Dizon vs CA and Overland Express Lines January 28, 1999 FACTS: Overland Express Lines, Inc.

. entered into a Contract of Lease with Option to Buy with petitioners involving a 1,755.80 square meter parcel of land situated at corner MacArthur Highway and South H Street, Diliman, Quezon City. The term of the lease was for 1 year commencing from May 16, 1974 up to May 15, 1975. During this period, Overland Express Lines was granted an option to purchase for the amount of P3,000.00 per square meter. Thereafter, the lease shall be on a per month basis with a monthly rental of P3,000.00. For failure of Overland Express Lines to pay the increased rental of P8,000.00 per month effective June 1976, petitioners filed an action for ejectment against it. The lower court rendered judgment ordering Overland Express Lines to vacate the leased premises and to pay the sum of P624,000.00 representing rentals in arrears and/or as damages in the form of reasonable compensation for the use and occupation of the premises during the period of illegal detainer from June 1976 to November 1982 at the monthly rental of P8,000.00, less payments made, plus 12% interest per annum from November 18, 1976, the date of filing of the complaint, until fully paid, the sum of P8,000.00 a month starting December 1982, until Overland Express Lines fully vacates the premises, and to pay P20,000.00 as and by way of attorneys fees.

1868 of the New Civil Code, there was no showing that petitioners consented to the act of Alice A. Dizon nor authorized her to act on their behalf with regard to her transaction with private respondent. The most prudent thing private respondent should have done was to ascertain the extent of the authority of Alice A. Dizon. Being negligent in this regard, private respondent cannot seek relief on the basis of a supposed agency. Every person dealing with an agent is put upon inquiry and must discover upon his peril the authority of the agent. If he does not make such inquiry, he is chargeable with knowledge of the agents authority, and his ignorance of that authority will not be any excuse. Persons dealing with an assumed agency, whether the assumed agency be a general or special one, are bound at their peril, if they would hold the principal, to ascertain not only the fact of the agency but also the nature and extent of the authority, and in case either is controverted, the burden of proof is upon them to establish it.

ISSUE: WON Overland Express Lines actually paid the alleged P300,000.00 to Fidela Dizon, as representative (agent) of petitioners in consideration of the option HELD: No. CA opined that the payment by Overland Express Lines of P300,000.00 as partial payment for the leased property, which petitioners accepted (through Alice A. Dizon) and for which an official receipt was issued, was the operative act that gave rise to a perfected contract of sale, and that for failure of petitioners to deny receipt thereof, Overland Express Lines can therefore assume that Alice A. Dizon, acting as agent of petitioners, was authorized by them to receive the money in their behalf. CA went further by stating that in fact, what was entered into was a conditional contract of sale wherei n ownership over the leased property shall not pass to the Overland Express Lines until it has fully paid the purchase price. Since Overland Express Lines did not consign to the court the balance of the purchase price and continued to occupy the subject premises, it had the obligation to pay the amount of P1,700.00 in monthly rentals until full payment of the purchase price. In an attempt to resurrect the lapsed option, Overland Express Lines gave P300,000.00 to petitioners (thru Alice A. Dizon) on the erroneous presumption that the said amount tendered would constitute a perfected contract of sale pursuant to the contract of lease with option to buy. There was no valid consent by the petitioners (as co-owners of the leased premises) on the supposed sale entered into by Alice A. Dizon, as petitioners alleged agent, and Overland Express Lines. The basis for agency is representation and a person dealing with an agent is put upon inquiry and must discover upon his peril the authority of the agent. As provided in Article

Fule vs. Court of Appeals March 2, 1998 Romero, J.: Facts: Gregorio Fule a banker and jeweler, acquired a 10-hectare property to be called Tanay Property. It used to be in the name of Fr. Antonio Jacobe but it was mortgage to the bank where petitioner worked as corporate secretary. Upon failure of Fr. Jacobe to pay, the Tanay Property was foreclosed and sold at public auction. Since petitioner was the corporate secretary of the bank which foreclosed the property, petitioner sought the help of Dichoso and Mendoza to look for a buyer. They found one in the person of Dr. Cruz. Dr. Cruz was the owner of a pair of diamond earrings which the petitioner found to be at a value of Php 100,000. Later, petitioner offered to buy the earrings for $6,000 at the rate of Php 25 for every $1. Dr. Cruz still declined stating that the real price is Php 19 to $1. Later, negotiations for a barter ensued. Petitioner would sell the Tanay Property while Dr. Cruz would give the petitioner the diamond earrings. October 19, 1984, Dr. Cruz was already amendable to the barter so petitioner went over to check the jewelry. In the afternoon of October 23, 1984, petitioner met Atty. Belarmino to prepare the deed of sale. Petitioner then signed this the following day and went over to the bank to get the jewelries. Upon inspecting the jewelries, petitioner was satisfied and left at around 6 p.m. that day. However, 2 hours later, at 8 p.m. petitioner went over to the house of Atty. Belarmino and told the latter that the jewelries involved in the barter were fake. A jeweler by the name of Macario Dimayuga confirmed that said earrings were fake. The lower court held that the sale was valid, and this was affirmed by the CA. Issue / Held: WON the CA erred in upholding the validity of the sale. NO. Ratio: Contracts are perfected by mere consent. A contract of sale is perfected at the moment there is a meeting of the minds upon the thing which is the object of the contract and upon the price. It is evident from the facts that there was a meeting of the minds between the petitioner and Dr. Cruz. Annullable contracts are those where in the parties are: 1. Incapable of giving consent to a contract, and 2. Those where the consent is vitiated by mistake violence, intimidation, undue influence or fraud. Petitioner alleges that since the jewelry turned out to be counterfeit, his consent was vitiated by fraud. But the SC held that it was petitioner who acted in bad faith. He had the opportunity to examine the jewelry many times before he actually took them in his possession. It was only after 2 hours, where a

switch between the genuine and fake diamonds did he call the attention of the respondent to the fact that the diamonds were fake. Moreover, the court held that ownership over the parcel of land and the pair of emerald-cut diamond earrings had been transferred to Dr. Cruz and petitioner, respectively, upon the actual and constructive deliver thereof. WHEREFORE, Decision of the CA is AFFIRMED. *there is another issue regarding moral and nominal damages in the case. This case is under barter in the outline. So, you think I should add that issue still?

Celestino Co & Co. v. Collector of Internal Revenue August 31, 1956 Bengzon, J. Relevant Provision: Art. 1467. A contract for the delivery at a certain price of an article which the vendor in the ordinary course of his business manufactures or procures for the general market, whether the same is on hand at the time or not, is a contract of sale, but if the goods are to be manufactured specially for the customer and upon his special order, and not for the general market, it is a contract for a piece of work. Facts: Celestino Co & Company is a duly registered general co-partnership doing business under the trade name of Oriental Sash Factory From 1946 to 1951, it paid percentage taxes of 7% on the gross receipts of its sash, door and window factory. o In accordance with section 186 of the National Revenue Code In 1952, it began to claim liability only to the contractors 3% o Under section 191 of same code Petitioner claims that they produce doors and windows specially for certain clients only o Petitioner presents letters, sketches of doors and windows and price quotations sent by the manager of the factory to four customers who allegedly made special orders for doors and windows from the said factory. o (Hence, would be a Contract for a Piece of Work)

Although the Factory does not, in the ordinary course of its business, manufacture and keep on stock doors of the kind sold to Teodoro, it could stock and/or probably hand in stock the sash, mouldings and panels it used therefor.

Dispositive: Appealed decision affirmed. Celestino Co & Company must pay percentage taxes of 7% on the gross receipts of its sash, door and window factory in accordance with sec. 186 of the National Revenue Code and NOT as a contractor under sec. 191.

Commissioner v Engineering Equipment COMMISSIONER OF INTERNAL REVENUE vs. ENGINEERING EQUIPMENT G.R. No. L27044 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 violation of the Tax Code. The firm, however, contested the tax assessment and requested that it be furnished with the details and particulars of the 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:

Issue/Held: WON Petitioners business is involved in contracts for pieces of work. / NO. It is involved in contracts of sale. Ratio: Any builder or homeowner, with sufficient money, may order windows or doors of the kind manufactured by this appellant. That the doors and windows must meet desired specifications is neither here nor there. o If theses specifications do not happen to be of the kind habitually manufactured by the appellant special forms of sash, mouldings or panels it would not accept the order and no sale is made. In relation to Art. 1467 of the Civil Code: o It is apparent that the Oriental Sash Factory did not merely sell its services to Don Toribio Teodoro & Co (claimed special client) because it also sold the materials. It sold materials ordinarily manufactured by it, although in such form or combination as suited the fancy of the purchaser.

1) The word contractor has come to be used with special reference to a person who, in the pursuit of the independent business, undertakes to do a specific job or piece of work for other persons, using his own means and methods without submitting himself to control as to the petty details. The true test of a contractor is that when he renders service in the course of an independent occupation, representing the will of his employer only as to the result of his work, and not as to the means by which it is accomplished. Engineering did not manufacture air conditioning units for sale to the general public, but imported some items (as refrigeration compressors in complete set, heat exchangers or coils) which were used in executing contracts entered into by it. Engineering undertook negotiations and execution of individual contracts for the design, supply and installation of air conditioning units of the central type taking into consideration in the process such factors as the area of the space to be air conditioned; the number of persons occupying or would be occupying the premises; the purpose for which the various air conditioning areas are to be used; and the sources of heat gain or cooling load on the plant such as sun load, lighting, and other electrical appliances which are or may be in the plan. Relative to the installation of air conditioning system, Engineering designed and engineered complete each particular plant and that no two plants were identical but each had to be engineered separately. 2) NATURE OF OBJECT TEST: The distinction between a contract of sale and one for work, labor and materials is tested by the inquiry whether the thing transferred is one NOT in existence and which never would have existed but for the order of the party desiring to acquire it, or a thing which would have existed and has been the subject of sale to some other persons even if the order had not been given. If the article ordered by the purchaser is exactly such as the plaintiff makes and keeps on hand for sale to anyone, and no change or modification of it is made at 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 of discussion: 1) Advertisement as manufacturer/contractor 2) Ready-made materials In Celestino Co, the Court held the taxpayer to be a manufacturer rather than a contractor of sash, doors and windows manufactured in its factory. From the very start, Celestino Co intended itself to be a manufacturer of doors, windows, sashes etc. as it did

register a special trade name for its sash business and ordered company stationery carrying the bold print ORIENTAL SASH FACTORY. As a general rule, sash factories receive orders for doors and windows of special design only in particular cases, but the bulk of their sales is derived from ready-made doors and windows of standard sizes for the average home, which sales were reflected in their books of accounts totalling P118,754.69 for the period of only nine (9) months. The Court found said sum difficult to have been derived from its few customers who placed special orders for these items. In the present case, the company advertised itself as Engineering Equipment and Supply Company, Machinery Mechanical Supplies, Engineers, Contractors and not as manufacturers. It likewise paid the contractors tax on all the contracts for the design and construction of central system. Similarly, it did not have ready-made air conditioning units for sale.

