration of
P210,000.00. Petitioner was to furnish the materials, labor, tools and all
services required in order to so fabricate and install said system. The
system was completed in 1963 and accepted by private respondent, who
paid in full the contract price.
Almeda learned from the employees of NIDC of the defects of the air-
conditioning system of the building. Almeda spent for the repair of the
air-conditioning system. He now sues Engineering for the refund of the
repair. Engineering contends that the contract was of sale and the claim
is barred by prescription since the responsibility of a vendor for any
hidden faults or defects in the thing sold runs only for 6 months (Arts
1566, 1567, 1571). Almeda contends that since it was a contract for a
piece of work, hence the prescription period was ten years (Hence Art
1144 should apply on written contracts).
RTC found that Engineering failed to install certain parts and accessories
called for by the contract, and deviated from the plans of the system,
thus reducing its operational effectiveness to achieve a fairly desirable
room temperature.
Issue:
1) Whether the contract for the fabrication and installation of a central
air-conditioning system in a building, one of “sale” or “for a piece of
work”? CONTRACT FOR PIECE OF WORK.
2) Corrollarily whether the claim for refund was extinguished by
prescription? NO.
Held:
1) A contract for a piece of work, labor and materials may be
distinguished from a contract of sale by the inquiry as to whether the
thing transferred is one not in existence and which would never have
existed but for the order, of the person desiring it. In such case, the
contract is one for a piece of work, not a sale. On the other hand, if the
thing subject of the contract would have existed and been the subject of
a sale to some other person even if the order had not been given, then
the contract is one of sale.
A contract for the delivery at a certain price of an article which the
vendor in the ordinary course of his business manufactures or procures
for the general market, whether the same is on hand at the time or not
is a contract of sale, but if the goods are to be manufactured specially for
the customer and upon his special order, and not for the general market,
it is a contract for a piece of work .
The contract in question is one for a piece of work. It is not petitioner’s
line of business to manufacture air-conditioning systems to be sold “off-
the-shelf.” Its business and particular field of expertise is the fabrication
and installation of such systems as ordered by customers and in
accordance with the particular plans and specifications provided by the
customers. Naturally, the price or compensation for the system
manufactured and installed will depend greatly on the particular plans
and specifications agreed upon with the customers.
2)The original complaint is one for damages arising from breach of a
written contract – and not a suit to enforce warranties against hidden
defects – we here – with declare that the governing law is Article 1715
(supra). However, inasmuch as this provision does not contain a specific
prescriptive period, the general law on prescription, which is Article 1144
of the Civil Code, will apply. Said provision states, inter alia, that actions
“upon a written contract” prescribe in ten (10) years. Since the governing
contract was executed on September 10, 1962 and the complaint was
filed on May 8, 1971, it is clear that the action has not prescribed.
Quiroga vs Parsons
G.R. No. L-11491
Subject: Sales
Doctrine: Contract of Agency to Sell vs Contract of Sale
Facts: On Jan 24, 1911, plaintiff and the respondent entered into a
contract making the latter an “agent” of the former. The contract
stipulates that Don Andres Quiroga, here in petitioner, grants exclusive
rights to sell his beds in the Visayan region to J. Parsons. The contract
only stipulates that J.Parsons should pay Quiroga within 6 months upon
the delivery of beds.
Quiroga files a case against Parsons for allegedly violating the following
stipulations: not to sell the beds at higher prices than those of the
invoices; to have an open establishment in Iloilo; itself to conduct the
agency; to keep the beds on public exhibition, and to pay for the
advertisement expenses for the same; and to order the beds by the
dozen and in no other manner. With the exception of the obligation on
the part of the defendant to order the beds by the dozen and in no other
manner, none of the obligations imputed to the defendant in the two
causes of action are expressly set forth in the contract. But the plaintiff
alleged that the defendant was his agent for the sale of his beds in Iloilo,
and that said obligations are implied in a contract of commercial agency.
The whole question, therefore, reduced itself to a determination as to
whether the defendant, by reason of the contract hereinbefore
transcribed, was a purchaser or an agent of the plaintiff for the sale of
his beds.
Issue: Whether the contract is a contract of agency or of sale.
