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- The case is all about a parcel of land designated in Basilan City that was awarded by the
government to Alonzo pursuant to RA 477. However, the award was cancelled by the Board
of Liquidators on 1965 on the ground that Alonzo was proved to have alienated the land to
another in violation of the law.
- On Aug. 1968, the Alonzos sold to Pichel all the fruits of the coconut trees which may be
harvested in the land from 1968-1976 in consideration of a certain amount (P4,200). even as
to the date of sale, the land was still under the lease to a certain Ramon Sua, and it was
agreed that part of the consideration of the sale, money will be given to the lessee to release
such land. Pending any payment will entail the inability to harvest any fruits.
- Alonzo filed an action for the annulment of the dead of sale.
- It was subsequently admitted by counsel of the Alonzos that payment was made the
petitioner in this case and therefore granted him the rights to enjoy the stipulated contract.
However, another issue arose, is the deed of sale the prohibited encumbrance contemplated
in section 8 of RA 477?
- It was found that even if the parties denominated the sale as a deed of sale of fruits, it is
actually a contract of lease of the land itself. sale gave defendant complete control and
enjoyment of the improvements of the land, onerous because rent or price certain is
stipulated, and thing certain is stipulated to be for a certain and definite period of time.
- TC concluded that the deed of sale in question is an encumbrance prohibited by RA 477.
And EXHIBIT A should be declared null and void.
- WON the respondent had the right to execute the deed of sale in 1968
- YES! The court cited Ras v Sua wherein it was stated that a cancellation of an award does
not automatically divest the awardee of his rights to such land. It must be noted that
appropriate proceedings for must reversion must be made. Hence, if there are no
proceedings, the awardee still has complete ownership of said land.
In applying such doctrine, nothing in the record show that at any time after the supposed
cancellation of the award, reversion proceedings were made. Instead, the admitted fact is
that the award was reinstated in 1972. Hence the respondents had all the right to execute
such deed of sale within said period.
- What was present here was a contract of sale of the fruits coming from the coconut trees,
the court agreed with the rationale of the petitioner that the terms of the agreement are clear
and unequivocal and leave no room for interpretation. Hence, the literal meaning of the
contract shall prevail.
- IT WAS NOT A LEASE AGREEMENT as found by the TC because the difference
between a contract of sale and a lease agreement is that ownership is transferred with regard
to the former. While no ownership is transferred with regard to the latter.
- A contract of sale may be absolute or conditional. The subject matter here are the fruits of
the coconut on the land during the years from 1968- 1976, which said subject matter is a
determinate thing. Under ART 1461 NCC, things having potential existence may be the
object of the contract of sale. a valid sale may be made of a thing, which though not yet
actually in existence, is reasonably certain to come into existence as the natural increment or
usual incident of something already in existence. (MECHEM on sales and AMERICAN
- REGARDING VALIDITY OF DEED OF SALE: VALID because what the law expressly
disallows is the encumbrance or alienation of the land itself or any of the permanent
improvements thereon. In this case, 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, and sold.