Quiroga vs Parsons (1918) J. Avancena 1. Quiroga and Parsons entered into a contract with the following conditions: a. Mr. Quiroga shall manufacture beds and shall invoice them at the same price he has fixed for sales in Manila + 25% commission on the sale + Parsons shall order the beds by the dozen b. Parsons shall pay within a period of 60 days from shipment date c. Transpo + Shipment expenses = Quiroga; Freight + insurance and Unloading cost = Parsons d. If before an invoice falls due, Quiroga should request its payment, the same will be considered as prompt payment = 2% deduction from invoice amount e. Quiroga shall give 15 days notice for any price alteration he wants f. Parsons shall not sell other beds than the Quiroga beds g. Quiroga assumes the obligation to offer and give preference to Parsons in case anyone should apply for the exclusive agency outside Visayas h. Parsons can sell the bed in any part of the Philippines where there are no exclusive agents i. Contract is for an unlimited period and may be terminated by either contracting parties by a previous 90 day notice. Quiroga filed a complaint against Parsons for allegedly violating portions of their agreement. With the exception of not ordering beds by the dozen, none of the obligations imputed to Parsons are expressly set forth in the contract. a. Quiroga: The obligations we agreed upon are implied in a contract of commercial agency so Parsons should have followed his obligations dutifully as my agent. SC: a. Is this a contract of agency or a contract of sale? CONTRACT OF SALE! i. In order to classify a contract, due regard must be given to its essential clauses. ii. APPLICATION: In the contract in question, what was essential, as its cause and subject matter, is that Parsons was to pay the price in the manner stipulated. The price agreed upon was determined by Quiroga with certain discounts if applicable. Payment was to be made at the end of 60 days, or at Quirogas request subject to a 2% discount for prompt payment. iii. ^ These are essentially the features of a contract of purchase and sale. There was the obligaton on the part of Quiroga to furnish the beds and there was obligation on the part of Parsons to pay the price. 1. These features exclude the legal conception of an agency or order to sell whereby the agent received the thing to sell it and does not pay the price, but delivers to the principal the price he obtains from the sale of a thing to 3rd person, and if he does not succeed in selling it, he returns it.

2.

iv. Debunking Quiroga: After examining the clauses of the contract, none of the single clauses conveys the idea of agency. 1. The word commission on sales merely means a discount in price 2. The word agency only expresses the idea that it was only Parsons who could sell the beds in the Visayan Islands 3. Re: Other clauses They are not incompatible with the contract of purchase and sale 4. Re: Testimony of Former VP of Parsons who allegedly drafted the said contract Well, he really is not the one who drafted according to Parsons evidence + supposing he is, then he is mistaken for thinking that what he is drafting is a contract of agency. a. Contract is what the law defines it to be not what the parties call it. 5. Re: Quirogas argument that it was agency because Parsons returned the beds it could not sell Mutual tolerance in the performance of their duties under the contract 6. Re: Parsons Obligation to order by the dozen If breached, then Quiroga could just disregard Parsons order but if he consents then he cannot complain anymore because ha acted of his own free will.

3.

Puyat v. Arco Date: June 20, 1941 Ponente: Laurel, J. Parties: Gonzalo Puyat & Sons, Inc., petitioner Arco Amusement Company (formerly known as Teatro Arco), respondent Topic: Agency to buy or sell FACTS: Arco (respondent) brought an action against Puyat (petitioner) in the CFI Manila to secure a reimbursement of certain amounts allegedly overpaid by it on account of the purchase price of sound producing equipment and machinery from Starr Piano Company of Indiana, USA. 1929: Teatro Arco, a corporation organized under Phil. laws, was engaged in the business of operating cinematographs 1930: Its name was change to Arco Amusement Company. About the same time, Gonzalo Puyat & Sons, Inc, another corporation, was acting as exclusive agents in the Phils for Starr Piano Company (dealth with cinematograph equipment and machinery). Arco then approached Puyat, desiring to purchase equipment from Starr Piano. Through their respective representatives, Arco agreed to order sound producing equipment from Starr Piano, with an additional 10% commission + expenses (freight, insurance banking charges, cables, etc.) to Puyat. Puyat sent a cable to Starr Piano inquiring about the price. A reply was received stating the list price of $1700 f.o.b. factory Richmond, Indiana. Puyat did not show Arco the letters but merely informed Arco that the price is $1700, to which the latter agreed to. 1929: Equiment arrived and the price of $1700, commission, and all the other expenses were paid upon delivery. 1930: Another transaction occurred for the purchase of another sound producing equipment. $1600, commission and other expenses were duly paid. Three years later: Arco learned about a civil case filed by one Fidel Reyes against Puyat, and discovered that the price relayed to them by the latter was not the net price, but the list price and that the latter was able to obtain a discount as well. This prompted them to obtain a reimbursement and file the present action. TC: absolved Puyat. The contract was one of outright purchase and sale. CA: held that the relation between Puyat and Arco was that of agent and principal and sentenced Puyat to pay for the alleged overpayments. CA further argued that even if the contract was one of purchase and sale, the petitioner was guilty of fraud in concealing the true price, hence, would still be liable for reimbursements. Hence, present petition. ISSUE: HELD: Whether the contract was one of purchase and sale, or that of agency PURCHASE AND SALE. Hence. Puyat is not bound to pay reimbursements.

The terms of the contract between them are clear and admit of no other interpretation than that the respondent agreed to purchase from the petitioner the equipment in question at the prices indicated which are fixed and determinate. The respondent even admitted that the petitioner agreed to sell to it the sound producing equipment and machinery. Also, in agency, the agent would be exempted from all liability in the discharge of his commission as long as he acts in accordance with the instructions received from his principal (Sec. 254, Code of Commerce), and the principal would even be liable to indemnify the agent for damages the latter may incur in carrying out the agency without fault or imprudence on his part (Art. 1729, CC). Such is not the case here. The 10% commission received by Puyat does not make the latter an agent because this is only an additional price which Arco bound itself to pay. Such stipulation is not incompatible with the contract of purchase and sale. Furthermore, Puyat is already the agent of Starr Piano in the Phils. It is out of the ordinary for one to be the agent of both the vendor and the purchaser. The respondent could not secure equipment and machinery manufactured by Starr Piano except from Puyat alone; it willingly paid the price quoted; it received the equipment and machinery as represented; and that was the end of the matter as far as respondent was concerned. The fact that Puyat more or less profit than Arco calculated before entering into the contract is no ground for rescission. Not every concealment is fraud; and short of fraud, it were better that, within certain limits, business acumen permit of the loosening of the sleeves and of the sharpening of the intellect of men and women in the business world.

DAO HENG BANK, INC (now Banco de Oro Universal Bank) v. LAIGO Carpio Morales, J. November 20, 2008 Relevant Law: Art. 1245: Dation in payment, whereby property is alienated to the creditor in satisfaction of a debt in money shall be governed by the law of sales. FACTS: Spouses Lilia and Reynaldo Laigo obtained loans from Dao Heng Bank in the amount of 11M to secure the payment of which they forged 3 real estate mortgages covering 2 parcels of land The loans were payable within 12 months from the execution of the promissory notes covering the loans. By 2000, respondents failed to settle their outstanding obligation drawing them to verbally offer to cede to Dao Heng one of the two mortgage lots by way of dacion en pago. The land has been appraised but there was no further action. Dao Heng was later to demand the settlement of the obligation (10,385,109). Upon non-payment, Dao Heng filed an application to foreclose the real estate mortgage. The properties were sold for 10,776,242 to Banco de Oro Universal Bank, the highest bidder. The spouses move to redeem the property and Dao Heng Bank proposed the redemption scheme as follows: Redemption price shall be 11.5M plus 12% interest based on diminishing balance payable in staggered payments up to January 2, 2002. 3M to be paid immediately upon receipt of this approval (see case for other conditions) Nothing was heard from the respondents hence the bank proceeded to consolidate the titles immediately after the expiration of the redemption period Six days before the expiration of the redemption period, the respondents filed a complaint with the RTC praying for the annulment of the foreclosure of the properties and for them to be allowed to deliver by way of dacion en pago one of the mortgaged properties as full payment of their mortgaged obligation The spouses claim that Dao Heng verbally agreed to enter into a dacion en pago, while Dao Heng said that there was no meeting of the minds between the parties for the settlement of the claim by dacion en pago. Hence, the bank moved to dismiss the complaint because it is unenforceable under the Statute of Frauds (must be in writing). The spouses, on the other hand, argued that the delivery of the titles to the mortgaged properties constituted partial performance of their obligation under the dacion en pago, taking it out of the coverage of the Statute of Frauds.

HELD: No. There was no common consent between the parties. Dao Heng Bank found the offer to settle by way of daccion not acceptable and thus, it opted to foreclose on the mortgage. RATIO: Dacion en pago as a mode of extinguishing an existing obligation partakes of the nature of sale whereby the property is alienated to the creditor in satisfaction of a debt in money. It is an objective novation of the obligation, hence, common consent is required. In dacion en pago, the debtor offers another thing to the creditor who accepts it as equivalent for payment of an outstanding debt. It partakes of a nature of a sale, the creditor buying the property of the debtor, hence the elements of a sale (consent, object, cause or consideration) must be present. In dacion en pago, what actually takes place is an objective novation of the obligation, where the thing offered as an accepted equivalent of the performance of an obligation is considered as the object of the contract of sale while the debt is the purchase price. In any case, common consent is an essential prerequisite be it a sale or novation to have the effect of totally extinguishing the debt or obligation. Being likened to that of a contract of sale, it is governed by the law of sales. Hence, the partial execution of the contract of sale takes it out of the provisions of the Statute of Frauds so long as the essential requisites of consent, object and cause concur. However, in this case, there is no showing that after the appraisal of the property, the bank approved of the proposal. The delivery of the title is the usual condition sine qua non to the execution of the mortgage.

ISSUE: WON there was a valid dacion en pago.

Luzon Brokerage v. Maritime Building January 31, 1972 J. JBL Reyes Facts: 1949: Defendant Myers Building Co. entered into a Deed of Conditional Sale in favor of Bary Building co. (later known as Maritime Building Co.) for the sale of 3 parcels of land in Manila o PhP 1M o PhP 50k paid upon the execution of the said contract; The balance to be paid in monthly instalments of PhP 10k, with 10% interest per annum until fully paid o Paragraph O: In case of failure to pay any instalment, the contract shall be annulled at the option of the vendor and all payments already made shall be forfeited + vendor has the right to re-enter and take possession of the property Monthly instalment was amended to PhP 5k per month and interest was raised to 5.5% p.a. Monthly instalments were regularly paid until 1961: Maritime requested for a moratorium on the monthly payments until the end of 1961 = difficulties in connection with the warehouse business o Board of directors rejected the request for suspension of payments Maritime failed to pay for the months of April and May 1961; May 1961: Myers demanded payment for instalments that were due and demandable June 1961: Myers wrote to Maritime advising it of the cancellation of the Deed of Conditional Sale entered into between them and demanded possession Myers demanded upon Luzon Brokerage (to whom Maritime leased the properties) payment of monthly rentals of PhP 10k and the surrender of the same to it -> Luzon found itself in a payment to the wrong party = filed action for interpleader against Maritime Myers filed an action against Maritime, praying for the confirmation of its right to cancel said contract o Maritime contends: (1) Myers cannot cancel the contract extrajudicially; (2) not failed to pay monthly payments Trial Court: Maritime = breach of contract -> Myers entitled to terminate said contract + forfeit prior instalments + repossess building + collect rentals from Luzon Brokerage

