Dizon vs CA and Overland Express Lines January 28, 1999
FACTS:
Overland Express Lines, Inc. entered into a Contract of Lease with Option to Buy with petitioners involving a 1,755.80 square meter parcel of land situated at corner MacArthur Highway and South “H” Street, Diliman, Quezon City. The term of the lease was for 1 year commencing from May 16, 1974 up to May 15, 1975. During this period, Overland Express Lines was granted an option to purchase for the amount of P3,000.00 per square meter. Thereafter, the lease shall be on a per month basis with a monthly rental of P3,000.00. For failure of Overland Express Lines to pay the increased rental of P8,000.00
per month effective June 1976, petitioners filed an action for ejectment against it. The lower court rendered judgment ordering Overland Express Lines to vacate the leased premises and to pay the sum of P624,000.00 representing rentals in arrears and/or as damages in the form of reasonable compensation for the use and occupation of the premises during the period of illegal detainer from June 1976 to November 1982 at the monthly rental of P8,000.00, less payments made, plus 12% interest per annum from November 18, 1976, the date of filing of the complaint, until fully paid, the sum of P8,000.00 a month starting December 1982, until Overland Express Lines fully vacates the premises, and to pay P20,000.00 as and by way of attorney’s fees.
ISSUE: WON Overland Express Lines actually paid the alleged P300,000.00 to Fidela Dizon, as representative (agent) of petitioners in consideration of the option
HELD: No.
CA opined that the payment by Overland Express Lines of P300,000.00 as partial payment for the leased property, which petitioners accepted (through Alice A. Dizon) and for which an official receipt was issued, was the operative act that gave rise to a perfected contract of sale, and that for failure of petitioners to deny receipt thereof, Overland Express Lines can therefore assume that Alice A. Dizon, acting as agent of petitioners, was authorized by them to receive the money in their behalf. CA went further by stating that in fact, what was entered into was a “conditional contract of sale” wherein ownership over the leased property shall not pass to the Overland Express Lines until it has fully paid the purchase price. Since Overland Express Lines did not consign to the court the balance of the purchase price and continued to occupy the subject premises, it had the obligation to pay the amount of P1,700.00 in monthly rentals until full payment of the purchase price. In an attempt to resurrect the lapsed option, Overland Express Lines gave
P300,000.00 to petitioners (thru Alice A. Dizon) on the erroneous presumption that the said amount tendered would constitute a perfected contract of sale pursuant to the contract of lease with option to buy. There was no valid consent by the petitioners (as co-owners of the leased premises) on the supposed sale entered into by Alice A. Dizon, as petitioners’ alleged agent, and Overland Express Lines. The basis for agency is representation and a person dealing with an agent is put upon inquiry and must discover upon his peril the authority of the agent. As provided in Article
1868 of the New Civil Code, there was no showing that petitioners consented to the act of Alice A. Dizon nor authorized her to act on their behalf with regard to her transaction with private respondent. The most prudent thing private respondent should have done was to ascertain the extent of the authority of Alice A. Dizon. Being negligent in this regard, private respondent cannot seek relief on the basis of a supposed agency.
Every person dealing with an agent is put upon inquiry and must discover upon his peril the authority of the agent. If he does not make such inquiry, he is chargeable with knowledge of the agent’s authority, and his ignorance of that authority will not be any excuse. Persons dealing with an assumed agency, whether the assumed agency be a general or special one, are bound at their peril, if they would hold the principal, to ascertain not only the fact of the agency but also the nature and extent of the authority, and in case either is controverted, the burden of proof is upon them to establish it.
Fule vs. Court of Appeals March 2, 1998
Romero, J.: Facts:
Gregorio Fule a banker and jeweler, acquired a 10-hectare property to be called “Tanay Property”. It used to be in the name of Fr. Antonio Jacobe but it was mortgage to the bank where petitioner worked as corporate secretary. Upon failure of Fr. Jacobe to pay, the “Tanay Property” was foreclosed and sold at public auction.
Since petitioner was the corporate secretary of the bank which foreclosed the property, petitioner sought the help of Dichoso and Mendoza to look for a buyer. They found one in the person of Dr. Cruz.
Dr. Cruz was the owner of a pair of diamond earrings which the petitioner found to be at a value of Php 100,000. Later, petitioner offered to buy the earrings for $6,000 at the rate of Php 25 for every $1. Dr. Cruz still declined stating that the real price is Php 19 to $1.
Later, negotiations for a barter ensued. Petitioner would sell the Tanay Property while Dr. Cruz would give the petitioner the diamond earrings.
October 19, 1984, Dr. Cruz was already amendable to the barter so petitioner went over to check the jewelry. In the afternoon of October 23, 1984, petitioner met Atty.
Belarmino to prepare the deed of sale. Petitioner then signed this the following day and went over to the bank to get the jewelries. Upon inspecting the jewelries, petitioner was satisfied and left at around 6 p.m. that day. However, 2 hours later, at 8 p.m. petitioner went over to the house of Atty. Belarmino and told the latter that the jewelries involved in the barter were fake. A jeweler by the name of Macario Dimayuga confirmed that said earrings were fake.
The lower court held that the sale was valid, and this was affirmed by the CA. Issue / Held:
WON the CA erred in upholding the validity of the sale. NO. Ratio:
- Contracts are perfected by mere consent. 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. It is evident from the facts that there was a meeting of the minds between the petitioner and Dr. Cruz.
- Annullable contracts are those where in the parties are: 1. Incapable of giving consent to a contract, and
2. Those where the consent is vitiated by mistake violence, intimidation, undue influence or fraud.
- Petitioner alleges that since the jewelry turned out to be counterfeit, his consent was vitiated by fraud. But the SC held that it was petitioner who acted in bad faith. He had the opportunity to examine the jewelry many times before he actually took them in his possession. It was only after 2 hours, where a
switch between the genuine and fake diamonds did he call the attention of the respondent to the fact that the diamonds were fake.
- Moreover, the court held that 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 deliver thereof. WHEREFORE, Decision of the CA is AFFIRMED.
*there is another issue regarding moral and nominal damages in the case. This case is under “barter” in the outline. So, you think I should add that issue still?
Celestino Co & Co. v. Collector of Internal Revenue August 31, 1956
Bengzon, J. Relevant Provision:
Art. 1467. 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.
Facts:
Celestino Co & Company is a duly registered general co-partnership doing business under the trade name of “Oriental Sash Factory”
From 1946 to 1951, it paid percentage taxes of 7% on the gross receipts of its sash, door and window factory.
o In accordance with section 186 of the National Revenue Code In 1952, it began to claim liability only to the contractor’s 3%
o Under section 191 of same code
Petitioner claims that they produce doors and windows specially for certain clients only
o Petitioner presents letters, sketches of doors and windows and price quotations sent by the manager of the factory to four customers who allegedly made special orders for doors and windows from the said factory.
o (Hence, would be a Contract for a Piece of Work)
Issue/Held:
WON Petitioner’s business is involved in contracts for pieces of work. / NO. It is involved in contracts of sale.
Ratio:
“Any builder or homeowner, with sufficient money, may order windows or doors of the kind manufactured by this appellant.”