Held: In order to classify a contract, due attention must be given to its
essential clauses. In the contract in question, what was essential, as
constituting its cause and subject matter, is that the plaintiff was to
furnish the defendant with the beds which the latter might order, at the
price stipulated, and that the defendant was to pay the price in the
manner stipulated. Payment was to be made at the end of sixty days, or
before, at the plaintiff’s request, or in cash, if the defendant so preferred,
and in these last two cases an additional discount was to be allowed for
prompt payment. These are precisely the essential features of a contract
of purchase and sale. There was the obligation on the part of the plaintiff
to supply the beds, and, on the part of the defendant, to pay their price.
These features exclude the legal conception of an agency or order to sell
whereby the mandatory or agent received the thing to sell it, and does
not pay its price, but delivers to the principal the price he obtains from
the sale of the thing to a third person, and if he does not succeed in
selling it, he returns it. By virtue of the contract between the plaintiff and
the defendant, the latter, on receiving the beds, was necessarily obliged
to pay their price within the term fixed, without any other consideration
and regardless as to whether he had or had not sold the beds.
In respect to the defendant’s obligation to order by the dozen, the only
one expressly imposed by the contract, the effect of its breach would
only entitle the plaintiff to disregard the orders which the defendant
might place under other conditions; but if the plaintiff consents to fill
them, he waives his right and cannot complain for having acted thus at
his own free will.
For the foregoing reasons, we are of opinion that the contract by and
between the plaintiff and the defendant was one of purchase and sale,
and that the obligations the breach of which is alleged as a cause of
action are not imposed upon the defendant, either by agreement or by
law.
Gonzalo Puyat vs. Arco Amusement
FACTS:
Arco Amusement was engaged in the business of operating
cinematographs while Gonzalo Puyat & Sons (GPS) was the exclusive
agent in the Philippines for the Starr Piano Company (SPC). Desiring to
equip its cinematograph with sound reproducing devices, Arco
approached GPS, through its president, Gil Puyat, and an employee
named Santos. After some negotiations, it was agreed between the
parties that GPS would order sound reproducing equipment from SPC
and that Arco would pay GPS, in addition to the price of the equipment,
a 10% commission, plus all expenses such as freight, insurance, etc.
When GPS inquired SPC the price (without discount) of the equipment,
the latter quoted such at $1,700.00 FOB Indiana. Being agreeable to the
price, Arco formally authorized the order. The following year, both
parties agreed for another order of sound reproducing equipment on the
same terms as the first at $1,600.00 plus 10% plus all other expenses. 3
years later, Arco discovered that the prices quoted to them by GPS with
regard to their first 2 orders mentioned, were not the net prices but
rather the latter has obtained a discount from SPC thus, equipment is
deemed overpriced and GPS had to reimburse the excess amount.
ISSUE:
Is there a contract of agency?
HELD:
No. The contract between the petitioner and the respondent was one of
purchase and sale. The letters, Exhibits 1 and 2, by which the respondent
accepted the prices of $1,700.00 and $1,600.00, respectively, for the
sound reproducing equipment subject of its contract with petitioner, are
clear in their terms and admit no other interpretation that the
respondent in question at the prices indicated which are fixed and
determinate. The respondent admitted in its complaint with the CFI of
Manila that the petitioner agreed to sell to it the first sound reproducing
equipment. To hold the petitioner an agent of the respondent in the
purchase of equipment and machinery from the SPC of Richmond,
Indiana, is incompatible with the admitted fact that the petitioner is the
exclusive agent of the same company in the Philippines. It is out of the
ordinary for one to be the agent of both the vendor and the purchaser.
Ker and Co., LTD vs Lingad
GR No. L-20871 April 30, 1971
Facts:
CIR assessed the sum of P20,272.33 as the commercial broker’s
percentage tax, surcharge, and compromise penalty against Ker & Co.
Ker and Co. requested for the cancellation of the assessment and filed a
petition for review with the Court of Tax Appeals. The CTA ruled that Ker
and Co is liable as a commercial broker. Ker has a contract with US
rubber. Ker is the distributor of the said company. Ker was precluded
from disposing the products elsewhere unless there has been a written
consent from the company. The prices, discounts, terms of payment,
terms of delivery and other conditions of sale were subject to change in
the discretion of the Company.
