Sales 001

CONCHITA NOOL and GAUDENCIO ALMOJERA vs.CAGR No. 116635July 24, 1997

Facts:One lot formerly owned by Victorio Nool has an area of 1 hectare. Another lot previously owned by Francisco Nool has an area of 3.0880 hectares. Spouses (plaintiffs) Conchita Nool and Gaudencio Almojera alleged that they are the owners of the subject lands. They are in dire need of money, they obtained a loan DBP , secured by a real estate mortgage on said parcels of land, which were still registered in the names of Victorino and Francisco Nool, at the time, Since the plaintiffs failed to pay the said loan, the mortgage was foreclosed; that within the period of redemption, the plaintiffs contacted Anacleto Nool for the latter to redeem the foreclosed properties from DBP, which the latter did; and as a result, the titles of the 2 parcels of land in question were transferred to Anacleto; that as part of their arrangement or understanding, Anacleto agreed to buy from Conchita the 2 parcels of land , for a total price of P100,000.00, P30,000.00 of which price was paid to Conchita, and upon payment of the balance of P14,000.00, the plaintiffs were to regain possession of the 2 hectares of land, which amounts spouses Anacleto Nool and Emilia Nebre failed to pay. Anacleto Nool signed the private writing, agreeing to return subject lands when plaintiffs have the money to redeem the same; defendant Anacleto having been made to believe, then, that his sister, Conchita, still had the right to redeem the said properties.Issue: Is the purchase of the subject lands to Anacleto valid?Held:Nono dat quod non habet, No one can give what he does not have; Contract of repurchase inoperative thus void.

Article 1505 of the Civil Code provides that where goods are sold by a person who is not the owner thereof, and who does not sell them under authority or with consent of the owner, the buyer acquires no better title to the goods than the seller had, unless the owner of the goods is by his conduct precluded from denying the sellers authority to sell. Jurisprudence, on the other hand, teaches us that a person can sell only what he owns or is authorized to sell; the buyer can as a consequence

acquire no more than what the seller can 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.

Paranaque Kings vs. CAMonday, September 1, 2014

Facts:

PR Catalina L. Santos is the owner of 8 parcels of land located at Paraaque, Metro Manila.November 28, 1977: a certain Frederick Chua leased the subject property from defendant Catalina L. Santos, the said lease was registered in the Register of Deeds. February 12, 1979: Frederick Chua assigned all his rights and interest and participation in the leased property to Lee Ching Bing, by virtue of a deed of assignment and with the conformity of defendant Santos, the said assignment was also registered. August 6, 1979: Lee Ching Bing also assigned all his rights and interest in the leased property to Paraaque Kings Enterprises, Incorporated by virtue of a deed of assignment and with the conformity of defendant Santos. Their contract provided that:"9. That in case the properties subject of the lease agreement are sold or encumbered, Lessors shall impose as a condition that the buyer or mortgagee thereof shall recognize and be bound by all the terms and conditions of this lease agreement and shall respect this Contract of Lease as if they are the LESSORS thereof and in case of sale, LESSEE shall have the first option or priority to buy the properties subject of the lease;"September 21, 1988: Catalina Santos sold the eight parcels of land subject of the lease to defendant David Raymundo for a consideration of P5,000,000.

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http://www.thelawchic.com/2014/09/paranaque-kings-vs-ca.html

Upon learning of this fact, the representative of Paranaque King wrote a letter to defendant Santos, requesting her to rectify the error and consequently realizing the error, she had it reconveyed to her for the same consideration of P5M.

Only 2 days after Catalina Santos sold her properties did she reply to Paranaque Kings letter saying period has lapsed.

July 6, 1989: counsel for defendant Santos informed the petitioners Paranaque Kings that the new owner is RAYMUNDO.

From the preceding facts, it is clear that the sale was simulated and that there was a collusion between the respondents Santos and Raymundo in the sales of the leased properties (defendants SANTOS and RAYMUNDO have the same counsel who represented both of them in their exchange of communication with PKs counsel, a fact that led to the conclusion that a collusion exist between them, among others)

Petitioner Paranaque demanded from the defendants to rectify their unlawful acts that they committed, but defendants refused and failed to comply with plaintiffs just and valid demands.RTC issued the order dismissing the complaint for lack of a valid cause of action. CA affirmed in toto.

Issue: Is such right of first refusal enforceable by an action for specific performance? YES(WON the complaint filed by Paranaque Kings states a valid cause of action. YES)

Held:

Paranaque Kings was granted a first option or priority to purchase the subject property (Based on the Par. 9 of the Lease Contract)A careful examination of the complaint filed by Paranaque Kings reveals that it sufficiently alleges an actionable contractual breach on the part of private respondents.

Under paragraph 9 of the contract of lease between respondent Santos and petitioner, the latter was granted the "first option or priority" to purchase the leased properties in case Santos decided to sell. If Santos never decided to sell at all, there can never be a breach, much less an enforcement of such "right."

But on September 21, 1988, Santos sold said properties to Respondent Raymundo without first offering these to petitioner. Santos indeed realized her error, since she repurchased the properties after petitioner complained. Thereafter, she offered to sell the properties to petitioner for P15 million, which petitioner, however, rejected because of the "ridiculous" price. But Santos again appeared to have violated the same provision of the lease contract when she finally resold the properties to respondent Raymundo for only P9 million without first offering them to petitioner at such price. Whether there was actual breach which entitled petitioner to damages and/or other just or equitable relief, is a question which can better be resolved after trial on the merits where each party can present evidence to prove their respective allegations and defenses.

The basis of the right of first refusal must be the current offer to sell of the seller or offer to purchase of any prospective buyer. Only after the optionee fails to exercise its right of first priority under the same terms and within the period contemplated, could the owner validly offer to sell the property to a third person, again, under the same terms as offered to the optionee.

The contention of Raymundo that he is not a privy to the contract is untenableWith respect to the contention of respondent Raymundo that he is not privy to the lease contract, not being the lessor nor the lessee referred to therein, he could thus not have violated its provisions, but he is nevertheless a proper party. Clearly, he stepped into the shoes of the owner-lessor of the land as, by virtue of his purchase, he assumed all the obligations of the lessor under the lease contract. Moreover, he received benefits in the form of rental payments. Furthermore, the complaint, as well as the petition, prayed for the annulment of the sale of the properties to him. Both pleadings also alleged collusion between him and respondent Santos which defeated the exercise by petitioner of its right of first refusal.

In order then to accord complete relief to petitioner, respondent Raymundo was a necessary, if not indispensable, party to the case. A favorable judgment for the petitioner will necessarily affect the rights of respondent Raymundo as the buyer of the property over which petitioner would like to assert its right of first option to buy.

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Deed of Assignment included the option to purchaseThe provisions of the deeds of assignment with regard to matters assigned were very clear. Under the first assignment between Frederick Chua as assignor and Lee Ching Bing as assignee, it was expressly stated that:

. . . . the ASSIGNOR hereby CEDES, TRANSFERS and ASSIGNS to herein ASSIGNEE, all his rights, interest and participation over said premises afore-described, . . . .

And under the subsequent assignment executed between Lee Ching Bing as assignor and the petitioner, represented by its Vice President Vicenta Lo Chiong, as assignee, it was likewise expressly stipulated that;

. . . . the ASSIGNOR hereby sells, transfers and assigns all his rights, interest and participation over said leased premises, . . . .

One of such rights included in the contract of lease and, therefore, in the assignments of rights was the lessee's right of first option or priority to buy the properties subject of the lease, as provided in paragraph 9 of the assigned lease contract. The deed of assignment need not be very specific as to which rights and obligations were passed on to the assignee. It is understood in the general provision aforequoted that all specific rights and obligations contained in the contract of lease are those referred to as being assigned. Needless to state, respondent Santos gave her unqualified conformity to both assignments of rights.