Co. into answering for an alleged promise of the late FH Myers to indemnify Schedler (Majority stock holder of Myers Co) o Attempt to burden Myers Building Co. with an uncollectible debt since the enforcement of the estate of FH Myers was already barred o Breach of contract tainted with fraud or malice o Being in bad faith, Maritime is not entitled to ask the court for more time to make payment, effectively removing the breach or default Irrelevant if breach is casual or serious o Manuel v. Rodriguez: Contracts to sell -> full payment is a positive suspensive condition, failure of which is not a breach (casual or serious) but an event that prevented the obligation of the vendor to convey the title from acquiring binding force [Art. 1117 of Old Civil Code] Re: Extrajudicial Rescission o Court cited actual terms in the contract: should the VENDEE fail to pay any of the monthly instalments when due xxx then this Deed of Conditional Sale SHALL AUTOMATICALLY and WITHOUT ANY FURTHER FORMALITY, become NULL AND VOID xxx o Cited UP v. De Los Angeles: The party who deems the contract violated may consider it resolved or rescinded, and act accordingly, without previous court action, but it proceeds at its own risk

Issue/Held: WON Myers was entitled to extrajudicially rescind the contract [YES] Ratio: Default not made in good faith o Letter of Maritime to Myers Co. = non-payment of installments was the result of a deliberate course of action, designed to coerce Myers

Title: Dignos v CA Date: Feb. 29, 1988 Ponente: Bidin, J. Facts: The Dignos spouses were owners of a parcel of land. On June 7, 1965, petitioners, Dignos spouses, sold the said parcel of land to respondent Atilano J. Jabil for the sum of P28,000.00, payable in two installments, with an assumption of indebtedness with the First Insular Bank of Cebu in the sum of P12,000.00, which was paid and acknowledged by the vendors in the deed of sale executed in favor of Jabil, and the next installment in the sum of P4,000.00 to be paid on or before September 15, 1965. On November 25, 1965, the Dignos spouses sold the same land in favor of the spouses, Luciano Cabigas and Jovita L. De Cabigas, who were then U.S. citizens, for the price of P35,000.00. A deed of absolute sale was executed by the Dignos spouses in favor of the Cabigas spouses. As the Dignos spouses refused to accept from Jabil the balance of the purchase price of the land, and as he discovered the second sale made by the spouses to the Cabigas spouses, Jabil brought the present suit. Issue: I. Whether or not subject contract is a deed of absolute sale or a contract Lot sell. DEED OF SALE!

of the land to Jabil, then on which the latter constructed a beach resort called Jabils Beach Resort. Petition dismissed.

Ratio: Petitioners argue it was a contract to sell subject to the suspensive condition of full payment of the price. Untenable. Thus, it has been held that a deed of sale is absolute in nature although denominated as a "Deed of Conditional Sale" where nowhere in the contract in question is a proviso or stipulation to the effect that title to the property sold is reserved in the vendor until full payment of the purchase price, nor is there a stipulation giving the vendor the right to unilaterally rescind the contract the moment the vendee fails to pay within a fixed period. A careful examination of the contract shows that there is no such stipulation reserving the title of the property on the vendors nor does it give them the right to unilaterally rescind the contract upon non-payment of the balance thereof within a fixed period. On the contrary, all the elements of a valid contract of sale under Article 1458 of the Civil Code, are present, such as: (1) consent or meeting of the minds; (2) determinate subject matter; and (3) price certain in money or its equivalent. In addition, Article 1477 of the same Code provides that "The ownership of the thing sold shall be transferred to the vendee upon actual or constructive delivery thereof." Moreover, though there was no constructive delivery, the Deed of Sale being a private instrument, there was actual delivery, as evidenced by the delivery of the Dignos spouses

Medina v. Collector of Internal Revenue January 28, 1961 Reyes, JBL Facts: -Petitioner Medina married Antonia Rodriguez. Before 1946, the spouses had neither property nor business of their own. Later, however, petitioner acquired forest, concessions in the municipalities of San Mariano and Palanan in the Province of Isabela. From 1946 to 1948, the logs cut and removed by the petitioner from his concessions were sold to different persons in Manila through his agent, Mariano Osorio. - Antonia started getting into the lumber business as well. Husband sold to her logs from San Mariano. She also sold in Manila these logs through agent, Osorio. The proceeds were, upon instructions from petitioner, either received by Osorio for petitioner or deposited by said agent in petitioner's current account with the Philippine National Bank. - Collector considered sale by Mrs. Medina as petitioners original sales taxable under the Sec. 186 of National Internal Revenue Code (deficiency sales tax, surcharges) citing that sales made by husband to wife was null and void pursuant to Art. 1490/ - Petitioner resisted saying he has an agreement of complete separation of properties and assessment for years 46-52 had already prescribed. Court of Tax Appeals- Ruled no such premarital agreement between the spouses and sale of husband to his wife was fictitious, simulated and not bona fide. ISSUE: WON there was really a prenuptial agreement of complete separation of property between the spouses? NO WON sales made by the petitioner to his wife could be considered as his original taxable sales under the provisions of Section 186 of the National Internal Revenue Code? YES because sale between spouses is null and void RATIO: On the first issue, at the time of their marriage they had neither property nor business to be the subject of such premarital agreement. They also could not say their agreement was recorded in the Registry of Property, due to the above fact (also not reflected on the records). Also, they have been acting otherwise to their claim. Ownership, usufruct and administration of business all by husband. This allegation was also made late, after they were informed of the CC prohibition. Contracts violative of the provisions of Article 1490 of the Civil Code are null and void. Being void transactions, the sales made by the petitioner to his wife were correctly disregarded by the Collector in his tax assessments that considered as the taxable sales those made by the wife through the spouses' common agent, Mariano Osorio. In upholding that stand, the Court of Tax Appeals committed no error.

CORNELIA MATABUENA vs. PETRONILA CERVANTES Note: This case is incredibly hard to find (none can be found anywhere). Presented here are patched up digests I got from various sources from the Internet. I apologize! L-2877 (38 SCRA 284) March 31, 1971 FACTS: In 20 February 1956, herein appellants brother Felix Matabuena donated a piece of lot to his common-law spouse, herein appellee Petronila Cervantes (she accepted). Felix and Petronila got married only in 1962 or six years after the deed of donation was executed. Five months later, or September 13, 1962, Felix died. Thereafter, appellant Cornelia Matabuena, by reason of being the only sister and nearest collateral relative of the deceased, filed a claim over the property, by virtue of a an affidavit of selfadjudication executed by her in 1962, had the land declared in her name and paid the estate and inheritance taxes thereon. Cornelia (plaintiff-appellant), sister of Felix Matabuena maintains that the donation made by Felix to Petronila Cervantes (defendant-appellee) was void because they were living without the benefit of marriage (common law marriage). This is in pursuant to Article 133 of Civil Code which provides "Every donation between the spouses during the marriage shall be void. On 23 November 1965, the lower court upheld the validity of the donation as it was made before Cervantes marriage to the donor. Hence this appeal. ISSUE: Whether or not the ban on donation between spouses during a marriage applies to a common-law relationship. HELD: Lower Court decision is REVERSED. Ban on donation also applies to common-law relationship. RATIO: While Article 133 of the Civil Code considers as void a donation between the spouses during marriage, policy consideration of the most exigent character as well as the dictates of morality requires that the same prohibition should apply to a commonlaw relationship. As stated in Buenaventura vs. Bautista (50 OG 3679, 1954), if the policy of the law is to prohibit donations in favor of the other consort and his descendants because of fear of undue and improper pressure and influence upon the donor, then there is every reason to apply the same prohibitive policy to persons living together as husband and wife without the benefit of nuptials. The lack of validity of the donation by the deceased to appellee does not necessarily result in appellant having exclusive right to the disputed property. As a widow, Cervantes is entitled to one-half of the inheritance, and the surviving sister to the other half. Article 1001, Civil Code: Should brothers and sisters or their children survive with the widow or widower, the latter shall be entitled to one-half of the inheritance and the brothers and sisters or their children to the other half.

CRUZ v. CA November 1997 | J. Bellosillo Petitioner: Gloria Cruz Private Respondents: Romy Suzara and Manuel Vizconde FACTS: Gloria Cruz owned Lot 10 (area: 747.7 square meters; location: Brgy. Doa Imelda, Quezon City), together with the improvements therein, which was covered by TCT No. 242553 in her name. 1997 Cruz began living together with Romeo Suzara as husband and wife without the benefit of marriage. 1982 solely out of love and affection for Suzara, she executed a deed of absolute sale over Lot 10 in Suzaras favor, without any monetary consideration. Suzara registered the document in his favor and used the property as collateral for a bank loan of P350,000. Four years later, as Suzara failed to pay the loan, the mortgage was foreclosed. Cruz paid the bank P40,638 to restructure the loan, resulting in the extension of the redemption period to two years However, without Cruzs knowledge and before the expiration of the extended period, Suzara redeemed the property. She tried to talk to him but he avoided her. Finally, to protect her own interests, Cruz executed an Affidavit of Adverse Claim which she filed with the Register of Deeds in Quezon City, asserting that her sale in favor of Suzara was null and void for: (1) lack of consideration, and (2) being contrary to law and public policy. February 1990 Cruz filed a complaint with the Regional Trial Court of Manila against respondent Suzara for quieting of title, declaration of nullity of documents and damages with prayer for writ of preliminary injunction. o Suzaras response: (1) he was already the registered owner of the property as evidenced by TCT No. 295388, having acquired the same from petitioner through a notarized deed of absolute sale; (2) the sale was for a valuable consideration and not tainted with fraud nor executed under duress; and, (3) petitioner Cruz was estopped from impugning the validity of the sale and questioning his title over the property RTC issued a TRO enjoining Suzara from disposing and/or encumbering the litigated property until further orders April 1990 Cruz filed an ex parte motion to admit her amended complaint impleading respondent Manuel Vizconde as additional defendant, and praying that the Register of Deeds of Quezon City be ordered to annotate her notice of lis pendens (pending suit) on respondent Suzaras title o RTC resolved in favor of her motion, and the amended complaint was admitted. o RTC also ordered the Register of Deeds to show cause why it was refusing to annotate the notice of lis pendens filed by her. May 1990 the Register of Deeds filed a manifestation informing the trial court that the property had been sold by respondent Suzara to his co-respondent Vizconde who was already the registered owner thereof. Since Vizconde was not impleaded in the case the notice of lis pendens could not be annotated on his title until the requirements of law were met and the annotation of the notice judicially ordered. o Vizcondes response: (1) there was no privity of contract between him and petitioner; (2) he (Vizconde) was a purchaser for value in good faith; (3) the

sale between him and Suzara was executed on 22 December 1989 or long before the execution of the Affidavit of Adverse Claim; and, (4) the action was barred by laches, estoppel and prescription. RTC dismissed Cruzs complaint, Suzaras counterclaim, and Vizcondes cross claim. It ruled that the sale between Cruz and Suzara was valid as love, affection, and accommodation was the consideration for the sale. o RTC found Vizconde an innocent purchaser, because at the time of his purchase he was unaware of the adverse claim of Cruz CA affirmed the RTC. Hence this petition. ISSUES: (1) WON the sale between Cruz and Suzara valid (2) WON Cruz have the legal personality to question the legality of the sale (3) WON Vizconde was an innocent, good faith purchaser HELD: Petition of Cruz DENIED, CA ruling affirmed. RATIO: Cruzs argument: (1) there being a factual finding by the trial court and the Court of Appeals that she and respondent Suzara were common-law husband and wife, the sale between them was void and inexistent, as per 1490 of the Civil Code; (2) the consideration of "love, affection and accommodation" for the sale was not a valid cause for the conveyance of the property as there was no price paid in money or its equivalent; and (3) resultantly, the sale by Suzara to his co-respondent Vizconde must also be declared null and void the latter being a purchaser in bad faith. We cannot sustain petitioner. Although under Art. 1490 the husband and wife cannot sell property to one another as a rule which, for policy consideration and the dictates of morality require that the prohibition apply to common-law relationships, petitioner can no longer seek reconveyance of the property to her as it has already been acquired by respondent Vizconde in good faith and for value from her own transferee. The real purpose of the Torrens system of registration is to quiet title to land and to put a stop to any question of legality of the title except claims which have been recorded in the certificate of title at the time of registration or which may arise subsequent thereto. Every registered owner and every subsequent purchaser for value in good faith holds the title to the property free from all encumbrances except those noted in the certificate. Hence, a purchaser is not required to explore further what the Torrens title on its face indicates in quest for any hidden defect or inchoate right that may subsequently defeat his right thereto.[6] Where innocent third persons acquire rights over the property the court cannot disregard such rights and order the total cancellation of the certificate. The effect of such an outright cancellation would be to impair public confidence in the certificate of title, for everyone dealing with property registered under the Torrens system would have to inquire in every instance whether the title has been regularly or irregularly issued. This is contrary to the evident purpose of the law. o A purchaser in good faith is one who buys the property of another without notice that some other person has a right to or interest in such property and pays a full and fair price for the same at the time of such purchase or before he has notice of the claim of another person.

