Rubias v.
Batiller
51 SCRA 120
FACTS:
On August 31, 1964, plaintiff Domingo D. Rubias, a lawyer, filed a suit to recover the ownership and
possession of certain portions of lot located in Barrio General Luna, Barotac Viejo, Iloilo which he
bought from his father-in-law, Francisco Militante in 1956 against its present occupant defendant,
Isaias Batiller, who illegally entered said portions of the lot. Plaintiff prayed also for damages and
attorney’s fees. In his answer with counter-claim defendant claims the complaint of the plaintiff does
not state a cause of action, the truth of the matter being that he and his predecessors-in-interest
have always been in actual, open and continuous possession since time immemorial under claim of
ownership of the portions of the lot in question and for the alleged malicious institution of the
complaint he claims he has suffered moral damages in the amount of P 2,000.00, as well as the sum
of P500.00 for attorney’s fees.
Defendant claims that plaintiff could not have acquired any interest in the property in dispute as the
contract he (plaintiff) had with Francisco Militante was inexistent and void. Plaintiff strongly opposed
defendant’s motion to dismiss claiming that defendant cannot invoke Articles 1409 and 1491 of the
Civil Code as Article 1422 of the same Code provides that ‘The defense of illegality of contracts is
not available to third persons whose interests are not directly affected’.
ISSUE:
Whether or not the contract of sale between appellant and his father-in-law, the late Francisco
Militante over the property 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.
RULING:
The stipulated facts and exhibits of record indisputably established plaintiff’s lack of cause of action
and justified the outright dismissal of the complaint. Plaintiff’s claim of ownership to the land in
question was predicated on the sale thereof for P2,000.00 made in 1956 by his father-in-law,
Francisco Militante, in his favor, at a time when Militante’s application for registration thereof had
already been dismissed by the Iloilo land registration court and was pending appeal in the Court of
Appeals.
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. Manifestly, then plaintiff’s complaint against defendant, to be
declared absolute owner of the land and to be restored to possession thereof with damages was
bereft of any factual or legal basis.
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.
Socorro Roldan is the
stepmother of Mariano Bernardo who
inherited 17 parcels of land from his late
father, Marcelo
Bernardo. On July1947, Socorro Roldan
filed in 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 St., Manila. TWO WEEKS after,
Dr. Ramos
executed in favor of Socorro a deed of
conveyance covering the same 17 parcels
for the sum of
P15,000.00. And on October 1947
Socorro sold 4 parcels out of the 17
to Emilio Cruz for
P3,000.00. In 1948, the Philippine
Trust Company replaced Socorro as
guardian, and two
months later this case was filed to undo
what Socorro has done.
Was the sale of Socorro Roldan to Dr.
Fidel C. Ramos valid?
NO. Even without proof that she
had connived with Dr. Ramos, the
general doctrine that
guardianship is a trust of the highest
order, and the trustee cannot be allowed
to have any
inducement to neglect his ward’s interest
and in line with the court’s suspicion
whenever the
guardian acquires the ward’s property we
have no hesitation to declare that in this
case, in the
eyes of the law, Socorro Roldan took by
purchase her ward’s parcels thru Dr.
Ramos, and that
Article 1459 of the Civil Code applies. The
sale of Socorro to Dr. Ramos and to
Emilio Cruz is
ANULLED.
PHIL. TRUST CO. vs. ROLDAN, ET AL (1956) – “Evil step-mother case” Socorro Roldan is the stepmother of
Mariano Bernardo who inherited 17 parcels of land from his late father, Marcelo Bernardo. On July1947,
Socorro Roldan filed in 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 St., Manila.
TWO WEEKS after, Dr. Ramos executed in favor of Socorro a deed of conveyance covering the same 17
parcels for the sum of P15,000.00. And on October 1947 Socorro sold 4 parcels out of the 17 to Emilio Cruz
for P3,000.00. In 1948, the Philippine Trust Company replaced Socorro as guardian, and two months later
this case was filed to undo what Socorro has done.