Ruling: WHEREFORE, the petition is GRANTED. The assailed decisions of the trial court and Court of Appeals are hereby REVERSED and SET ASIDE. The case is REMANDED to the Regional Trial Court of Makati for further proceedings.

ROMERO vs. CAG.R. No. 107207 November 23, 1995

Facts:

Romero, a civil engineer, was engaged in the business of production, manufacture and exportation of perlite filter aids, permalite insulation and processed perlite ore. In 1988, he decided to put up a central warehouse in Metro Manila. Flores and his wife offered a parcel of land measuring 1,952 square meters. The lot was covered in a TCT in the name of private respondent Enriqueta Chua vda. de Ongsiong. Petitioner visited the property and, except for the presence of squatters in the area, he found the place suitable for a central warehouse. Flores called on petitioner with a proposal that should he advance the amount of P50,000.00 which could be used in taking up an ejectment case against the squatters, private respondent would agree to sell the property for only P800/square meter. Romero agreed. Later, a "Deed of Conditional Sale" was executed between Flores and Ongsiong.Purchase price = P1,561,600.00; Downpayment = P50K; Balance = to be paid 45 days after the removal of all the squatters; upon full payment, Ongsiong shall execute deed of absolute sale in favor of Romero.Ongsiong sought to return the P50,000.00 she received from petitioner since, she said, she could not "get rid of the squatters" on the lot. She opted to rescind the sale in view of her failure to get rid of the squatters. Regional Trial Court of Makati rendered decision holding that private respondent had no right to rescind the contract since it was she who "violated her obligation to eject the squatters from the subject property" and that petitioner, being the injured party, was the party who could, under Article 1191 of the Civil Code, rescind the agreement.

Issue:

Is there a perfected contract of sale?

Held:

YES. A sale is at once perfected when a person (the seller) obligates himself, for a price certain, to deliver and to transfer ownership of a specified thing or right to another (the buyer) over which the latter agrees. (BILATERAL and RECIPROCAL CHARACTERISTIC OF SALE).

In determining the real character of the contract, the title given to it by the parties is not as much significant as its substance. For example, a

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deed of sale, although denominated as a deed of conditional sale, may be treated as absolute in nature, if title to the property sold is not reserved in the vendor or if the vendor is not granted the right to unilaterally rescind the contract predicated on the fulfillment or non-fulfillment, as the case may be, of the prescribed condition. From the moment the contract is perfected, the parties are bound not only to the fulfillment of what has been expressly stipulated but also to all the consequences which, according to their nature, may be in keeping with good faith, usage and law. Under the agreement, private respondent is obligated to evict the squatters on the property. The ejectment of the squatters is a condition the operative act of which sets into motion the period of compliance by petitioner of his own obligation, i .e to pay the balance of the purchase price. Private respondents failure "to remove the squatters from the property" within the stipulated period gives petitioner the right to either refuse to proceed with the agreement or waive that condition in consonance with Article 1545 of the Civil Code.

This option clearly belongs to petitioner and not to private respondent. There was no potestative condition on the part of Ongsiong but a "mixed" condition "dependent not on the will of the vendor alone but also of third persons like the squatters and government agencies and personnel concerned."

Dichoso v. Roxas GR No. L-17441 July 31, 1962 5 SCRA 781

FACTS: Roxas sold to Dichoso and Hernandez a parcel of unregistered coconut land, subject to the condition that the vendor could repurchase the land within 5 years from the date of sale. Roxas received from Dichoso several sums of money as initial or advance payments, with the agreement that Roxas would sell the same property, by absolute sale, to Dichoso. Out of their remaining balance, they would use P850 to repurchase the property from Borja and Alanguilan within the period stipulated. Dichoso informed Borja of their readiness to repurchase and sent Roxas a check. Roxas returned the check with the request that they indorsed it to Borja and Alanguilan when they make the repurchase. Despite the repeated demands and representations, Roxas and Borja had deliberately failed to execute the corresponding deed of absolute sale and deed of resale.

ISSUE: Whether or not there was a double sale.

HELD: No. The contract between the petitioners and Roxas was a mere promise to sell because Roxas merely promised to execute a deed of absolute sale upon Dichosos completion of payment. On the date that Roxas could possibly sell sell or convey in relation to the property in question was her right to repurchase the same from Borja. The private document executed between Roxas and Dichoso can be considered as an assignment by Roxas to Dischoso of her right to repurchase which Roxas only had knowledge thereof when Dichoso attempted to make the repurchase. Such being its condition, it could not possibly give rise to the case of one and the same property having been sold to two different purchasers. The sale in favor of Borja was of the property itself, while the one in favor of Dichoso, if not a mere promise to assign, was at most an actual assignment of the right to repurchase the same property. Art. 1544, par. 3 of the CC do not apply

INCHAUSTI & CO. VS. CROMWELL20 Phil 345

FACTS:1. Plaintiff firm for many years past has been and is now engaged in business of buying and selling at wholesale hemp.2. It was customary for it to sell hemp in bales and that in all sales of hemp by the plaintiff firm no mention is made of baling; but with the tacit understanding, unless otherwise expressly agreed, that the hemp will be delivered in bales.3. A charge is then made against the buyers for said baling.4. Elias Cromwell, the Collector of the Internal Revenue then made a tax assessment upon the sums received from the sale of baled hemp.5. Plaintiff paid under protest contending that the tax assessed by the defendant upon the aggregate of charges made against said purchasers of hemp by the plaintiff is illegal upon the ground that the said charge does not constitute a part of the selling price of the hemp, but is a charge made for the services of baling the hemp.

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ISSUE:Is there a contract of sale?

HELD:The judgment of the court below was right. It is one of the stipulations in the Statement of Facts that it is customary to sell hemp in bales, and that the price quoted in the market for hemp per picul is the price for the hemp baled. The fact it that among large dealers like the plaintiff in this case it is practically impossible to handle hemp without its being baled, and it is admitted by the Statement of Facts, as well as demonstrated by the documentary proof introduced in this case, that if the plaintiff sold a quantity of hemp it would be the understanding, without words, that purchase price would include the cost and expense of baling.

In other words, it is the fact as stipulated, as well as it would be the fact of necessity, that in all dealings in hemp in the general market the selling price consist of the value of the hemp loose plus the cost and expense of petting it into marketable form.

* Under such conditions the cost and expenses of baling the hemp is a part of the purchase price and subject to a tax imposed by law on the gross amount of sales of the dealers, and is not a sum paid for work, labor, and materials performed and furnished by the vendor for the vendee.

The word price signifies the sum stipulated or the equivalent of the thing sold and also every incident taken into consideration for the fixing of the price, put to the debit of the vendee and agreed to by him.

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 been the subject of sale to some other person, even if the order has not been given.

It is clear that in the case at bar the hemp was in existence in baled form

before the agreements of sale were made, or, at least, would have been in existence even if none of the individual sales herein question had been consummated. It would have been baled nevertheless, for sale to someone else, since, according to the agreed Statement of Facts, it is customary to sell hemp in bales.

When a person stipulates for the future sale of articles which he is habitually making, and which at the time are not made or finished, it is essentially a contract of sale and not a contract for labor. It is otherwise when the article is made pursuant to agreement. Where labor is employed on the materials of the seller he cannot maintain an action for work and labor. 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 the 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.

In the case at bar the baling was performed for the general market and was not something done by the plaintiff which was a result of any peculiar wording of the particular contract between him and his vendee. It is undoubted that the plaintiff prepared his hemp for the general market. This would be necessary. One who exposes goods for sale in the market must have them in marketable form.