“That the doors and windows must meet desired specifications is neither here nor there.”
o “If theses specifications do not happen to be of the kind habitually manufactured by the appellant – special forms of sash, mouldings or panels – it would not accept the order – and no sale is made.”
In relation to Art. 1467 of the Civil Code:
o “It is apparent that the Oriental Sash Factory did not merely sell its services to Don Toribio Teodoro & Co (claimed special client) because it also sold the materials.”
“It sold materials ordinarily manufactured by it, although in such form or combination as suited the fancy of the purchaser.”
“Although the Factory does not, in the ordinary course of its business, manufacture and keep on stock doors of the kind sold to Teodoro, it could stock and/or probably hand in stock the sash, mouldings and panels it used therefor.”
Dispositive:
Appealed decision affirmed. Celestino Co & Company must pay percentage taxes of 7% on the gross receipts of its sash, door and window factory in accordance with sec. 186 of the National Revenue Code and NOT as a contractor under sec. 191.
Commissioner v Engineering Equipment
COMMISSIONER OF INTERNAL REVENUE vs. ENGINEERING EQUIPMENT G.R. No. L-27044 June 30, 1975
Facts:
Engineering Equipment and Supply Co., an engineering and machinery firm, is engaged in the design and installation of central type air conditioning system, pumping plants and steel fabrications.
CIR received an anonymous letter denouncing Engineering for tax evasion by misdeclaring its imported articles and failing to pay the correct percentage taxes due thereon in connivance with its foreign suppliers. Engineering was likewise denounced to the Central Bank (CB) for alleged fraud in obtaining its dollar allocations. So, NBI and Central Bank conducted a raid and search on which occasion voluminous records of the firm were seized and confiscated. CIR also reported about deficiency advance sales tax. CIR assessed against the Company payment of the increased amount and suggested that P10,000 be paid as compromise in extrajudicial settlement of the Company’s penal liability for violation of the Tax Code. The firm, however, contested the tax assessment and requested that it be furnished with the details and particulars of the Commissioner’s assessment.Engineering appealed the case to the Court of Tax Appeals. During the pendency of the case the investigating revenue examiners reduced the Company’s deficiency tax. CTA declared that Engineering is a contractor and is exempt from deficiency manufacturers sales tax. The Commissioner, not satisfied with the decision of the CTA, appealed to the Supreme Court.
Issue:
1) WON Engineering Equipment is a manufacturer or contractor? CONTRACTOR. 2) Corrollarily WON the installation of a centralized air-conditioning system a contact of sale or a contract for piece of work? CONTRACT FOR PIECE OF WORK. 3) Is Celestino Co vs. CIR case applicable in this case? NO.
1)
The word “contractor” has come to be used with special reference to a person who, in the pursuit of the independent business, undertakes to do a specific job or piece of work for other persons, using his own means and methods without submitting himself to control as to the petty details. The true test of a contractor is that when he renders service in the course of an independent occupation, representing the will of his employer only as to the result of his work, and not as to the means by which it is accomplished.
Engineering did not manufacture air conditioning units for sale to the general public, but imported some items (as refrigeration compressors in complete set, heat exchangers or coils) which were used in executing contracts entered into by it. Engineering undertook negotiations and execution of individual contracts for the design, supply and installation of air conditioning units of the central type taking into consideration in the process such factors as the area of the space to be air conditioned; the number of persons occupying or would be occupying the premises; the purpose for which the various air conditioning areas are to be used; and the sources of heat gain or cooling load on the plant such as sun load, lighting, and other electrical appliances which are or may be in the plan. Relative to the installation of air conditioning system, Engineering designed and engineered complete each particular plant and that no two plants were identical but each had to be engineered separately.
2)
NATURE OF OBJECT TEST:
The distinction between a contract of sale and one for work, labor and materials is tested by the inquiry whether the thing transferred is one NOT in existence and which never would have existed but for the order of the party desiring to acquire it, or a thing which would have existed and has been the subject of sale to some other persons even if the order had not been given. 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 defendant’s request, it is a contract of sale, even though it may be entirely made after, and in consequence of, the defendants order for it.
The air conditioning units installed in a central type of air conditioning system would not have existed but for the order of the party desiring to acquire it and if it existed without the special order of Engineering’s customer, the said air conditioning units were not intended for sale to the general public. Hence, it is a contract for a piece of work. 3)
Celestino Co compared to Engineering Equipment:
Points of discussion: 1) Advertisement as manufacturer/contractor 2) Ready-made materials
In Celestino Co, the Court held the taxpayer to be a manufacturer rather than a contractor of sash, doors and windows manufactured in its factory. From the very start, Celestino Co intended itself to be a manufacturer of doors, windows, sashes etc. as it did
register a special trade name for its sash business and ordered company stationery carrying the bold print “ORIENTAL SASH FACTORY.” As a general rule, sash factories receive orders for doors and windows of special design only in particular cases, but the bulk of their sales is derived from ready-made doors and windows of standard sizes for the average home, which “sales” were reflected in their books of accounts totalling P118,754.69 for the period of only nine (9) months. The Court found said sum difficult to have been derived from its few customers who placed special orders for these items. In the present case, the company advertised itself as Engineering Equipment and Supply Company, Machinery Mechanical Supplies, Engineers, Contractors and not as
manufacturers. It likewise paid the contractors tax on all the contracts for the design and construction of central system. Similarly, it did not have ready-made air conditioning units for sale.
Quiroga vs Parsons (1918) J. Avancena
1. Quiroga and Parsons entered into a contract with the following conditions: a. Mr. Quiroga shall manufacture beds and shall invoice them at the
same price he has fixed for sales in Manila + 25% commission on the sale + Parsons shall order the beds by the dozen
b. Parsons shall pay within a period of 60 days from shipment date c. Transpo + Shipment expenses = Quiroga; Freight + insurance and
Unloading cost = Parsons
d. If before an invoice falls due, Quiroga should request its payment, the same will be considered as prompt payment = 2% deduction from invoice amount
e. Quiroga shall give 15 days’ notice for any price alteration he wants f. Parsons shall not sell other beds than the Quiroga beds
g. Quiroga assumes the obligation to offer and give preference to Parsons in case anyone should apply for the exclusive agency outside Visayas
h. Parsons can sell the bed in any part of the Philippines where there are no exclusive agents
i. Contract is for an unlimited period and may be terminated by either contracting parties by a previous 90 day notice.
2. Quiroga filed a complaint against Parsons for allegedly violating portions of their agreement. With the exception of ‘not ordering beds by the dozen’, none of the obligations imputed to Parsons are expressly set forth in the contract.
a. Quiroga: The obligations we agreed upon are implied in a contract of commercial agency so Parsons should have followed his obligations dutifully as my agent.
3. SC:
a. Is this a contract of agency or a contract of sale? CONTRACT OF SALE!
i. In order to classify a contract, due regard must be given to its essential clauses.
ii. APPLICATION: In the contract in question, what was essential, as its cause and subject matter, is that Parsons was to pay the price in the manner stipulated. The price agreed upon was determined by Quiroga with certain discounts if applicable. Payment was to be made at the end of 60 days, or at Quiroga’s request subject to a 2% discount for prompt payment.
iii. ^ These are essentially the features of a contract of purchase and sale. There was the obligaton on the part of Quiroga to furnish the beds and there was obligation on the part of Parsons to pay the price.