Was the sale of Socorro Roldan to Dr. Fidel C. Ramos valid?
NO. Even without proof that she had connived with Dr. Ramos, the general doctrine that guardianship is a trust
of the highest order, and the trustee cannot be allowed to have any inducement to neglect his ward’s interest
and in line with the court’s suspicion whenever the guardian acquires the ward’s property we have no
hesitation to declare that in this case, in the eyes of the law, Socorro Roldan took by purchase her ward’s
parcels thru Dr. Ramos, and that Article 1459 of the Civil Code applies. The sale of Socorro to Dr. Ramos and
to Emilio Cruz is ANULLED.
Fabilo vs. IAC
G.R. No. L-68838 March 11, 1991
FLORENCIO FABILLO and JOSEFA TANA (substituted by their heirs Gregorio Fabillo, Roman
Fabillo, Cristeta F. Maglinte and Antonio Fabillo), petitioners,
vs.
THE HONORABLE INTERMEDIATE APPELLATE COURT (Third Civil Case Division) and ALFREDO
MURILLO (substituted by his heirs Fiamita M. Murillo, Flor M. Agcaoili and Charito M.
Babol), respondents.
In the instant petition for review on certiorari, petitioners seek the reversal of the appellate court's decision
interpreting in favor of lawyer Alfredo M. Murillo the contract of services entered into between him and his
clients, spouses Florencio Fabillo and Josefa Taña.
In her last will and testament dated August 16, 1957, Justina Fabillo bequeathed to her brother, Florencio,
a house and lot in San Salvador Street, Palo, Leyte which was covered by tax declaration No. 19335, and
to her husband, Gregorio D. Brioso, a piece of land in Pugahanay, Palo, Leyte. After Justina's death,
Florencio filed a petition for the probate of said will. On June 2, 1962, the probate court approved the
project of partition "with the reservation that the ownership of the land declared under Tax Declaration No.
19335 and the house erected thereon be litigated and determined in a separate proceeding."
Two years later, Florencio sought the assistance of lawyer Alfredo M. Murillo in recovering the San
Salvador property.
Florencio and Murillo entered into a contract.
Pursuant to said contract, Murillo filed for Florencio Fabillo Civil Case No. 3532 against Gregorio D.
Brioso to recover the San Salvador property. The case was terminated on October 29, 1964 when the
court, upon the parties' joint motion in the nature of a compromise agreement, declared Florencio Fabillo
as the lawful owner not only of the San Salvador property but also the Pugahanay parcel of land.
Consequently, Murillo proceeded to implement the contract of services between him and Florencio Fabillo
by taking possession and exercising rights of ownership over 40% of said properties. He installed a tenant
in the Pugahanay property.
Sometime in 1966, Florencio Fabillo claimed exclusive right over the two properties and refused to give
Murillo his share of their produce. Inasmuch as his demands for his share of the produce of the
Pugahanay property were unheeded, Murillo filed on March 23, 1970 in the then Court of First Instance of
Leyte a complaint captioned "ownership of a parcel of land, damages and appointment of a receiver"
against Florencio Fabillo, his wife Josefa Taña, and their children Ramon Fabillo and Cristeta F. Maglinte.
Issue: WON the contract of services agreed upon is in violation of Article 1491 of the Civil Code.
Held: The contract of services did not violate said provision of law. Article 1491 of the Civil Code,
prohibits lawyers from acquiring by purchase even at a public or judicial auction, properties and rights
which are the objects of litigation in which they may take part by virtue of their profession. The said
prohibition, however, applies only if the sale or assignment of the property takes place during the
pendency of the litigation involving the client's property.
Hence, a contract between a lawyer and his client stipulating a contingent fee is not covered by said
prohibition under Article 1491 (5) of the Civil Code because the payment of said fee is not made during
the pendency of the litigation but only after judgment has been rendered in the case handled by the
lawyer. In fact, under the 1988 Code of Professional Responsibility, a lawyer may have a lien over funds
and property of his client and may apply so much thereof as may be necessary to satisfy his lawful fees
and disbursements.