COMMISSIONER OF INTERNAL REVENUE vs. ENGINEERING EQUIPMENTG.R. No. L-27044 June 30, 1975Facts: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

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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:

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/contractor2) Ready-made materialsIn 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.

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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.

Celestino Co & Company v. CIRG.R. No. L-8506 August 31, 1956Bengzon, J.

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, in accordance with section 186 of the National Revenue Code imposing taxes on sales of manufactured articles. However in 1952 it began to claim liability only to the contractors 3% tax (instead of 7%)under section 191 of the same Code. It bolstered its contention by claiming that it does not manufacture ready-made sash, doors and windows for the public and that it makes these articles only upon special order of its customers; hence it is a contractor within the purview of section 191 of the National Internal Revenue Code which enumerates no less 50occupations subject to taxation. Having failed to convince the Bureau of Internal Revenue, it brought the matter to the Court of Tax Appeals, where it also failed.

Issue: whether or not petitioner could be taxed with lesser strain and more accuracy as seller of its manufactured articles under section 186 of the same code, as the respondent Collector of Internal Revenue has in fact been doing since the Oriental Sash Factory was established in 1946

Held: No. The percentage tax imposed in section 191 of the Tax Code is generally a tax on the sales of services, in contradiction with the tax imposed in section 186 of the same Code which is a tax on the original sales of articles by the manufacturer, producer or importer. The fact that the articles sold are manufactured by the seller does not exchange the

contract from the purview of section 186 of the National Internal Revenue Code as a sale of articles. Moreover, the fact that windows and doors are made by it only when customers place their orders, does not alter the nature of the establishment, for it is obvious that it only accepted such orders as called for the employment of such materials-molding, frames, panels-as it ordinarily manufactured or was in a position habitually to manufacture. Also, the business enterprise of petitioner does not fall under the enumeration provided in section 191. It would require a stretch of the law and much effort to make the business of manufacturing sash, doors and windows upon special order of customers fall under the category of road, building, navigation, artesian well, water works and other construction work contractors. Construction work contractors are those who alter or repair buildings, structures, streets, highways, sewers, street railways, railroads, logging roads, electric, steam or water plants telegraph and telephone plants and lines, electric lines or power lines, and includes any other work for the construction, altering or repairing for which machinery driven by mechanical power is used.

Antonio Medina vs Collector of Internal Revenue G.R. No L-15113 January 28, 1961

Facts: Antonio Medina and Antonia Rodriguez married in 1944 without any property. Antonio later acquired forest concessions in Isabela. In 1949, Antonia engaged in lumber business. From 1949 to 1952, Antonio sold all his logs to Antonia. Antonia in turn sold the products in Manila through an agent. Upon assessment of their taxes, the Collector of Internal Revenue considered the sale from Antonio to Antonia as null and void, thus, an additional tax of about 4,553.54 was assessed. The spouses protested the assessment claiming that they had a prenuptial agreement pf complete separation of properties.

Issue: Was the sale between Antonio and Antonia valid?Held: No. The validity of the prenuptial agreement was declared by the court null because of material inconsistencies a) the prenuptial agreement was said to be executed 3 months before the marriage; b) the spouses did not have any property before the marriage which would compel them into entering into the agreement c) they did not act in accordance to the

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said agreement. The sale from Antonio to Antonia was null because such is expressly prohibited in Article 1490 of the Civil Code

Philippine Trust Co. v. Roldan

Facts:Mariano Bernardo, a minor, inherited 17 parcels of land from his deceased father. Respondent, Marianos step-mother, was appointed his guardian. As guardian, she sold the 17 parcels to Dr. Ramos, her brother-in-law, for P14,700. After a week, Dr. Ramos sold the lands to her for P15,000. Subsequently, she sold 4 out of 17 parcels to Emilio Cruz. Petitioner replaced Roldan as guardian, and two months thereafter, this litigation sought to declare as null and void the sale to Dr. Ramos, and the sale to Emilio Cruz.

Issue:Whether the sale of the land by the guardian is null and void for being violative of the prohibition for a guardian to purchase either in person or through the mediation of another the property of her ward

Held:Remembering 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 wards interest, and in line with the courts suspicion whenever the guardian acquires wards property we have no hesitation to declare that in this case, 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.

THE PHILIPPINE TRUST COMPANY, AS GUARDIAN OF THE PROPERTY OF THE MINOR,MARIANO L. BERNARDO, PETITIONER, VS. SOCORRO ROLDAN, FRANCISCOHERMOSO, FIDEL C. RAMOS AND EMILIO CRUZ, RESPONDENTS. [ G.R. No. L-8477, May31, 1956 ]FACTS:Mariano L Bernardo, a minor, inherited from his father, Marcelo Bernardo 17 parcels of land located in Guiguinto, Bulacan. In view of his minority,

guardianship proceedings were instituted on July 27, 1947, where Socorro Roland, surviving spouse of Marcelo and step-mother of Mariano, was appointed as guardian of the latter. Also, Socorro filed a motion asking authority to sell as guardian the 17 parcels for the sum of P14,700 to his brother-in-law, Dr. Fidel C. Ramos, the purpose of the sale being allegedly to invest money in a residential house, which the minor desired to have on Tindalo St., Manila. The motion was granted.

On August 5, 1947 Socorro, as guardian, then executed the proper deed of sale in favor of Fidel Ramos and on August 12, 1947, she asked for and obtained judicial confirmation of the sale. However, on August 13, 1947, Fidel Ramos executed in favor of Socorro personally, a deed of conveyance covering the same 17 parcels for the sum of P15,000. And on October 21, 1947 Socorro sold 4 out of the 17 parcels to Emilio Cruz for P3,000, reserving herself the right to repurchase.

On August 10, 1948, petitioner Phil. Trust Co. replaced Socorro as guardian. Petitioner filed a complaint to annul two contracts regarding the 17 parcels of land: a) the sale thereof by Socorro, as guardian, to Fidel Ramos; and b) sale thereof by Fidel Ramos to Socorro personally. Petitioner contends that the step-mother in effect, sold to herself, the properties of her ward thus should be annulled as it violates Art. 1459 of the Civil Code prohibiting the guardian frompurchasing either in person or through the mediation of another the property of her ward. As to the third conveyance, that Socorro had acquired no valid title to convey to Cruz.

The trial court held that Art 1459 was not controlling as there was no proof that Ramos was a mere intermediary or that the latter agreed with Socorro to but the parcels of land for her benefit. The Court of Appeals affirmed the judgment, adding that the minor new the particulars of, and approved the transactions, and that only clear and positive evidence of fraud and bad faith, and not mere insinuations and interferences will overcome the presumptions that a sale was concluded in all good faith for value. Hence, this petition.

ISSUE: Whether the two contracts of sale made by Socorro was valid.

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HELD: No. The court held that even without proof that Socorro had connived with Fidel Ramos. Remembering 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 temptation which naturally besets a guardian so circumstanced, necessitates the annulmentof 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.

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 it (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.

G.R. No. L-2342 October 27, 1950

SILVERIO Q. CORNEJO, plaintiff -appellant, vs.MANUEL B. CALUPITAN, D. B. CASTAEDA and EUSTACIO BARRERA, defendants-appellees.

Francisco M. Africa and Jose L. Africa for appellant.Mariano A. Albert for appellee.

MONTEMAYOR, J.:

This is an appeal prosecuted by the plaintiff Silverio Q. Cornejo directly from the judgment of the Court of First Instance of Manila, absolving the defendants from the complaint for specific performance, seeking to compel Manuel B. Calupitan to convey his land containing about 110 hectares situated in the Province of Tayabas (now Quezon) in favor of plaintiff-appellant.

By a direct appeal from the Court of First Instance, only question of law may be raised here, and counsel for appellant so states and intimates in his brief where on page one thereof, he says:

This appeal is now brought to this Honorable Tribunal that it may finally resolve certain questions of law involved herein.