1. These features exclude the legal conception of an agency or order to sell whereby the agent received the thing to sell it and does not pay the price, but delivers to the principal the price he obtains from the sale of a thing to 3rd person, and if he does not succeed in selling it, he returns it.
iv. Debunking Quiroga: After examining the clauses of the contract, none of the single clauses conveys the idea of agency.
1. The word commission on sales merely means a discount in price
2. The word agency only expresses the idea that it was only Parsons who could sell the beds in the Visayan Islands
3. Re: Other clauses They are not incompatible with the contract of purchase and sale
4. Re: Testimony of Former VP of Parsons who allegedly drafted the said contract Well, he really is not the one who drafted according to Parson’s evidence + supposing he is, then he is mistaken for thinking that what he is drafting is a contract of agency.
a. Contract is what the law defines it to be not what the parties call it.
5. Re: Quiroga’s argument that it was agency because Parsons returned the beds it could not sell Mutual tolerance in the performance of their duties under the contract
6. Re: Parsons’ Obligation to order by the dozen If breached, then Quiroga could just disregard Parson’s order but if he consents then he cannot complain anymore because ha acted of his own free will.
Puyat v. Arco Date: June 20, 1941 Ponente: Laurel, J. Parties:
Gonzalo Puyat & Sons, Inc., petitioner
Arco Amusement Company (formerly known as Teatro Arco), respondent Topic: Agency to buy or sell
FACTS:
Arco (respondent) brought an action against Puyat (petitioner) in the CFI Manila to secure a reimbursement of certain amounts allegedly overpaid by it on account of the purchase price of sound producing equipment and machinery from Starr Piano Company of Indiana, USA. 1929: “Teatro Arco”, a corporation organized under Phil. laws, was
engaged in the business of operating cinematographs
1930: Its name was change to Arco Amusement Company. About the same time, Gonzalo Puyat & Sons, Inc, another corporation, was acting as exclusive agents in the Phils for Starr Piano Company (dealth with cinematograph equipment and machinery).
Arco then approached Puyat, desiring to purchase equipment from Starr Piano. Through their respective representatives, Arco agreed to order sound producing equipment from Starr Piano, with an
additional 10% commission + expenses (freight, insurance banking charges, cables, etc.) to Puyat.
Puyat sent a cable to Starr Piano inquiring about the price. A reply was received stating the list price of “$1700 f.o.b. factory Richmond, Indiana”. Puyat did not show Arco the letters but merely informed Arco that the price is $1700, to which the latter agreed to.
1929: Equiment arrived and the price of $1700, commission, and all the other expenses were paid upon delivery.
1930: Another transaction occurred for the purchase of another sound producing equipment. $1600, commission and other expenses were duly paid.
Three years later: Arco learned about a civil case filed by one Fidel Reyes against Puyat, and discovered that the price relayed to them by the latter was not the net price, but the list price and that the latter was able to obtain a discount as well. This prompted them to obtain a reimbursement and file the present action.
TC: absolved Puyat. The contract was one of “outright purchase and sale.”
CA: held that the relation between Puyat and Arco was that of “agent and principal” and sentenced Puyat to pay for the alleged
overpayments. CA further argued that even if the contract was one of purchase and sale, the petitioner was guilty of fraud in concealing the true price, hence, would still be liable for reimbursements.
Hence, present petition. ISSUE:
Whether the contract was one of purchase and sale, or that of agency HELD:
PURCHASE AND SALE. Hence. Puyat is not bound to pay reimbursements.
The terms of the contract between them are clear and admit of no other interpretation than that the respondent agreed to purchase from the petitioner the equipment in question at the prices indicated which are fixed and determinate.
The respondent even admitted that the petitioner agreed to “sell” to it the sound producing equipment and machinery.
Also, in agency, the agent would be exempted from all liability in the discharge of his commission as long as he acts in accordance with the instructions received from his principal (Sec. 254, Code of
Commerce), and the principal would even be liable to indemnify the agent for damages the latter may incur in carrying out the agency without fault or imprudence on his part (Art. 1729, CC). Such is not the case here.
The 10% commission received by Puyat does not make the latter an agent because this is only an additional price which Arco bound itself to pay. Such stipulation is not incompatible with the contract of purchase and sale.
Furthermore, Puyat is already the agent of Starr Piano in the Phils. It is out of the ordinary for one to be the agent of both the vendor and the purchaser.
“The respondent could not secure equipment and machinery
manufactured by Starr Piano except from Puyat alone; it willingly paid the price quoted; it received the equipment and machinery as
represented; and that was the end of the matter as far as respondent was concerned.”
The fact that Puyat more or less profit than Arco calculated before entering into the contract is no ground for rescission.
Not every concealment is fraud; and short of fraud, it were better that, within certain limits, business acumen permit of the loosening of the sleeves and of the sharpening of the intellect of men and women in the business world.
DAO HENG BANK, INC (now Banco de Oro Universal Bank) v. LAIGO Carpio Morales, J.
November 20, 2008 Relevant Law:
Art. 1245: Dation in payment, whereby property is alienated to the creditor in satisfaction of a debt in money shall be governed by the law of sales.
FACTS:
Spouses Lilia and Reynaldo Laigo obtained loans from Dao Heng Bank in the amount of 11M to secure the payment of which they forged 3 real estate mortgages covering 2 parcels of land
The loans were payable within 12 months from the execution of the promissory notes covering the loans.
By 2000, respondents failed to settle their outstanding obligation drawing them to verbally offer to cede to Dao Heng one of the two mortgage lots by way of dacion en pago. The land has been appraised but there was no further action.
Dao Heng was later to demand the settlement of the obligation (10,385,109). Upon non-payment, Dao Heng filed an application to foreclose the real estate mortgage. The properties were sold for 10,776,242 to Banco de Oro Universal Bank, the highest bidder.
The spouses move to redeem the property and Dao Heng Bank proposed the redemption scheme as follows:
Redemption price shall be 11.5M plus 12% interest based on diminishing balance payable in staggered payments up to January 2, 2002.
3M to be paid immediately upon receipt of this approval (see case for other conditions)
Nothing was heard from the respondents hence the bank proceeded to consolidate the titles immediately after the expiration of the redemption period
Six days before the expiration of the redemption period, the respondents filed a complaint with the RTC praying for the annulment of the foreclosure of the properties and for them to be allowed “to deliver by way of ‘dacion en pago’ one of the mortgaged properties as full payment of their mortgaged obligation”
The spouses claim that Dao Heng verbally agreed to enter into a dacion en pago, while Dao Heng said that there was no meeting of the minds between the parties for the settlement of the claim by dacion en pago. Hence, the bank moved to dismiss the complaint because it is unenforceable under the Statute of Frauds (must be in writing). The spouses, on the other hand, argued that the delivery of the titles to the mortgaged properties constituted partial performance of their obligation under the dacion en pago, taking it out of the coverage of the Statute of Frauds.
ISSUE: WON there was a valid dacion en pago.
HELD: No. There was no common consent between the parties. Dao Heng Bank found the offer to settle by way of daccion not acceptable and thus, it opted to foreclose on the mortgage.