As long as the lawyer does not exert undue influence on his client, that no fraud is committed or
imposition applied, or that the compensation is clearly not excessive as to amount to extortion, a contract
for contingent fee is valid and enforceable. Moreover, contingent fees were impliedly sanctioned by No.
13 of the Canons of Professional Ethics which governed lawyer-client relationships when the contract of
services was entered into between the Fabillo spouses and Murillo.
However, SC disagree with the courts below that the contingent fee stipulated between the Fabillo
spouses and Murillo is 40% of the properties subject of the litigation for which Murillo appeared for the
Fabillos. A careful scrutiny of the contract shows that the parties intended forty percent of the value of the
properties as Murillo's contingent fee. This is borne out by the stipulation that "in case of success of any
or both cases," Murillo shall be paid "the sum equivalent to forty per centum of whatever benefit" Fabillo
would derive from favorable judgments. The same stipulation was earlier embodied by Murillo in his letter
of August 9, 1964 aforequoted.
Worth noting are the provisions of the contract which clearly states that in case the properties are sold,
mortgaged, or leased, Murillo shall be entitled respectively to 40% of the "purchase price," "proceeds of
the mortgage," or "rentals." The contract is vague, however, with respect to a situation wherein the
properties are neither sold, mortgaged or leased because Murillo is allowed "to have the option of
occupying or leasing to any interested party forty per cent of the house and lot." Had the parties intended
that Murillo should become the lawful owner of 40% of the properties, it would have been clearly and
unequivocally stipulated in the contract considering that the Fabillos would part with actual portions of
their properties and cede the same to Murillo.
The ambiguity of said provision, however, should be resolved against Murillo as it was he himself who
drafted the contract. This is in consonance with the rule of interpretation that, in construing a contract of
professional services between a lawyer and his client, such construction as would be more favorable to
the client should be adopted even if it would work prejudice to the lawyer. Rightly so because of the
inequality in situation between an attorney who knows the technicalities of the law on the one hand and a
client who usually is ignorant of the vagaries of the law on the other hand.
Considering the nature of the case, the value of the properties subject matter thereof, the length of time
and effort exerted on it by Murillo, we hold that Murillo is entitled to the amount of P3,000.00 as
reasonable attorney's fees for services rendered in the case which ended on a compromise agreement. In
so ruling, we uphold "the time-honored legal maxim that a lawyer shall at all times uphold the integrity and
dignity of the legal profession so that his basic ideal becomes one of rendering service and securing
justice, not money-making. For the worst scenario that can ever happen to a client is to lose the litigated
property to his lawyer in whom all trust and confidence were bestowed at the very inception of the legal
controversy."
ASUNCION ATILANO v. LADISLAO ATILANO, GR No. L-22487, 1969-05-21
Facts:
Eulogio Atilano I acquired... lot No. 535 of the then municipality of Zamboanga... lot No. 535
of the then municipality of Zamboanga cadastr
In 1920 he had the land subdivided into five parts,... In 1916 Eulogio Atilano I acquired, by
purchase from one Gerardo Villanueva, lot No. 535 of the then municipality of Zamboanga
cadastre. The vendee thereafter obtained transfer certificate of title No. 1134 in his...
name. In 1920 he had the land subdivided into five parts, identified as lots Nos. 535-A, 535-
B, 535-C, 535-D and 535-E, respectively. On May 18 of the same year, after the sub-
division had been effected, Eulogio
Atilano I, for the sum of P150.00, executed a deed of sale covering lot No. 535-E in favor of
his brother Eulogio Atilano II
Three other portions... sold to other persons, the original owner, Eulogio Atilano I, retaining
for himself only the remaining portion of the land,... presumably covered by the title to lot
No. 535-A
Upon his death the title to this lot passed to Ladislao Atilano, defendant in this case, in
whose name the corresponding certificate (No. T-5056) was issued.