Under the circumstances, we may therefore rely on the findings of fact made by the trial court. Said facts necessary for the determination of the appeal may be briefly stated as follows.

In January, 1945 defendant Manuel B. Calupitan who owned a parcel of land in the barrio of Mayabobo, Candelaria, Tayabas with an area of 110.9125 hectares, authorized his co-defendants D. B. Castaeda and Eustacio Barrera, real estate brokers operating in Manila, to sell the aforementioned parcel. The defendant brokers contacted their friends and clients and finally received an offer in writing (Exhibit B, Annex 2) from plaintiff Silverio Q. Cornejo, which reads thus:

CASTAEDA-BARRERA REALTY CO.R. 317 Kneedler Bldg.Manila.

The undersigned respectfully offers to buy the 110.9125 hectares in barrio Mayabobo, Candelaria, Tayabas of Dr. Manuel Calupitan for the total amount of Six Hundred fifty thousand (P650,000) pesos with an earnest money of Seventy thousand (P70,000) pesos; the balance payable within fifteen (15) days from date hereof; with the condition that all the papers evidencing ownership are in order. lawphil.net

Manila, Philippines, this 4th day of Jan. 1945.

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(Sgd.) S. Q. CORNEJO

Accepted by:

(Sgd.) MANUEL B. CALUPITAN

It will be noted that on the same day that the offer was made, January 4,1945, defendant Calupitan accepted it by signing his name at the foot thereof under the phrase "accepted by". The parties are agreed that the price of P650,000, including the earnest money of P70,000 was payable in Japanese military notes. Cornejo, however, because he did not have the cash to pay the P70,000 earnest money and to complete the payment within the period specified in his offer as accepted by Calupitan, delivered only P65,000 Japanese war notes to defendant brokers Castaeda & Barrera on January 6, 1945, with instructions to deliver the same to Calupitan on the same date and to inform the latter that the balance of P585,000 was to be made on January 25,1945. This transaction or proposition was reduced to writing in the form of a receipt, and is now Exhibit C. A carbon copy of the said exhibit was given to Calupitan by the brokers on the same date, January 6, 1945, presumably for his approval and acceptance, together with the P65,000 earnest money in Japanese military notes. Calupitan, however, instead of merely affixing his signature at the foot thereof to show his conformity, as he had formerly done with the original offer, Exhibit B, wrote out a receipt for the P65,000 earnest money in military notes delivered to him by Castaeda & Barrera, specifying his own terms as to the payment of the balance, so that the carbon copy of Exhibits C and said receipt written out by Calupitan at the bottom thereof, now marked Exhibit M, Annex 3 reads as follows:

CASTAEDA-BARRERA REALTY CO., LTD. 317 Kneedler Building, Manila Telephone 2-48-88

Received from Atty. Silverio Q. Cornejo the sum of Sixty-five thousand (P65,000) pesos to be delivered to Dr. Manuel Calupitan (owner) as partial payment of the 110.9095 hectares, more or less, in the barrio of

Mayabobo, Candelaria, Tayabas, Philippines and covered by T. C. T. No. 3366.

The balance of Five hundred eighty-five thousand (P585,000) pesos to be paid in accordance with the written offer of Atty. Cornejo and accepted by Dr. Manuel Calupitan, on or before January 25, 1945.

Manila, Philippines, this 6th day of January, 1945.

CASTAEDA-BARRERA REALTY CO.

BY: D. B. CASTAEDA

Received from Atty. Silverio Q. Cornejo through Atty. D. B. Castaeda of the Castaeda-Barrera Realty Co., Ltd. the sum of Sixty-five thousand pesos (P65,000) J. N. as earnest money and /or partial payment of my one hundred ten hectares, ninety centares and 95 ares (110.9095 hectares) more or less in barrio Mayabobo, municipality of Candelaria, Province of Tayabas. Philippines, as described in the Escritura de Venta dated Dec. 28, 1937, made by Maria Pardel in favor of Manuel B. Calupitan, Doc. No. 219, page No. 48, Libro No. VI, serie de 1937, of Notary Public Arturo Fanlo of Manila, and more particularly described in T. C. T. No. 3366 in the name of Jose Javier, as administrator of the Estate of Margarita Valenzuela deceased. The balance of Five hundred and eighty-five thousand pesos (P585,000) Philippine currency, to be paid on or before January 25, 1945.

Manila, Philippines, this 6th day of January, 1945.

(Sgd.) MANUEL B. CALUPITAN

The balance of P585,000 was never paid or delivered by Cornejo nor received by Calupitan. Cornejo claims that he had been looking in vain for Calupitan to deliver to him the said balance in Japanese military notes but that Calupitan had either avoided him, hidden himself or had left the money to him. Calupitan on the other had, insists that he never avoided Cornejo nor purposely prevented delivery of the balance of the purchase price but that for security reasons he made it a point not to disclose his address because he was being sought by the Japanese military authorities

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for his guerrilla activities. The fact is that on January 22, 1945, after supposedly failing to deliver the balance of P585,000 in Japanese war notes to Calupitan, Cornejo deposited the sum with the Clerk of Court, securing the corresponding receipt therefor, Exhibit H, and then on the same day Cornejo filed the corresponding complaint in court against Calupitan and the two real estate brokers for specific performance and for payment of damages.

The trial Court through Judge Dionisio de Leon in absolving the defendant-appellee from the complaint, held that appellant Cornejo repudiated the original agreement by proposing that the earnest money be reduced from P70,000 to 65,000 and that the period for payment of the balance of the purchase price be extended form the 19th to the 25th of January, 1945; that in that particular agreement or transaction, time was of the essence of the contract, and that in such a case, acceptance of option and payment of the purchase price constituted a condition precedent for specific performance; that this was particularly true during those days in January, 1945 when the American liberation forces were already at the outskirt of Manila and the people in the City were living from day to day in constant expectation of being liberated from the Japanese, and that those who ventured into business were greatly influenced in their decisions by the circumstances of the times and the fact that Japanese military notes, then used as legal tender, were depreciating in value by leaps and bounds. The trial court further held that the plaintiff himself rendered the original agreement null and void, and that in making his new proposition as to the payment of the earnest money and the period for the delivery of the balance of the purchase price, Calupitan could either accept or reject said new proposition or make a counter proposition which he did by imposing the condition that the said balance be paid in genuine Philippine currency on or before January 25, 1945, as proposed by Cornejo.

Did Calupitan really intend and make it clear that said balance be paid in genuine Philippine currency instead of Japanese military notes, and did Cornejo so understand it? This is really the crucial point on which the decision in the case mainly hinges. Counsel for appellant correctly boils down the controversy in the present appeal when he states in his brief:

The critical point to be determined in this controversy particularly centers on the meaning to be given to the phrase "Philippine currency" which was used by one of the parties. The interpretation of that phrase will ultimately decide all other questions subsidiary to this issue, and will eventually formulate the status which the parties assumed in the case. For if it can be interpreted to mean what the defendant and the lower court contended to be the "genuine" Philippine currency, then the stand taken by the plaintiff cannot be maintained; but if it should be held to be the currency prevailing during the period when the contract was made and when it was enforceable, then the decision cannot but be favorable to the plaintiff. For then the plaintiff will have complied with his end of the bargain and the contract deemed enforced in accordance with its terms.

As we stated at the beginning of the decision, we have to rely upon the findings of fact of trial court, for only questions of law may be raised in this appellate tribunal. The trial court found and held that Calupitan wanted, intended and made it clear that the balance of the purchase price of P585,000 be paid in genuine Philippine currency, not in Japanese war notes. This finding is based not only on what appears on Exhibit M, particularly the note or receipt written out in longhand and signed by Calupitan, but also on the oral evidence submitted, consisting of several hundred pages of transcript. If the appellant was dissatisfied by the findings of the trial court and wanted the oral evidence received, he should have appealed to the Court of Appeals. Instead, he came direct to this court and made it of record that he was raising only questions of law.

