Peoples Homesite vs. Court of Appeals, and Mendoza Peoples Homesite vs.

Court of Appeals, and Mendoza 133 SCRA 777 December 1984 FACTS: In February 1960, herein petitioner Peoples Homesite & Housing Corporation (PHHC) passed a resolution, subject to the approval of the Court Court Council of the PHHCs consolidation subdivision plan, awarding Lot 4 with an area of 4,182.2 square meters located at Diliman, Court City to respondents Rizalino and Adelaida Mendoza (spouses Mendoza) at a price of twenty-one pesos (P21.00) per square meter. The Court Court Council disapproved the consolidation subdivision plan in August 1960 but approved in February 1964 its revised version where Lot 4 was reduced to an area of 2,608.7 square meters. Then in October 1965, the PHHC withdrew the tentative award of Lot 4 to the spouses Mendoza for the latters failure neither to pay its price nor to make a 20% initial deposit, and re-awarded said lot jointly and in equal shares to Miguela Sto. Domingo, Enrique Esteban, Virgilio Pinzon, Leonardo Redublo and Jose Fernandez, all of whom made the initial deposit. The subdivision of Lot 4 into five lots was later approved by the Court council and the Bureau of Lands. The spouses Mendoza asked for reconsideration and for the withdrawal of the said 2nd award to Sto. Domingo and four others, and at the same time filed an action for specific performance plus damages. The trial court sustained the award but the Court of Appeals reversed the said decision, declared void the re-award to Sto. Domingo and four others, and ordered the PHHC to sell Lot 4 with an area of 2,608.7 square meters at P21.00 per square meter to spouses Mendoza. ISSUE: Was there a perfected sale of Lot 4, with its reduced area, between the parties? COURT RULING: The Supreme Court found that there was no perfected sale of Lot 4 because the said lot was conditionally or contingently awarded to the Mendozas subject to the approval by the Court council of the proposed consolidation subdivision plan and the approval of the award by the valuation committee and higher authorities. When the plan with the area of Lot 4 reduced to 2,608.7 square meters was approved in 1964, the spouses Court should have manifested in writing their acceptance of the award for the purchase of Lot 4 just to show that they were still interested in its purchase although the area was reduced. Article 1475 of the Civil Court says [t]he contract of sale is perfected at the moment there is a meeting of

minds upon the thing which is the object of the contract and upon the price. From that moment, the parties may reciprocally demand performance, subject to the law governing the form of contracts. Indeed, there was a no meeting of the minds between the parties on the purchase of Lot 4 with an area of 2,608.7 square meters at P21 a square meter and the PHHC board of directors acted within its rights in withdrawing the tentative award.

Dignos vs CA (G.R. No. L-59266)

MAY

FACTS: The spouses Silvestre and Isabel Dignos were owners of a parcel of land in Opon, Lapu-Lapu City. On June 7, 1965, appellants, herein 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 plaintiff-appellant, 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 defendants 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, and which was registered in the Office of the Register of Deeds pursuant to the provisions of Act No. 3344. As the Dignos spouses refused to accept from plaintiff-appellant the balance of the purchase price of the land, and as plaintiff- appellant discovered the second sale made by defendantsappellants to the Cabigas spouses, plaintiff-appellant brought the present suit. ISSUE: 1 . Whether or not there was an absolute contract of sale. 2. Whether or not the contract of sale was already rescinded when the Dignos spouses sold the land to Cabigas HELD: I. Yes. 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. While it may be conceded that there was no constructive delivery of the land sold in the case at bar, as subject Deed of Sale is a private instrument, it is beyond question that there was actual delivery thereof. As found by the trial court, the Dignos spouses delivered the possession of the land in question to Jabil as early as March 27,1965 so that the latter constructed thereon Sallys Beach Resort also known as Jabils Beach Resort in March, 1965; Mactan White Beach Resort on January 15, J 966 and Bevirlyns Beach Resort on September 1, 1965. Such facts were admitted by petitioner spouses. 2. No. The contract of sale being absolute in nature is governed by Article 1592 of the Civil Code. It is undisputed that petitioners never notified private respondents Jabil by notarial act that they were rescinding the contract, and neither did they file a suit in court to rescind the sale. There is no showing that Amistad was properly authorized by Jabil to make such extrajudicial rescission for the latter who, on the contrary, vigorously denied having sent Amistad to tell petitioners that he was already waiving his rights to the land in question. Under Article 1358 of the Civil Code, it is required that acts and contracts which have for their object extinguishment of real rights over immovable property must appear in a public document. Petitioners laid considerable emphasis on the fact that private respondent Jabil had no money on the stipulated date of payment on September 15,1965 and was able to raise the necessary amount only by mid-October 1965. It has been ruled, however, that where time is not of the essence of the agreement, a slight delay on the part of one party in the performance of his obligation is not a sufficient ground for the rescission of the agreement. Considering that private respondent has only a balance of P4,OOO.00 and was delayed in payment only for one month, equity and justice mandate as in the aforecited case that Jabil be given an additional period within which to complete payment of the purchase price.