 At the time respondent Suzara executed the deed of absolute sale on 22 December 1989 in favor of respondent Vizconde, which was acknowledged before a notary public, Suzara was the registered owner appearing in the certificate of title. There is no doubt that respondent Vizconde was a purchaser for value in good faith and that when he bought the property he had no knowledge that some other person had a right to or an adverse interest in the property. As the Court of Appeals observed, Vizconde paid a full and fair price for the property at the time of the purchase and before he had any notice of petitioner's claim or interest in the property. For purposes of resolving the present controversy, the allegation that there was a second deed of sale executed solely for the purpose of evading the penalties resulting from late payment of taxes and registration is immaterial. The fact is, petitioner herself admits that the actual sale of the property occurred on 22 December 1989. A contract of sale is consensual and is perfected once agreement is reached between the parties on the subject matter and the consideration therefor. We cannot grant petitioner's prayer to have respondent Vizconde's certificate of title declared null and void. Neither can we order the reconveyance of the property to petitioner. Vizconde being a purchaser of registered land for value in good faith holds an indefeasible title to the land. This is without prejudice however to any appropriate remedy petitioner may take against her erstwhile common-law husband, respondent Suzara.

The Philippine Trust Company v. Socorro Roldan Petitioners: The Philippine Trust Company Respondents: Socorro Roldan May 31, 1956 Bengzon, J. FACTS: Marcelo Bernardo died and left his son, Mariano L. Bernardo (a minor) with 17 parcels of land. In view of his minority, guardianship proceedings were instituted, wherein Socorro Roldan was appointed his guardian. She was the surviving spouse of Marcelo Bernardo, and the stepmother of said Mariano L. Bernardo. July 27, 1947: Socorro Roldan filed in said guardianship proceedings, a motion asking for authority to sell as guardian the 17 parcels for the sum of P14,700 to Dr. Fidel C. Ramos (her brother-in-law), the purpose of the sale being allegedly to invest the money in a residential house, which the minor desired to have on Tindalo Street, Manila. The motion was granted. August 5, 1947: Socorro Roldan, as guardian, executed the proper deed of sale in favor of her brother-in-law Dr. Fidel C. Ramos. August 12, 1947: she asked for, and obtained, judicial confirmation of the sale. August 13, 1947, Dr. Fidel C. Ramos executed in favor of Socorro Roldan, personally, a deed of conveyance covering the same seventeen parcels, for the sum of P15,000. October 21, 1947 Socorro Roldan sold four parcels out of the seventeen to Emilio Cruz for P3,000, reserving to herself the right to repurchase. August 10, 1948: Philippine Trust Company became Marianos guardian. Two months later, they instituted this proceeding seeking to annul the two contracts (a) sale thereof by Socorro Roldan, as guardian of said minor, to Fidel C. Ramos; (b) sale thereof by Fidel C. Ramos to Socorro Roldan personally; (c) a conveyance of four out of the said seventeen parcels by Socorro Roldan to Emilio Cruz; and alleges that such sale was contrary to Article 1459 of the Civil Code prohibiting the guardian from purchasing either in person or through the mediation of another the property of her ward. Defendant asserts that she merely repurchased the lot from her brother-in-law to preserve it and give her protg the opportunity to redeem said property. CFI: Article was not Controlling. (Rodriguez v. Mactal). CA affirmed. ISSUE: WON the sale of the properties was valid? HELD: Re: Sale to Dr. Ramos No. The sale is INVALID. CA decision REVERSED. Guardianship is a trust of the highest order, and the trustee cannot be allowed to have any inducement to neglect his wards interest She acted it may be true without malice; may have been no previous agreement between her and Dr. Ramos to the effect that the latter would buy the lands for

her. But the stubborn fact remains that she acquired her proteges properties, through her brother-in-law. That she planned to get them for herself at the time of selling them to Dr. Ramos, may be deduced from the very short time between the two sales (one week). The temptation which naturally besets a guardian so circumstanced, necessitates the annulment of the transaction, even if no actual collusion is proved (so hard to prove) between such guardian and the intermediate purchaser. This would uphold a sound principle of equity and justice. Whenever a guardian acquires the property of his ward, the Court is always suspicious. Hence, in the eyes of the law, Socorro Roldan took by purchase her wards parcels thru Dr. Ramos, and that Article 1459 of the Civil Code applies. Rodriguez v. Mactal: Does not apply here. In that case, two years have elapsed before the guardian acquired the property sold. Such long period of time is sufficient to dispel the natural suspicion of the guardians motives or actions. In the case at bar, however, only one week had elapsed. And technically speaking, we could say, only one day had elapsed from the judicial approval of the sale (August 12), to the purchase by the guardian. From both the legal and equitable standpoints these three sales should not be sustained: the first two for violation of article 1459 of the Civil Code; and the third because Socorro Roldan could pass no title to Emilio Cruz. The annulment carries with is (Article 1303 Civil Code) the obligation of Socorro Roldan to return the 17 parcels together with their fruits and the duty of the minor, through his guardian to repay P14,700 with legal interest.

Dispositive: Judgment is therefore rendered: a. Annulling the three contracts of sale in question; b. declaring the minor as the owner of the seventeen parcels of land, with the obligation to return to Socorro Roldan the price of P14,700 with legal interest from August 12, 1947;yc. Ordering Socorro Roldan and Emilio Cruz to deliver said parcels of land to the minor; d. Requiring Socorro Roldan to pay him beginning with 1947 the fruits, which her attorney admits, amounted to P1,522 a year; e. Authorizing the minor to deliver directly to Emilio Cruz, out of the price of P14,700 above mentioned, the sum of P3,000; and f. charging Appellees with the costs.

TITLE: Rubias vs. Batiller DATE: May 29, 1973 PONENTE: Teehankee, J. PARTIES: Plaintiff-appellant (1) Domingo Rubias Defendant-appellee (1)- Isaias Batiller RELEVANT LAWS: Civil Code Art. 1409. The following contracts are inexistent and void from the beginning: xxx xxx xxx (7) Those expressly prohibited by law. Art. 1491. The following persons cannot acquire any purchase, even at a public auction, either in person of through the mediation of another: . xxx xxx xxx (5) Justices, judges, prosecuting attorneys, clerks of superior and inferior courts, and other officers and employees connected with the administration of justice, the property and rights of in litigation or levied upon an execution before the court within whose jurisdiction or territory they exercise their respective functions; this prohibition includes the act of acquiring an assignment and shall apply to lawyers, with respect to the property and rights which may be the object of any litigation in which they may take part by virtue of their profession.' FACTS: Before the war with Japan, Francisco Militante filed with the CFI Iloilo an application for the registration of the title of the subject land in Iloilo. However, during the war with Japan, the record of the case was lost before it was heard. Upon petition by Militante after the war, the record was reconstituted at the CFI Iloilo. Then, CFI Iloilo heard the land registration case but dismissed the application for registration. Militante then appealed to the Court of Appeals and in which case, plaintiff was the counsel on record of Militante. Pending the disposal of the appeal in the CA, Militante sold the land to the plaintiff. The CA dismissed the application for registration filed by Militante. Later, plaintiff filed forcible Entry and Detainer case against Isaias Batiller in the Justice of the Peace Court of Barotac Viejo Province of Iloilo. The municipal court decided in favor of the defendant. Defendant asserted that the land was originally owned and possessed by Felipe Batiller, his great grandfather. The defendant succeeded his father, Basilio Batiller, in the ownership and possession of the land in the year 1930. Since then up to the present, the land remains in the possession of the defendant--- his possession being actual, open, public, peaceful and continuous in the concept of an owner, exclusive of any other rights and adverse to all other claimants. Furthermore, defendant alleged that plaintiff could not have acquired any interest in the property in dispute as the contract that the plaintiff had with Francisco Militante was inexistent and void. Defendants invoked Articles 1409 and 1491 of the Civil Code. ISSUE:

WON the contract of sale between Rubias and his father-in-law over the property subject was void because it was made when plaintiff was counsel of his father-in-law in a land registration case involving the property in dispute HELD/RATIO: Yes. It was void. 1. First of all, with the Court of Appeals' 1958 final judgment affirming the dismissal of Militante's application for registration, the lack of any rightful claim or title of Militante to the land was conclusively and decisively judicially determined. Hence, there was no right or title to the land that could be transferred or sold by Militante's purported sale in 1956 in favor of plaintiff. 2. Nonetheless, plaintiff's purchase of the property in litigation from his client (assuming that his client could sell the same since as already shown above, his client's claim to the property was defeated and rejected) was void and could produce no legal effect, by virtue of Article 1409, paragraph (7) of our Civil Code which provides that contracts "expressly prohibited or declared void by law' are "inexistent and that "(T)hese contracts cannot be ratified. Neither can the right to set up the defense of illegality be waived." Article 1491 of our Civil Code (like Article 1459 of the Spanish Civil Code) prohibits in its six paragraphs certain persons, by reason of the relation of trust or their peculiar control over the property, from acquiring such property in their trust or control either directly or indirectly and "even at a public or judicial auction," as follows: (1) guardians; (2) agents; (3) administrators; (4) public officers and employees; judicial officers and employees, prosecuting attorneys, and lawyers; and (6) others especially disqualified by law. APPEAL DISMISSED.