After a careful study of the record, particularly Exhibit M, we agree with the trial court that in varying and modifying the terms of the original agreement, Exhibits B, offered by Cornejo and accepted by Calupitan, that the earnest money was to be P70,000 and the balance was to be paid fifteen days after January 4, 1945, which modification consisted in reducing the earnest money from P70,000 to 65,000 and in extending the period of payment of the balance from January 19th to January 25th, Cornejo abandoned and rendered void the said original agreement. His new proposition, a modification of the old one, was subject to acceptance or rejection by Calupitan who, as already stated, may make a counter

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proposition which he did, and unless accepted and complied with by Cornejo, then the deal between the two parties was off.

We are also convinced that Calupitan wanted to have the balance paid in genuine Philippine currency . This is established not only by his extended testimony during the hearing as found by the trial court but also by the very terms of Exhibit M, particularly the portion written out in longhand by Calupitan. It will be noticed that in referring to the earnest money of P65,000 which he received, he added the two letters "J. N.", meaning Japanese notes. On the other hand, in describing the balance of P585,000, he denominates it "Philippine currency". Moreover, as found by the trial court during the latter part of January, 1945, when Manila where the parties were then living was on the eve of being assaulted and liberated by the American liberation forces, the Japanese military notes were fast losing their purchasing power not only by the week but by the day if not by the hour. According to the trial court's findings, Calupitan said at the beginning when he accepted the original offer of Cornejo to pay the balance in Japanese military notes, he intended to re-invest the sales price in urban property. However, when the terms of the original agreement were varied and the balance was not to be paid as early as was originally agreed upon and realizing that investment of said balance would be hazardous difficult, if not impossible because of the approaching battle of Manila, he changed his mind and wanted said balance to be paid in genuine Philippine currency although he accepted the earnest money of P65,000 in Japanese military notes. This, he said he made plain to the brokers who delivered to him said earnest money.

According to the very testimony of Cornejo quoted by the trial court in its decision, Cornejo himself had his doubts about the payment of the balance of P585,000 in Japanese military notes as he now claims. In fact, he was rather intrigued or worried about the phrase "Philippine currency" written by Calupitan Exhibit M, and that was the reason why he made so much effort to see Calupitan to put his mind at ease on that point. This of course, greatly weakens the stand now taken by the appellant that the understanding between himself and Calupitan as to the payment of the balance of the purchase price, even under Calupitan's counter proposition (Philippine currency) was to be made in Japanese military notes.

It is urged on the part of the appellant that the balance of the purchase price of P585,000 in genuine Philippine currency is out of all proportion to the real value of the land in questioned whose assessed value is only about P5,000. This may be true but as the trial court well said, the owner of a parcel of land could quote his own price, reasonable or unreasonable. It is up to the prospective purchaser to accept or reject it. It might even be possible that Calupitan had changed his mind not to part with his land and so he imposed a condition hard to fulfill and named a price quite unreasonable, but he was well within his rights as owner of the land because the original agreement had already been abandoned and rendered void.

But Calupitan had received the P65,000 earnest money in Japanese war notes. He should not be allowed to enrich himself at the expense of plaintiff. He should return the value of said sum at the time, to the plaintiff.

In view of the foregoing, we find that the original agreement, Exhibit B between Cornejo and Calupitan had been abandoned and rendered void by Cornejo himself, and that as to the new proposition made by Cornejo, there was no meeting of the minds of the parties for it was not accepted entirely by Calupitan. Consequently, the contract of sale of the land in question was not perfected and so Calupitan may not now be compelled to convey said land to plaintiff-appellant. However, Calupitan is ordered to return to the plaintiff the value of the P65,000 Japanese war notes he received, which value is to be ascertained according to the Ballantyne schedule as of January 6, 1945, in Manila. Said value is hereby fixed at P541.66, with legal interest from January 6, 1945, until paid.

With this modification, the decision appealed from is hereby affirmed. No pronouncement as to costs.

Moran, Bengzon, C. J., Pablo, Tuason, and Reyes, JJ., concur.

Paras, J., concurs in the result.

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Separate Opinions

FERIA, J., dissenting and concurring:

In his direct appeal from the Court of First Instance of Manila to this court, only questions of the law may be raised by the appellant and passed upon by this court, as admitted by the appellant in his brief and stated in the majority. The solution of the question of law raised in this appeal depends on the interpretation of the phrase "Philippine currency" used by the appellee Calupitan in Exhibit M. And the conclusion of the trial court that it was the intention of Calupitan in using said phrase that the balance of the purchase price be paid in genuine Philippine currency, and not in Japanese war notes, In view of his testimony and other evidence in the record, is certainly a conclusion or finding of fact.

The decision of the majority correctly holds that "we have to rely upon the findings of the trial court, for only have to rely upon the findings of the trial court, for only questions of law may be raised in this appellate tribunal." But, instead of accepting the above findings of the court below, regardless of whether it is supported by the evidence or not, and basing on it as a minor premise its conclusion of law in the question properly raised by the appellant, the majority examines the evidence and concludes that "We are also convinced that Calupitan wanted to have the balance paid in genuine Philippine currency," Because "This is established not only by his extended testimony during the hearing as found by the trial court but also by terms of Exhibit M." In passing upon this finding of fact of the court a quo, the majority says:

We are also convinced that Calupitan wanted to have the balance paid in genuine Philippine currency. This is established not only by his extended testimony during the hearing as found by the trial court but also by the very terms of Exhibit M, particularly the portion written out in longhand by Calupitan. It will be noticed that in referring to the earnest money of

P65,000 which he received, he added the two letters "J. N.", meaning Japanese notes. On the other hand, in describing the balance of P85,000, he denominates it "Phil. currency". Moreover, as found by the trial court, during the latter part of January, 1945, when Manila where the parties were then living was on the eve of being assaulted and liberated by the American liberation forces, the Japanese military notes were fast losing their purchasing power not only by the week but by the day if not by the hour.According to the trial court's findings, Calupitan said that at the beginning when he accepted the original offer of Calupitan said that at the beginning when he accepted the original offer of Cornejo to pay the balance in Japanese military notes, he intended to re-invest the sales price in urban property. However, when the terms of the original agreement were varied and the balance was not to be paid as early as was originally agreed upon, and realizing that investment of said balance would be hazardous, difficult, if not impossible because of the approaching battle of Manila, he changed his mind and wanted said balance to be paid in genuine Philippine currency although he accepted the earnest money of P65,000 in Japanese military notes. This, he said, he made plain to the brokers who delivered to him said earnest money.

According to the very testimony of Cornejo quoted by the trial court in its decision, Cornejo himself had his doubts about the payment of the balanced of P585,000 in Japanese military notes as he now claims. In fact, he was rather intrigued or worried about the phrase "Philippine currency" written by Calupitan on Exhibit M, and that was the reason why he made so much effort to see Calupitan to put his mind at ease on that point. This, of course, greatly weakens the stand now taken by the appellant that the understanding between himself and Calupitan as to the payment of the balance of the purchase price, even under Calupitan's counter proposition (Philippine currency) was to be made in Japanese military notes.

In view of the foregoing, I am sorry to dissent from the decision of the majority, because this Supreme Court has no jurisdiction or power to pass upon the findings of fact of the Court of First Instance in appeals like the present, and the decision is misleading. I would have signed it without hesitation, had the above-quoted portion of the decision been omitted or stricken out.