RATIO:
Dacion en pago as a mode of extinguishing an existing obligation partakes of the nature of sale whereby the property is alienated to the creditor in satisfaction of a debt in money. It is an objective novation of the obligation, hence, common consent is required.
In dacion en pago, the debtor offers another thing to the creditor who accepts it as equivalent for payment of an outstanding debt. It partakes of a nature of a sale, the creditor buying the property of the debtor, hence the elements of a sale (consent, object, cause or consideration) must be present.
In dacion en pago, what actually takes place 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 the purchase price.
In any case, common consent is an essential prerequisite be it a sale or novation to have the effect of totally extinguishing the debt or obligation.
Being likened to that of a contract of sale, it is governed by the law of sales. Hence, the partial execution of the contract of sale takes it out of the provisions of the Statute of Frauds so long as the essential requisites of consent, object and cause concur. However, in this case, there is no showing that after the appraisal of the property, the bank approved of the proposal. The delivery of the title is the usual condition sine qua non to the execution of the mortgage.
Luzon Brokerage v. Maritime Building January 31, 1972
J. JBL Reyes Facts:
- 1949: Defendant Myers Building Co. entered into a “Deed of Conditional Sale” in favor of Bary Building co. (later known as Maritime Building Co.) for the sale of 3 parcels of land in Manila
o PhP 1M
o PhP 50k paid upon the execution of the said contract; The balance to be paid in monthly instalments of PhP 10k, with 10% interest per annum until fully paid
o Paragraph O: In case of failure to pay any instalment, the contract shall be annulled at the option of the vendor and all payments already made shall be forfeited + vendor has the right to re-enter and take possession of the property
- Monthly instalment was amended to PhP 5k per month and interest was raised to 5.5% p.a.
- Monthly instalments were regularly paid until 1961: Maritime requested for a moratorium on the monthly payments until the end of 1961 = difficulties in connection with the warehouse business
o Board of directors rejected the request for suspension of payments - Maritime failed to pay for the months of April and May 1961; May 1961: Myers
demanded payment for instalments that were due and demandable
- June 1961: Myers wrote to Maritime advising it of the cancellation of the Deed of Conditional Sale entered into between them and demanded possession - Myers demanded upon Luzon Brokerage (to whom Maritime leased the
properties) payment of monthly rentals of PhP 10k and the surrender of the same to it -> Luzon found itself in a payment to the wrong party = filed action for interpleader against Maritime
- Myers filed an action against Maritime, praying for the confirmation of its right to cancel said contract
o Maritime contends: (1) Myers cannot cancel the contract extrajudicially; (2) not failed to pay monthly payments
- Trial Court: Maritime = breach of contract -> Myers entitled to terminate said contract + forfeit prior instalments + repossess building + collect rentals from Luzon Brokerage
Issue/Held: WON Myers was entitled to extrajudicially rescind the contract [YES] Ratio:
- Default not made in good faith
o Letter of Maritime to Myers Co. = non-payment of installments was the result of a deliberate course of action, designed to coerce Myers
Co. into answering for an alleged promise of the late FH Myers to indemnify Schedler (Majority stock holder of Myers Co)
o Attempt to burden Myers Building Co. with an uncollectible debt since the enforcement of the estate of FH Myers was already barred o Breach of contract tainted with fraud or malice
o Being in bad faith, Maritime is not entitled to ask the court for more time to make payment, effectively removing the breach or default - Irrelevant if breach is casual or serious
o Manuel v. Rodriguez: Contracts to sell -> full payment is a positive suspensive condition, failure of which is not a breach (casual or serious) but an event that prevented the obligation of the vendor to convey the title from acquiring binding force [Art. 1117 of Old Civil Code]
- Re: Extrajudicial Rescission
o Court cited actual terms in the contract: “should the VENDEE fail to pay any of the monthly instalments when due xxx then this Deed of Conditional Sale SHALL AUTOMATICALLY and WITHOUT ANY FURTHER FORMALITY, become NULL AND VOID xxx”
o Cited UP v. De Los Angeles: “The party who deems the contract violated may consider it resolved or rescinded, and act accordingly, without previous court action, but it proceeds at its own risk”
Title: Dignos v CA Date: Feb. 29, 1988 Ponente: Bidin, J. Facts:
The Dignos spouses were owners of a parcel of land. On June 7, 1965, petitioners, Dignos spouses, sold the said parcel of land to respondent Atilano J. Jabil for the sum of
P28,000.00, payable in two installments, with an assumption of indebtedness with the First Insular Bank of Cebu in the sum of P12,000.00, which was paid and acknowledged by the vendors in the deed of sale executed in favor of Jabil, and the next installment in the sum of P4,000.00 to be paid on or before September 15, 1965.
On November 25, 1965, the Dignos spouses sold the same land in favor of the spouses, Luciano Cabigas and Jovita L. De Cabigas, who were then U.S. citizens, for the price of P35,000.00. A deed of absolute sale was executed by the Dignos spouses in favor of the Cabigas spouses.
As the Dignos spouses refused to accept from Jabil the balance of the purchase price of the land, and as he discovered the second sale made by the spouses to the Cabigas spouses, Jabil brought the present suit.
Issue:
I. Whether or not subject contract is a deed of absolute sale or a contract Lot sell. DEED OF SALE!
Ratio:
Petitioners argue it was a contract to sell subject to the suspensive condition of full payment of the price.
Untenable.
‘Thus, it has been held that a deed of sale is absolute in nature although denominated as a "Deed of Conditional Sale" where nowhere in the contract in question is a proviso or stipulation to the effect that title to the property sold is reserved in the vendor until full payment of the purchase price, nor is there a stipulation giving the vendor the right to unilaterally rescind the contract the moment the vendee fails to pay within a fixed period.
A careful examination of the contract shows that there is no such stipulation reserving the title of the property on the vendors nor does it give them the right to unilaterally rescind the contract upon non-payment of the balance thereof within a fixed period. ‘On the contrary, all the elements of a valid contract of sale under Article 1458 of the Civil Code, are present, such as: (1) consent or meeting of the minds; (2) determinate subject matter; and (3) price certain in money or its equivalent. In addition, Article 1477 of the same Code provides that "The ownership of the thing sold shall be transferred to the vendee upon actual or constructive delivery thereof."’
Moreover, though there was no constructive delivery, the Deed of Sale being a private instrument, there was actual delivery, as evidenced by the delivery of the Dignos spouses
of the land to Jabil, then on which the latter constructed a beach resort called “Jabil’s Beach Resort.”
Medina v. Collector of Internal Revenue January 28, 1961
Reyes, JBL Facts:
-Petitioner Medina married Antonia Rodriguez. Before 1946, the spouses had neither property nor business of their own. Later, however, petitioner acquired forest,
concessions in the municipalities of San Mariano and Palanan in the Province of Isabela. From 1946 to 1948, the logs cut and removed by the petitioner from his concessions were sold to different persons in Manila through his agent, Mariano Osorio.
- Antonia started getting into the lumber business as well. Husband sold to her logs from San Mariano. She also sold in Manila these logs through agent, Osorio. The proceeds were, upon instructions from petitioner, either received by Osorio for petitioner or deposited by said agent in petitioner's current account with the Philippine National Bank.