Issue:
Whether the relationship of Ker and Co and US rubber was that of a
vendor- vendee or principal-broker
Ruling:
The relationship of Ker and Co and US rubber was that of a principal-
broker/ agency. Ker and Co is only an agent of the US rubber because it
can dispose of the products of the Company only to certain persons or
entities and within stipulated limits, unless excepted by the contract or
by the Rubber Company, it merely receives, accepts and/or holds upon
consignment the products, which remain properties of the latter
company, every effort shall be made by petitioner to promote in every
way the sale of the products and that sales made by petitioner are
subject to approval by the company. Since the company retained
ownership of the goods, even as it delivered possession unto the dealer
for resale to customers, the price and terms of which were subject to the
company’s control, the relationship between the company and the
dealer is one of agency.
Antonio Medina v. CIR and CTA
Facts:
Subsequent to marriage, petitioners engaged in concessions with the
government, while his wife started to engage in business as a lumber
dealer. From 1949 to 1952, petitioner sold logs to his wife. On the thesis
that the sales are null and void, CIR considered the sales by Mrs. Medina
as the petitioner’s original sales taxable under the NIRC. Petitioner filed
a petition for reconsideration, revealing for the first time the alleged
premarital agreement of complete separation of property.
Issue:
Whether or not the sales made by the petitioner to his wife could be
considered as his original taxable sales
Held:
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.
Matabuena v. Cervantes
G.R. No. L-28771 (March 31, 1971)
FACTS:
Felix Matabuena cohabitated with Respondent. During this period,
Felix Matabuena donated to Respondent a parcel of land. Later the two
were married. After the death of Felix Matabuena, his sister, Petitioner,
sought the nullification of the donation citing Art.133 of the Civil Code
“Every donation between the spouses during the marriage shall be
void.”
The trial court ruled that this case was not covered by the prohibition
because the donation was made at the time the deceased and
Respondent were not yet married and were simply cohabitating.
ISSUE:
W/N the prohibition applies to donations between live-in partners.
HELD:
Yes. It is a fundamental principle in statutory construction that what is
within the spirit of the law is as much a part of the law as what is written.
Since the reason
for the ban on donations between spouses during the marriage is t
o prevent the possibility of undue influence and improper pressure
being exerted by one spouse on the other, there is no reason why this
prohibition shall not apply also to common-
law relationships.The court, however, said that the lack of the don
ation made by the deceased to Respondent does not necessarily mean
that the Petitioner will have exclusive rights to the disputed property
because the relationship between Felix and Respondent were
legitimated by marriage.
[ G. R. No. 5970, October 13, 1911 ]
JOSEPH N. WOLFSON, PLAINTIFF AND APPELLEE, VS. THE ESTATE OF
FRANCISCO MARTINEZ, DECEASED, DEFENDANT AND APPELLANT.
DECISION
MORELAND, J.:
This is an appeal by the defendant from a judgment of the Court of First
Instance of Manila, the Hon. A. S. Crossfield presiding, reversing
the findings of certain commissioners who rejected the claim of the
plaintiff presented against the estate of Francisco Martinez,
deceased, and finding in favor of the plaintiff for the sum of P12,000.
The learned trial court in the opinion which forms the basis of his
judgment said;
"From the evidence presented at the trial it appears that on the 29th
day of January, 1906, a judgment was entered in this court by Hon. John
C. Sweeney, one of the judges thereof, in favor of Mariano Yap-Tuangco
against the deceased Francisco Martinez for the sum of twelve
thousand pesos;
"That there was a contract agreement between the plaintiff in that
judgment and the above mentioned Joseph N. Wolfson and one Basilio
Regalado y Mapa to the effect that said Wolfson and Mapa
should have as their fees for prosecuting the case fifty per cent of
whatever amount might be obtained;
"That subsequently said Mapa assigned his interest in said contract to
the said Wolfson;
"That subsequently and on the 18th day of June, 1907, the plaintiff
Mariano Yap-Tuangco, for value received, sold and transferred
and delivered to said Wolfson all his right, title and interest in and to
the aforementioned judgment."
The question raised on this appeal is whether or not under the
provisions of article 1459 of the Civil Code the plaintiff, Joseph N.
Wolfson, was prohibited from purchasing the judgment of his client in
such manner and to such extent that the contract of
which such purchase was a part was absolutely null and void and
could be attacked by a person not a party to the transaction. The article
in question reads as follow:
"Art. 1459. The following persons can not acquire by purchase, even
at public or judicial auction, neither in person nor by an agent:
"1. The guardian or protutor, the property of the person or persons who
may be under their guardianship.