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The question of law raised by the appellant is whether or not the new offer made by him to buy the land on the condition that he has to pay an earnest money of P65,000 and the balance of P585,000 in Japanese war notes on or before January 25, 1945, was accepted by Calupitan, and therefore a new contract binding upon the parties was perfected as contended by the appellant.

In view of the conclusive finding of the lower court that, according to the evidence, the words or phrase "Philippine currency" used by the appellee Calupitan in his counter proposition Exhibit M was intended to mean genuine Philippine currency, it is obvious that appellant's contention is without foundation, and the lower court did not commit any error in deciding that the new contract proposed by appellant Cornejo to appellee Calupitan was not perfected. Because there was no meeting of the minds of the parties, since Cornejo's proposition to pay the balance in Japanese war notes was not accepted by Calupitan, who made the counter-proposition that it be paid in genuine Philippine currency.

I therefore concur in the decision of the majority on this question of law and in the result.

G.R. No. L-31701 October 31, 1974

SERGIO KEMPIS and his wife, ZORAHAYDA KEMPIS, petitioners, PEOPLE'S HOMESITE AND HOUSING CORPORATION, (Defendant-Appellee) vs.GUILLERMA GONZALES, and THE COURT OF APPEALS, respondents.

Braulio G. Alfaro for petitioners.

L. Castillo Reyno for private respondent.

ESGUERRA, J.:p

Petition for review on certiorari of the decision of the Court of Appeals vacating and setting aside the decision of the Court of First Instance of Quezon City dated February 1, 1965, which dismissed the complaint for specific performance filed by plaintiff, now respondent Guillerma Gonzales, and ordered the defendant-appellee, People's Homesite and Housing Corporation (PHHC for short), to execute the necessary contract of sale in favor of the intervenor-appellees, now petitioners Sergio Kempis and Zorahayda G. Kempis. The PHHC was ordered by the Court of Appeals to execute the contract of sale in favor of Guillerma Gonzales.

The factual background of the case is as follows:

On January 14, 1963, plaintiff Guillerma Gonzales filed with the Court of First Instance of Quezon City a complaint for specific performance against defendant People's Homesite and Housing Corporation, which reads as follows:

xxx xxx xxx

2. That defendant is the absolute owner of a parcel of land which is more particularly designated as Lot 19, Block E-148, East Avenue Subdivision, situated in Quezon City, Philippines and embraced and covered by Transfer Certificate of Title No. 1356 of the Register of Deeds for Quezon City;

3. That by virtue of the award by defendant in favor of plaintiff of the above-mentioned lot, plaintiff, on February 4, 1957, tendered and paid to defendant the sum of NINE HUNDRED AND THIRTY PESOS (P930.00) as a pre-requisite for the sale of said lot in favor of said plaintiff;

xxx xxx xxx

6. That notwithstanding the fact that plaintiff has fully complied with all the requirements relative to the execution in her favor of the said contract and that her payments of the installment due has been up-to-date, the defendant, on its part, failed and refused to execute the said "Conditional Contract to Sell" to the said lot;

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7. That plaintiff made due representations with defendant to execute the afore-mentioned contract but the latter failed and refused, without any valid or lawful reasons, to perform its obligation inspite of repeated demands therefor made upon it by plaintiff;

xxx xxx xxx

WHEREFORE, plaintiff most respectfully prays of this Honorable Court that judgment be rendered in favor of the plaintiff and against the defendant ordering the latter:

(a) to execute the corresponding Conditional Contract to Sell in favor of the plaintiff over the lot above-mentioned;

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(pp. 2-5, Record on Appeal)

On February 5, 1963, Sergio Kempis and his wife, Zorahayda G. Kempis, filed a motion for leave to intervene in the case and were granted by the trial court the right to do so in its order of February 16, 1963.

On February 6, 1963, defendant PHHC filed its answer to the complaint, as follows:

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2. It denies specifically the material allegations in paragraph 7 of the Complaint, the truth of the matter being the defendant failed to execute the corresponding Conditional Contract to Sell in favor of the plaintiff, due to the claims of Zorahayda G. Kempis and Jose Egobia over the lot in question, to the effect that even before the said lot was awarded to the plaintiff they were already occupying the same as squatters, having their houses thereon and having introduced therein other improvements;

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6. Both the plaintiff and the aforesaid squatters claim that under the law, justice and equity, they are qualified and entitled to have the said lot be awarded to them;

7. While the defendant PHHC is willing and ready to execute the necessary Conditional contract to Sell in conformity with the existing rules and regulations covering the sale of the said PHHC lots to the public, it cannot readily do so in favor of the plaintiff because of the conflicting claims of the plaintiff and the squatters, referred to herein, over the lot in question so that, to avoid multiplicity of suits, it is suggested that plaintiff's complaint be amended so as to include the aforesaid squatters as party-defendants and to require them to litigate with the plaintiff so as to enable this Honorable Court to determine who is legally entitled to be awarded the aforesaid lot.

WHEREFORE, it is most respectfully prayed that plaintiff be ordered to amend her complaint so as to include the squatters, namely Zorahayda G. Kempis and Jose Egobia, as party-defendants, and, after hearing on the merits, to order the PHHC to execute the necessary Conditional Contract to Sell in favor of the party who may be declared by this Honorable Court to be legally entitled to the award to her or to him of the lot in question;

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(pp. 9-12, Record on Appeal)

On February 13, 1963, plaintiff filed her reply to defendant's answer and on February 20, 1963, she filed her manifestation and opposition to the motion for intervention.

On February 23, 1963, the trial court denied the manifestation and opposition to the motion for intervention.

On March 13, 1963, plaintiff filed a motion to declare intervenors in default which was denied in an order of the trial court made in open court on March 6, 1963.

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On March 28, 1963, intervenors filed their Answer in Intervention, as follows; to wit:

1. That intervenors are husband and wife, of legal age and residents of Lot No. 19, Block E-148 of the East Avenue Subdivision of the defendant PHHC;

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4. That what was tendered by plaintiff and duly receipted by the defendant was not in the concept of a partial payment for the price of the said lot in question, but merely as a deposit for 10% of its price, should after investigation pursuant to law, it be found that the lot has no bona fide occupant who, by the same law, is entitled to a priority of the purchase thereof, and should the said complainant be proven to be capable therefor and that she be qualified for the purchase of said lot in question;

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9. That at the time complainant applied for the purchase of the lot in question, she was a minor, a mere student, without any property or source of income of her own, and without any authorization from her parents, for whom she claimed, she applied for the purchase of the property in question, a provincial resident, and as such not qualified to purchase the lot in question, more so that herein intervenors have been living in the lot in question since 1950 and uninterruptedly till the present with the intention of buying the same and having applied for the purchase of it, and as such bona fide residents are by law entitled to a pre-emption in the purchase of said lot, capable as they are for the payment of whatever amortizations are required and for the compliance of other requirements as provided for in defendant's rules and regulations; nor are they disqualified to purchase the same, as they own no lot or housing within the metropolitan area; and

10. That intervenors above filed an administrative complaint with the defendant PHHC and against plaintiff above questioning the illegality of the award of the lot in favor of said plaintiff, which administrative case is still unresolved till the present.

(pp. 32-36, Record on Appeal)

On October 28, 1963, the trial court suspended the proceedings in the case and allowed the defendant PHHC to proceed with its investigation concerning the lot under litigation, pursuant to a directive from the Office of the President of the Republic, after which the court should be furnished with a copy of the final action taken on the result of the aforesaid investigation on or before November 30, 1963.

On December 3, 1963, plaintiff filed a motion to set the case for hearing. Thereafter hearing on the case was conducted and on February 1, 1965, the trial court rendered its decision against the plaintiff by dismissing her complaint for specific performance, and in favor of the intervenors, the spouses Kempis, by ordering the defendant PHHC to execute the necessary contract of sale for the lot in question in their favor.