Celestino Co & Company v. CIR Facts: Celestino Co & Company is a general co-partnership registered under the trade name Oriental Sash Factory. From 1946 to 1951, it paid taxes equivalent to 7% on the gross receipts under Sec. 186 of the NIRC, which is a tax on the original sales of

articles by manufacturer, producer or importer. However, in 1952 it began to claim 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 company is engaged in manufacturing, or is merely a special service provider Held: Celestino 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 by it only when customers place their orders, does not alter the nature of the establishment, for it is obvious that it only accepted such orders as called for the employment of such material-moulding, frames, panels-as it ordinarily manufactured or was in a position habitually to manufacture. Any builder or homeowner, with sufficient money, may order windows or doors of the kind manufactured by this appellant. Therefore it is not true that it serves special customers only or confines its services to them alone. And anyone who sees, and likes, the doors ordered by Don Toribio Teodoro & Sons Inc. may purchase from appellant doors of the same kind, provided he pays the price. Surely, the appellant will not refuse, for it can easily duplicate or even mass-produce the same doors-it is mechanically equipped to do so. The Oriental Sash Factory does nothing more than sell the goods that it massproduces or habitually makes; sash, panels, mouldings, frames, cutting them to such sizes and combining them in such forms as its customers may desire. When this Factory accepts a job that requires the use of extraordinary or additional equipment, or involves services not generally performed by it-it thereby contracts for a piece of work filing special orders within the meaning of Article 1467. The orders herein exhibited were not shown to be special. They were merely orders for work nothing is shown to call them special requiring extraordinary service of the factory. Anyway, supposing for the moment that the transactions were not sales, they were neither lease of services nor contract jobs by a contractor. But as the doors and windows had been admittedly "manufactured" by the Oriental Sash Factory, such transactions could be, and should be taxed as "transfers" thereof under section 186 of the National Revenue Code.

CIR vs. Engineering Equipment

11072010
COMMISSIONER OF INTERNAL 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 Companys penal liability for viol ation of the Tax Code. The firm, however, contested the tax assessment and requested that it be furnished with the details and particulars of the Commissioners assessment.Engineering appealed the case to the Court of Tax Appeals. During the pendency of the case the investigating revenue examiners reduced the Companys 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. Held: 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: REVENUE vs. ENGINEERING EQUIPMENT

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 defendants 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 Engineerings 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 1) Advertisement 2) Ready-made materials of as discussion: manufacturer/contractor

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 G.R. No. L-11491 Subject: Sales Doctrine: Contract of Agency to Sell vs Contract of Sale Facts: On Jan 24, 1911, plaintiff and the respondent entered into a contract making the latter an agent of the former. The contract stipulates that Don Andres Quiroga, here in petitioner, grants exclusive rights to sell his beds in the Visayan region to J. Parsons. The contract only stipulates that J.Parsons should pay Quiroga within 6 months upon the delivery of beds. Quiroga files a case against Parsons for allegedly violating the following stipulations: not to sell the beds at higher prices than those of the invoices; to have an open establishment in Iloilo; itself to conduct the agency; to keep the beds on public exhibition, and to pay for the advertisement expenses for the same; and to order the beds by the dozen and in no other manner. With the exception of the obligation on the part of the defendant to order