MACARIOLA v ASCUNCION May 31, 1982 Makasiar, J. PERTINENT LAW: Article 1491. The following persons cannot acquire by purchase, even at a public or judicial action, either in person or through the mediation of another: xxx xxx xxx (5) Justices, judges, prosecuting attorneys, clerks of superior and inferior courts, and other officers and employees connected with the administration of justice, the property and rights in litigation or levied upon an execution before the court within whose jurisdiction or territory they exercise their respective functions; this prohibition includes the act of acquiring by assignment and shall apply to lawyers, with respect to the property and rights which may be the object of any litigation in which they may take part by virtue of their profession [emphasis supplied]. FACTS June 8, 1963 decision for Civil Case 3010 was rendered by Hon. Judge Elias B. Asuncion of the Court of Appeals of Leyte o Complaint for partitioning of the properties left by the deceased Francisco Reyes o Partition project submitted and he approved in an Order dated October 23, 1963 o Bernardita Macariola one of the parties Lot 1184 adjudicated to plaintiffs Reyes in equal shares (5 lots) July 31, 1964 Lot 1184-E (one of the properties) was sold to Dr. Arcadio Galapon who later sold the same to Judge Asuncion and his wife on March 6, 1965 Sps. Asuncion and Sps. Galapon conveyed their respective shares and interests in the lot to the Traders Manufacturing and Fishing Industries Inc. o Judge Asuncion was president here August 9, 1968 Bernardita Macariola filed a complaint dated August 6, 1968 against Judge Ascuncion with acts unbecoming of a judge. o Upon acquiring the lot, he violated Article 1491 par. 5 of the NCC, o By associating himself with the Traders Manufacturing and FishingIndustries, Inc., as a stockholder and a ranking officer while he was a judge - Art. 14, pars. 1 and 5 of the Code and Commerce, Sec. 3 par. H of R.A. 3019, Sec. 12 Rule XVIII of the Civil Service Rules and Canon 25 of the Canons of Judicial Ethics. ISSUE: Whether or not respondent judges acquisition of the property is null and void? HELD: NO RATIO: Probation in art 1491 applies only to the sale or assignment of the property which is subject of litigation to the persons disqualified therein. o Only applies to the sale or assignment of the property which is the issue of the litigation

Previous ruling that: "... for the prohibition to operate, the sale or assignment of the property must take place during the pendency of the litigation involving the property. When the respondent Judge purchased on March 6, 1965 a portion of Lot 1184-E, the decision in Civil Case No. 3010 which he rendered on June 8, 1963 was already final because none of the parties therein filed an appeal within the reglementary period The lot therefore was no longer subject of the litigation o Also Judge Asuncion did not buy the lot in question directly from the plaintiffs in Civil Case No. 3010 but from Dr. Arcadio Galapon who earlier purchased Lot1184-E from the plaintiffs Reyes after the finality of the decision in Civil Case No. 3010. However since hes already an Associate Justice in the Court of Appeals, he should be more discreet in his private and business activities because his conduct as a member of the Judiciarymust not only be characterized with propriety but must always be above suspicion.

Martinez vs. CA April 29, 1974 Esguerra, J FACTS

ISSUES

Sps. Martinez are registered owners of 2 parcels of land in Lubao, Pampanga Both are fishponds o The property in dispute is the second lot (Lot 2) The lot was originally owned by Paulino Montemayor which was eventually sold to Potenciano Garcia Garcia was prevented by the president of Lubao (Beltran) from restoring the dikes on the property o June 22, 1914 - Garcia filed a civil case to restrain Beltran from molesting him in the possession of said second parcel with an application for a writ of preliminary injunction The Court ruled in favor of Garcia o From June 22, 1914 until the outbreak of the Pacific War the dikes around the property remained closed 1925 Garcia applied for the registration of both parcels of land in his name o CFI granted the registration Thereafter, the ownership changed hands until they were acquired by the Sps. Martinez The disputants referred the matter to the Committee on Rivers and Streams (which appointed a sub-committee) o Conducted an ocular inspection of the property o The sub-committee found out that it is not a public river but a private fish pond owned by the spouses Municipal officials of Lubao refused to recognize the decision of the Committee 1954 Sps. Martinez filed a civil case against Lubao Mayor o Praying that the Mayor be enjoined from molesting them in their possession of their property and in the construction of the dikes therein 4 years later, while the case was pending, the Sec. of Public Works and Communications (PWC) ordered an investigation o Pursuant to RA 20561 o He ordered that the dikes be removed, with the threat that the dikes will be demolished if the Sps. Fails to comply within 30 days The Civil case was eventually decided in favor of the Sps. CA reversed the judgment of court aquo 1. 2. WON C erred in declaring that parcel No. 2 is a public river and ordered the cancellation of the registration WON the Sps. Are buyers in good faith

HELD ISSUES 1 and 2 The properties are parts of the public domain intended for public use, are outside the commerce of men and, therefore, not subject to private appropriation. o CC Art. 339 par. 1 intended for public use, are outside the commerce of men and, therefore, not subject to private appropriation. Ledesma vs. Municipality of Ilo-ilo o A simple possession of a certificate of title under the Torrens system does not necessarily make the possessor a true owner of all the property described therein. If a person obtains title under the Torrens system which includes by mistake or oversight, lands which cannot be registered under the Torrens system, he does not by virtue of said certificate alone become the owner of the land illegally included. Dizon, et al. v. Rodriguez, et al o incontestable and indefeasible character of a Torrens certificate of title does not operate when the land covered thereby is not capable of registration. The Land Registration Court has no jurisdiction over non-registerable properties, such as public navigable rivers which are parts of the public domain, and cannot validly adjudge the registration of title in favor of a private applicant. Also, the right of reversion or reconveyance to the State of the public properties fraudulently registered and which are not capable of private appropriation or private acquisition does not prescribe. In the case at bar, Lot. No. 2 is a branch of the main river that has been covered with water since time immemorial o A river is not capable of private appropriation or acquisition by prescription ISSUE 3 Sps. Argue that the nullification of its registration would be contrary to the law and to the applicable decisions of the Supreme Court as it would destroy the stability of the title which is the core of the system of registration. SC: Before purchasing a parcel of land, the Sps. Must have known the condition of the land that they were buying and the obstacles or restrictions thereon that may be put up by the government in connection with their project of converting Lot No. 2 in question into a fishpond. o they willfully and voluntarily assumed the risks attendant to the sale of said lot. o One who buys something with knowledge of defect or lack of title in his vendor cannot claim that he acquired it in good faith

"An Act To Prohibit, Remove and/or Demolish the Construction of Dams. Dikes, Or Any Other Walls In Public Navigable Waters, Or Waterways and In Communal Fishing Grounds, To Regulate Works in Such Waters or Waterways And In Communal Fishing Grounds, And To Provide Penalties For Its Violation, And For Other Purposes.

Melliza vs. City of Iloilo Petitioner: Pio Sian Melliza Respondents: City of Iloilo, University of the Philippines, Court of Appeals April 30 1968 Bengzon, J.P., J. Topic: Requisites of Valid Subject Matter Must be determinate or determinable FACTS: Juliana Melliza owned three parcels of land in Iloilo City, among them Lot No. 1214. On November 27, 1931, she donated 9000 square meters of Lot 1214 to the then Municipality of Iloilo. However, this donation was revoked by the parties because the land area was inadequate to meet the requirements of Iloilos development plan. Later, Lot No. 1214 was divided into Lots 1214-A and 1214-B. Lot 1214-B was also later divided into three Lot 1214-B, Lot 1214-C and Lot 1214-D On November 15, 1932, Juliana Melliza executed an instrument, expressly donating Lots 1214-C and 1214-D to Iloilo, as well as such other portions or lots as were necessary for the municipal hall site according to the Arellano plan. Juliana Melliza then sold her remaining interest in Lot 1214 to Remedios Sian Villanueva, who transferred it to Pio Sian Melliza, herein petitioner. On August 24, 1949, Iloilo donated the lots they received and the building therein to UPIloilo. UP commenced fencing the site in 1952. It was at this point that Pio Sian Melliza demanded payment for Lot 1214-B which, though not expressly mentioned in the 1932 instrument of donation, was also included in the municipal hall site. Petitioner contended that, not being included in the 1932 instrument, respondents could not claim the lot. Moreover, the part of the instrument stating that other portions or lots as necessary are also included in the donation could not justify respondents claim over 1214-B because the law requires as an essential element of sale a determinate object. The CFI ruled for respondents and the CA affirmed the CFI ruling. ISSUES: 1. WON the 1932 instrument of donation may include Lot 1214-B HELD: Yes, Lot 1214-B is included in the donation. Petitioner cannot demand payment for it. Reading the public instrument in toto, with special reference to the paragraphs describing the lots included in the sale, shows that said instrument describes four parcels of land by their lot numbers and area; and then it goes on to further describe, not only those lots already mentioned, but the lots object of the sale, by stating that said lots are the ones needed for the construction of the city hall site, avenues and parks according to the Arellano plan. If the parties intended merely to cover the specified lots 1214-C and 1214-D, there would scarcely have been any need for the next paragraph, since these lots are already plainly and very clearly described by their respective lot number and area. Said next paragraph does not really add to the clear description that was already given to them in the previous one. It is therefore the more reasonable interpretation, to view it as describing those other portions of land contiguous to the lots aforementioned that, by reference to the Arellano plan, will be found needed for the purpose at hand, the construction of the city hall site. This lot is 1214-B.

As to petitioners contention that this would not be a determinate object as required by law, the Court ruled that the requirement of the law that a sale must have for its object a determinate thing, is fulfilled as long as, at the time the contract is entered into, the object of the sale is capable of being made determinate without the necessity of a new or further agreement between the parties (Art. 1273, old Civil Code; Art. 1460, New Civil Code). The specific mention of some of the lots plus the statement that the lots object of the sale are the ones needed for city hall site, avenues and parks, according to the Arellano plan, sufficiently provides a basis, as of the time of the execution of the contract, for rendering determinate said lots without the need of a new and further agreement of the parties. This could only refer to Lot 1214-B, being adjacent to 1214-C and 1214-D. The Arellano plan was in existence as early as 1928. The required area for the municipal hall plan was already known and Lots 1214-C and 1214-D alone could not cover it. Therefore, it could be determined which, and how much of the portions of land contiguous to those specifically named, were needed for the construction of the city hall site.

Atilano v Atilano May 21, 1969 Makalintal Must be determinate or determinable Facts: Eulogio Atilano I purchased from Gerardo Villanueva lot no 535 in the Municipality of Zamboanga. He obtained a TCT in his name. In 1920, he subdivided the land into 5 parts (535-A, B, C, D, and 535-E). He executed a deed of sale covering 535-E for the sum of P150 in favor of his brother Eulogio Atilano II. Eulogio II obtained TCT in his name. Lots B, C, and D were also sold and only Lot 535-A was retained by Eulogio I. Upon his death, the lot passed to Ladislao Atilano (defendant). Dec 6, 1952, Eulogio II obtained another TCT to name his children as co-heirs. In 1959, desiring to put an end to the co-ownership, they had the land resurveyed and discovered that the land they were actually occupying was lot 535-A and not 535-E as referred to in the 1920 deed while Ladislao was in possession of lot 535-E. The heirs of Eulogio II filed the action in the CFI of Zamboanga that they had offered to surrender possession of lot A and demanded the return of lot E but defendants refused to accept. Lot E has an area of 2, 612 sq m and Lot A has only 1, 808sq m. CFI ruled in favor of the plaintiffs. Defendant Atilano: The reference to lot E in the 1920 deed of sale was an involuntary error. The intention of the parties was to convey the lot correctly identified as lot A. since 1916, Eulogio I had been possessing lot E. He had his house built and even bought a portion of an adjacent land to increase its area. Issue: Who owns lot 535-E? Defendant Atilano Ratio: When one sells or buys real property, a piece of land, for example, one sells or buys the property as he sees it, in its actual setting and by its physical metes and bounds, and not by a mere lot number assigned to it in the certificate of title. In this case, Eulogio II was already in possession of lot A and constructed his residence there even before the sale. The two brothers continued possession of the respective portions for the rest of their lives, ignorant of the mistake in the designation of the lot in the sale. The real intention of the parties to the sale was that the object was the specific portion where the vendee was then residing, where he constructed his house and where his heirs continued to reside namely, lot A and that its designation as lot E in the deed was a simple mistake in the drafting of the document. The mistake did not vitiate the consent of the parties or affect the validity and binding effect of the contract. Reformation of the sale need no longer be performed. All they should do is to execute mutual deeds of conveyance. Reversed.

