Sales Digests Block 2b 2016

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BLOCK B

2016

Compiled by: Gil Arandia

Pucha nasa board pa talaga yung procurator in rem suan (Photo is for those people na may crush kay ma’am hahaha)

SALES DIGESTS BLOCK 2B 2016

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Chapter 1: Nature of a Sale

GAITE v. FONACIER

Facts:

Fonacier, owner/holder of 11 iron lode mineral claims executed a deed of assignment appointing Gaiter as his attorney-in-fact. In light of the appointment, Gaite executed a general

assignment conveying the use and development of Fonacier’s mining claims into Larap iron mines owned by Gaite himself. Thereafter, Gaite developed and used the mining claim. In time, he extracted 24,000 metric tons of iron ore.

Fonacier then revoked the authority granted to Gaite. Gaite assented, but with the condition that he receive royalties and P75,000 for the iron ores already extracted. Fonacier then issued 2 sureties good for 1 year to answer for the P65,000 balance. The sureties expired and Fonacier defaulted. Fonacier alleged that he is to pay the balance only when the suspensive condition has been fulfilled.

Issue(s):

1. W/N the payment is subject to a suspensive condition

Held:

There was no suspensive condition, only a suspensive period. The sale or shipment is not a condition for the payment of the balance; it was merely to fix the future date of payment. According to the SC, a contract of sale is normally commutative and onerous, and that the parties thereto assume a correlative

obligation. By virtue of the sale being onerous, the favored

interpretation of its terms favor the greater reciprocity of interests. Hence, the buyer’s obligation exists, only its due date is postponed.

CELESTINO CO & COMPANY vs. COLLECTOR OF INTERNAL

REVENUE

Facts:

Celestino Co & Company, registered under the trade name “Oriental Sash Factory, markets itself as “Manufacturers of all kinds of doors, windows, sashes, furniture, etc. used season-dried and kiln-dried lumber, of the best quality workmanships.” From 1946 to 1951, it paid taxes equivalent to 7% on the gross receipts under Sec. 186 of the NIRC(National Internal Revenue Code), which is a tax on the original sales of articles by manufacturer, producer or importer. However, in 1952 it began to pay only 3% tax under Sec. 191, which is a tax on sales of services. Petitioner claims that it does not manufacture ready-made doors, sash and windows for the public, but only upon special orders from the customers, hence, it is not engaged in manufacturing, but only in sales of services.

Issue: Whether the petitioner’s claim is correct, that it is merely a

special service provider – NO.

Held:

1. As a general rule, “factories” receive orders for doors and windows of special design only in particular cases but the bulk of their sales is derived from a ready-made doors and windows of standard sizes for the average home. Celestino

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Co & Company habitually makes sash, windows and doors, as it has represented in its stationery and advertisements to the public. That it "manufactures" the same is practically admitted by appellant itself. The fact that windows and doors are made only when customers place their orders does not alter the nature of the establishment.

2. It is not true that it serves special customers only. Citing one of its clients, Don Toribio Teodoro & Sons Inc, the court ruled that anyone who sees, and likes, the doors ordered by it, may identically purchase it provided he pays the price. The appellant will not refuse, for it can easily duplicate or even mass-produce the same doors.

3. The nature of the work they do does not fall within the definition of a construction work contractor enumerated in section 191 of the NIRC

4. Appellant invokes Article 14671 of the New Civil Code to bolster its contention that in filing orders for windows and doors according to specifications, it did not sell, but merely contracted for particular pieces of work or "merely sold its services". HOWEVER, Oriental Sash Factory did not merely sell its services to Don Toribio Teodoro & Co. because it also

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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 mark et, 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 mark et, it is contract for a piece of work .

sold the materials. Also, the orders herein exhibited were not shown to be “special” as the article expressed. They were merely orders for work.

COMMISSIONER OF INTERNAL REVENUE v ENGINEERING

EQUIPMENT & SUPPLY CO.

FACTS:

Engineering Equipment & Supply (EES) was engaged in the business of designing and installing central air-conditioning systems. On July 27, 1956, certain Juan de la Cruz wrote to the CIR denouncing EES for tax evasion. Pursuant to Section 1852_{of the Tax Code, EES was} assessed by the CIR for 30% advanced sales tax plus surcharges (of 25% and 50%) for misdeclaring its importation of air conditioning units and parts and accessories. EES appealed to Court of Tax Appeals (CTA), arguing that they are contractors and not

manufacturers, and thus, should only be liable for the 3% tax on sales of services or pieces of work. The Court of Tax Appeals reversed the order of the CIR, declaring that EES is a contractor. Hence, this appeal.

ISSUE: W/N EES is a manufacturer of air conditioning units under Section 185 of the Code or a contractor (piece of work) under Section 191.

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Sec 185. Ther e shall be levied, assessed and collected once only on every original sale, barter, exchange, or similar transaction intended to transfer ownership of…a tax equivalent to 30% of the gross selling price….

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HELD:. EES is a contractor, subject to tax stated in Section 191 of the Code.

 There is a distinction between a contract of sale

(manufacturer) and a contract for furnishing services, labor and materials. Such difference is tested by the inquiry of 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.

o Art 1467 (Civil Code) – 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.

o A contractor is a person who, in pursuit of

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

 Though EES imported such items, they were NOT for sale to the general public and were used as mere components for

the design of the centralized air-conditioning system,

wherein its designs and specifications are different for every client. Various technical factors must be considered and it can be argued that no 2 plants are the same; all are engineered separately and distinctly. Each project requires

careful planning and meticulous layout. Such central air- conditioning systems and their designs would not have existed were it not for the special order of the party desiring to acquire it. This implies that EES did not intend to sell the said aircon units to the general public. Thus, EES is not liable for the sales tax of 30%.

 .EES should be held liable to pay the taxes prescribed in

Section 190 of the Code. This compensating tax is not a tax on the importation of goods but a tax on the use of imported goods not subject to sales tax. Hence, it should be held liable to the payment of 30% compensating tax in accordance with Sec 190, but without the 50% mark up provided in Section 183 (b) (I think 50% is removed because

it’s for contract of sale!?!?).