- Collector considered sale by Mrs. Medina as petitioner’s original sales taxable under the Sec. 186 of National Internal Revenue Code (deficiency sales tax, surcharges) citing that sales made by husband to wife was null and void pursuant to Art. 1490/
- Petitioner resisted saying he has an agreement of complete separation of properties and assessment for years 46-52 had already prescribed.
Court of Tax Appeals- Ruled no such premarital agreement between the spouses and sale of husband to his wife was fictitious, simulated and not bona fide.
ISSUE: WON there was really a prenuptial agreement of complete separation of property between the spouses? NO
WON sales made by the petitioner to his wife could be considered as his original taxable sales under the provisions of Section 186 of the National Internal Revenue Code? YES because sale between spouses is null and void
RATIO:
- On the first issue, at the time of their marriage they had neither property nor business to be the subject of such premarital agreement. They also could not say their agreement was recorded in the Registry of Property, due to the above fact (also not reflected on the records). Also, they have been acting otherwise to their claim. Ownership, usufruct and administration of business all by husband. This allegation was also made late, after they were informed of the CC
prohibition.
- 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 of Tax Appeals committed no error.
CORNELIA MATABUENA vs. PETRONILA CERVANTES
Note: This case is incredibly hard to find (none can be found anywhere). Presented here are patched up digests I got from various sources from the Internet. I
apologize!
L-2877 (38 SCRA 284) March 31, 1971
FACTS: In 20 February 1956, herein appellant’s brother Felix Matabuena donated a piece of lot to his common-law spouse, herein appellee Petronila Cervantes (she accepted). Felix and Petronila got married only in 1962 or six years after the deed of donation was executed.
Five months later, or September 13, 1962, Felix died. Thereafter, appellant Cornelia Matabuena, by reason of being the only sister and nearest collateral relative of the deceased, filed a claim over the property, by virtue of a an affidavit of self-adjudication executed by her in 1962, had the land declared in her name and paid the estate and inheritance taxes thereon.
Cornelia (plaintiff-appellant), sister of Felix Matabuena maintains that the donation made by Felix to Petronila Cervantes (defendant-appellee) was void because they were living without the benefit of marriage (common law marriage). This is in pursuant to Article 133 of Civil Code which provides "Every donation between the spouses during the marriage shall be void. On 23 November 1965, the lower court upheld the validity of the donation as it was made before Cervantes’ marriage to the donor. Hence this appeal.
ISSUE: Whether or not the ban on donation between spouses during a marriage applies to a common-law relationship.
HELD: Lower Court decision is REVERSED. Ban on donation also applies to common-law relationship.
RATIO: While Article 133 of the Civil Code considers as void a donation between the spouses during marriage, policy consideration of the most exigent character as well as the dictates of morality requires that the same prohibition should apply to a common-law relationship.
As stated in Buenaventura vs. Bautista (50 OG 3679, 1954), if the policy of the law is to prohibit donations in favor of the other consort and his descendants because of fear of undue and improper pressure and influence upon the donor, then there is every reason to apply the same prohibitive policy to persons living together as husband and wife without the benefit of nuptials.
The lack of validity of the donation by the deceased to appellee does not necessarily result in appellant having exclusive right to the disputed property. As a widow, Cervantes is entitled to one-half of the inheritance, and the surviving sister to the other half.
Article 1001, Civil Code: Should brothers and sisters or their children survive with the widow or widower, the latter shall be entitled to one-half of the inheritance and the brothers and sisters or their children to the other half.
CRUZ v. CA
November 1997 | J. Bellosillo Petitioner: Gloria Cruz
Private Respondents: Romy Suzara and Manuel Vizconde FACTS:
Gloria Cruz owned Lot 10 (area: 747.7 square meters; location: Brgy. Doña Imelda, Quezon City), together with the improvements therein, which was covered by TCT No. 242553 in her name.
1997 — Cruz began living together with Romeo Suzara as husband and wife without the benefit of marriage.
1982 — solely out of love and affection for Suzara, she executed a deed of absolute sale over Lot 10 in Suzara’s favor, without any monetary consideration. Suzara registered the document in his favor and used the property as collateral for a bank loan of P350,000.
Four years later, as Suzara failed to pay the loan, the mortgage was foreclosed. Cruz paid the bank P40,638 to restructure the loan, resulting in the extension of the redemption period to two years
However, without Cruz’s knowledge and before the expiration of the extended period, Suzara redeemed the property. She tried to talk to him but he avoided her.
Finally, to protect her own interests, Cruz executed an Affidavit of Adverse Claim which she filed with the Register of Deeds in Quezon City, asserting that her sale in favor of Suzara was null and void for: (1) lack of consideration, and (2) being contrary to law and public policy.
February 1990 — Cruz filed a complaint with the Regional Trial Court of Manila against respondent Suzara for quieting of title, declaration of nullity of documents and damages with prayer for writ of preliminary injunction.
o Suzara’s response: (1) he was already the registered owner of the property as evidenced by TCT No. 295388, having acquired the same from petitioner through a notarized deed of absolute sale; (2) the sale was for a valuable consideration and not tainted with fraud nor executed under duress; and, (3) petitioner Cruz was estopped from impugning the validity of the sale and questioning his title over the property
RTC issued a TRO enjoining Suzara from disposing and/or encumbering the litigated property until further orders
April 1990 — Cruz filed an ex parte motion to admit her amended complaint
impleading respondent Manuel Vizconde as additional defendant, and praying that the Register of Deeds of Quezon City be ordered to annotate her notice of lis
pendens (pending suit) on respondent Suzara’s title
o RTC resolved in favor of her motion, and the amended complaint was admitted. o RTC also ordered the Register of Deeds to show cause why it was refusing to
annotate the notice of lis pendens filed by her.
May 1990 — the Register of Deeds filed a manifestation informing the trial court that the property had been sold by respondent Suzara to his co-respondent Vizconde who was already the registered owner thereof. Since Vizconde was not impleaded in the case the notice of lis pendens could not be annotated on his title until the requirements of law were met and the annotation of the notice judicially ordered.
o Vizconde’s response: (1) there was no privity of contract between him and petitioner; (2) he (Vizconde) was a purchaser for value in good faith; (3) the
sale between him and Suzara was executed on 22 December 1989 or long before the execution of the Affidavit of Adverse Claim; and, (4) the action was barred by laches, estoppel and prescription.
RTC dismissed Cruz’s complaint, Suzara’s counterclaim, and Vizconde’s cross claim. It ruled that the sale between Cruz and Suzara was valid as “love, affection, and accommodation” was the consideration for the sale.
o RTC found Vizconde an innocent purchaser, because at the time of his purchase he was unaware of the adverse claim of Cruz
CA affirmed the RTC. Hence this petition. ISSUES:
(1) WON the sale between Cruz and Suzara valid
(2) WON Cruz have the legal personality to question the legality of the sale (3) WON Vizconde was an innocent, good faith purchaser
HELD: Petition of Cruz DENIED, CA ruling affirmed. RATIO:
Cruz’s argument: (1) there being a factual finding by the trial court and the Court of Appeals that she and respondent Suzara were common-law husband and wife, the sale between them was void and inexistent, as per 1490 of the Civil Code; (2) the
consideration of "love, affection and accommodation" for the sale was not a valid cause for the conveyance of the property as there was no price paid in money or its equivalent; and (3) resultantly, the sale by Suzara to his co-respondent Vizconde must also be declared null and void the latter being a purchaser in bad faith.