On December 6, 1952, Eulogio Atilano II having become a widower upon the death of his
wife Luisa Bautista, he and his children obtained transfer certificate of title No. 4889 over lot
No. 535-E in their names as co-owners.
Then, on
July 16, 1959, desiring to put an end to the co-ownership, they had the land resurveyed so
that it could properly be subdivided; and it was then discovered that the land they were
actually occupying on the strength of the deed of sale executed in 1920 was lot No.
535-A and not lot 535-E... while the land which remained in the possession of the vendor,
Eulogio Atilano I, and which passed to his successor, defendant Ladislao Atilano, was lot
No. 535-E and not... lot No. 535-A.
the heirs of Eulogio Atilano II... filed the present action in the Court of First Instance of
Zamboanga, alleging, inter alia, that they had... offered to surrender to the defendants the
possession of lot No. 535-A and demanded in return the possession of lot No. 535-E, but
that the defendants had refused to accept the exchange.
lot No. 535-E has an area of 2,612 square meters, as compared to the 1,808 square-meter
area of lot No. 535-A.
defendants alleged that the reference to lot No. 535-E in the deed of sale of May 18, 1920
was an involuntary error; that the intention of the parties to that sale was to convey the lot
correctly identified as lot No. 535-A... that since
1916, when he acquired the entirety of lot No. 535, and up to the time of his death, Eulogio
Atilano I had been possessing and had his house on the portion designated as lot No. 535-
E, after which he was succeeded in such possession by the... defendants herein... and that
as a matter of fact Eulogio Atilano I even increased the area under his possession when on
June 11, 1920 he bought a portion of an adjoining lot, No. 536, from its owner Fruto del
Carpio.
The trial court rendered judgment for the plaintiffs on the sole ground that since the property
was registered under the Land Registration Act the defendants could not acquire it through
prescription.
defendants... also alleged error in the deed of sale
Issues:
The real issue here is not adverse possession, but the real intention of the parties to that
sale.
Ruling:
The logic and common sense of the situation lean heavily in favor of the defendants'
contention.
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 the mere lot number assigned to it in the certificate of title.
In the particular case before us, the portion correctly referred to as lot No. 535-A was
already in the possession of the vendee,... Eulogio Atilano II, who had constructed his
residence therein, even before the sale in his favor
In like manner the latter had his house on the portion correctly identified, after the
subdivision, as lot No. 535-E, even adding to the area thereof by purchasing a portion of an
adjoining property belonging to a different owner.
The two brothers... continued in possession of the respective portions for the rest of their
lives, obviously ignorant of the initial mistake in the designation of the lot subject of the 1920
sale until 1959, when the mistake was discovered for the first time.
From all the facts and circumstances we are convinced that the object thereof... was that
specific portion where the... vendee was then already residing, where he reconstructed his
house at the end of the war, and where his heirs, the plaintiffs herein, continued to reside
thereafter: namely, lot: No. 535-A; and that its designation as lot No. 535-E in the deed of...
sale 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 between them.
The new Civil Code provides a remedy for... such a situation by means of reformation of the
instrument.
This remedy is available when, there having been a meeting of the minds of the parties to a
contract, their true intention is not expressed in the instrument purporting to... embody the
agreement by reason of mistake, fraud, inequitable conduct or accident.
In this case, the deed of sale executed in 1920 need no longer be reformed. The parties
have retained possession of their... respective properties conformably to the real intention of
the parties to that sale, and all they should do is to execute mutual deeds of conveyance.
Melliza v. City of Iloilo
23 SCRA 477
FACTS:
Juliana Melliza owned 3 parcels of residential land in Iloilo City (OCT 3462). Said parcels of land
were known as Lots Nos. 2, 5 and 1214. The total area of Lot 1214 was 29,073 sq. m. She donated
to the then Municipality of Iloilo to serve as site for the municipal hall. The donation was revoked by
the parties for the reason that the area donated was not enough to development plan of the
municipality, the so- called “Arellano Plan.”