the beds by the dozen and in no other manner, none of the obligations imputed to the defendant in the two causes of action are expressly set forth in the contract. But the plaintiff alleged that the defendant was his agent for the sale of his beds in Iloilo, and that said obligations are implied in a contract of commercial agency. The whole question, therefore, reduced itself to a determination as to whether the defendant, by reason of the contract hereinbefore transcribed, was a purchaser or an agent of the plaintiff for the sale of his beds. Issue: Whether the contract is a contract of agency or of sale. Held: In order to classify a contract, due attention must be given to its essential clauses. In the contract in question, what was essential, as constituting its cause and subject matter, is that the plaintiff was to furnish the defendant with the beds which the latter might order, at the price stipulated, and that the defendant was to pay the price in the manner stipulated. Payment was to be made at the end of sixty days, or before, at the plaintiffs request, or in cash, if the defendant so preferred, and in these last two cases an additional discount was to be allowed for prompt payment. These are precisely the essential features of a contract of purchase and sale. There was the obligation on the part of the plaintiff to supply the beds, and, on the part of the defendant, to pay their price. These features exclude the legal conception of an agency or order to sell whereby the mandatory or agent received the thing to sell it, and does not pay its price, but delivers to the principal the price he obtains from the sale of the thing to a third person, and if he does not succeed in selling it, he returns it. By virtue of the contract between the plaintiff and the defendant, the latter, on receiving the beds, was necessarily obliged to pay their price within the term fixed, without any other consideration and regardless as to whether he had or had not sold the beds. In respect to the defendants obligation to order by the dozen, the only one expressly imposed by the contract, the effect of its breach would only entitle the plaintiff to disregard the orders which the defendant might place under other conditions; but if the plaintiff consents to fill them, he waives his right and cannot complain for having acted thus at his own free will. For the foregoing reasons, we are of opinion that the contract by and between the plaintiff and the defendant was one of purchase and sale, and that the obligations the breach of which is alleged as a cause of action are not imposed upon the defendant, either by agreement or by law.
KER & G.R. No. L-20871 April 30, 1971 CO., LTD. vs. LINGAD

Facts: CIR assessed the sum of P20,272.33 as the commercial brokers percentage tax, surcharge, and compromise penalty against Ker & Co. There was a request on the part of petitioner for the cancellation of such assessment, which request was turned down. As a result, it filed a petition for review with the Court of Tax Appeals. CTA ruled that that Ker & Co is liable as a commercial broker under Section 194 (t) of the National Internal Revenue Code. Ker & Co signed a contract with the United States Rubber International, the former being referred to as the Distributor and the latter specifically designated as the Company. The shipments would cover products for consumption in Cebu, Bohol, Leyte, Samar, Jolo, Negros Oriental, and Mindanao except [the] province of Davao. Ker & Co, as Distributor, was precluded from disposing such products elsewhere than in the above places unless written consent would first be obtained from the Company. It was required to exert every effort to have the shipment of the products in the maximum quantity and to promote in every way the sale thereof. The prices, discounts, terms of payment, terms of delivery and other conditions of sale were subject to change in the discretion of the Company. Issue: WON the relationship Ker & Co and US Rubber was that of a vendor-vendee or principal-broker? PRINCIPAL- BROKER, hence liable under Section 194 (t) of the NIRC. Held: The relationship between them is one of brokerage or agency. That the petitioner Ker & Co., Ltd. is, by contractual stipulation, an agent of U.S. Rubber International is borne out by the facts that: 1. petitioner can dispose of the products of the Company only to certain persons or entities and within stipulated limits, unless excepted by the contract or by the Rubber Company; 2. it merely receives, accepts and/or holds upon consignment the products, which remain properties of the latter company 3. every effort shall be made by petitioner to promote in every way the sale of the products (Par. 3); that sales made by petitioner are subject to approval by the company 4. on dates determined by the rubber company, petitioner shall render a detailed report showing sales during the month 5. the rubber company shall invoice the sales as of the dates of inventory and sales report (Par. 14); that the rubber company agrees to keep the consigned goods fully insured under insurance policies payable to it in case of loss 6. upon request of the rubber company at any time, petitioner shall render an inventory of the existing stock which may be checked by an authorized representative of the former 7. upon termination or cancellation of the Agreement, all goods held on consignment shall be held by petitioner for the account of the rubber company until their disposition is provided for by the latter. CONTROLLING TEST (cited CIR vs. Constantino): 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 companys control, the relationship between the company and the dealer is one of agency. Sale vs. Agency a. In sale, the essence is the transfer of title or agreement to transfer it for a price paid or promised. In agency, the essence is the delivery to an agent. b. In sale, the transfer puts the transferee in the attitude or position of an owner and makes him liable to the transferor as a debtor for the agreed price, and not merely as an agent who must account for the proceeds of a resale, the transaction is a sale. In agency, the transfer does not make the property as the agents own, but that of principal, who remains the owner and has the right to control sales, fix the price, and terms, demand and receive the proceeds less the agents commission upon sales made. Besides, The control by the United States Rubber International over the goods in question is pervasive.