 Also, EES should be subjected to 25% surcharge for

delinquency in the payment of the said tax, as provided in Section 190:

o Sec 190 – If any article withdraen from the

customhouse or the post office without payment of the compensating tax is subsequently used by the importer for other purposes, corresponding entry should be made in the books of accounts if any are kept or a written notice thereof sent to the

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Collector and payment of the corresponding compensating tax made within 30 days from the date of entry or notice, and if tax is not paid within such period the amount of tax shall be increased by 25%....

MINOR ISSUES

1. W/N EES is guilty of fraud (tax evasion)

Held: Yes, as proven by correspondences of EES with foreign companies wherein EES requested that words of airconditioning equipment should not be mentioned in shipping documents.

 The CTA absolved EES from paying the 50% surcharge prescribed in Sec 183 (a) because the surcharge Section 190 of the tax Code (where EES is subjected to as a contractor) does not provide it. According to CTA, where a particular provision of the tax code does not impose a 50% surcharge as fraud penalty, it cannot be enforced.

 BUT, because the fraud is too glaring, it was held that EES could not be absolved from the 50% fraud surcharge. Otherwise, it would give premium to an intolerable act of tax evasion.

2. W/N the tax assessment has prescribed Held: no

 EES contends that the prescriptive period is 5 yrs. from importation. But the SC held that Sec 332 of

the code provides for the exceptions as to the period of limitation of assessment and collection of taxes :

o Sec 332 – in case of a false and fraudulent return with intent to evade tax…, the tax may be assessed, or a proceeding in court for the collection of such tax may be begun without assessment at any time within 10 years after the discovery of the falsity, fraud or omission.

QUIROGA V PARSONS

FACTS:

On January 24, 1911, herein plaintiff-appellant

AndressQuiroga and J. Parsons, both merchants, enteredinto a contract, for the exclusive sale of "Quiroga" Beds in the Visayan Islands. It was agreed, among others, that Andres Quiroga grants the exclusive right to sell his beds in the Visayan Islands to J.Parsons, subject to some conditions provided in the contract. Likewise, it was agreed that. Incompensation for the expenses of advertisement which, for the benefit of both contracting parties, Mr.Parsons may find himself obliged to make, Mr.Quiroga assumes the obligation to offer and give thep reference to Mr. Parsons in case anyone should apply for the exclusive agency for any island notcomprised with the Visayan group; and that, Mr. Parsons may sell, or establish branches of his agency forthe sale of "Quiroga" beds in all the towns of the Archipelago where there are no

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exclusive agents, and shall immediately report such action to Mr. Quiroga for his approval.

The defendant violated the following obligations: 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

He alleged that the defendant washis agent for the sale of his beds in Iloilo, and that said obligations are implied in a contract

of commercial agency.

ISSUE:

1. Whether or not the defendant, by reason of the contract hereinbefore transcribed, was an agent of theplaintiff for the sale of his beds.

HELD:

No.

In order to classify a contract, due regard must be given to its essential clauses. In the contract in question, there was the obligation on the part of the plaintiff to supply the beds, and, on the part of thedefendant, to pay their price.

That the contract by and between the defendant and the plaintiff is one of purchase and sale, in order to show that it was not

one made on the basis of a commission on sales, as the plaintiff claims it was, for these contracts are incompatible with each other. But, besides, examining the clauses of this contract, none of them is found that substantially supports the plaintiff's contention. Not a single one of these clauses necessarily conveys the idea of an agency.

These features exclude the legal conception of an agency or order to sellwhereby the mandatory or agent received the thing to sell it, and does not pay its price, but delivers tothe principal the price he obtains from the sale of the thing to a third person, and if he does not succeedin selling it, he returns it. By virtue of the contract between the plaintiff and the defendant, the latter, onreceiving the beds, was necessarily obliged to pay their price within the term fixed, without any otherconsideration 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.

Puyat v Arco

Facts:

Arco Amusement Company and Gonzalo Puyat & Sons Inc, entered into an agreement that the latter would order sound reproduing equipment from Starr Piano Company (which was based in the US). Gonzalo Puyat & Sons Inc is the exclusive agent of Starr Piano. The first and second order of the said equipment all arrived

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in due time. They were charged the price of the equipment, 10% commission and other charges (freight, insurance, banking, etc.). Some time later, in a civil case filed by another company against Puyat, Arco found out that Puyat charged them with the list price and not the net price of the equipment and that Puyat had received discounts for the order of said equipments. By reason of said events, Arco brought a suit to the CFI of Manila, seeking reimbursement from Puyat. Trial Court ruled that the contract was that of outright purchase and sale and absolved Puyat. The CA reversed the decision by holding that the relationship between petitioner and respondent was that of agency.

Issues:

W/N there was the contract was that of an agency or an outright purchase and sale.

W/N there was fraud when petitioner obtained the consent of the Arco on the price of the sound reproducing equipment.

Held:

SC sustained the theory of the trial court that the contract between petitioner and respondent was that of purchase and sale. The contract entered into was clear in their terms and admit no other interpretation. The agreement between them was for Puyat to sell to Arco the sound reproducing equipment. The 10% commission does not necessarily make the petitioner an agent of the respondent, as this provision is only an additional price which the respondent bound itself to pay, and which stipulation is not incompatible with the contract of purchase and sale. Also, SC noted

that Puyat was the exclusive agent of Starr Piano and that it is out of the ordinary to be the agent of BOTH the vendor and purchaser

There was no fraud. It is to be observed that the twenty-five per cent (25%) discount granted by the Starr Piano Company to the petitioner is available only to the latter as the former's exclusive agent in the Philippines. The respondent could not have secured this discount from the Starr Piano Company and neither was the petitioner willing to waive that discount in favor of the respondent. Respondent willingly paid the price quoted and it received the equipment and machinery as represented. It is well known that local dealers acting as agents of foreign manufacturers, aside from obtaining a discount from the home office, sometimes add to the list price when they resell to local purchasers. Not every

concealment is fraud, in this issue SC said that, business acumen

permit of the loosening of the sleeves and of the sharpening of the intellect of men and women in the business world.

KER & CO. LTD. vs. Jose B. LINGAD.

FACTS:

 Petitioner Ker & Co. was held liable as a commercial broker under Section 194(t) of the National Internal Revenue and was assessed to be liable for P20,272.33 as commercial broker’s percentage tax.

o This liability arose when petitioner (Ker & Co. as “distributor”) entered to a contract with United States Rubber International (referred to as “Company”).