Pichel vs Alonzo Jan. 30, 1982 Guerrero, J. Facts: Issue: 1. 2. WON the document between Pichel and Alonzo was a valid contract. WON the deed of sale in question is an encumbrance on the land and its improvements prohibited by Section 8 of Republic Act 477; and Alonzo was awarded a parcel of land by the Government. The award was cancelled because Alonzo alienated it to another which was a violation of law. Alonzo sold to Pichel all the fruits of the coconut tress which may be harvested for the period Sept. 15, 1968 Jan. 1, 1976 for P4,200. (Added info: Ramon Sua is leasing the land being sold by Alonzo) Alonzo asked the court to annul the deed of sale because the action goes against RA 477 (law that awarded the land to Alonzo) Lower court: the deed of sale was an encumbrance.

awarded to him. What the law expressly disallows is the encumbrance or alienation of the land itself or any of the permanent improvements thereon. Permanent improvements on a parcel of land are things incorporated or attached to the property in a fixed manner, naturally or artificially. They include whatever is built, planted or sown on the land which is characterized by fixity, immutability or immovability. Houses, buildings, machinery, animal houses, trees and plants would fall under the category of permanent improvements, the alienation or encumbrance of which is prohibited by R.A. No. 477. While coconut trees are permanent improvements of a land, their nuts are natural or industrial fruits which are meant to be gathered or severed from the trees, to be used, enjoyed, sold or otherwise disposed of by the owner of the land. Hence, respondents had the right and prerogative to sell the coconut fruits of the trees growing on the property.

Held: Complaint Dismissed. Lower Court decision is set aside. 1. Yes. All the essential elements of a contract of sale under Art. 1485 are present. Art. 1458. By the contract of sale one of the contracting parties obligates himself to transfer the ownership of and to deliver a determinate thing, and the other to pay therefor a price certain in money or its equivalent. The Subject matter of the contract are the fruits of the coconut tree on the land during the years from Sept. 15, 1968 to Jan. 1, 1976. The subject matter is a determinate thing. Art. 1461 provides that things having potential existence may be the object of the contract of sale. Hence, pending crops which have potential existence may be the object of the contract of sale. The Court's holding that the contract in question fits the definition of a lease of things wherein one of the parties binds himself to give to another the enjoyment or use of a thing for a price certain and for a period which may be definite or indefinite (Art. 1643, Civil Code of the Philippines) is erroneous. The essential difference between a contract of sale and a lease of things is that the delivery of the thing sold transfers ownership, while in lease no such transfer of ownership results as the rights of the lessee are limited to the use and enjoyment of the thing leased. 2. The grantee of a parcel of land under R.A. No. 477 is not prohibited from alienating or disposing of the natural and/or industrial fruits of the land

Yu Tek vs. Gonzales February 1, 1915 Trent, J: GENERIC THINGS Article 1246. When the obligation consists in the delivery of an indeterminate or generic thing, whose quality and circumstances have not been stated, the creditor cannot demand a thing of superior quality. Neither can the debtor deliver a thing of inferior quality. The purpose of the obligation and other circumstances shall be taken into consideration. Article 1409. The following contracts are inexistent and void from the beginning: (6) Those where the intention of the parties relative to the principal object of the contract cannot be ascertained; FACTS Contract between Gonzales and Yu Tek Co: 1. Gonzales received 3,000 php as consideration for the delivery of 600 piculs of sugar, first and second grade, within a period of three months at any place within the municipality of Sta. Rosa which Yu Tek may designate. Non-delivery within 3 months = recission of contract + return of 3,000 php + 1,200 php as indeminity for loss and damages No sugar delivered to Yu Tek nor was it able to recover the 3,000 php. First Contention: Gonzales: He should be allowed to present parol evidence showing that the parties intended that sugar was to be obtained exclusively from the crop which Gonzales raised on his plantation. Non-fulfillment of contract was because of total failure of crop. SC: No slightest intimation in the contract that suggest such condition. The contract placed no restriction in the manner of obtaining the sugar. He can purchase it on the market or raise it himself. Second Contention: Gonzales: 1. Contract limited to the sugar he might raise on his plantation. 2. Contract represented a perfect sale. 3. By failure of his crop he was relieved from complying with is undertaking because of loss of thing due. ISSUE: WON there was a perfected sale. There was NO perfected sale. There is a perfected sale with regard to the "thing" whenever the article of sale has been physically segregated from all other articles In this case, there was no segregation of the object of the contract. If called upon to designate the article sold, it is clear that the defendant could only say that it was "sugar." He could only use this generic name for the thing sold. There was no "appropriation" of any particular lot of sugar. Neither party could point to any specific quantity of sugar and say: "This is the article which was the subject of our contract." 2.

The contract in the case at bar was merely an executory agreement; a promise of sale and not a sale. As there was no perfected sale, it is clear that article 1262 is not applicable. Gonzales having defaulted in his engagement, Yu Tek is entitled to recover the 3,000 php which it advanced to the defendant.

Hernaez v Hernaez November 13, 1915 Trent, J. Facts Spouses Pedro Hernaez and Juana Espinosa died, leaving several legitimate descendants. Their estates have not been divided yet but are both under administration, until the institution of the institution of the action. November 6, 1901: Domingo Hernaez y Espinosa, son of the spouses, sold all his interest in both the spouses estates to his son, Vicente Hernaez y Tuason. February 27, 1907: In connivance with Vicente, Domingo executed a document of sale in favor of Alejandro Montelibano y Ramos all his undivided interest in his fathers estate + 1/18 of his undivided interest in his mothers estate Domingo also executed a document of sale in favor of Jose Montelibano UyCana 4/18 of his interest in his mothers estate August 19, 1912: Jose Montelibano Uy-Cana sold his interest in the estate to Alejandro Montelibano y Ramos. January 8, 1913: Rosendo Hernaez y Espinosa, another son of the spouses, was notified of Montelibanos purchases and the latters motion asking that he be substituted as assignee of the interests of various heirs of the estate which he acquired by purchase. Notwithstanding Rosendos knowledge of the motion, he entered into a contract of sale with Vicente. January 24, 1913: Rosendo instituted the action seeking to subrogate himself in the rights acquired by Montelibano in the estate. ISSUE: WON Alejandro is the true owner of the interest over the estate of the dead spouses. Yes. However, Rosendo may subrogate himself in the rights acquired by Montelibano in pursuant to Art 1607 (i.e. If any of the heirs should sell his hereditary rights to a stranger before the division, all or any of the co-heirs may subrogate himself in the place of the purchaser, reimbursing him for the value of the purchase, provided they do so within the period of a month, to be counted from the time they were informed thereof.) 1. Vicente is estopped when Domingo sold the interests with his connivance. He cannot anymore assert his title as against any of the vendees Montelibano and Uy-Cana. where true owner of propertyholds out another, or with knowledge of his own right, allows another to appear as owner of or as having full power of disposition over the property, the same being in the latters actual possession, and innocent third parties are thus led into delaing with such apparent owner, third parties will be protected. 2. Montelibano acquired his interest in the estate for a valuable consideration and in good faith.

Alejandro Montelibano is the holder of a prior equitable right and should have priority over the purchaser [Rosendo] of a subsequent estate without value or with notice of equitable right, but not as against a subsequent purchaser for value and without notice.

SIY CONG BIENG & CO., INC. V HONGKONG & SHANGHAI BANKING CORPORATION March 5, 1932 J. Ostrand Facts: -

The appealed judgment is reversed and the appellant is absolved from the plaintiff's complaint. Without costs. So ordered.

Otto Ranft called the office of Siy Cong Bieng to purchase hemp(abaca) and he was offered bales of hemp as described in the quedans (warehouse receipts) Parties agreed to a price and on the same date, the quedans, together with the covering invoice, were sent to Ranft, without having paid for the hemp, but the plaintiffs understanding was that the payment would be made against the same quedans, and it appears that in previous transaction of the same kind between the bank and the plaintiff, quedans were paid one or two days after their delivery to them In the evening that the quedans were delivered, Ranft died, and when the plaintiff found that such was the case, it immediately demanded the return of the quedans, or the payment of the value, but was told that the quedans had been sent to the herein defendant as soon as they were received by Ranft Demand was made by the plaintiff to the bank for the return of the quedans, or their value, which demand was refused by the bank on the ground that it was a holder of the quedans in due course

Issue: WON HSBC acquired the quedans in good faith. YES WON Siy is estopped from questioning the HSBCs title to the quedans. YES Held: First, the quedans were negotiable in form and duly endorsed in blank by the plaintiff and by Otto Ranft Also, it follows that on the delivery of the qeudans to the bank, they were no longer the property of the indorser unless he liquidated his debt with the bank. Also, Ranft delivered to HSBC the quedans for a valuable consideration, which is valid. Plaintiff insists that the defendant, before the delivery of the quedans, should have ascertained whether Ranft had any authority to negotiate the quedan but SC was unable to find anything in the record which would have compelled the bank to investigate the indorser. The bank had a perfect right to act as it did, and its action is in accordance with sections 47, 38, and 40 of the Warehouse Receipts Act (Act No. 2137) For a warehouse receipt to be negotiated, it should be properly indorsed and delivered which is evident in this case. Since it was a blank warehouse receipt, it may be delivered to any person, and the bearer thereon becomes the owner of the receipt Also, Siy is estopped from denying that the bank had a valid title to the quedans for the reason that the plaintiff had voluntarily clothed Ranft with all the attributes of ownership and upon which the defendant bank relied National Safe Deposit vs. Hibbs - Where one of two innocent persons must suffer a loss he who by his conduct made the loss possible must bear it The bank is not responsible for the loss; the negotiable quedans were duly negotiated to the bank and as far as the record shows, there is no fraud on the part of the defendant.

VICENTA JALBUENA v. SALVADOR LIZARRAGA etal. December 24, 1915 Trent, J. Facts: Salvador Lizarraga, the judgement creditor, caused the sheriff of the province of Iloilo to levy upon an old sugar-mill. At the time of the levy, Ildefonso Doronilla (the judgement debtor and husband of Jalbuena) told the sheriff that the mill belonged to him. Lopez purchased the land in the public sale. The present action was instituted by Jalbuena for the purpose of recovering the mill (or its value), alleging that the property was her exclusive property and that her husband had no interest therein. The action was dismissed. RTC found that Jalbuena knew that the sugar mill was being levied upon as the property of her husband and yet she stood by. She never protested and let the sale proceed. Thus, she is estopped from asserting her claim of ownership against Lizarraga et al. Jalbuena appealed. Issue: WON Jalbuena has the right to demand the return of the sugar mill? Held/Ratio: NO. SC ruled that he cannot demand the return of the mill. An execution is an order to the sheriff to attach and sell the property of the judgment debtor. If the sheriff sells the property of another person, he exceeds his authority and the true owner may sue for damages or for the recovery of the property, provided that such owner has not lost his right to do so by his own conduct. Court cited No. 1 of Section 333 of the Code of Civil Procedure: "Whenever a party has, by his own declaration, act, or omission, intentionally and deliberately led another to believe a particular thing true, and to act upon such belief, he cannot, in any litigation arising out of such declaration, act, or omission, be permitted to falsify it." The phrase "stood by" does not mean actual presence, but implies knowledge under such circumstances as to render it the duty of the possessor to communicate it. Jalbuena had full knowledge of the fact that the property was going to be sold to pay the debts of her husband but she did NOT communicate her claim to the purchaser.