We cannot sustain petitioner. Although under Art. 1490 the husband and wife cannot sell property to one another as a rule which, for policy consideration and the dictates of morality require that the prohibition apply to common-law relationships, petitioner can no longer seek reconveyance of the property to her as it has already been acquired by respondent Vizconde in good faith and for value from her own transferee.
The real purpose of the Torrens system of registration is to quiet title to land and to put a stop to any question of legality of the title except claims which have been recorded in the certificate of title at the time of registration or which may arise subsequent thereto. Every registered owner and every subsequent purchaser for value in good faith holds the title to the property free from all encumbrances except those noted in the certificate. Hence, a purchaser is not required to explore further what the Torrens title on its face indicates in quest for any hidden defect or inchoate right that may subsequently defeat his right thereto.[6]
Where innocent third persons acquire rights over the property the court cannot disregard such rights and order the total cancellation of the certificate. The effect of such an outright cancellation would be to impair public confidence in the certificate of title, for everyone dealing with property registered under the Torrens system would have to inquire in every instance whether the title has been regularly or irregularly issued. This is contrary to the evident purpose of the law.
o A purchaser in good faith is one who buys the property of another without notice that some other person has a right to or interest in such property and pays a full and fair price for the same at the time of such purchase or before he has notice of the claim of another person.
At the time respondent Suzara executed the deed of absolute sale on 22 December 1989 in favor of respondent Vizconde, which was acknowledged before a notary public, Suzara was the registered owner appearing in the certificate of title. There is no doubt that respondent Vizconde was a purchaser for value in good faith
and that when he bought the property he had no knowledge that some other person had a right to or an adverse interest in the property. As the Court of Appeals observed, Vizconde paid a full and fair price for the property at the time of the purchase and before he had any notice of petitioner's claim or interest in the property.
For purposes of resolving the present controversy, the allegation that there was a second deed of sale executed solely for the purpose of evading the penalties resulting from late payment of taxes and registration is immaterial. The fact is, petitioner herself admits that the actual sale of the property occurred on 22 December 1989. A contract of sale is consensual and is perfected once agreement is reached between the parties on the subject matter and the consideration therefor.
We cannot grant petitioner's prayer to have respondent Vizconde's certificate of title declared null and void. Neither can we order the reconveyance of the property to petitioner. Vizconde being a purchaser of registered land for value in good faith holds an indefeasible title to the land. This is without prejudice however to any appropriate remedy petitioner may take against her erstwhile common-law husband, respondent Suzara.
The Philippine Trust Company v. Socorro Roldan Petitioners: The Philippine Trust Company Respondents: Socorro Roldan
May 31, 1956 Bengzon, J. FACTS:
Marcelo Bernardo died and left his son, Mariano L. Bernardo (a minor) with 17 parcels of land. In view of his minority, guardianship proceedings were instituted, wherein Socorro Roldan was appointed his guardian. She was the surviving spouse of Marcelo Bernardo, and the stepmother of said Mariano L. Bernardo.
July 27, 1947: Socorro Roldan filed in said guardianship proceedings, a motion asking for authority to sell as guardian the 17 parcels for the sum of P14,700 to Dr. Fidel C. Ramos (her brother-in-law), the purpose of the sale being allegedly to invest the money in a residential house, which the minor desired to have on Tindalo Street, Manila. The motion was granted.
August 5, 1947: Socorro Roldan, as guardian, executed the proper deed of sale in favor of her brother-in-law Dr. Fidel C. Ramos.
August 12, 1947: she asked for, and obtained, judicial confirmation of the sale. August 13, 1947, Dr. Fidel C. Ramos executed in favor of Socorro Roldan,
personally, a deed of conveyance covering the same seventeen parcels, for the sum of P15,000.
October 21, 1947 Socorro Roldan sold four parcels out of the seventeen to Emilio Cruz for P3,000, reserving to herself the right to repurchase.
August 10, 1948: Philippine Trust Company became Mariano’s guardian. Two months later, they instituted this proceeding seeking to annul the two contracts (a) sale thereof by Socorro Roldan, as guardian of said minor, to Fidel C. Ramos; (b) sale thereof by Fidel C. Ramos to Socorro Roldan personally; (c) a
conveyance of four out of the said seventeen parcels by Socorro Roldan to Emilio Cruz; and alleges that such sale was contrary to Article 1459 of the Civil Code prohibiting the guardian from purchasing “either in person or through the mediation of another” the property of her ward.
Defendant asserts that she merely repurchased the lot from her brother-in-law to ‘preserve’ it and give her protégé the opportunity to redeem said property. CFI: Article was not Controlling. (Rodriguez v. Mactal). CA affirmed.
ISSUE:
WON the sale of the properties was valid?
HELD:
Re: Sale to Dr. Ramos
No. The sale is INVALID. CA decision REVERSED.
Guardianship is a trust of the highest order, and the trustee cannot be allowed to have any inducement to neglect his ward’s interest
She acted it may be true without malice; may have been no previous agreement between her and Dr. Ramos to the effect that the latter would buy the lands for
her. But the stubborn fact remains that she acquired her protege’s properties, through her brother-in-law.
That she planned to get them for herself at the time of selling them to Dr. Ramos, may be deduced from the very short time between the two sales (one week).
The temptation which naturally besets a guardian so circumstanced, necessitates the annulment of the transaction, even if no actual collusion is proved (so hard to prove) between such guardian and the intermediate purchaser. This would uphold a sound principle of equity and justice. Whenever a guardian acquires the property of his ward, the Court is always
suspicious. Hence, in the eyes of the law, Socorro Roldan took by purchase her ward’s parcels thru Dr. Ramos, and that Article 1459 of the Civil Code applies. Rodriguez v. Mactal: Does not apply here. In that case, two years have elapsed
before the guardian acquired the property sold. Such long period of time is sufficient to dispel the natural suspicion of the guardian’s motives or actions. In the case at bar, however, only one week had elapsed. And technically speaking, we could say, only one day had elapsed from the judicial approval of the sale (August 12), to the purchase by the guardian.
From both the legal and equitable standpoints these three sales should not be sustained: the first two for violation of article 1459 of the Civil Code; and the third because Socorro Roldan could pass no title to Emilio Cruz. The annulment carries with is (Article 1303 Civil Code) the obligation of Socorro Roldan to return the 17 parcels together with their fruits and the duty of the minor, through his guardian to repay P14,700 with legal interest.
Dispositive:
Judgment is therefore rendered: a. Annulling the three contracts of sale in question; b. declaring the minor as the owner of the seventeen parcels of land, with the obligation to return to Socorro Roldan the price of P14,700 with legal interest from August 12, 1947;yc. Ordering Socorro Roldan and Emilio Cruz to deliver said parcels of land to the minor; d. Requiring Socorro Roldan to pay him beginning with 1947 the fruits, which her attorney admits, amounted to P1,522 a year; e. Authorizing the minor to deliver directly to Emilio Cruz, out of the price of P14,700 above mentioned, the sum of P3,000; and f. charging Appellees with the costs.