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 That the Company will from time to time consign the specified products to the Distributor as the Company would judge to be necessary.

 All goods consigned will remain the property of the Company until sold by the Distributor and all sales made by the Distributor shall be made in his name.  However, it was also stipulated that the

contract does not constitute the Distributor the agent or legal representative of the Company for any purpose whatsoever.  The Commissioner of Internal Revenue therefore assessed

Ker & Co. to be a commercial broker under such agreement and that the Court of Tax Appeals upheld such finding. Hence, the petition to the Supreme Court

ISSUE(s):

1. W/N the relationship between Ker & Co. LTD. and United States Rubber International is one of vendor and vendee or broker and principal.

HELD/RATIO:

 The Supreme Court affirmed the decision of the Court of Tax Appeals finding that Ker & Co. LTD. is a

commercial broker of United States Rubber International.

o The National Internal Revenue Code defines a commercial broker as, “…all persons, other than

importers, manufacturers, producers or bona fide employees, who, for compensation or profit, sell or bring about sales or purchasers of merchandise for other persons or bring

proposed buyers and sellers together.” o The Court reiterated the controlling test to be

followed as to who falls under the definition of a commercial broker in Commissioner of Internal Revenue v. Constantino which states that:

 “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 was of agency.”

o Salisbury v. Brooks supports such view: o The transaction is a sale if such

transfer puts the transferee in the position of an owner and makes him liable to the transferor as a debtor for the agreed price.

o The transaction is one of agency to

sell if the ownership of the property

delivered to the agent remained with principal and has the right to fix the price, control sales and

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receive the proceed less the agent’s commission upon sales made.

Lo v. KJS

[G.R. No. 149420. October 8, 2003]

Facts:

Lo bought from KJS scaffolding equipment worth P540k. He paid a downpayment of P150k, the balance to be payable in ten monthly installments.

Upon default on the installments, both parties consented to a dacion en pago to satisfy the debt. A deed of assignment was executed in favor of KJS, assigning Lo’s credit from Jomero Realty Corp. (JRC), a company who owes him money.

The deed contained, among others, a warranty that Lo (assignor) “shall and will at times hereafter, at the request of said ASSIGNEE, 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.”

However, when KJS tried to collect from JRC, the latter refused on the ground that Lo was also indebted to him (JRC). So, KJS demanded payment from Lo who however contends that his obligation has been extinguished when they executed the deed of assignment.

Issue:

W/N THE EXECUTED DEED OF ASSIGNMENT, A FORM OF DACION EN PAGO, EXTINGUISHED LO’S OBLIGATION TO KJS – No.

Held:

1.) No. The deed of assignment served to be a dacion en pago, 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. In order that there be a valid dation in payment, the following are the requisites:

(1) There must be the performance of the prestation in lieu of payment (animo solvendi) which may consist in the delivery of a corporeal thing or a real right or a credit against the third person;

(2) There must be some difference between the prestation due and that which is given in substitution (aliud pro alio);

(3) There must be an agreement between the creditor and debtor that the obligation is immediately extinguished by reason of the performance of a prestation different from that due.

2.) However, although there is a dacion en pago which may extinguish an obligation, such dacion is, by express provision of law (Art. 1245), governed by the Law on Sales. Being governed by the Law on Sales, Art. 1628 applies:

The vendor i n good faith shall be responsible for the exis tence and legali ty of the credit a t the time of the sale , unless it should ha ve been sold as doubtful ; but not for the sol vency of the debtor, unless i t has been s o expressly s tipula ted or unless the insol vency was prior to the sale and of common knowledge.

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Accordingly, Lo, being the vendor of his credit, is bound by

law and the stipulation on the deed to warrant the existence and

legality of the credit at the time of the sale or assignment. This he failed to do because, as it appears, compensation had already taken place between him and JRC. In other words, at the time he assigned his credit to KJS, the credit was already non-existent because of compensation had already taken place by operation of law.

Chapter 2: Parties to a Contract of Sale

DOMINGO v CA

(sorry for the long digest and dahil hindi paragraph form! heavy to

sa facts dahil 2 different versions kaya hiniwalay ko na parang bullet form para mas malinaw. magulo din pagkasulat sa case eh)

Facts:

Paulina Rigonan owned 3 parcels of land in Ilocos. She allegedly sold them to spouses Felipe and Concepcion Rigonan (private respondents) who claim to be her relatives. Respondents filed a complaint for revindication against Petitioners Eugenio Domingo and 2 others, who claim to be Paulina's closest surviving relatives, who allegedly took possession of the properties and refused to vacate the same.

RESPONDENT's VERSION

-they are the owners of the three parcels of land through a deed of sale executed by Paulina in 1965

-since then, they had been in continuous possession and had introduced permanent provisions

-that petitioners entered the properties illegally and refused to leave when asked to do so

PETITIONER's VERSION

-alleged deed of absolute sale is void for being spurious and for lacking consideration

-Paulina did not sell her properties to anyone

-as Paulina's nearest surviving kin within the 5th degree of consanguinity, they inherited the three lots upon her death in 1966 -they had been in possession of the properties for more than 10 years

- the alleged consideration for the parcels of land which was for the price of P850 only indicates a fictitious sale

TESTIMONY FOR RESPONDENTS

1. Juan Franco testified that he was a witness to the questionned deed. However when cross-examined and shown the deed, he stated that the deed was not the document he signed as a witness 2. Atty Tagatag (Notary) testified that he personally prepared the deed, that he saw Paulina affix her thumbprint, and that he signed as both witness and notary. He also testified to notarizing Paulina's last will and testament in 1965. The will mentioned the same lots sold to respondents and he could not explain why.

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3. Felipe Rigonan claimed to be Paulina's close relative, that their fathers were first cousins. But he could not remember the name of Paulina's grandfather. His claim was disputed by defendants who lived withh Paulina as their close kin.