"2. Agents, the property the administration or sale of which may have
been intrusted to them.
"3. Executors, the property intrusted to their care.
"4. Public officials, the property of the State, municipalities, towns, and
also of public institutions, the administration of which has been intrusted
to them.
"This provision shall apply to judges and experts who, in any manner
whatsoever, take part in the sale.
"5. Associate justices, judges, members of the department of public
prosecution, clerks of superior and inferior courts, and officials of
justice, the property and rights in litigation before the court in the
jurisdiction or territory over which they exercise their respective duties,
this prohibition including the act of acquiring by assignment. "From
this rule shall be excepted the cases in which hereditary actions among
coheirs are involved, or assignments in payment of debts, or security
for the goods they may possess.
"The prohibition contained in this number shall include the lawyers and
solicitors with regard to the property and rights, which may be the object
of the litigation, in which they may take part by virtue of their profession
and office."
On this appeal we do not discuss or decide the question whether or
not the judgment in question actually falls within the prohibition of the
article, it being the disposition of a majority of the court to place the
decision wholly upon the proposition that, even if it be conceded that
the purchase of the judgment in question was within the prohibition of
the article quoted, nevertheless, the contract of purchase and sale is
not void but voidable at the election of the vendor. This being so, its
voidability can not be asserted by one not a party to the transaction, or
his representatives.
Manresa, commenting on this section, says;
"Considering the question from the point of view of the civil law, the view
taken by the code, we must limit ourselves to classifying as void all acts
done contrary to the express prohibition of the statute. Now then: As
the code does not recognize such nullity by the mere operation of law,
the nullity of the acts herein before referred to must be asserted by the
person having the necessary legal capacity to do so and decreed by a
competent court. Chapter 6, title 2, book 4 of the code contains the
provisions applicable to the matter under consideration." (Manresa,
Spanish Civil Code, vol. 10, p. 108.)
Article 1257 of the Civil Code reads ;
"Contracts shall be valid only between the parties who execute them
and their heirs, except, with regard to the latter, the case in which the
rights and obligations arising from the contract are not
transmissible, either by their nature, or by agreement, or by provision
of law.
"Should the contract contain any stipulation in favor of a third person,
he may demand its fulfillment, provided he has given notice of his
acceptance to the person bound before it may have been revoked."
Commenting on articles 1457, 1458, and 1459 of the Civil Code, Manresa
says:
"From this statement of the rule and its relation to the succeeding
articles, these consequences logically follow: (1) That there are no
incapacities except those expressly mentioned in the law and that such
incapacities can not be extended to other cases by implication for the
reason that such construction would be in conflict with the very nature
of the provision; (2) That as a general rule those who can bind
themselves have also legal capacity to buy and sell; (3) That there are
certain exceptions to this rule; (4) That the incapacity to buy or sell may
be absolute or relative; (5) That such incapacity is absolute in the^Jase
of persons who can not bind themselves; (6) That relative incapacity
may exist with reference to certain persons or a certain class of
property." (Manresa, Spanish Civil Code, vol. 10, p. 87.)
Article 1302 of the Civil Code reads:
"The action for nullity of contracts may be brought by those who are
principally or subsidiarily obligated by virtue thereof. Persons
with capacity can not, however, allege the incapacity of those with
whom they contracted; neither those who caused the intimidation or
violence, or employed deceit, or caused the error, can base their action
on these defects of the contract."
Manresa, commenting on the latter article, says:
"Two different requisites are required to confer the necessary capacity
for the exercise of such action. With each of the said requisites the two
paragraphs of this section deal separately. The first requisite is that the
plaintiff must have an interest in the contract. The second is that the
victim and not the party responsible for the defect is the person who
must assert the same." (Manresa, Spanish Civil Code, vol. 8, p. 737.)
"It was declared in a judgment of the 18th of April, 1901, in accordance
with the rule hereinbefore stated, that he who is not a party to
a contract, or an assignee thereunder, or does not represent those who
took part therein, has, under articles 1257 and 1302 of the Civil Code,
no legal capacity to challenge the validity of such contract." (Manresa,
Spanish Civil Code, vol. 8, p. 788.)
In relation to the same matter the supreme court of Spain on the 23d
of November, 1903, published a decision [p. 702] in which appears the
following:
"The judgment appealed from in so far as it declares that the
instrument of dissolution of the partnership between A and B was null
and void for the reason that the plaintiff was not bound, either
principally or subsidiarily, by the said instrument, is contrary to the
provisions of article 1302 of the Civil Code."