Certeza Surveying Co., Inc. divided subsequently Lot 1214 into four parts named; Lot 1214A, Lot
1214B, Lot 1214C, and Lot1214D. Juliana Melliza executed an instrument without any caption
providing for the absolute sale of all of lot 5, in favor of the Municipal Government of Iloilo for the
sum of P6,422Melliza later sold her remaining interest in Lot 1214 to Remedios Sian Villanueva
which later transferred to Pio Sian Melliza. Annotated at the back of Pio Sian Melliza’s title certificate
was the following ‘that a portion of 10,788 sq. m. of Lot 1214 now designated as Lots 1412-B-2 and
1214-B-3 of the subdivision plan belongs to the Municipality of Iloilo as per instrument dated
November 15 1932’, On 24 August 1949 the City of Iloilo, which succeeded to the Arellano Plan,
donated the city hall site together with the building thereon, to the University of the Philippines (Iloilo
branch).
In 1952, the University of the Philippines enclosed the site donated with a wire fence. Pio Sian
Melliza thereupon made representations, through his lawyer, with the city authorities for payment of
the value of the lot (Lot 1214-B). No recovery was obtained, because the City allegedly did not have
funds. The University of the Philippines, meanwhile, obtained Transfer Certificate of Title No. 7152
covering the three lots, Nos. 1214-B, 1214-C and 1214-D.
Pio Sian Melizza filed an action in the Court of First Instance of Iloilo against Iloilo City and the
University of the Philippines for recovery of Lot 1214-B or of its value. After stipulation of facts and
trial, the Court of First Instance decided on dismissing the complaint. Court ruled that the title
certificate Juliana Melliza presented was in favor to the respondent, included in the conveyance Lot
1214-B, for that Iloilo City had the right to donate Lot 1214-B to UP. Pio Sian Melliza appealed to the
Court of Appeals.
The Court of Appeals affirmed the interpretation of the Court of First Instance that the portion of Lot
1214 sold by Juliana Melliza was not limited to the 10,788 square meters specifically mentioned but
included whatever was needed for the construction of avenues, parks and the city hall site.
Nonetheless, it ordered the remand of the case for reception of evidence to determine the area
actually taken by Iloilo City for the construction of avenues, parks and for city hall site.
The Court affirmed the decision appealed from insofar as it affirms that of the Court of First Instance,
and dismissed the complaint.
ISSUE:
Whether or not the conveyance by Juliana Melliza to Iloilo municipality included that portion of Lot
1214 known as Lot 1214-B.
RULING:
First of all, there is no question that the paramount intention of the parties was to provide Iloilo
municipality with lots sufficient or adequate in area for the construction of the Iloilo City hall site, with
its avenues and parks.
Secondly, 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 — Lots 2, 5, 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.
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. 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.
Appellant however fails to consider that the area needed under that plan for city hall site was then
already known; that the specific mention of some of the lots covered by the sale in effect fixed the
corresponding location of the city hall site under the plan; that, therefore, considering the said lots
specifically mentioned in the public instrument Exhibit “D”, and the projected city hall site, with its
area, as then shown in the Arellano plan (Exhibit 2), 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.
And, moreover, there is no question either that Lot 1214-B is contiguous to Lots 1214-C and 1214-D,
admittedly covered by the public instrument. It is stipulated that, after execution of the contract , the
Municipality of Iloilo possessed it together with the other lots sold. It sits practically in the heart of the
city hall site.
Furthermore, Pio Sian Melliza, from the stipulation of facts, was the notary public of the public
instrument. Said instrument was also registered with the Register of Deeds and such registration
was annotated at the back of the corresponding title certificate of Juliana Melliza. From these
stipulated facts, it can be inferred that Pio Sian Melliza knew of the aforesaid terms of the instrument
or is chargeable with knowledge of them; that knowing so, he should have examined the Arellano
plan in relation to the public instrument Exhibit “D”; that, furthermore, he should have taken notice of
the possession first by the Municipality of Iloilo, then by the City of Iloilo and later by the University of
the Philippines of Lot 1214-B as part of the city hall site conveyed under that public instrument, and
raised proper objections thereto if it was his position that the same was not included in the same.