TESTIMONY FOR PETITIONERS

1. Jose Flores, owner of the adjacent lot and who lived there with Paulina since he could remember and til her death, said thathe did not receive any notice nor offer to sell the lots. This is contrary to the deed of sale which mentioned that all adjacent owners were notified of the sale. He doesnt have any knowledge of any sale 2. Ruben Blanco, Refistrar of Deeds, testified that only a carbon copy of the deed was filed in his office

3. Zosima Domingo, wife ofEugenio, testified that her husband was Paulina's nephew ( Eugenio's father and Paulina were first cousins) and that they lived with Paulina since 1956. They took care of her daily needs even whenl she was hospitalized and until she died.

RULINGS OF LOWER COURTS

1. RTC favored herein petitioners and declared them the lawful owners and possessors by virtue of intestate succession. The deed was found to be "fake", being a carbon copy with no original presented, and that the document's execution was tainted with alterations, defects, tamperings, and irregularities which render it void ab initio. Testimonies for respondents were also rebutted as Franco retracted his testimony, Tagatag's testimony was not credible as he is a witness and notary to both the deed and will AND

ALSO a paid witness to the case. Also, Zosima Domingo, Paulina's housekeeper, testified that he did not seeTagatag and the other parties in Paulina's house on the alleged date of the deed's execution.

2. CA reversed and ordered herein petitioners to vacate the property.

Issue

W/N the existence and due execution of the deed of sale was established. --NO.

Ruling

1. Respondents only presented a carbon copy of the deed. Although CA calls it a "duplicate original", it contained filled in blanks and alterations.It also did not bear Paulina's signature but only her alleged thumbprint. Franco, also testified that said deed was not the one he signed as witness. The only testimony available for them is Atty Tagatag's, which is uncorroborated and self-serving

2. Irregularities abound regarding the execution and registration of the alleged deed of sale. The carbon copy had intercalations and discrepancies allegedly due to blanks left unfilled by Tagatag during its registration. The alleged other copies also bore different dates of entry and the deed was registered long after its date of execution and after Paulina's death. Paulina, the alleged vendor, was not given a copy.

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Also, Paulina was never asked to vacate the premises she purportedly sold, allegedly because Felipe agreed to let Paulina to stay in the house until her death. In one case, The buyer's

immediate possession and occupation of the property was deemed corroborative of truthfulness and authenticity of the deed of sale. The alleged vendor's continued possession in this case throws an inverse implication, a serious doubt on the due execution of the deed of sale.

It is also noteworthy that the same parcels of land involved here were still included in he will subsequently executed by Paulina.

3. The price of P850 allegedly paid by respondents for 9 parcels of land, including 3 parcels in dispute, a house, and a warehouse, raises further questions. Consideration is the why of the contract,

the essential reason which moves the contracting parties to enter into the contract. Since Paulina is well-off, we see no compelling

reason for her to sell the subject properties at a meager price of P850. (Fictitious and grossly and shockingly inadequate consideration -- sale is void ab initio)

4.The general rule is that a person is not incompetent to contract merely because of advanced years or by reason of physical infirmities. However, when such age or infirmities have impaired the mental faculties so as to prevent the person from properly, intelligently, and firmly protecting her property rights, then she is undeniably incapacitated.At the time of the execution of the

alleged contract, Paulina was already of advanced age and senile. Zosima he housekeeper testified that at the time of the alleged

execution of thhe deed, Paulina was already incapacitated physically and mentally (she was 80 y/o.Zosima narrated that at that time, Paulina plays with her waste and urinates in bed). These raise doubt that she consented to the sale of and the price of the properties. There is also no receipt.

IF EVER ASKED: Procedural Issues raised by Respondents

1. Factual determination by the trial court lacks credibility for itwas made by trial judge who presided only in one hearing of the case COURT RULED: A judge may validly render a decision although he has only partly heard the tertimony of the witnesses since he could rely on the records of the case

2. The Petition lacks a certification against forum shopping

COURT RULED: Petitiones averred that they attached one in the copy intended for this Court. This is substantial compliance

3. Petition must be deniedbecause it does not present anybsubstantial legal issue, but factual or evidentiary ones which were already firmly resolved by the CA

COURT RULED: This petition is properly given due course though mainly factual because of the contradictory findings of the trial court and the CA. The latter court apparenlty overlooked certain relevant factswhich justify a different conclusion.

PARAGAS v. HEIRS of BALACANO

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Gregorio Balacano was the registered land owner of Lots 1175-E and 1175-F in Santiago City, Isabela. He was hospitalized for suffering from liver cirrhosis on June 28, 1996 at the Veterans Hospital in Nueva Viscaya, and was later on transferred to Veterans Memorial Hospital in Quezon City. He died on July 28, 1996.

On July 22, 1996, or barely a week before his death, Gregorio purportedly sold Lot 1175-F and a portion of 1175-E to spouses Rudy and Corazon Paragas for P500,000. On October 17, 1996, the spouses sold a portion of Lot 1175-E to Catalino, one of the children of Gregorio.

On October 22, 1996, the grandchildren of Gregorio then filed a complaint for annulment of sale and partition. They allege that their grandfather could not have sold the subject lots because at the time of the execution of the deed of sale, their grandfather was seriously ill and dying at that time, which vitiated his consent to the disposition of the property.

Issue:

1. W/N the sale of the lots are valid

Held:

No. In Domingo v. Court of Appeals, the Court declared as null and void the deed of sale therein inasmuch as the seller, at the time of the execution of the alleged contract, was already of advanced age and senile. The general rule is that a person is not incompetent to contract merely because of advanced years or by

reason of physical infirmities. However, when such age or infirmities have impaired the mental faculties so as to prevent the person from properly, intelligently, and firmly protecting her property rights, then she is undeniably incapacitated.

In the case at bar, the deed of sale was allegedly signed by Gregorio on his death bed in the hospital. Gregorio was an octogenarian and was suffering an illness at that time – circumstances which raise grave doubts on his physical and mental capacity to freely consent to the contract.

CALIMLIM-CANULLAS v. FORTUN

FACTS

Mercedes and Fernando were married in 1962 and had 5 children. They lived in a small house on the residential land in question. Fernando inherited such land after the death of his father in 1965. In 1978, Fernando left his family to live w/ his concubine Corazon. He then sold said lot w/ the house in favor of Corazon for P2,000.00. Corazon, unable to take possession of the house and lot, filed a complaint for quieting of title. Mercedes objected alleging that the the sale of the land together with the house and improvements to Corazon was null and void because they are conjugal properties and she had not given her consent to the sale.