Even if the sale of the judgment in question is found comprehended
within the prohibition of article 1459, a question which we do not now
decide, still the defendant is not entitled to invoke the terms of said
article for the reason, above stated, that such prohibition is personal to
the parties to the contract, being available only to them or their
representatives.
For these reasons the judgment of the court below is affirmed without
special finding as to costs.
Rodriguez vs. MactalNature:
This is an appeal from an order of the Court of First Instance of Nueva
Ecija, issued in the intestate proceeding of Mauricia de
Guzman,deceased, denying the motion of the appellants in which they
sought to annula sale, executed January 23, 1926, by the administratrix
Trinidad Mactal, of aparcel of land to Silverio Choco and a resale of the
same land on March 10,1928, to the administratrix Trinidad Mactal.
Facts:
1. The appellants Catalina and Rodriguez, and the appellee Mactal, are
allheirs of Mauricia de Guzman whose estate is under administration
inCFI.2. Appellee Mactal was appointed as administratrix. The committee
of claims submitted a report in which various claims against the estate
wereallowed. The report was approved by the court.3. The
administratrix prayed that she be allowed to sell the only parcel of land
belonging to the estate with an area of 19 hectares for the purposeof
paying debts. This land was a part of a parcel of land of 23 hectares
of which belonged to Rodriguez."4. The court authorized
the administratrix to sell the land. The latter thensold it to Silverio Choco.
Thereafter, the administratrix paid the approvedclaims against the
estate. These payments, all of which were made after the sale in favor of
Silverio Choco, conclusively prove that sale was notfictitious as alleged
by the appellants.5. More than two years later, Choco sold the same land
to the spouses PioVillar and Trinidad Mactal for the sum of P4,500, who
in turn mortgagedit to PNB for the same amount.
Petitioners-
appellant’s contention:
they alleged that this sale wasfictitious, that there was collusion between
Choco and Mactal and that theformer never paid the latter.The
appellants relied on article 1459 of the Civil Code, which
enumeratespersons who cannot take by purchase, i.e. agents and
executors.They insisted that the administratrix bought the land indirectly
through themediation of Choco and that both sales should be annulled
under theprovisions of the article cited above.
Issue:
WON the sale in question should be annulled due to the fact that
it fallsunder the prohibition under article 1459 with respect to purchase
byexecutors/ administrators.
Held:
No.
The proofs in this case do not substantiate this claim of theappellants.
The SC declared that In order to bring the sale in thiscase within the
part of article 1459, quoted above, it is essential thatthe proof
submitted establish some agreement between SilverioChoco and
Mactal to the effect that Choco should buy the propertyfor the benefit
of Mactal. If there was no such agreement, either express or implied,
then the sale cannot be set aside. The evidencebefore this court does
not establish such agreement.
Note: (Additional contention of the appellants)The appellants also
alleged that the order of the court authorizing theadministrator to sell
the land in question is null and void due to the fact themotion of Trinidad
Mactal, praying that she be authorized to sell, was notaccompanied by
the written consent of the heirs or their duly authorizedguardian.The SC
applied Act No. 3882, sec 714 provides that:
Realty may be sold or encumbered
.
—
When there is no personal estate of the deceased or when,though there
be such, its sale would redound to the detriment of the interestsof the
participants in the estate and the deceased has left no
testamentarydisposition for the payment of his debts and charges of
administration, thecourt, on application of the executor or
administrator, and on written notice tothe heirs, devisees, and other
persons interested, may grant him a license tosell, mortgage, or
otherwise encumber for that purpose real estate, if itclearly appears that
such sale, mortgaging or encumbrance would bebeneficial to the persons
interested and will not defeat any devise of land; inwhich case the assent
of the devisee shall be required.
The appealed order of the lower court is affirmed with costs against
theappellants.