TITLE: Rubias vs. Batiller DATE: May 29, 1973 PONENTE: Teehankee, J. PARTIES:
Plaintiff-appellant (1) – Domingo Rubias Defendant-appellee (1)- Isaias Batiller RELEVANT LAWS: Civil Code
Art. 1409. The following contracts are inexistent and void from the beginning: xxx xxx xxx
(7) Those expressly prohibited by law.
Art. 1491. The following persons cannot acquire any purchase, even at a public auction, either in person of through the mediation of another: .
xxx xxx xxx
(5) Justices, judges, prosecuting attorneys, clerks of superior and inferior courts, and other officers and employees connected with the administration of justice, the property and rights of in litigation or levied upon an execution before the court within whose jurisdiction or territory they exercise their respective functions; this prohibition includes the act of acquiring an assignment and shall apply to lawyers, with respect to the property and rights which may be the object of any litigation in which they may take part by virtue of their profession.'
FACTS:
Before the war with Japan, Francisco Militante filed with the CFI Iloilo an application for the registration of the title of the subject land in Iloilo. However, during the war with Japan, the record of the case was lost before it was heard. Upon petition by Militante after the war, the record was reconstituted at the CFI Iloilo. Then, CFI Iloilo heard the land registration case but dismissed the application for registration. Militante then appealed to the Court of Appeals and in which case, plaintiff was the counsel on record of Militante.
Pending the disposal of the appeal in the CA, Militante sold the land to the plaintiff. The CA dismissed the application for registration filed by Militante.
Later, plaintiff filed forcible Entry and Detainer case against Isaias Batiller in the Justice of the Peace Court of Barotac Viejo Province of Iloilo. The municipal court decided in favor of the defendant.
Defendant asserted that the land was originally owned and possessed by Felipe Batiller, his great grandfather. The defendant succeeded his father, Basilio Batiller, in the ownership and possession of the land in the year 1930. Since then up to the present, the land remains in the possession of the defendant--- his possession being actual, open, public, peaceful and continuous in the concept of an owner, exclusive of any other rights and adverse to all other claimants.
Furthermore, defendant alleged that plaintiff could not have acquired any interest in the property in dispute as the contract that the plaintiff had with Francisco Militante was inexistent and void. Defendants invoked Articles 1409 and 1491 of the Civil Code.
ISSUE:
WON the contract of sale between Rubias and his father-in-law over the property subject was void because it was made when plaintiff was counsel of his father-in-law in a land registration case involving the property in dispute
HELD/RATIO: Yes. It was void.
1. First of all, with the Court of Appeals' 1958 final judgment affirming the dismissal of Militante's application for registration, the lack of any rightful claim or title of Militante to the land was conclusively and decisively judicially determined. Hence, there was no right or title to the land that could be transferred or sold by Militante's purported sale in 1956 in favor of plaintiff.
2. Nonetheless, plaintiff's purchase of the property in litigation from his client (assuming that his client could sell the same since as already shown above, his client's claim to the property was defeated and rejected) was void and could produce no legal effect, by virtue of Article 1409, paragraph (7) of our Civil Code which provides that contracts "expressly prohibited or declared void by law' are "inexistent and that "(T)hese contracts cannot be ratified. Neither can the right to set up the defense of illegality be waived." Article 1491 of our Civil Code (like Article 1459 of the Spanish Civil Code) prohibits in its six paragraphs certain persons, by reason of the relation of trust or their peculiar control over the property, from acquiring such property in their trust or control either directly or indirectly and "even at a public or judicial auction," as follows: (1) guardians; (2) agents; (3) administrators; (4) public officers and employees; judicial officers and employees, prosecuting attorneys, and lawyers; and (6) others especially disqualified by law.
MACARIOLA v ASCUNCION May 31, 1982
Makasiar, J. PERTINENT LAW:
Article 1491. The following persons cannot acquire by purchase, even at a public or judicial action, either in person or through the mediation of another:
xxx xxx xxx
(5) Justices, judges, prosecuting attorneys, clerks of superior and inferior courts, and other officers and employees connected with the administration of justice, the property and rights in litigation or levied upon an execution before the court within whose jurisdiction or territory they exercise their respective functions; this prohibition includes the act of acquiring by assignment and shall apply to lawyers, with respect to the property and rights which may be the object of any litigation in which they may take part by virtue of their profession [emphasis supplied].
FACTS
June 8, 1963 – decision for Civil Case 3010 was rendered by Hon. Judge Elias B. Asuncion of the Court of Appeals of Leyte
o Complaint for partitioning of the properties left by the deceased Francisco Reyes
o Partition project submitted and he approved in an Order dated October 23, 1963
o Bernardita Macariola – one of the parties
Lot 1184 – adjudicated to plaintiffs Reyes in equal shares (5 lots)
July 31, 1964 – Lot 1184-E (one of the properties) was sold to Dr. Arcadio Galapon who later sold the same to Judge Asuncion and his wife on March 6, 1965
Sps. Asuncion and Sps. Galapon conveyed their respective shares and interests in the lot to the Traders Manufacturing and Fishing Industries Inc.
o Judge Asuncion was president here
August 9, 1968 – Bernardita Macariola filed a complaint dated August 6, 1968 against Judge Ascuncion with “acts unbecoming of a judge”.
o Upon acquiring the lot, he violated Article 1491 par. 5 of the NCC, o By associating himself with the Traders Manufacturing and
FishingIndustries, Inc., as a stockholder and a ranking officer while he was a judge - Art. 14, pars. 1 and 5 of the Code and Commerce, Sec. 3 par. H of R.A. 3019, Sec. 12 Rule XVIII of the Civil Service Rules and Canon 25 of the Canons of Judicial Ethics.
ISSUE:
Whether or not respondent judge’s acquisition of the property is null and void?
HELD: NO RATIO:
Probation in art 1491 applies only to the sale or assignment of the property which is subject of litigation to the persons disqualified therein.
o Only applies to the sale or assignment of the property which is the issue of the litigation
Previous ruling that: "... for the prohibition to operate, the sale or assignment of the property must take place during the pendency of the litigation involving the property.”
When the respondent Judge purchased on March 6, 1965 a portion of Lot 1184-E, the decision in Civil Case No. 3010 which he rendered on June 8, 1963 was already final because none of the parties therein filed an appeal within the reglementary period
The lot therefore was no longer subject of the litigation
o Also Judge Asuncion did not buy the lot in question directly from the plaintiffs in Civil Case No. 3010 but from Dr. Arcadio Galapon who earlier purchased Lot1184-E from the plaintiffs Reyes after the finality of the decision in Civil Case No. 3010.
However since he’s already an Associate Justice in the Court of Appeals, he should be more discreet in his private and business activities because his conduct as a member of the Judiciary must not only be characterized with propriety but must always be above suspicion.