The trial court at first ruled in favor of Corazon as the lawful owner of the land as well as ½ of the house erected on the land. However, lower court later modified the judgment by declaring that Corazon is the lawful owner of the land but the sale of the conjugal house was null and void.

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(1) W/N the construction of a conjugal house on the exclusive property of the husband ipso facto gave the land the character of conjugal property; and

(2) W/N the sale of the lot together with the house and improvements thereon was valid under the circumstances surrounding the transaction.

HELD

(1) YES. According to Article 158 of the Civil Code, buildings constructed at the expense of the partnership during the marriage on land belonging to one of the spouses also pertain to the partnership, but the value of the land shall be reimbursed to the spouse who owns the same. Therefore, Fernando could not have alienated the house and lot to Corazon since Mercedes had not given her consent to said sale.

(2) NO. The sale was null and void for being contrary to morals and public policy. The law generally prohibits spouses from selling or donating properties to each other; the same prohibitions apply to a couple living as husband and wife w/o the benefit of marriage. To rule otherwise would be to put the persons in guilt at a better position than those legally married. This is dictated by the public interest.

MATABUENA v CERVANTES

Facts:

On February 20, 1956 Felix Matabuena executed a deed of

donation inter vivos in favor of Petronila Cervantes, his

common-law spouse. They married on March 28, 1962. Unfortunately, on

Sept. 13 1962, Felix died intestate (um... it means: “Having made no legal will”). Cornelia Matabuena, Felix’ only sister and nearest relative to him, questioned the validity of the donation. She claimed that the ban on donations between spouses should also apply to common-law marriages. She had the land declared in her name by virtue of an affidavit on self-adjudication, paying the estate and inheritance taxes as well. On November 23, 1965, the lower court upheld the validity of the donation saying that it was done while the spouses weren’t married yet, hence the prohibition on art. 133 does

not apply. Cornelia then appealed to the supreme court

Issue:

W/N the ban on a donation between the spouses during a marriage applies to common-law relationship

Held:

The supreme court reversed the decision of the lower court. 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 it is contrary to public policy (JBL Reyes,

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other consort because of fear of undue pressure and influence upon the donor. So long as marriage remains the cornerstone of family law, reason and morality alike demand that the disabilities

attached to marriage should likewise attach to concubinage.

(Spirit of the Law: StatCon: Whatever omission may be apparent in an interpretation purely literal of the language used must be remedied by an adherence to its avowed objective)

However, 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 plaintiff, the surviving sister to the other half.

PHILIPPINE TRUST CO. V ROLDAN

Facts:

Mariano Bernardo inherited 17 parcels of land from his deceased father. Since Mariano was a minor, guardianship proceedings were instituted and her step-mother, Socorro Roldan was appointed as his guardian. 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 in Tindalo Street Manila, which the minor desired to have. The motion was granted and she sold the land with judicial confirmation of the sale. After a week, Dr. Ramos sold to her the same lands for P15,000. Later on, Roldan sold 4 parcels out of the 17 to Emilio Cruz. Philippine Trust Company subsequently replaced Roldan as guardian and sought to declare as null and void the three

sales that occurred stating that the first two (between Roldan and Dr. Ramos and vice versa) was against Article 1459 of the Civil Code and that the third sale was also ineffectual because Roldan had acquired no valid title to convey to Cruz.

Issue:

1. w/n the sale of the 17 parcels of land was null and void for violation of Article 1459 of the Civil Code which prohibits a guardian from purchasing either in person or through the mediation of another the property of her ward.

Held:

The Supreme Court annulled the 3 contracts of sale in question; declared the minor as the owner of the 17 parcels of land along with its fruits, with the obligation to return to Roldan the price of P14,700 with legal interest.

Guardianship is a trust of the highest order, and the trustee cannot be allowed to have any inducement to neglect his ward’s interest and in line with the court’s suspicion whenever the guardian acquires the ward’s property, the Court has no hesitation to declare that in this case, in the eyes of the law, Socorro Roldan took by purchase her ward’s parcels thru her brother-in-law, and that Article 1459 ofthe Civil Code applies.

Even if no collusion is proved or that the guardian may have acted without malice, the fact remains that she acquired the properties of her protégé through her brother-in-law.. Due to the very short time between the two sales (a week), it may be deduced that she planned to acquire the properties for herself at the time of

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selling them to Dr. Ramos. The sale between Roldan and Cruz is likewise void because Roldan never acquired title to the parcels of land.

More Information:

The Philippine Trust Company filed the case against Roldan before the CFI Manila which held that there was no proof that Dr. Ramos was a mere intermediary or that the latter had an agreement with Socorro to buy the parcels for her benefit. The trial court upheld the contracts but allowing the minor to repurchase all the parcels by paying P15, 000, within 1 year. The CA affirmed the judgment. Hence, the appeal to the SC which reversed the decision.

The defense sought by Roldan through Rodriguez v. Mactal does not apply because in that case the guardian sold the property of her ward in 1926 and repurchased it two years after which is enough to dispel the natural suspicion of the guardian’s motives or actions. In the present case, only 1 week had elapsed between the first two sales.

Minor on losing end in the transaction. The calculation, that the investment in the Tindalo Street house produces to the minor the rentals of P2,400 yearly while the parcels of land yield for the stepmother an average of P1,522 yearly, does not include the price of the lot on which the house was erected. Estimating such lot at P14,700 only, the result is that the price paid for the 17 parcels gave the minor an income of only P1,200 a year, whereas the harvest from the seventeen parcels netted his step-mother a yearly profit of P1,522.00. The minor was on the losing end.

Macariola v Asuncion

Who were the petitioners/respondents?

Macariola: A civil case for partition of property was decided after her father died. She was unhappy with her share. Apparently it was the smallest and least valuable. So naturally she sued to annul.

Judge Asuncion: The Judge who decided Civil Case 3010. He later purchased a lot which was part of that involved in the partition of that case.

Facts:

Both the petitioner and the respondents in the antecedent civil case are the children of a certain recently deceased Francisco Reyes. The two contending parties in this case were Macariola, child of Reyes by his first wife, and the remaining Reyeses, Francisco’s children with his second wife. The case stemmed from a dispute regarding how to divide the estate of the late Francisco among his various heirs, and for this purpose a civil case had been filed previously which resulted in a project of partition among the properties as between the Macariolas and the Reyeses, duly approved by both. The problem emerged when one of the properties solely owned by Francisco Reyes, Lot Number 1184, was subdivided after the Project of Partition. It was divided into 5 lots, Lot 1184-A through E.