GAN TINGCO vs PABINGUITFACTS:
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, toone Gan Tingco. But the purchaser Gan
Tingco was unable totake possession of the six parcels of land sold him
by Acabo,for they were in the possession of Silvino
Pabinguit, whoalleges certain rights therein. He claims to have
purchasedthem from Faustino Abad. Abad had become the
ownerthrough purchase from Henry Gardner.Prior to the purchase made by
Garnder, a judgment has beenrendered against Ancabo as a result of the
complaint filed bySilvestre Basaltos. Because of Ancabo’s failure to
comply, herfixtures and other chattels were levied upon the
order of Gardner being the justice of peace.Public auction sale was executed
and Gardner appeared to bethe highest bidder and was the purchaser of
Candida Acabo'slands 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 topurchase, 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 toSilvino Pabinguit six parcels of
land. The Court of First Instance of Oriental NEgros rendered judgment in
behalf of the plaintiff, Gan Tingco, declaring himt h e o w n e r o f t h e
lands described in the complaint, andordered the de
f e n d a n t , S i l v i n o P a b i n g u i t , t o r e s t o r e t h e plaintiff to their
possession.ibrary The defendant appealed, with the right to a review of th
eevidence. The appeal was heard by this court, it having beenbrought 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
publicauction, Candida Acabo did not cease to be
the owner of these properties, because there were certain irregularities
anddefects in the said auction.
ISSUE:
WON Candida Acabo did not cease to be the owner of the properties despite
certain irregularities and defects in thesaid auction.
HELD:
The trial court was impressed by the circumstancethat in the
public auction the purchaser was the justice of thepeace himself. This,
in the judge's opinion, was unauthorized,because article 1459, No. 5, of the Civil
Code, prohibits judgesfrom acquring by purchase, even at pub;ic or
judicial sale,e i t h e r i n p e r s o n o r b y a n a g e n t ,
a n y p r o p e r t y o r r i g h t s litigated in the court in
the jurisdiction or territory withinwhich they exercise their
respective duties; this prohibitionincludes taking of property by assignment. The
appellant alleges that the property purchased by justiceof the peace
Gardner was not the subject of litigation in the justice court; that the
action was to recover a certain sum
of m o n e y , a n d t h a t h e h a d o r d e r e d t h e p r o p e r t
y s o l d o n execution.chanroblesvirtualawlibrary chanrobles This raises, there
fore, a question as to the true meaning of paragraph 5 of article 1459 of the Civil
Code.in accordance with which the Civil Codewas enacted, provides as
follows
26: The forms, requirements and conditions of each particularc o n t r a c
t shall be determined and defined subject to theg e n
eral list of obligations and their effects, with
t h e understanding that the legislation in force and t
h e l e g a l principles evolved therefrom by judicial decisions, etc.,
etc.,shall serve as basis.One of the bodies of law which conastitute the
legislation nowin force in the. In Law 4, Title 14, Book5 of the same is
found the following provision: "We order thatin public auctions held by
direction of our alcaldes, neither thelatter nor any person whomsoever in their
name shall bid
ina n y t h i n g s o l d a t s u c h p u b l i c
a u c t i o n s . " T h e word alcaldes means judges
. The caption of Title 14 is"
Alcaldes
or Provincial Judges," and the entire title deals withthe 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 exchang
e,trade or porfit with respect to things not the product of
hisown property, within the territory over which
he exercises jurisdiction. Judging from the legal oprecedents on
which theCivil Code is based, it would not seem too much to
concludethat the said article of the Civil Code does not make
anydistinction between property in litigation. In effect, it appearsto be
as delicate a matter for a judge to take part in the saleof property
that had been the subject of ligitgation in hiscourt, as to intervene in
auction of property which, though notdirectly litigated in his court, is
nevertheless levied upon andsold as the result of a writ of execution
issued by him. Whatthe law intends to avoid is the improper interference
with aninterest of a judge in a thing levied upon and sold by
hisorder.virtual law libraryIf under the law Gardner was prohibited from
acquiring
theo w n e r s h i p o f A c a b o ' s l a n d s , t h e n h e c o u l d n
o t h a v e transmitted to Faustino Abad the right of ownership that
hed i d
n o t p o s s e s s ; n o r c o u l d A b a d , t o w h o m t h i s a l l e g e d ow
nership had not been transmitte, have conveyed the sameto Pabinguit.