Plaintiff Guillerma Gonzales appealed the decision to the Court of Appeals, and on October 10, 1969, the herein respondent Court of Appeals promulgated its decision, the dispositive portion of which reads as follows:

WHEREFORE, we vote to vacate the judgment appealed from and to enter another ordering the defendant-appellee People's Homesite and Housing Corporation to execute the corresponding Conditional Contract to Sell in favor of plaintiff-appellant Guillerma Gonzalez over Lot 19, Block E-148, East Avenue Subdivision, Quezon City. Said appellee People's Homesite and Housing Corporation is also hereby ordered to pay to the plaintiff-appellant the sum of P500.00 as attorney's fees, and the costs.

Hence this petition for review on certiorari of the decision.

The evidence presented by the plaintiff consist of the following, as summarized by the trial court:

Plaintiff, who never appeared to testify in this case, presented Atty. Bernardo V. Atienza as her only witness. His testimony shows that he was the lawyer of the plaintiff in an investigation conducted by the Administrative Investigating Committee of the defendant sometime in

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1961 or 1962 involving the lot that is now the subject of controversy; that on September 2, 1962, a resolution was rendered by the said investigating committee sustaining the award of the lot in favor of the plaintiff and dismissing the claim of the intervenors (Exh. A); that after the rendition of said resolution contained in Exhibit A, he wrote a letter urging the defendant to execute the corresponding conditional contract to sell in favor of the plaintiff (Exh. B); that in reply, the plaintiff was requested by the defendant to go to its office to sign the contract to sell and to bring with her Residence Certificates "A" and "B" for that current year (Exh. C); that pursuant to said request, and together with the plaintiff, he went to the office of the defendant corporation to sign the contract, but they were informed that the records of the lot were with the Board of Directors; and that when several attempts made by the plaintiff for the defendant to execute the necessary contract to sell were of no avail, the plaintiff instituted the present action for which she suffered damages in the form of attorney's fees. Plaintiff also presented in evidence Exhibit E which is a receipt for the payment of the sum of P930.00 as 10% deposit for the lot; Exhibit F, the passbook issued to the plaintiff by the defendant for the lot in question; Exhibit G, a confirmation letter from the PHHC about the balance of the plaintiff for the said lot.

The evidence for the defendant, as likewise summarized by the trial court, is as follows:

The evidence for the defendant consisted of the testimony of an employee of the Record Division of the defendant and Atty. Olimpio R. Epis, Head Executive Assistant and concurrently Chairman of the Administrative Investigating Committee of the defendant corporation up to March, 1964. It was shown from their testimony that plaintiff was awarded the lot in question by virtue of an application to purchase a lot she filed on January 21, 1957 (Exh. 5); that the resolution rendered by the Administrative Investigating Committee of the defendant corporation sustaining the award in favor of the plaintiff (Exh. A) was appealed by the intervenors to the Board of Directors; that the Board of Directors, acting on said appeal, issued an action slip directing the committee on investigation then headed by Atty. Olimpio R. Epis to conduct an investigation concerning the lot (Exhibit 4); that said committee submitted its findings and recommended the cancellation of the award in

favor of the plaintiff on the grounds that the award was made to the plaintiff when she was still a minor and that the herein intervenors who were incessantly applying to purchase the lot were in continuous, peaceful and public possession of the same since the year 1950 up to the present. (Exh. 7).

As to the intervenors, their evidence, as also summarized by the trial court, is as follows:

The intervenors, aside from adopting in toto the evidence of the defendant, also presented in evidence a certified copy of a teacher's contract between the plaintiff and the Mabini High School of Balete, Tanauan, Batangas, showing that plaintiff was born on Feb. 10, 1937 (Exh. 1-Intervenors); a certification from the Office of the Civil Registrar General, Bureau of Census and Statistics, Manila, to the effect that birth records filed at the Municipality of Tanauan, Batangas for the year 1937 were among those destroyed during the last world war as per report of the Local Civil Registrar of said municipality dated November 24, 1959 (Exh. 2-Intervenors); a notice by publication intended for the plaintiff to appear before the Chairman, PHHC investigating committee on or before January 25, 1961 (Exh. 7-Intervenors); and a directive coming from the Office of the President of the Philippines directing the defendant to cancel conditional awards of PHHC lots in the East Avenue Subdivision (Piahan Area), Quezon City, made in favor of outsiders who are not occupants of the area in question and the immediate sale thereof to the members of the Piahan Homeowners Association who were and still are occupants thereof from the time the area was reclassified and subdivided in accordance with the directive of the late President Magsaysay (Exh. 8-Intervenors). The testimony of the intervenors were dispensed with upon admission by the counsel for the plaintiff of the actual occupation by the former of the lot in dispute since 1950 and continuously up to the present; that intervenor Zorahayda Kempis was included in the list of the census map of actual occupants made by the defendant sometime in 1957; the existence of Exhibit 8-Intervenors; and that intervenor Zorahayda Kempis is a member of the Piahan Homeowners Association.

(Record on Appeal, pp. 96-100, which is a portion of the decision of the trial court dated February 1, 1965)

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The issue to be determined in this case is whether the award of the lot in question by defendant PHHC to plaintiff Guillerma Gonzales constitutes a perfected contract of sale which bestows upon the awardee the incontrovertible right to compel the PHHC to convey the lot to her.

Well settled is the rule in this jurisdiction that an award of this nature is not in itself a perfected contract of sale, the same being still subject to revocation in case the applicant is found not to possess the necessary qualifications (Alvarez, et al., vs. Board of Liquidators, G.R. No. L-14834, Jan. 31, 1962, 4 SCRA 195; Galvez, et al., vs. Kangleon, G.R. No. L-17197, Sept. 29, 1962, 6 SCRA 162; Guardiano vs. Encarnacion, G.R. No. L-23396, Aug. 29, 1969, 29 SCRA 326). Here applicant Gonzales is not qualified for being a minor and not gainfully employed.

There being no valid and perfected contract of sale, the question is who between the contending parties should be given preference over the lot in dispute? The law and jurisprudence are on the side of the intervenor-petitioners and We declare that they are entitled to preference thereto as against respondent Guillerma Gonzales. As We held in Guardiano vs. Encarnacion, 29 SCRA 326, 331-336:

We find that the appellate court erred in concluding from the documents submitted in evidence that "there had been entered into between PHHC as vendor, and Jorge (Encarnacion), as vendee, a perfected contract to sell," citing "the conditional contract to sell, Exh. B, under which the PHHC promise and agree to sell the property in question." supra. ... The record likewise shows that what respondent transacted with the PHHC was to file on February 8,1957, his application to purchase the subject lot, Exh. A-2 and on the same date secure a tentative award of the lot to him, by virtue of which he was authorized to make a 10% deposit in the amount of P810.00 (Exh. A-1). The application, Exh. A-2, shows that there was no "perfected contract to sell," because it was a mere application which provided that a contract setting out the terms would still have to be executed after survey and inspection of the lot involved and further provided for the forfeiture to the PHHC of 5% of the 10% deposit should the applicant not proceed with the purchase, "when (the lot)is ready to be sold." The initial 10% deposit was expressly and precisely received as

such deposit, not as "10% initial payment" for which there was a separate space provided in the Order of Payment form, Exh. A-1.

xxx xxx xxx

We find no explicable or plausible reason in the record why respondent who was just squatting in the nearby lot of the MVO offices, would insist on taking over the subject lot occupied by petitioner since 1945 and reject the PHHC offer to sell to him another lot "which is free and just as good, but located in another block." Incidentally, this offer of the PHHC to provide another home lot to respondent was not brought out or appreciated in the appealed decisions of the trial and appellate courts. On the other hand, we find the PHHC to have acted properly and in accordance with its functions under its charter and the Presidential policy since 1957 to sell its subdivided lots to actual bona fide occupants, such as petitioner, and re-affirmed in the directive of then President Macapagal, through then Executive Secretary Calixto O. Zaldivar, on February 20, 1964, that the lots in the East Avenue subdivision should be sold to the member of the Piahan Homeowners Association who were still occupants thereof, and whose names are listed in the East Avenue Subdivision Plan as occupants, in which petitioner was admittedly listed a member and actual occupant under No. 272. ...