SUN BROTHERS COMP. V. VELASCO Angeles, J. Parties: Plaintiff: Sun Brothers Company (Sun Bros) Defendants: Jose Velasco, Co Kang Chiu FACTS: Sun Bros filed an action for recovery of personal property against Francisco Lopez (Lopez), Jose Velasco (Velasco), and Co Kang Chiu (Chiu) to return his refrigerator. Sun Bros entered into a Conditional Sale Agreement with Lopez, where Sun Bros delivered a refrigerator along with a transformer to Lopez for the amount of P1700. Lopez paid P500 as down payment. o The conditions of the Conditional Sale Agreement: o 1. The ref shall remain the absolute property of Sun Bros until Lopez has paid the full purchase price o 2. Lopez shall not remove the ref from his address nor part possession of it without authorization, if he does, Sun Bros may rescind the contract, and may keep the down payment as liquidated damages. Without the knowledge of Sun Bros, Lopez sold the ref to J.V. Trading (a business store in Manila owned by Velasco) for the sum of P850 by misrepresenting himself as the absolute owner. Then, again without Sun Bros knowledge, Velasco, who placed the ref on display in his store, sold the ref to Chiu for the sum of P985. The ref was then delivered to the residence and business address of Chiu. CFI held: Sun bros are the absolute owner. Chiu, who is in possession, must return the ref, and failure to do so, Velasco must pay Sun Bros. Both Velasco and Chiu appealed claiming that the sale was valid and they should be declared the true owners. ISSUE: WON SUN BROS IS THE ABSOLUTE OWNER OF THE REFRIGERATOR? No. Chiu is. HELD: The case depends on the proper application of Art. 1505 of the CC: o Art. 1505: Subject to the provisions of this title, where goods are sold by a person who is not the owner thereof, and who does not sell them under authority or with the 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. o Nothing in this title shall affect: Par. 1) provisions of any factors acts, recording laws, or any other provision of law enabling the apparent owner of goods to dispose of them as if he were the true owner thereof Par. 2) xxx Par. 3) Purchases made in a merchants store, or in fairs, or markets, in accordance with the Code of Commerce and special laws Clearly, Lopez violated the contract (when it removed the possession without consent), which is contrary to the conditional sale hence Lopez never had title to the ref because such title would only be vested upon payment of the full

purchase price, which was not done. However, the ref is now in the hands of an innocent third party for value. The court ruled that what must be applied is not Par. 1 but Par. 3. Chiu bought the ref at a merchant store (when it was on display at J.V. Trading). Hence, Chiu should be declared to have acquired a valid title to the ref, even though his predecessors in interest did not have any right of ownership over it. This is a case of an imperfect or void title ripening into a valid one, as a result of some intervening causes. Because, where the rights and interests of a vendor comes into clash with that of an innocent buyer for value, the latter must be protected. This rule is important in order to protect innocent third parties who make purchases in good faith and for value (give stability to business transactions). The doctrine of caveat emptor (buyer beware) is now rarely applied and if ever mentioned, it is more of an exception rather than the rule. Not even the remedy granted by 559 to the owner of a movable to obtain its return provided he reimburses the one in possession is available to Sun Bros because neither did it lose the ref nor was it unlawfully deprived. Sun Bros voluntarily parted with it pursuant to a contract of purchase and sale. Thus, Recourse of Sun Bros is to file a claim for indemnity against Lopez. CFI reversed.

Masiclat v. Centeno May 31, 1956 Paras Topic: Sale in Merchants Store, Market or Fair Facts: Centeno owned 15 sacks of rice which she offered to an unknown purchaser in her store near the public market of Angeles. He was willing to buy the rice at 26 pesos per sack, and promised to pay as soon as he would receive the payment from the adobe stones that were being unloaded from his truck. The sacks of rice were then loaded into his truck and Centeno was watching over the sacks. After the adobe stones were unloaded, the purchaser still has not paid. Since the purchaser was nowhere to be found, Centeno ordered the unloading of the rice. Masiclat (the caretaker of the truck) then objected to the unloading of the rice stating that he bought it at 26 per sack from a person whom he did not know and met only that morning for the first time. The rice was brought to the municipal building where it was deposited pending investigation.

Issue/Held: WON there was a sale/No Ratio: There was no clear evidence as to the identity of the person who sold the rice to Masiclat. He did not own any title because the respondent had not lost ownership and legal possession over the rice. Ownership is not considered transmitted until the property is actually delivered and the purchaser has taken possession and paid the price agreed upon. Although she allowed the loading of the rice to the truck, there was no transfer until she was paid. She continually watched her rice and demanded unloading as soon as the unknown purchaser was missing.

TRINIDAD TAGATAC v. LIBERATO JIMENEZ 1957 / Ocampo / Appeal from CFI judgment Trinidad Tagatac bought a car for $4,500 in the US, and seven months later, she brought the car to the Philippines. When her friend Joseph Lee came to see her, he was with one Warner Feist who posed as a wealthy man. Seeing that Tagatac seemed to believe him, he offered to buy her car for P15,000, and Tagatac was amenable to the idea. The deed of sale was made, Feist paid by means of a postdated check, and the car was delivered to Feist. When Tagatac tried to encash the check, PNB refused to honor it and told her that Feist had no account in said bank. Tagatac notified the law enforcement agencies of the estafa committed on her by Feist, but he was not apprehended and the car disappeared. Meanwhile, Feist managed to have the private deed of sale notarized, so he succeeded in having the cars registration certificate [RC] transferred in his name. He sold the car to Sanchez, who was able to transfer the RC to his name. He offered to sell the car to defendant Liberato Jimenez, who bought the car for P10,000 after investigating in the Motor Vehicles Office. Jimenez delivered the car to the California Car Exchange so that it may be displayed for sale. Masalonga offered to sell the car for Jimenez, so the car was transferred to the former, but when Masalonga failed to sell it right away, he transferred it to Villanueva so he could sell it for Jimenez. Tagatac discovered that the car was in California Car Exchanges possession, so she demanded from the manager for the delivery of the car, but the latter refused. The RC was retransferred to Jimenez. Tagatac filed a suit for the recovery of the cars possession, and the sheriff, pursuant to a warrant of seizure that Tagatac obtained, seized and impounded the car, but it was delivered back to Jimenez upon his filing of a counter-bond. The lower court held that Jimenez had the right of ownership and possession over the car. JIMENEZ IS A PURCHASER IN GOOD FAITH; TAGATAC NOT ENTITLED TO POSSESSION RATIO The disputable presumption that a person found in possession of a thing taken in the doing of a recent wrongful act is the taker and the doer of the whole act does NOT apply in this case because the car was not stolen from Tagatac, and Jimenez came into possession of the car two months after Feist swindled Tagatac. In addition, when Jimenez acquired the car, he had no knowledge of any flaw in the title of the person from whom he acquired it. It was only later that he became fully aware that there were some questions regarding the car, when he filed a petition to dissolve Tagatacs search warrant which had as its subject the car in question. Re: Tagatacs allegation that the lower court ignored the judgment convicting Feist of estafa, and that it erred in not declaring that restitution of the swindled property must follow, SHE IS WRONG! The lower court noted that Feist was accused of estafa because of the check and NOT because of the delivery of the car. Her legal basis for the restitution of thing is RPC 104-51 . Now the question is WON she has beenunlawfully deprived of her car. It seems like though, but it does not fall under the scope of NCC 599. 2In this case, there is a valid transmission of ownership from true owner [Tagatac] to the swindler [Feist], considering that they had a contract of sale. As long as no action is taken by the entitled party [annulment / ratification], the contract of sale remains valid and binding. Feist acquired defective and voidable title, but when he sold it to Sanchez, he conferred a good title on the latter. Jimenez bought the car from Sanchez in good faith, for value, and without notice of any defect in Sanchez title, so he

acquired a good title to the car. Good title means an indefeasible title to the car, even as against original owner Tagatac. As between two innocent parties, the one whose acts made possible the injury must shoulder the consequences thereof.

De Garcia vs. CA ????????????????

EDCA Publishing vs. Santos April 26, 1990 Ponente: Cruz Facts:

A person who identified himself as Professor Jose Cruz placed an order through telephone with EDCA Publishing. He ordered 406 books amounting to P8,995.65 and issued a personal check as payment. Then he sold some of the books to Santos who, after verifying the sellers ownership from the invoice shown, paid Cruz. Meanwhile, EDCA being suspicious over the second order placed by Cruz verified with De La Salle College where he had claimed to be dean and was informed that no such person was under its employ. It was also found out that there was no account with the bank against which he had drawn his check. It was later found out that his real name was Tomas de la Pena EDCA reported this to the police and through an entrapment, de la Pena was captured. On the same date, Edca sought the assistance of the police in recovery of the books bought from it. They forced their way inside Santos store and seized the books without any warrant WON EDCA was unlawfully deprived of their property

Issue: Held

First, the contention of petitioner that Santos has not established ownership over the disputed books because they have not even shown the receipt evidencing the purchase, is without merit. The possession of movable property acquired in good faith is equivalent to title Second, Santos acquired the books in good faith as found by the lower courts. She first ascertained the ownership and relied on the invoice shown to her by de la Pena. Santos was in the business of buying and selling books and often deal with hard-up sellers who urgently have to part with their books at reduced prices Third, and on the real issue, on whether Edca had been unlawfully deprived of the books, Edca argued that the impostor acquired no title to the books because of the lack of funds in the check issued and want of consideration. This is without merit. Nonpayment of purchase price only gives rise to the right to demand payment or rescission of the contract. Actual delivery was made to the impostor and thus, ownership was acquired by him. Non-payment was a matter privy to him and Edca and doesn't involve Santos who later acquired the books. It would certainly be unfair now to make the private respondents bear the prejudice sustained by EDCA as a result of its own negligence. We cannot see the justice in transferring EDCA's loss to the Santoses who had acted in good faith, and with proper care, when they bought the books from Cruz.

Aznar vs. Yapdiangco March 31, 1965 Regala, J.: Facts: May 1959, Teodoro Santos advertised that he was selling his FORD FAIRLANE 500. May 28, 1959, L. De Dios, came to Teodoro Santos to tell him that his uncle, Vicente Marella was interested in buying the car for Php 14,700. May 29, 1959, the son of Teodoro Santos, Irineo Santos, accompanied L. De Dios to 1642 Crisostomo St., Sampaloc Manila. There, Irineo met Marella and agreed to buy the car. It was agreed that the price would be paid only after the car had been registered in his name. Irineo then effected the transfer of the registration and upon completion went back to Marello. Marello paid Php 12,700 and said that the remaining balance was to be loaned from his sister. So Marello asked Irineo and L. De Dios and one unidentified man to go to Marellos sisters house to get the remaining Php 2,000. Upon reaching the said house, L. De Dios told Irineo to wait in the sala. After a considerable amount of time, Irineo found out that L. De Dios had already left with the car and the unidentified man. Upon such fraudulent actions, Irineo was divested of the car which he later reported to his father. They then reported this to the authorities. Marello then was successful in selling the car for Php 15,000 to Aznar. Aznar acquired the car in good faith and when he was registering the car, agents of the Philippine Constabulary confiscated the same, acting upon the report of Teodoro Santos. Issue / Held: Between Aznar and Santos, who has a better right to the possession of the automobile? Santos. Ratio: The court held that Santos was unlawfully deprived of his car by Vicente Marella hence, ownership belongs to Santos. Aznar says that the applicable law is Article 1506 which provides: o Where the seller of goods has a voidable title thereto, but his title has not been voided at the time of the sale, the buyer acquires a good title to the goods, provided he buys them in good faith, for value and without notice of the sellers defective title. The Court finds this position unmeritorious. This provision is inapplicable because the seller did not have a title at all. Vicente Marella could not have acquired ownership because such will only be transferred upon delivery of the car. In the case at bar, there was no delivery. Santos was unlawfully divested of his property. Assuming arguendo that Irineo voluntarily gave the car keys to the unidentified man to drive the car, such voluntariness was only under the pretense that it would be driven by someone else and not to effect the delivery contemplated by law.