Lot 1184-E (2,172 sqm) was thereafter reconveyed (sold) to Dr. Arcadio Galapon and wife, in 1964. On 1965, Galapon thereafter sold a portion of this lot to Judge Asuncion (he was the judge that handled the previous Civil Case regarding partition) and wife. The year after (1966), The spouses Galapon and Asuncion sold their

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collective shares and interests in Lot 1184-E to Traders

Manufacturing and Fishing Industries, Inc. of which the spouses Asuncion were shareholders.

On 1968, Macariola, filed a complaint to annul the partition of the property. It was only then that Macariola discovered that a lot was already owned by the Judge. Learning of what transpired, Macariola filed a complaint against Judge Asuncion with four causes of action:

1) Violation of Article 1491 of the Civil Code by

purchasing a lot which was the subject of decision by him in a judicial proceeding.

2) Violation of Anti-Graft and Corrupt Practices Act by associating with Traders Manufacturing and being a stockholder therein while at the same time a presiding judge.

3) That he willingly associated with an impostor lawyer who was a stockholder at Traders.

4) That he lacked judicial ethics.

Issue Important to Sales:

I) Whether or not Judge Asuncion Violated Article 1491 of the Civil Code: No

Article 1491 states that:

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:

"(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".

Ruling:

The prohibition regarding the purchase of the subject property under article 1491 only applies to property under litigation. By ‘under litigation’, we mean literally that there is still a case pending. By the time Judge Asuncion had acquired the property, there has been a long time had already transpired, there was no appeal filed or perfected in due course, In short, it was already final and executor. Note that his decision was made in 1963, while he purchased the land in 1965. Hence, it was no longer subject of litigation. The subsequent case filed to annul the partition on 1968 did not change the character of the property and the fact that, by then, it was already owned by Asuncion. Hence, there was no violation. Further, the property was purchased not from the parties in litigation, but from an innocent third party afterwards (Galapon). <However>, the Court did say it was improper (not illegal) for the judge to purchase a property previously subject to his judicial

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decision, because judges should avoid the appearance of impropriety. Nevertheless, as to the charges of possessing

prohibited interest, the Court took notice of the fact that a few days after the incorporation of Traders, the Asuncions sold their share, implies that they were aware of the appearance of impropriety. This is according to Canon 25, Canons of Judicial Ethics.

"A judge should abstain from making personal investments in enterprises which are apt to be involved in litigation in his court; and, after his accession to the bench, he should not retain such investments previously made, longer than a period sufficient to enable him to dispose of them without serious loss. It is desirable that he should, so far as reasonably possible, refrain from all relations which would normally tend to arouse the suspicion that such relations warp or bias his judgment, or prevent his impartial attitude of mind in the administration of his judicial duties. . . ."

Judge Asunción was Aquitted

Also, he got promoted to Court of Appeals Justice in the end.

DOMINGO D.RUBIAS vs. ISAIAS BATILLER

FACTS:

On August 31, 1964, plaintiff Domingo D. Rubias filed a suit to recover the ownership and possession of certain portions of lot under Psu-99791 located in Barrio General Luna, Barotac Viejo, Iloilo which he bought from his father-in-law, Francisco Militante in 1956 against its present occupant defendant, Isaias Batiller,

Before the war, Militante claimed ownership of a parcel of land located in the Barrio of General Luna, municipality of Barotac

Viejo province of Iloilo, which he caused to be surveyed on, whereby he was issued a plan Psu-99791. During the war, the record of the case was lost before it was heard, so Militante petitioned to reconstitute the case. The CFI of Iloilo dismissed his application. Militante appealed to the CA. Pending appeal, Militante sold the land to plaintiff. However, the CA affirmed the CFI’s decision dismissing Militante’s application for registration.

ISSUES:

1. WON the contract of sale between appellant and his father-in-law, the late Francisco Militante over the property subject of Plan Psu-99791 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 (relevant

to Sales) HELD:

1. Yes. Plaintiff lacks cause of action that calls for the dismissal of the complaint. No right or title was passed on/sold by Militante to plaintiff because Militante’s application for registration was dismissed. Also, even assuming that Militante had the right to sell to plaintiff, their deed of sale/contract is null and void according to the Civil Code: Art. 1409. The following contracts are inexistent and void from the beginning: xxx

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ART. 1491. The following persons cannot acquire any purchase, even at a public auction, either in person of through the mediation of another: 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.

DAROY V ABECIA

Nature: Complaint for malpractice filed by Regalado Daroy (now

deceased) against Atty. Esteban Abecia, a member of the Bar.

Facts:

Abecia was the counsel for Daroy in a forcible entry case. He hired Abecia as his lawyer and won. To satisfy the award for damages, a parcel of land of the defendant was sold to Daroy at an execution sale. . Upon failure of the defendants to redeem the land, its ownership was consolidated in complainant Daroy. The land was then sold to Daroy’s relative, who then sold it to Abecia’s wife. Complainant Daroy claimed that respondent Abecia forged his signature in a deed of absolute sale, dated March 31, 1971, transferring the subject parcel of land to Jose Gangay purportedly for the sum of P1,250.00 and that in a fictitious deed of absolute sale, dated April 17, 1971, it was made to appear that Gangay in

turn conveyed the land to Nena Abecia, wife of respondent Abecia, for the sum of P1,350.00. Two weeks thereafter, under date of April 17, 1971, the said Jose Gangay executed a Deed of Sale of the same property in favor of Mrs. Nena Abecia, the wife of the respondent, by virtue of which TCT No. T-15926 was issued in the name of Nena Abecia, married to Atty. Esteban Abecia, the respondent.

Sometime in the year 1984, the complainant discovered that his said property was already in the name of Mrs. Nena Abecia and Atty. Esteban Abecia.

He now claims that these sales are void because Abecia forged his signature on the deeds of sale. IBP disbarred Abecia.