What Gardner should have done in view of thefact that the sale, as he
finally acknowledged, was void, wasto claim the price that had been
deposited in court, and
the justice of the peace of Guijulngan should have declared theauction
void and have ordered a new sale to be held,
besidesc o r r e c t i n g t h e e r r o r s t h a t h a d b e e n c o m m
itted in t h e proceedings. To the reasons already
stated, there is to beadded the additional one, with respect to the
sale made byFaustino Abad to Silvino Pabinguit, that Abad was a minor
atthe time - a circumstance that deprived him of capacity to sell(Civil
Code, art. 1263). Abad had no ownership to transmit toanyone and,
besides, he had no personality to enable him tocontract by himself, on account
of his lack of legal age. This court finds no reason whatever why it should
not affirmthe judgment appealed from
MACARIOLA VS. ASUNCION, 114 SCRA 77
Posted by kaye lee on 7:44 AM
Macariola Vs. Asuncion 114 SCRA 77
Facts:
On June 8, 1963, respondent Judge Elias Asuncion rendered a decision in
Civil Case 3010 final for lack of an appeal.
On October 16, 1963, a project of partition was submitted to Judge
Asuncion. The project of partition of lots was not signed by the parties
themselves but only by the respective counsel of plaintiffs and petitioner
Bernardita R. Macariola. The Judge approved it in his order dated
October 23, 1963.
One of the lots in the project of partition was Lot 1184, which was
subdivided into 5 lots denominated as Lot 1184 A – E. Dr. Arcadio
Galapon bought Lot 1184-E on July 31, 1964, who was issued transfer of
certificate of Title No, 2338 of the Register of Deeds of Tacloban City. On
March 6, 1965, Galapon sold a portion of the lot to Judge Asuncion and
his wife.
On August 31, 1966, spouses Asuncion and Galapon conveyed their
respective shares and interest inn Lot 1184-E to the Traders
Manufacturing & Fishing Industries Inc. Judge Asuncion was the
President and his wife Victoria was the Secretary. The Asuncions and
Galapons were also the stockholder of the corporation.
Respondent Macariola charged Judge Asuncion with "Acts unbecoming a
Judge" for violating the following provisions: Article 1491, par. 5 of the
New Civil Code, Article 14, par. 1 & 5 of the Code of Commerce, Sec. 3
par H of RA 3019 also known as the Anti-Graft & Corrupt Practice Act.,
Sec. 12, Rule XVIII of the Civil Service Rules and Canon 25 of the Canons
of Judicial Ethics.
On November 2, 1970 a certain Judge Jose D. Nepomuceno dismissed the
complaints filed against Asuncion.
Issue:
Whether or Not the respondent Judge violated the mentioned
provisions.
Ruling:
No. Judge Asuncion did not violate the mentioned provisions constituting
of "Acts unbecoming a Judge" but was reminded to be more discreet in
his private and business activities.
Respondent Judge did not buy the lot 1184-E directly on the plaintiffs in
Civil Case No. 3010 but from Dr. Galapon who earlier purchased the lot
from 3 of the plaintiffs. When the Asuncion bought the lot on March 6,
1965 from Dr. Galapon after the finality of the decision which he
rendered on June 8, 1963 in Civil Case No 3010 and his two orders dated
October and November, 1963. The said property was no longer the
subject of litigation.
In the case at bar, Article 14 of Code of Commerce has no legal and
binding effect and cannot apply to the respondent. Upon the sovereignty
from the Spain to the US and to the Republic of the Philippines, Art. 14
of this Code of Commerce, which sourced from the Spanish Code of
Commerce, appears to have been abrogated because whenever there is
a change in the sovereignty, political laws of the former sovereign are
automatically abrogated, unless they are reenacted by Affirmative Act of
the New Sovereign.
Asuncion cannot also be held liable under the par. H, Sec. 3 of RA 3019,
citing that the public officers cannot partake in any business in
connection with this office, or intervened or take part in his official
capacity. The Judge and his wife had withdrawn on January 31, 1967 from
the corporation and sold their respective shares to 3rd parties, and it
appears that the corporation did not benefit in any case filed by or
against it in court as there was no case filed in the different branches of
the Court of First Instance from the time of the drafting of the Articles of
Incorporation of the corporation on March 12, 1966 up to its
incorporation on January 9, 1967. The Judge realized early that their
interest in the corporation contravenes against Canon 25.