MERCADO v ESPIRITU

FACTS:

This case is about the signing of a deed of sale in which two of the four parties were minors with age 18, and 19. On the date of sale, these minors presented themselves that they were of legal age at the time they signed it, and they made the same manifestation before the notary public.

ISSUE:

Whether or not the deed of sale is valid when the minors presented themselves that they were of legal age.

RATIO:

The courts laid down that such sale of real estate was still valid since it was executed by minors, who have passed the ages of puberty and adolescence, and are near the adult age, and that the minors pretended that they had already reached their majority.

Article 38. Minority,

insanity or imbecility, the state of being a deaf-mute, prodigality and civilinterdiction are mere restrictions on the capacity to act, and do not exempt the incapacitated person from certain obligations, as when the latter arise from his acts or from property relations, such as easements. Also, these minors cannot be permitted afterwards to excuse themselves from compliance with the obligation assumed by them or seek their annulment. This is in accordance with the provisions of the law on estoppels. This is in accordance with the provisions of the law on estoppel. Art 1431 of Civil Code. Through estoppel, an admission or representation is rendered conclusive upon the person making it, and cannot be denied or disproved as against the person relying thereon. This is also in accordance with the provisions of Rule 123, Sec 68, Par. A
Rule 123, sec 68, Par. A...Whenever a party has, by his own declaration, act or omission, intentionally and deliberately led another to believe a particular thing to be true, and to act upon such belief, he cannot, in any litigation arising out of such declaration, act or omission, cannot be permitted to falsify it.

Rubias v. Batiller Facts: Before the war with Japan, Francisco Militante filed an application for registration of the parcel of land in question. After the war, the petition was heard and denied. Pending appeal, Militante sold the land to petitioner, his son-in-law. Plaintiff filed an action for forcible entry against respondent. Defendant claims the complaint of the plaintiff does not state a cause of action, the truth of the matter being that he and his

predecessors-in-interest have always been in actual, open and continuous possession since time immemorial under claim of ownership of the portions of the lot in question. Issue: Whether or not the contract of sale between appellant and his father-in-law 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: The stipulated facts and exhibits of record indisputably established plaintiff's lack of cause of action and justified the outright dismissal of the complaint. Plaintiff's claim of ownership to the land in question was predicated on the sale thereof made by his father-in- law in his favor, at a time when Militante's application for registration thereof had already been dismissed by the Iloilo land registration court and was pending appeal in the Court of Appeals. 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. Fundamental consideration of public policy render void and inexistent such expressly prohibited purchase (e.g. by public officers and employees of government property intrusted to them and by justices, judges, fiscals and lawyers of property and rights in litigation and submitted to or handled by them, under Article 1491, paragraphs (4) and (5) of our Civil Code) has been adopted in a new article of our Civil Code, viz, Article 1409 declaring such prohibited contracts as "inexistent and void from the beginning." Indeed, the nullity of such prohibited contracts is definite and permanent and cannot be cured by ratification. The public interest and public policy remain paramount and do not permit of compromise or ratification. In his aspect, the permanent disqualification of public and judicial officers and lawyers grounded on public policy differs from the first three cases of guardians, agents and administrators (Article 1491, Civil Code), as to whose transactions it had been opined that they may be "ratified" by means of and in "the form of a new contact, in which cases its validity shall be determined only by the circumstances at the time the execution of such new contract. The causes of nullity which have ceased to exist cannot impair the validity of the new contract. Thus, the object which was illegal at the time of the first contract, may have already become lawful at the time of the ratification or second contract; or the service which was impossible may have become possible; or the intention which could not be ascertained may have been