Issue:

1. Did the IBP erred in dismissing Abecia? 2. Is the sale of the property void?

Held:

1. The IBP erred in dismissing Abecia. (see reason in no. 2) 2. Daroy had knowledge of the sale. Complainant very well

knew of the execution of the deed of sale as shown in the Sheriff’s Return of Service. The evidence shows that Daroy was a party to the sale at the time it was made and did not “discover” it 9 years later as he claimed. He was not defrauded. The parties thought that because the land had been acquired at a public sale to satisfy a judgment in a case in which respondent was complainant’s counsel, the latter could not acquire the land. The parties made this

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arrangement to circumvent Art. 1491 of the Civil Code which prevents lawyers from acquiring property and rights that may be the object of any litigation in which they may take by virtue of their profession.

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

. . . .

(5) Justices, judges, prosecuting attorneys, clerks of superior and inferior courts, and other officers and employees connected with the administration of justice, the property and rights in litigation or levied upon an execution before the court within whose jurisdiction or territory they exercise their respective functions; this prohibition includes the act of acquiring by assignment and shall apply to lawyers, with respect to the property and rights which may be the object of any litigation in which they may take part by virtue of their profession.

The prohibition in Art. 1491 does not apply to the sale of a parcel of land acquired by a client to satisfy a judgment in his favor, to his attorney was not the subject of the litigation.

While judges, prosecuting attorneys, and others connected with the administration of justice are prohibited from acquiring “property or rights in litigation or levied upon in execution” the prohibition with respect to attorneys in the case extends only to “property and rights that may be the object of any litigation in which they may take part by virtue of their profession.”

Chapter 3: Subject Matter of a Contract of Sale

SIBAL Vs VALDEZ

Facts:

On 1923, Macondray & Co., Inc. bought 8 parcels of land at the auction held by the sheriff of the Province of Tarlac. On the same year, Leon Sibal, the judgment debtor, paid Macondray 2000php as the redemption price of said parcels of land, without specifying the particular parcels to which it was to apply.

On 1924, Emilio J. Valdez bought parcels of land, where the sugar cane in question is planted, at the auction held by the sheriff of Province of Tarlac. He bought all of Macondray's rights and interest in the eight parcels of land it acquired. He also paid Macondray another 2000php for the redemption price Sibal paid.

Sibal alleged two causes of action (1) that Valdez has refused to accept Sibal's offer to redeem the sugar cane the latter planted and (2) that Valdez has harvested and attempted to further harvest palay that belongs to Sibal. So Sibal prayed for a writ of injuction against Valdez to prevent the latter from possessing the subject property and from further possessing or harvesting the sugar cane and palay in said parcels of land. He also prayed to order Valdez to consent with the redemption of the sugar cane. However, Valdez argued that the sugar cane is his personal property and cannot be subject to redemption.

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WON the sugar cane in question is a personal property? WON the sugar cane in question is subject to sale?

Held:

Yes, sugar cane is classified under personal property so it cannot be subject of redemption. Art. 334 of the Civil Code provides that trees, plants, and ungathered products, while they are annexed to the land are real property. However, it has been modified by the Code of Civil Procedure and by Act No. 1508, in the sense that, for the purpose of attachment and execution, and for the purposes of the Chattel Mortgage Law, "ungathered products" have the nature of personal property.

Yes, a man may sell something which he potentially but not actually possesses. It is valid to sell a thing, which though not yet actually in existence, is reasonably certain to come into existence as the natural increment or usual incident of something already in existence, provided that the thing can be specified and identified. The thing sold must also belong to the vendor to begin with. The buyer's title to the thing will vest upon its existence. Moreover, crops, whether growing or standing in the field ready to be harvested, when produced by annual cultivation, are not part of the realty. They can be sold.

Note:

The immovability of growing crops are "only in abstracto and without reference to rights on or to the crop acquired by others than the owners of the property to which the crop is attached" but jurisprudence recognizes the possible mobilization of the growing

crop." [point is crops can be immovable first but then they mature and become movable. Yan pagkagets ko]

SC decided that since the Sibal, in good faith, planted the palay in said parcels he is entitled to half of it.

PICHEL V. ALONZO

Facts:

Prudencio Alonzo was awarded a parcel of land by the PHHC. He leased it to Sua. The board of liquidators cancelled the award to Alonzo on Jan 27, 1965 because the land was leased to someone, which is not allowed by RA 477. It was later reinstated in 1972. Alonzo executed a deed of sale for the coconut fruits (from Sept 15, 1968 to Jan 1, 1976) of the parcel of land awarded to him by PHHC by reason of RA 477. He executed this in favor of Luis Pichel in exchange for payment amounting to 4,200.00.

According to RA 477, the grantee is prohibited to sell, lease or encumber the land and the improvements therein within 10 years from the issuance of the title, if he does, the transfer shall be considered null and void. The trial court held that the deed of sale was a contract of lease of the land itself and that it is null and void by virtue of RA 477. It ordered Alonzo to pay back the 4,200 that Pichel paid.

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1. WON Alonzo has the right to execute such deed of sale considering that the award was, at the time, cancelled by the Board of Liquidators

2. WON the Deed of sale is the prohibited encumbrance contemplated in RA 477

Held:

1. Yes. Cancellation of the award granted pursuant to RA 477 does not automatically divest the awardee of his rights to the land. No immediate reversion to the state. There should be an appropriate proceeding for reversion.

2. No.

a. The terms of the contract are controlling when there is no ambiguity. No need to resort to statutory construction.

b. It is for the SALE of the FRUITS of the land and not lease of the land. The subject matter of the sale is the fruits of the land. Possession and use of Fruits is different from possession and use of land. Different rights. The first one is of the accessories, the second of the principal. Right over the accessories does not vest right over principal. The accessory merely follows the principal and not vice versa.

c. A valid sale may be made of a thing, which, though not yet in existence, is reasonably certain to come into existence as natural increment of something in existence and the title will vest on the buyer when it comes into existence. These are called things of “potential existence”.

d. A lease is where one party binds himself to give to another the enjoyment or use of a thing for a price certain for a period which may be definite or indefinite and a sale is one where there is transfer of ownership upon delivery.

e. The purpose of the law is fulfilled, not violated when the fruits are sold.

The grantee can be self sufficient and not fully reliant on the government.