PAULINO VALENCIA vs. ATTY. ARSENIO FERCABANTINGFACTS:
In 1933, complainant Paulino Valencia and hiswife allegedly bought a parcel of land,
where they builttheir house, from a certain Serapia Raymundo, an heirof Pedro
Raymundo the original owner. However, theyfailed to register the sale or secure a
transfercertificate of title in their names. A conference washeld in the
house of Atty. Eduardo Jovellanos to settlethe land dispute between Serapia
and the Valenciaspouses. Serapia was willing to relinquish ownership if the Valencias
could show documents evidencingownership. Paulino exhibited a deed of sale written
inthe Ilocano dialect. However, Serapia claimed that thedeed
covered a different property. Serapia, assistedby Atty. Arsenio Fer. Cabanting, filed a
complaintagainst Paulino for the recovery of possession withdamages. The
Valencias engaged the services of Atty.Dionisio Antiniw. Atty. Antiniw advised
them to presenta notarized deed of sale in lieu of the private documentwritten in Ilocano.
For this purpose, Paulino gave Atty.Antiniw an amount of P200.00 to pay the person
whowould falsify the signature of the alleged vendor. A"Compraventa Definitiva" as a
result thereof. The Court of First Instance of Pangasinan, rendered adecision
in favor of Serapia. Paulino filed a Petitionfor
Certiorari
with Preliminary Injunction before the CA.While the petition was pending, the TC issued
an orderof execution stating that "the decision in this case hasalready
become final and executory".On March 20, 1973, Serapia sold 40 square meters of the
litigated lot to Atty. Jovellanos and the remainingportion she sold to her
counsel, Atty. Arsenio Fer.Cabanting, on April 25, 1973. Paulino filed adisbarment
proceeding against Atty. Cabanting on theground that said counsel allegedly violated
Article1491 of the New Civil Code as well as Article II of theCanons of Professional Ethics,
prohibiting the purchaseof property under litigation by a counsel. The appellatecourt
dismissed the petition of Paulino.Constancia Valencia, daughter of Paulino, also filed
adisbarment proceeding against Atty. Dionisio Antiniwfor his participation in the forgery
and its subsequentintroduction as evidence for his client; and also,against Attys. Eduardo
Jovellanos and ArsenioCabanting for purchasing a litigated property allegedlyin violation
of Article 1491 of the New Civil Code; andagainst the three lawyers, for allegedly rigging
thecase against her parents.
ISSUES:(issue 1 lang ang connected pero iapil nlng nakoang uban basig
pangutaon)
I . W h e t h e r o r n o t A t t y . C a b
a n t i n g p u r c h a s e d the subject property in violation of
Art. 1491 of theNew Civil
Code.I I . W h e t h e r o r n o t A t t
y s . A n t i n i w a n d Jovellanos are guilty of
malpractice in falsifyingnotarial documents.
III.
Whether or not the three lawyers connivedin rigging the case against spouses Valencia.
HELD:
Under Article 1491 of the New Civil Code: The followingpersons cannot acquire by
purchase, even at a publicof judicial auction, either in person or through themediation of
another: (5) . . . this prohibition includesthe act of acquiring by assignment and shall apply
tolawyers, with respect to the property and rights whichmay be the object
of any litigation in which they maketake part by virtue of their profession. Public
policyprohibits the transactions in view of the fiduciaryrelationship involved. It is
intended to curtail anyundue influence of the lawyer upon his client. Greedmay
get the better of the sentiments of loyalty anddisinterestedness. Any violation
of this prohibitionwould constitute malpractice and is a ground forsuspension. Art. 1491,
prohibiting the sale to thecounsel concerned, applies only while the litigation
ispending.In the case at bar, while it is true that Atty. Arsenio Fer.Cabanting
purchased the lot after finality of judgment ,there was still a pending
Certiorari proceeding. A thingis said to be in litigation not only if there is somecontest
or litigation over it in court, but also from themoment that it becomes
subject to the judicial actionof the judge. Logic indicates, in
Certiorari proceedings,that the appellate court may either grant or dismissthe
petition. Hence, it is not safe to conclude, forpurposes under Article 1491 that
the litigation hasterminated when the judgment of the trial courtbecome final while a
Certiorari connected therewith isstill in progress. Thus, purchase of the property byAtty.
Cabanting in this case constitutes malpractice inviolation of Art. 1491 and the Canons of
ProfessionalEthics. Clearly, this malpractice is a ground forsuspension. The sale
in favor of Atty. Jovellanos doesnot constitute malpractice. There was
no attorney-client relationship between Serapia and Atty. Jovellanos, considering
that the latter did not take partas her counsel. The transaction is not covered by
Art.1491 nor by the Canons adverted to