clarified by the parties. The ratification or second contract would then be valid from its execution; however, it does not retroact to the date of the first contract." Sia Suan and Gaw Chiao versus Ramon Alcantara Digest Facts: On August 3, 1931, appellant Sia Suan executed a deed of sale with Rufino Alcantara andhis sons Damaso Alcantara and appellee Ramon Alcantara, conveying five parcels of land tosaid petitioner. Ramon Alcantara was then 17 years, 10 months and 22 days old. On August27, 1931, Gaw Chiao (husband of Sia Suan) received a letter from Francisco Alfonso, attorneyof Ramon Alcantara, informing Gaw Chiao that Ramon Alcantara was a minor andaccordingly disavowing the contract. After being contacted by Gaw Chiao, however, RamonAlcantara executed an affidavit ratifying the deed of sale. On said occasion Ramon Alcantarareceived from Gaw Chiao the sum of P500. In the meantime, Sia Suan sold one of the lots to Nicolas Azores from whom Antonio Azores inherited the same. On August 8, 1940, an actionwas instituted by respondent Ramon Alcantara in the CFI (Court of First Instance) of Lagunafor the annulment of the deed of sale as regards his undivided share in the two parcels of landcovered by certificates of title Nos. 751 and 752 of Laguna. The CFI of Laguna rendered adecision in favor of appellee Alcantara in view of his minority during the execution of thecontract. Thus, this appeal by certiorari of Sia Suan and Gaw Chiao.Issue: Whether or not the Deed of Sale executed on August 31, 1931 is null and voidRuling: No. The SC ruled that Ramon is not allowed to annul such deed, because he alreadyratified it. The letter written by him informing the appellants of his minority constituted aneffective disaffirmance of the sale, and that although the choice to disaffirm will not by itself avoid the contract until the courts adjudge the agreement to be invalid, said notice shieldedRamon from laches and consequent estoppel.. Ramon may have executed his acts in badfaith for he earned money from Gaw Chiao as a result of the sale and its ratification, yethe summons the courts to annul the sale because he executed it while still a minor. Theappealed decision of the Court of Appeals is hereby reversed and the appellants absolved from thecomplaint, with costs against the appellee, Ramon Alcantara DAVID P. FORNILDA, JUAN P. FORNILDA, EMILIA P. FORNILDAOLILI, LEOCADIA P. FORNILDA LABAYEN and ANGELA P. FORNILDAGUTIERREZ, petitioners,vs. THE BRANCH 164, REGIONAL TRIAL COURT IVTH JUDICIALREGION, PASIG, JOAQUIN C. ANTONIO Deputy Sheriff, RTC, 4JR Tanay, Rizal and ATTY. SERGIO I. AMONOY respondents. G.R. No. 72306 October 6, 1988FACTS:

The Controverted Parcels were part of the estate of the late JulioM. Catolos subject of intestate estate proceedings, whereinRespondent Amonoy acted as counsel for some of the heirs from1959 until 1968 by his own admission. These properties were adjudicated to Alfonso Fornilda andAsuncion M. Pasamba in the Project of Partition approved by theCourt on 12 January 1965 On 20 January 1965, or only eight (8) days thereafter, and whilehe was still intervening in the case as counsel, these propertieswere mortgaged by petitioners' predecessor-in-interest toRespondent Amonoy to secure payment of the latter's attorney'sfees in the amount of P27,600.00 Since the mortgage indebtedness was not paid, RespondentAmonoy instituted an action for judicial foreclosure of mortgageon 21 January 1970 The mortgage was subsequently ordered foreclosed and auctionsale followed where Respondent Amonoy was the sole bidder forP23,600.00 Being short of the mortgage indebtedness, he applied for andfurther obtained a deficiency judgment. ISSUE: Whether or not the mortgage constituted on the ControvertedParcels in favor of Respondent Amonoy comes within the scope of theprohibition in Article 1491 of the Civil Code. HELD: YES The pertinent portions of the said Articles read:Art. 1491. The following persons cannot acquire by purchase even at a public or judicial or auction, either inperson or through the mediation of another:xxx xxx xxx(5) Justices, judges, prosecuting attorneys, ... the property and rights in litigation or levied upon onexecution before the court within whose junction orterritory they exercise their respective functions; thisprohibition includes the act of acquitting by assignmentand shall apply to lawyers with respect to the property and rights which may be the object of any litigation inwhich they may take part by virtue of their profession .(Emphasis supplied) Under the aforequoted provision , a lawyer is prohibited fromacquiring either by purchase or assignment the property or rights involved which are the object of the litigation inwhich they intervene by virtue of their profession. Theprohibition on purchase is all embracing to include not only salesto private individuals but also public or judicial sales

At the time the mortgage was executed, therefore, therelationship of lawyer and client still existed, the very relation of trust and confidence sought to be protected by the prohibition,when a lawyer occupies a vantage position to press upon ordictate terms to a harassed client. From the time of the executionof the mortgage in his favor, Respondent Amonoy had alreadyasserted a title adverse to his clients' interests at a time when therelationship of lawyer and client had not yet been severed. Considering that the mortgage contract, entered into incontravention of Article 1491 of the Civil Code is expresslyprohibited by law, the same must be held inexistent and void abinitio.
Cavite Development vs. Lim (G.R. No. 131679 February 1, 2000)

Was it an option contract? NO. In the case at bar, the sum of P30,000.00, although denominated in the offer to purchase as option money, is actually in the nature of earnest money or down payment. An option contract is a preparatory contract in which one party grants to the other, for a fixed period and under specified conditions, the power to decide, whether or not to enter into a principal contract, hence only preparatory. After the payment of the 10% option money, the Offer to Purchase provides for the payment only of the balance of the purchase price, implying that the option money forms part of the purchase price. This is precisely the result of paying earnest money under Art. 1482 of the Civil Code. It is clear then that the parties in this case actually entered into a contract of sale, partially consummated as to the payment of the price. Was the sale null and void? YES, for being an impossible service. CDB never acquired a valid title to the property because the foreclosure sale, by virtue of which, the property had been awarded to CDB as highest bidder, is likewise void since the mortgagor was not the owner of the property foreclosed. Such contract may be deemed to be inoperative and may thus fall, by analogy, under item No. 5 of Article 1409 of the Civil Code: Those which contemplate an impossible service. The bank was also negligent. There is no evidence that CDB observed its duty of diligence in ascertaining the validity of Rodolfo Guansings title. The alleged ocular inspection report20 by CDBs representative w as never formally offered in evidence.

CONCHITA NOOL and GAUDENCIO ALMOJERA vs.CA GR No. 116635 July 24, 1997 Facts: One lot formerly owned by Victorio Nool has an area of 1 hectare. Another lot previously owned by Francisco Nool has an area of 3.0880 hectares. Spouses (plaintiffs) Conchita Nool and Gaudencio Almojera alleged that they are the owners of the subject lands. They are in dire need of money, they obtained a loan DBP , secured by a real estate mortgage on said parcels of land, which were still registered in the names of Victorino and Francisco Nool, at the time, Since the plaintiffs failed to pay the said loan, the mortgage was foreclosed; that within the period of redemption, the plaintiffs contacted Anacleto Nool for the latter to redeem the foreclosed properties from DBP, which the latter did; and as a result, the titles of the 2 parcels of land in question were transferred to Anacleto; that as part of their arrangement or understanding, Anacleto agreed to