The fact remains that, instead, for twenty long years, Pio Sian Melliza and his predecessors-in-
interest, did not object to said possession, nor exercise any act of possession over Lot 1214-B.
Applying, therefore, principles of civil law, as well as laches, estoppel, and equity, said lot must
necessarily be deemed included in the conveyance in favor of Iloilo municipality, now Iloilo City.
WHEREFORE, the decision appealed from is affirmed insofar as it affirms that of the Court of First
Instance, and the complaint in this case is dismissed.
NATIONAL GRAINS AUTHORITY and WILLLAM CABAL, petitioners
vs.
THE INTERMEDIATE APPELLATE COURT and LEON
SORIANO, respondents.
FACTS:
Petitioner, National Grains Authority (now the NFA), is a government agency
created under Presidential Decree No. 4. One of the its incidental functions is
the buying of palay grains from disqualified famers.
On August 23, 1979, private respondent Leon Soriano offered to sell palay
grains to the NFA, through William Cabal, the Provincial Manager of NFA
stationed at Tuguegarao, Cagayan. He submitted the documents required by
the NFA for pre-qualifying as a seller. Then, private respondent’s documents
were processed accordingly; he was given a quota of 2 640 cavans of palay.
The quota noted in the Farmer’s Information Sheet represented the maximum
number of cavans of palay that Soriano may sell to the NFA.
Soriano delivered 630 cavans of palay. The palay delivered were not
rebagged, classified and weighed. When Soriano demanded payment of 630
cavans of palay, he was informed that its payment will be held in abeyance
since Mr. Cabal was still investigating on an information he received that
Soriano was not a bona fide farmer and the palay delivered by him was not
produced from his farmland but was taken from the warehouse of a rice
trader, Ben de Guzman. Then, private respondent was asked to withdraw
from the NFA Warehouse the 630 cavans Soriano delivered, stating that NFA
cannot legally accept the said delivery on the basis of the subsequent
certification of the BAEX technician, Napoleon Callangan, that Soriano is not a
bona fide farmer.
Despite the advised to withdraw the cavans of palay, private respondent
insisted that the palay grains delivered be paid. Then, he filed a complaint for
specific performance and collection of money with damages against NFA and
Mr. Cabal before the Court of First Instance of Tugeugarao.
Upon the agreement and order of the court, the cavans of play were
withdrawn and an inventory was made by the sheriff as representative of the
court, representative of Soriano, and a representative of NFA.
The Court of First Instance of Cagayan rendered judgment in favor of private
respondent and ordered the NFA to pay the amount of Php 47 250
representing the unpaid price of the 630 cavans of palay plus legal interest.
The lower court’s decision was then affirmed by the Intermediate Appellate
Court.
ISSUE:
Is there a contract of sale between the parties?
HELD:
Yes. Article 1458 of the Civil Code of the Philippines defines sale as a
contract whereby one of the contracting parties obligates himself to transfer
the ownership of and to deliver a determinate thing, and the other party to pay
the price certain in money or its equivalent. A contract, on the other, is a
meeting of minds between two persons whereby one binds himself, with
respect to the other, to give something or to render some service. The
essential requisites of contracts are: 1. consent of the contracting parties, 2.
Object certain which is the subject matter of the contract, and 3. cause of the
obligation which is established. In the present case, private respondent initially
offered to sell palay grains produced in his farmland to NFA. When the latter
accepted the offer noting in Soriano’s Farmer’s Information Sheet a quota of 2
640 cavans of palay, there was already meeting of minds between the parties.