Martinez vs. CA April 29, 1974 Esguerra, J
FACTS
Sps. Martinez are registered owners of 2 parcels of land in Lubao, Pampanga Both are fishponds
o The property in dispute is the second lot (Lot 2)
The lot was originally owned by Paulino Montemayor which was eventually sold to Potenciano Garcia
Garcia was prevented by the president of Lubao (Beltran) from restoring the dikes on the property
o June 22, 1914 - Garcia filed a civil case to restrain Beltran from “molesting him in the possession of said second parcel” with an application for a writ of preliminary injunction
The Court ruled in favor of Garcia
o From June 22, 1914 until the outbreak of the Pacific War – the dikes around the property remained closed
1925 – Garcia applied for the registration of both parcels of land in his name o CFI granted the registration
Thereafter, the ownership changed hands until they were acquired by the Sps. Martinez
The disputants referred the matter to the Committee on Rivers and Streams (which appointed a sub-committee)
o Conducted an ocular inspection of the property
o The sub-committee found out that it is not a public river but a private fish pond owned by the spouses
Municipal officials of Lubao refused to recognize the decision of the Committee 1954 – Sps. Martinez filed a civil case against Lubao Mayor
o Praying that the Mayor be “enjoined from molesting them in their possession of their property and in the construction of the dikes therein
4 years later, while the case was pending, the Sec. of Public Works and Communications (PWC) ordered an investigation
o Pursuant to RA 20561
o He ordered that the dikes be removed, with the threat that the dikes will be demolished if the Sps. Fails to comply within 30 days The Civil case was eventually decided in favor of the Sps.
CA reversed the judgment of court aquo ISSUES
1. WON C erred in declaring that parcel No. 2 is a public river and ordered the cancellation of the registration
2. WON the Sps. Are buyers in good faith
1 "An Act To Prohibit, Remove and/or Demolish the Construction of Dams. Dikes, Or Any Other Walls In Public Navigable Waters, Or Waterways and In Communal Fishing Grounds, To Regulate Works in Such Waters or Waterways And In Communal Fishing Grounds, And To Provide Penalties For Its Violation, And For Other Purposes. “
HELD
ISSUES 1 and 2
The properties are parts of the public domain intended for public use, are outside the commerce of men and, therefore, not subject to private appropriation.
o CC Art. 339 par. 1
intended for public use, are outside the commerce of men and, therefore, not subject to private appropriation. Ledesma vs. Municipality of Ilo-ilo
o “A simple possession of a certificate of title under the Torrens system does not necessarily make the possessor a true owner of all the property described therein. If a person obtains title under the Torrens system which includes by mistake or oversight, lands which cannot be registered under the Torrens system, he does not by virtue of said certificate alone become the owner of the land illegally included.” Dizon, et al. v. Rodriguez, et al
o incontestable and indefeasible character of a Torrens certificate of title does not operate when the land covered thereby is not capable of registration.
The Land Registration Court has no jurisdiction over non-registerable properties, such as public navigable rivers which are parts of the public domain, and cannot validly adjudge the registration of title in favor of a private applicant.
Also, the right of reversion or reconveyance to the State of the public properties fraudulently registered and which are not capable of private appropriation or private acquisition does not prescribe.
In the case at bar, Lot. No. 2 is a branch of the main river that has been covered with water since time immemorial
o A river is not capable of private appropriation or acquisition by prescription
ISSUE 3
Sps. Argue that the nullification of its registration would be contrary to the law and to the applicable decisions of the Supreme Court as it would destroy the stability of the title which is the core of the system of registration.
SC: Before purchasing a parcel of land, the Sps. Must have known the condition of the land that they were buying and the obstacles or restrictions thereon that may be put up by the government in connection with their project of converting Lot No. 2 in question into a fishpond.
o they willfully and voluntarily assumed the risks attendant to the sale of said lot.
o One who buys something with knowledge of defect or lack of title in his vendor cannot claim that he acquired it in good faith
Melliza vs. City of Iloilo Petitioner: Pio Sian Melliza
Respondents: City of Iloilo, University of the Philippines, Court of Appeals April 30 1968
Bengzon, J.P., J.
Topic: Requisites of Valid Subject Matter – Must be determinate or determinable FACTS:
Juliana Melliza owned three parcels of land in Iloilo City, among them Lot No. 1214. On November 27, 1931, she donated 9000 square meters of Lot 1214 to the then Municipality of Iloilo. However, this donation was revoked by the parties because the land area was inadequate to meet the requirements of Iloilo’s development plan. Later, Lot No. 1214 was divided into Lots 1214-A and 1214-B.
Lot 1214-B was also later divided into three – Lot 1214-B, Lot 1214-C and Lot 1214-D On November 15, 1932, Juliana Melliza executed an instrument, expressly donating Lots 1214-C and 1214-D to Iloilo, as well as “such other portions or lots as were necessary for the municipal hall site according to the Arellano plan”.
Juliana Melliza then sold her remaining interest in Lot 1214 to Remedios Sian Villanueva, who transferred it to Pio Sian Melliza, herein petitioner.
On August 24, 1949, Iloilo donated the lots they received and the building therein to UP-Iloilo. UP commenced fencing the site in 1952. It was at this point that Pio Sian Melliza demanded payment for Lot 1214-B which, though not expressly mentioned in the 1932 instrument of donation, was also included in the municipal hall site.
Petitioner contended that, not being included in the 1932 instrument, respondents could not claim the lot. Moreover, the part of the instrument stating that other portions or lots as necessary are also included in the donation could not justify respondents claim over 1214-B because the law requires as an essential element of sale a “determinate” object. The CFI ruled for respondents and the CA affirmed the CFI ruling.
ISSUES:
1. WON the 1932 instrument of donation may include Lot 1214-B HELD:
Yes, Lot 1214-B is included in the donation. Petitioner cannot demand payment for it.
Reading the public instrument in toto, with special reference to the paragraphs describing the lots included in the sale, shows that said instrument describes four parcels of land by their lot numbers and area; and then it goes on to further describe, not only those lots already mentioned, but the lots object of the sale, by stating that said lots are the ones needed for the construction of the city hall site, avenues and parks according to the Arellano plan.
If the parties intended merely to cover the specified lots — 1214-C and 1214-D, there would scarcely have been any need for the next paragraph, since these lots are already plainly and very clearly described by their respective lot number and area. Said next paragraph does not really add to the clear description that was already given to them in the previous one.
It is therefore the more reasonable interpretation, to view it as describing those other portions of land contiguous to the lots aforementioned that, by reference to the Arellano plan, will be found needed for the purpose at hand, the construction of the city hall site. This lot is 1214-B.
As to petitioner’s contention that this would not be a determinate object as required by law, the Court ruled that the requirement of the law that a sale must have for its object a determinate thing, is fulfilled as long as, at the time the contract is entered into, the object of the sale is capable of being made determinate without the necessity of a new or further agreement between the parties (Art. 1273, old Civil Code; Art. 1460, New Civil Code).
The specific mention of some of the lots plus the statement that the lots object of the sale are the ones needed for city hall site, avenues and parks, according to the Arellano plan, sufficiently provides a basis, as of the time of the execution of the contract, for rendering determinate said lots without the need of a new and further agreement of the parties. This could only refer to Lot 1214-B, being adjacent to 1214-C and 1214-D.
The Arellano plan was in existence as early as 1928. The required area for the municipal hall plan was already known and Lots 1214-C and 1214-D alone could not cover it. Therefore, it could be determined which, and how much of the portions of land
contiguous to those specifically named, were needed for the construction of the city hall site.