MANANSALA VS COURT OF APPEALS

Facts:

1. Fidela Manansala is the registered owner of a parcel of land in QC. She has been in possession of the land since 1955 by virtue of conditional sale made in her favour by PHHC (now NHA). In 1960, however, the PHHC awarded the land to the spouses Mercado who took possession of the land also in that year.

2. Manansala was able to successfully retrieve the land from the Mercado spouses by claiming precedence not only in actual possession but also in the application for its purchase. In 1984, Manansala paid the full price of the land and thereafter a deed of sale was executed in her favour in 1985.

3. Aranez brought this action for specific performance against Manansala to enforce a deed of sale covering the same lot entered into by her and Manansala in 1960. The contract stipulated that the land shall be transferred to Aranez within 30 days after full payment

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of the purchase price by Manansala to the PHHC. The deed was notarized by Atty. Lopez who was also her counsel against the Mercado spouses.

4. Manansala denies selling the land; alleging further that the deed was a forgery and that her signature was secured through fraud. She also averred that the selling of the land was void because it was made in violation of the prohibition of the PHHC against subsequent disposition of the land within one year after the issuance of the title.

5. The RTC held the signature to be genuine but there was no perfected contract since there was no intention to sell the land and because at the time of the sale, the petitioner was not yet the owner thereof.

6. The CA reversed the decision holding that there was meeting of the minds between the party evidence by the signature of the petitioner in the deed of sale which the NBI found to be genuine. Further, the CA held that the sale was valid in accordance with ART 1461of the Civil Code which provides that things having potential existence may be the object of a contract of sale.

Issues:

1. W/N the CA erred in validating a contract in violation of law and public policy?

2. W/N the challenged notarial document, apart from being contrary to law and public policy, does not serve the presumption of regularity?

Held:

1. No, there was no evidence that the sale of the lot was made in violation of any rules of the PHHC. Further, this contention although raised in the trial court was not pursued by Manansala. In her appeal to the CA, she also never argued this point as she simply considered the issues raised by the RTC. Hence this point is considered waived and can’t be urged as a ground to reverse the decision of the CA. (Conclusion of fact by a trial judge --- as affirmed by the CA--- is conclusive upon the SC.)

2. The signature was found out to be genuine as per the report of the NBI. Further,

Manasala’s claim that her signature on the deed had been procured through fraud is contradicted by her allegation that the signature on the deed was not hers.

Pio Sian Melliza vs. City of Iloilo, University of the Philippines

and the Court of Appeals (1968)

FACTS:

Juliana Melliza owned Lot 2, Lot 5 and Lot 1214. She donated a part of Lot 1214 to the Municipality of Iloilo to serve as the municipal hall. The donation was revoked by the parties since the area donated was found inadequate to meet the requirements of the municipality development plan called the Arellano Plan.

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Lot 1214 was divided by into several lots, namely: 1214-A, 1214-B, 1214-C and 1214-D. (See illustration below for reference)

Juliana executed an instrument which states that she assigns and transfers certain parts of Lot 1214 to the Municipal Govt of Iloilo. Juliana sold her remaining interest in Lot 1214 to Remedios Sian Villanueva who in turn transferred her rights to said portion of land to petitioner Pio Sian Melliza. The City of Iloilo donated the city hall site together with the building thereon to UP Iloilo, which consisted of Lots Nos 1214-B, 1214-C and 1214-D. Pio Sian Melliza asked city authorities for payment of value of Lot 1214-B. No recovery was obtained because the City did not have funds. Pio Sian Melliza filed in the CFI of Manila an action for recovery of Lot 1214-B or its value against Iloilo City and UP.

Defendants answered claiming that Lot 1214-B was included in the public instrument executed by Juliana Melliza in favor of Iloilo municipality. Pio Sian Melliza claims that the public instrument is clear that only 1214-C and 1214-D is included and that the 2nd paragraph of said instrument was only to better identify the lots sold. Petitioner further claims that to hold that 1214-B is included in the sale would render the contract invalid because the law requires as an essential element of sale a “determinate” object.

CFI: dismissed the complaint, saying that instrument by Juliana included Lot 1214-B.

CA: affirmed CFI decision, and that the portion sold by Juliana necessarily included whatever was needed for construction of avenues, parks, city hall site.

ISSUES:

1. W/N the conveyance by Juliana Melliza to Iloilo municipality included Lot 1214-B

2. W/N the description of other lots in the 2nd paragraph of the instrument would be legally insufficient, because the object would not be determinate as required by law (SALES issue)

HELD:

1. YES. Accdg to the SC, the public instrument describes four parcels of land, Lot 2, Lot 5, Lot 1214-C and Lot 1214-

D and further describes not only those but also lots needed for the construction of the city hall site, avenues, parks, according to the Arellano Plan. If the parties merely intended to cover the specified lots, there would have been no need for the 2nd paragraph which describes other portions of land contiguous to the four lots needed for the said Arellano Plan.

2. NO. 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 1460 NCC.) The specific mention of some lots plus the statement that the lots object of the sale are the ones needed for 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.

Sales Digests Block 2b 2016

BLOCK B

2016

SALES DIGESTS BLOCK 2B 2016

Table of Contents

Chapter 1: Nature of a Sale

GAITE v. FONACIER

CELESTINO CO & COMPANY vs. COLLECTOR OF INTERNAL

REVENUE

COMMISSIONER OF INTERNAL REVENUE v ENGINEERING

EQUIPMENT & SUPPLY CO.

QUIROGA V PARSONS

Puyat v Arco

KER & CO. LTD. vs. Jose B. LINGAD.

Lo v. KJS

Chapter 2: Parties to a Contract of Sale

DOMINGO v CA

PARAGAS v. HEIRS of BALACANO

CALIMLIM-CANULLAS v. FORTUN

MATABUENA v CERVANTES

PHILIPPINE TRUST CO. V ROLDAN

Macariola v Asuncion

DOMINGO D.RUBIAS vs. ISAIAS BATILLER

DAROY V ABECIA

Chapter 3: Subject Matter of a Contract of Sale

SIBAL Vs VALDEZ

PICHEL V. ALONZO

MANANSALA VS COURT OF APPEALS

Pio Sian Melliza vs. City of Iloilo, University of the Philippines

and the Court of Appeals (1968)

CELESTINO CO & COMPANY vs. COLLECTOR OF INTERNAL