The lower court was correct in applying Article 559. This rule is to the effect that if the owner has lost a thing or if he has been unlawfully deprived of it, he has a right to recover it, not only from the finder, thief or robber, but also from a third person who may have acquired it in good faith from such finder, thief or robber. There is a common law principle that between two innocent persons who suffered by a fraud perpetrated by another, the one who enabled the fraud to be committed must suffer the loss. However, this situation is covered by an express provision of the NCC under Article 559. Between a common law principle and a statutory provision, the latter must prevail.

WHEREFORE, petition of Aznar is DISMISSED.

Miguel Mapalo, et. al. v Maximo Mapalo, et. al. May 19, 1966 Bengzon, J. Facts: Spouses Miguel Mapalo and Candida Quiba decided to donate the eastern half of their land to Miguels brother, Maximo (who was about to get married). Maximo deceived them into signing a deed of absolute sale on October 15, 1936 (spouses were illiterate) o Said deed stated that the consideration is for P 500.00 for the whole lot. On March 15, 1938, Maximo registered the deed of sale and obtained the TCT in his name. On October 20, 1951, Maximo sold the entire lot to the Narciscos for P2,500.00. o On November 5, 1951, TCT was issued in the name of the Narciscos. o Narciscos took possession only of the eastern portion of the land in 1951. On February 7, 1952, Narciscos filed suit to be declared owners of the entire land and for possession of its western portion.

Note: Narcisos were found to be buyers in bad faith. This is because they first approached the spouses and asked them if they will permit their elder brother Maximo to sell the property. Dispositive: Wherefore, the decision of the Court of Appeals is hereby reversed and set aside, and another one is hereby rendered affirming in toto the judgement of the Court of First Instance a quo, with attorneys fees on appeal in favour of appellants in the amount of P1,000.00, plus the costs, both against private appellees.

Issue/Held: WON there is no consideration or a false consideration. / no consideration WON the deed of sale between the spouses and Maximo is void ab initio or voidable. / void ab initio. Since absence of a consideration deems the contract void ab initio, the action does not prescribe. Ratio: The essential requisites of a contract are: o Consent o Object o Cause or consideration The consent was present, though defective (obtained through fraud) The object was present (the land, specifically the western portion) The consideration is the main issue. o According to Manresa, what is meant by a contract that states a false consideration is one that has in fact a real consideration but the same is not the one stated in the document. o MAY MAHABANG PART NA SPANISH!! ANDITO PA ATA UNG EXPLANATION NI MANRESA! >.< o From the foregoing it can be seen that where, as in this case, there was in fact no consideration, the statement of one in the deed will not suffice to bring it under the rule of Article 1276 of the Old Civil Code as stating a false consideration. o Hence, the contract is deemed inexistent. Therefore, the action or defense for declaration of such inexistence does not prescribe.

Ong vs. Ong ????????????

Bagnas vs CA (1989) Justice Narvasa 1. 2. Hilario Mateum died single, without ascendants or descendants. He also left no will, no debts and an estate consisting of 292 parcels of land in Cavite. Petitioners who are Hilarios first cousins are the nearest heirs. Respondents on the other hand are also collateral relatives but much farther in the consanguinity line than the petitioners. Now respondents, after 1 year from Hilarios death, registered 2 deeds of sale (covering 10 lands) purportedly executed by Hilario in their favor. The problem is that the consideration in each of these deeds appears to be P1 only! Because of this, petitioners commenced suit against the respondents seeking: a. Annulment of the deeds of sale as fictitious, fraudulent or falsified + prayed for recovery of ownership and possession of said lands Respondents claim: a. Sale was made for good and valuable consideration + you can actually view this as a donation because of the services we rendered to Hilario. RTC: Dismissed Petitioners suit. CA: affirmed SC a. Are the deeds of conveyance allegedly given by Hilario to respondents void or voidable because of the P1 consideration? VOID! i. In the olden times, Art 1276 of the 1889 CC says that a false cause in a contract rendered it voidable only. However, today, we consider a false or fictitious consideration in contracts not merely voidable but void! ii. ^ A logical consequence of that change is the juridical status of contracts without, or with a false, cause is that conveyances of property affected with such a vice cannot operate to divest and transfer ownership, even if unimpugned. 1. If afterwards the transferor dies the property descends to his heirs, and without regard to the manner in which they are called to the succession, said heirs may bring an action to recover the property from the purported transferee. 2. Such an action is not founded on fraud, but on the premise that the property never leaves the estate of the transferor and is transmitted upon his death to heirs, who is under no incapacity to maintain the action just because they may be only collateral

3.

4.

5.

6. 7. 8.

relatives and bound neither principally or subsidiarily under the deed or contract of conveyance. iii. Application to case: 1. There is an enormous disproportion among the following factors: a. The stipulated price (in each deed) of P l.00 + unspecified and unquantified services allegedly rendered by respondents + the real estate is worth at least P10,500.00 in accordance with the tax assessments which are already notoriously low indicators of value! 2. ^ These circumstances plainly and unquestionably demonstrate that the deeds state a false and fictitious consideration. There being no other true and lawful cause shown, the Court finds both said deeds, insofar as they purport to be sales, not merely voidable, but void ab initio. 3. Re: Donation argument a. Neither can the validity of said conveyances be defended on the theory that their true causa is the liberality of the transferor and they may be considered in reality donations because the law also prescribes that donations of immovable property, to be valid, must be made and accepted in a public instrument. Not present here though! 4. The transfers in question being void, it follows as a necessary consequence, that the properties purportedly conveyed remained part of the estate of Hilario Mateum, said transfers notwithstanding, recoverable by his intestate heirs, the petitioners herein

However, well only focus on 10 of these lands.

Morales v. CA G.R. No. L-26572/March 28, 1969/EN BANC/C.J. Concepcion (C2015 Digests) Parties: Petitioner: Morales Development Company, Inc. Respondents: Court of Appeals, Hermenegildo Deseo, and Socorro Deseo History of the Lot: Belonged to Enrique Montinola, who alleged that his duplicate copy of the Transfer Certificate of Title had been lost. The CFI of Quezon ordered the issuance of a second owners duplicate, with which Montinola was able to sell the lot to Pio Reyes. The TCT of Montinola was cancelled when the deed of sale was registered and a new TCT was issued in the name of Reyes. A married coupled named Abella purchased the land from Reyes, who executed a deed of conveyance, and again a new TCT was issued in the Abellas name. Seven months later, the Abellas sold the land to the Deseos, who immediately took possession of the property. But, the first owners duplicate of the first TCT was either never lost or subsequently found by Montinola, who mortgaged the lot to PNB. On the same day, Montinola sold the property to Morales for P2,000, from which the sum due the bank (P700.00) was deducted. Upon presentation of the deed of sale in favor of Morales, the latter was advised by the office of the Register of Deeds of Quezon that said TCT had already been cancelled and the property sold, first to Pio Reyes, and then to the Abellas. Thereupon, Morales filed a petition for the annulment and cancellation of the second owners copy of the old TCT. After due notice to Reyes and the Ab ellas, but not to the Deseos, said petition was granted on March 12, 1956. Having been unable, in view of these developments, to register the deed of conveyance executed by the Abellas, the Deseos commenced in the CFI of Quezon an action against Morales, for the annulment of the subsequent sale thereto by Montinola, and the registration of said deed of conveyance in their (Deseos) favor, alleging that the same enjoys preference over the sale to Morales, the Deseos having, prior thereto, bought lot No. 2488 in good faith and for value, and having been first in possession of said lot, likewise, in good faith. On the other hand, Morales claimed to have a better right upon the ground that it (Morales) had bought the property in good faith and for value, relying upon the first owners duplicate copy of the TCT, unlike the Deseos, whose predecessor in interest, Pio Reyes, had relied upon the second owners duplicate which had been secured fraudulently, and that the sale to Reyes and that made by the latter to the Abellas is null and void, because both sales took place under suspicious circumstances, so that they (Reyes and the Abellas) were not purchasers in good faith and for value. After appropriate proceedings, the court of first instance sustained the contention of Morales and rendered judgment in its favor, which, on appeal taken by the Deseos, was reversed by the Court of Appeals. ISSUE: Were the sales to Reyes and later to the Abellas null and void? NO. RULING: The consideration stated in the deeds of sale to Reyes and later to the Abellas is P1.00, which is not unusual. In deeds of conveyance adhering to the Anglo-Saxon practice of stating that the consideration given is the sum of P1.00, although the actual consideration may have been much more. Moreover, assuming that said consideration of

P1.00 is suspicious, this circumstance, alone, does not necessarily justify the inference that Reyes and the Abellas were not purchasers in good faith and for value. Neither does this inference warrant the conclusion that the sales were null and void ab initio. Indeed, bad faith and inadequacy of the monetary consideration do not render a conveyance inexistent, for the assignors liberality may be sufficient cause for a valid contract, whereas fraud or bad faith may render either rescissible or voidable although valid until annulled, a contract concerning an object certain, entered into with a cause and with the consent of the contracting parties, as in the case at bar. What is more, the aforementioned conveyance may not be annulled, in the case at bar, inasmuch as Reyes and the Abellas are not parties therein. The Deseos had bought the land in question for value and in good faith, relying upon the transfer certificate of title in the name of their assignors, the Abellas. The sale by the latter to the former preceded the purchase made by Morales by about eight (8) months, and the Deseos took immediate possession of the land, which was actually held by them at the time of its conveyance to Morales by Montinola, and was in the possession of the Deseos up to the time of the SCs decision. Meanwhile, the TCT in the name of Montinola had been cancelled over a year before he sold the property to Morales who in turn was only informed of this fact when it sought to register the deed of conveyance in its favor. Since the object of this litigation is a registered land and the two (2) buyers thereof have so far been unable to register the deeds of conveyance in their respective favor, it follows that the ownership of said lot pertain(s) pursuant to Article 1544 of our Civil Code to the Deseos, as the only party who took possession thereof in good faith. Morales argued that it was not enough for the Deseos to have gone to the office of the Register of Deeds and found therein that there were no flaws in the title of the Abellas, and that the Deseos should have ascertained why the Abellas had paid only P1.00 to Reyes, and why the latter had paid the same amount to Montinola. To begin with, the Deseos did not know that said sum was the consideration paid by the Abellas to Reyes and by Reyes to Montinola. Secondly, the Deseos were not bound to check the deeds of conveyance by Reyes to the Abellas, and by Montinola to Reyes. Having found that the owners duplicate copy of the TCT in the name of the Abellas was a genuine copy of the original on file with the Office of the Register of Deeds, the Deseos were fully justified in relying upon said TCT, and had no legal obligation to make further investigation. Assuming arguendo that it was not sufficient for the Deseos to verify in said office the genuineness of the owners duplicate of the Abellas TCT, much less would Morales have been justified in relying upon Montinolas copy of the TCT in his name. In fact, had Morales at least gone to the Office of the Register of Deeds as the Deseos did before purchasing the property in dispute, Morales would have found out that not only that TCT in Montinolas name long been cancelled, but also that the property had been previously sold by Montinola to Reyes and by Reyes to the Abellas. In short, the negligence of Morales was the proximate cause of the resulting wrong, and, hence, Morales should be the party to suffer its consequences. DISPOSITIVE: CAs decision affirmed.