buy from Conchita the 2 parcels of land , for a total price of P100,000.00, P30,000.00 of which price was paid to Conchita, and upon payment of the balance of P14,000.00, the plaintiffs were to regain possession of the 2 hectares of land, which amounts spouses Anacleto Nool and Emilia Nebre failed to pay. Anacleto Nool signed the private writing, agreeing to return subject lands when plaintiffs have the money to redeem the same; defendant Anacleto having been made to believe, then, that his sister, Conchita, still had the right to redeem the said properties. Issue: Is the purchase of the subject lands to Anacleto valid? Held: Nono dat quod non habet, No one can give what he does not have; Contract of repurchase inoperative thus void. Article 1505 of the Civil Code provides that where goods are sold by a person who is not the owner thereof, and who does not sell them under authority or with consent of the owner, the buyer acquires no better title to the goods than the seller had, unless the owner of the goods is by his conduct precluded from denying the sellers authority to sell. Jurisprudence, on the other hand, teaches us that a person can sell only what he owns or is authorized to sell; the buyer can as a consequence acquire no more than what the seller can lega lly transfer. No one can give what he does not have nono dat quod non habet. In the present case, there is no allegation at all that petitioners were authorized by DBP to sell the property to the private respondents. Further, the contract of repurchase that the parties entered into presupposes that petitioners could repurchase the property that they sold to private respondents. As petitioners sold nothing, it follows that they can also repurchase nothing. In this light, the contract of repurchase is also inoperative and by the same analogy, void. Cavite Development Bank v. LimDate: Feb. 1, 2000 Ponente: Mendoza, J. Facts: June 15, 1983 Rodolfo Guansing obtained a loan from CDB, to secure which hemortgaged a parcel of land situated at La Loma and covered by TCT registered in hisname. As Guansing defaulted in the payment of his loan, CDB foreclosed the mortgage. Themortgaged property was sold to CDB as the highest bidder at the foreclosure sale.Guansing failed to redeem, and CDB consolidated title to the property in its name. June 16, 1988 private respondent Lolita Chan Lim, assisted by a broker namedRemedios Gatpandan, offered to purchase the property from CDB.

 Written Offer to Purchase:We hereby offer to purchase your property at #63 Calavite and Retiro Sts., La Loma,Quezon City for P300,000.00 under the following terms and conditions:(1) 10% Option Money;(2) Balance payable in cash;(3) Provided that the property shall be cleared of illegal occupants or tenants. Lim paid CDB P30,000 as Option Money. After some time following up the sale, Lim discovered that the subject property wasoriginally registered in the name of Perfecto Guansing, father of mortgagor Rodolfo.Rodolfo succeeded in having the property registered in his name under TCT No. 300809,the same title he mortgaged to CDB. It appears, however, that the father, Perfecto,instituted a civil case for the cancellation of his sons title. The trial court rendered adecision restoring Perfectos previous title and cancelling TCT No. 300809 on the groundthat the latter was fraudulently secured by Rodolfo. This decision has since become finaland executory. Lim and her husband filed an action for specific performance and damages againstCDB and its mother-company, Far East Bank and Trust Co. RTC in favor of Lim spouses: there was a perfected contract of sale; CDB and FEBTCliable for damages. CA affirmed. Issue: W/N there was a VALID contract of sale between the parties. Held: NO. Ratio: There is a perfected contracted of sale Contracts are not defined by the parties thereto but by principles of law. Indetermining the nature of a contract, the courts are not bound by the name or title givento it by the contracting parties. In the case at bar, the sum of P30,000, althoughdenominated in the offer to purchase as "option money," is actually in the nature of earnest money or down payment when considered with the other terms of the offer. Definition of option contract: It is a preparatory contract in which one party grants tothe other, for a fixed period and under specified conditions, the power to decide, whetheror not to enter into a principal contract, it binds the party who has given the option notto enter into the principal contract with any other person during the period designated,and within that period, to enter into such contract with the one to whom the option wasgranted, if the latter should decide to use the option. It is a separate agreement

distinctfrom the contract to which the parties may enter upon the consummation of the option.