The object of the contract, being the palay grains produced in Soriano’s
farmland and the NFA was to pay the same depending upon its quality. The
fact the exact number is not determinate shall not be an obstacle to the
existence of the contract – Provided it is possible to determine the same,
without the need of a new contract between the parties. In this case, there
was no need for NFA and Soriano to enter into a new contract to determine
the exact number of cavans of palay sold. Soriano can deliver so much of his
produce as long as it does not exceed 2 640 cavans.
JOHANNES SCHUBACK & SONS PHILIPPINE TRADING
CORPORATION, petitioner,
vs.
THE HON. COURT OF APPEALS, RAMON SAN JOSE, JR., doing business
under the name and style “PHILIPPINE SJ INDUSTRIAL
TRADING,” respondents.
G.R. No. 105387 November 11, 1993
FACTS:
Sometime in 1981, the defendant established a contract with plaintiff through
the Philippine Consulate General in Hamburg, West Germany, because he
wanted to purchase MAN bus spare parts from Germany. Plaintiff
communicated with its trading partner, JOHANNES SCHUBACK & SONS
PHILIPPINE TRADING CORPORATION (Schuback Hamburg) regarding the
spare parts defendant wanted to order. Defendant submitted to plaintiff a list
of the parts he wanted to purchase with specific part numbers and description.
Plaintiff sent to defendant a letter dated 25 November, 1981, enclosing its
offer on the items listed by defendant.
Plaintiff submitted its formal offer containing the item number, quantity, part
number, description, unit price and total to defendant. On December, 24,
1981, defendant informed plaintiff of his desire to avail of the prices of the
parts at that time.
Plaintiff immediately ordered the items needed by defendant from Schuback
Hamburg to enable defendant to avail of the old prices. Schuback Hamburg in
turn ordered the items from NDK, a supplier of MAN spare parts in West
Germany. On January 4, 1982, Schuback Hamburg sent plaintiff a proforma
invoice to be used by defendant in applying for a letter of credit. Said invoice
required that the letter of credit be opened in favor of Schuback Hamburg.
On October 18, 1982, Plaintiff again reminded defendant of his order and
advised that the case may be endorsed to its lawyers. Defendant replied that
he did not make any valid Purchase Order and that there was no definite
contract between him and plaintiff. Plaintiff sent a rejoinder explaining that
there is a valid Purchase Order and suggesting that defendant either proceed
with the order and open a letter of credit or cancel the order and pay the
cancellation fee of 30% of F.O.B. value, or plaintiff will endorse the case to its
lawyers.
Consequently, petitioner filed a complaint for recovery of actual or
compensatory damages, unearned profits, interest, attorney’s fees and costs
against private respondent.
In its decision dated June 13, 1988, the trial court ruled in favor of petitioner
by ordering private respondent to pay petitioner, among others, actual
compensatory damages in the amount of DM 51,917.81, unearned profits in
the amount of DM 14,061.07, or their peso equivalent.
Thereafter, private respondent elevated his case before the Court of Appeals.
On February 18, 1992, the appellate court reversed the decision of the trial
court and dismissed the complaint of petitioner. It ruled that there was no
perfection of contract since there was no meeting of the minds as to the price
between the last week of December 1981 and the first week of January 1982.
Issue:
Whether or not a contract of sale has been perfected between the parties
Held:
The Supreme Court reversed the decision of the Court of Appeals and
reinstated the decision of the trial court. It bears emphasizing that a “contract
of sale is perfected at the moment there is a meeting of minds upon the thing
which is the object of the contract and upon the price.”
Article 1319 of the Civil Code states: “Consent is manifested by the meeting of
the offer and acceptance upon the thing and the cause which are to constitute
the contract. The offer must be certain and the acceptance absolute. A
qualified acceptance constitutes a counter offer.” The facts presented to us
indicate that consent on both sides has been manifested.
The offer by petitioner was manifested on December 17, 1981 when petitioner
submitted its proposal containing the item number, quantity, part number,
description, the unit price and total to private respondent. On December 24,
1981, private respondent informed petitioner of his desire to avail of the prices
of the parts at that time and simultaneously enclosed its Purchase Order No.
0l01 dated December 14, 1981. At this stage, a meeting of the minds between
vendor and vendee has occurred, the object of the contract: being the spare
parts and the consideration, the price stated in petitioner’s offer dated
December 17, 1981 and accepted by the respondent on December 24,1981.
When petitioner forwarded its purchase order to NDK, the price was still
pegged at the old one. Thus, the pronouncement of the Court Appeals that
there as no confirmed price on or about the last week of December 1981
and/or the first week of January 1982 was erroneous.
On the part of the buyer, the situation reveals that private respondent failed to
open an irrevocable letter of credit without recourse in favor of Johannes
Schuback of Hamburg, Germany. This omission, however, does not prevent
the perfection of the contract between the parties.
The opening of a letter of credit in favor of a vendor is only a mode of
payment. It is not among the essential requirements of a contract of sale
enumerated in Article 1305 and 1474 of the Civil Code, the absence of any of
which will prevent the perfection of the contract from taking place.
To adopt the Court of Appeals’ ruling that the contract of sale was dependent
on the opening of a letter of credit would be untenable from a pragmatic point
of view because private respondent would not be able to avail of the old prices
which were open to him only for a limited period of time.
WHEREFORE, the petition is GRANTED and the decision of the trial court
dated June 13, 1988 is REINSTATED with modification.
CONCHITA NOOL and GAUDENCIO ALMOJERA vs.CA
GR No. 116635
July 24, 1997
Facts:
One lot formerly owned by Victorio Nool has an area of 1 hectare. Another lot previously
owned by Francisco Nool has an area of 3.0880 hectares. Spouses (plaintiffs) Conchita
Nool and Gaudencio Almojera alleged that they are the owners of the subject lands.
They are in dire need of money, they obtained a loan DBP , secured by a real estate
mortgage on said parcels of land, which were still registered in the names of Victorino
and Francisco Nool, at the time, Since the plaintiffs failed to pay the said loan, the
mortgage was foreclosed; that within the period of redemption, the plaintiffs contacted
Anacleto Nool for the latter to redeem the foreclosed properties from DBP, which the
latter did; and as a result, the titles of the 2 parcels of land in question were transferred
to Anacleto; that as part of their arrangement or understanding, Anacleto agreed to buy
from Conchita the 2 parcels of land , for a total price of P100,000.00, P30,000.00 of
which price was paid to Conchita, and upon payment of the balance of P14,000.00, the
plaintiffs were to regain possession of the 2 hectares of land, which amounts spouses
Anacleto Nool and Emilia Nebre failed to pay. Anacleto Nool signed the private writing,
agreeing to return subject lands when plaintiffs have the money to redeem the same;
defendant Anacleto having been made to believe, then, that his sister, Conchita, still
had the right to redeem the said properties.
Issue: Is the purchase of the subject lands to Anacleto valid?
Held:
Nono dat quod non habet, No one can give what he does not have; Contract of
repurchase inoperative thus void.
Article 1505 of the Civil Code provides that “where goods are sold by a person who is
not the owner thereof, and who does not sell them under authority or with consent of the
owner, the buyer acquires no better title to the goods than the seller had, unless the
owner of the goods is by his conduct precluded from denying the seller’s authority to
sell.” Jurisprudence, on the other hand, teaches us that “a person can sell only what he
owns or is authorized to sell; the buyer can as a consequence acquire no more than
what the seller can legally transfer.” No one can give what he does not have — nono
dat quod non habet. In the present case, there is no allegation at all that petitioners
were authorized by DBP to sell the property to the private respondents. Further, the
contract of repurchase that the parties entered into presupposes that petitioners could
repurchase the property that they “sold” to private respondents. As petitioners “sold”
nothing, it follows that they can also “repurchase” nothing. In this light, the contract of
repurchase is also inoperative and by the same analogy, void.