We find untenable the appellate court's court dismissal of petitioner's claim of priority to the subject lot on the ground that "the law has never and can never make it a policy to give prior choice unto the first squatter," supra. Untenable in fact, because petitioner's initial status as a squatter had been legalized with her having been duly accepted by the PHHC as a "registered squatter" or bona fide occupant occupying the lot since 1945, and untenable in law, because as stated in the PHHC Answer, "the lot in question was really intended for squatters as per PHHC policy and by virtue of a Memorandum of the President of the Philippines, dated April 15, 1957, whereby lots in said area were earmarked for allocation to prior and deserving squatters.

In giving preference to the petitioners, spouses Zorahayda Kempis and Sergio Kempis, We have not overlooked, but are fully aware of, the decision in Baez, et al. vs. Court of Appeals and Pio Arcilla, G. R. No. L-30351, September 11, 1974, where it was held that the awardee there has

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a better right to the PHHC lot involved than the squatter thereon, Pio Arcilla. There are, however, substantial differences between the two cases which do not make this (Kempis) case fall within the law of the Baez case and, consequently, there would be no conflict between them.

In the Baez case, although respondent Pio Arcilla, occupied the lot in question as early as 1956, long before the award thereof to applicant Cristeta Laguihon on May 20, 1960, he did not take the necessary steps towards acquiring the lot from the PHHC. He asserted his right over the lot only in 1963 when he filed a protest with the PHHC against the transfer of the same to Aurea Baez by Basilio Laguihon, father and successor of Cristeta Laguihon. The protest was dismissed by the PHHC Office and although Arcilla went to court, he did not obtain a favorable decision.

It should be noted that awardee Cristeta Laguihon was qualified to acquire the lot in question; that when she died on May 9, 1962, her father, Basilio Laguihon, inherited all her rights to the lot and in turn transferred his rights thereto on July 27, 1962, to Aurea Baez in consideration of the indebtedness of P3,000.00 of Cristeta Laguihon to Aurea Baez; that the transfer of rights from Basilio Laguihon to Aurea Baez was approved by the PHHC Board of Directors in Resolution No. 200, dated November 15, 1962, and thereafter Aurea Baez continued paying the installments on the purchase price of the lot until it was fully paid; that on October 29, 1964, the PHHC executed the corresponding deed of sale for the lot and on October 30, 1964, Transfer Certificate of Title No. 85886 (p. 102, Record) was issued to the spouses Aurea Baez and Ramon Baez. The land was declared by them for taxation purposes under Tax Declaration No. 5475 and they paid the taxes thereon.

In the Baez case, there is not only a perfected but a consummated contract of sale between the PHHC, as vendor, and Aurea Baez, as vendee, which no third person, like Pio Arcilla, could impugn. Pio Arcilla was even ordered ejected from the lot in question, at the instance of PHHC, by the City Court of Quezon City (Annex A, pp. 92-93, Record), and his appeal from the judgment of eviction was dismissed by the Court of First Instance of Quezon City (Annex B, pp. 94-95, Record) and by this Court on September 16, 1968 (Annexes C & D, pp. 96 & 97, Record).

In this (Kempis) case, there is no perfected contract of sale but only a revocable "contract to sell" between the PHHC and Guillerma Gonzales who was not an occupant of the lot in question. She was also a minor and a mere student without means of self-support when she was awarded the lot under litigation on February 4, 1957 (Annex "E", pp. 39-44, Record). She was, therefore, disqualified to acquire the lot as, having been born on February 10, 1937, she was only 19 years 11 months and 24 days when the award was made in her favor.

The spouses Kempis, on the other hand, meet all the qualifications prescribed by the PHHC, beside being the actual occupants of the lot in question since 1950, or long before the shift in policy of the PHHC in 1963 when squatters were placed on the same footing as other qualified applicants, and before the actual award to Gonzales was made on February 4, 1957.

The PHHC policy from 1957 to 1962 was to award PHHC lots to qualified and deserving squatters in consonance with a Presidential directive of April 15, 1957, whereby lots in the Piahan area or the East Avenue Subdivision were earmarked for allocation to prior and deserving squatters. Although this policy was changed in 1963, it was later restored and "reaffirmed in the directive of President Macapagal, through then Acting Executive Secretary Calixto O. Zaldivar, on February 20, 1964, (Exh. "G", pp. 46-47, Record) that the lots in the East Avenue Subdivision should be sold to the members of the Piahan Homeowners Association who were still occupants thereof, and whose names are listed in the East Avenue Subdivision Plan as occupants." (GUARDIANO vs. ENCARNACION, 29 SCRA 326, 335). Petitioner Zorahayda Kempis is listed as a member of the Piahan Homeowners Association and the spouses Kempis are still the occupants of Lot 19, Block E-148, East Avenue Subdivision, their occupancy having lasted from 1950 up to the present. (CFI Decision, pp. 99-100, Record on Appeal).

Although the Kempis spouses were originally squatters on the lot in question, they were later recognized by no less than the Office of the President and the PHHC as prior and deserving occupants entitled to be given preference under the Presidential directive issued through then

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Acting Executive Secretary, Hon. Calixto O. Zaldivar, on February 20, 1964, which re-affirmed the policy adopted in 1957 by the late President Magsaysay of giving preference to prior and deserving squatters in the acquisition of PHHC lots.

The position of petitioners Kempis fits squarely into the pattern of the case of Guardiano vs. Encarnacion, supra, where this Court gave preference to the actual occupant as against the applicant-awardee who was not occupying the lot.

WHEREFORE, the decision of the Court of Appeals under review is hereby reversed and set aside and the complaint for specific performance filed by herein respondent Guillerma Gonzales (as plaintiff in the lower court) is hereby dismissed.

The PHHC is ordered to execute a deed of sale for the lot in question in favor of intervenors Sergio Kempis and Zorahayda G. Kempis, provided they are qualified to purchase the same and can comply with all requirements of the PHHC on the matter.

With costs in all instances against plaintiff-respondent Guillerma Gonzales.

SO ORDERED.

Castro, Fernando, Teehankee, Barredo, Makasiar, Antonio, Fernandez, Muoz Palma and Aquino, JJ., concur.

ZAYCO vs. SERRAFacts: Zayco and Serra executed a contract for an option to buy Palma Central for 1M but no stipulation was made as to how much the first payment would be and when it should be paid. Zayco wrote to Serra accepting the contract tendering P100,000 as his first payment before the option period expired. Serra wrote to Zayco stating that the option contract of November 7, 1918, was cancelled and annulled. On the same day, Zayco brought suit against Serra to compel him to execute the deed of sale and conveyance of the Palma Central and Estate and to pay, in addition, P500,000 as damages. Serra demurred on the ground that the

contract does not specify the part of the price that was to be paid in cash and the part that was to be paid within a period not exceeding three years. Zayco later learned that Serra had already sold the property to Whitaker and Concepcion for 1.5M.

Issue: Whether or not there was a perfected contract of sale. NO

Held: The court below holds that this contract has no consideration and is, for this reason, null and void. This conclusion, however, is not supported by the evidence. It is true that the contract does not state any consideration on the part of Serra, but it is presumed that there is a consideration in all contracts. Besides, a consideration can be proved and, in this case, there is evidence showing its existence. The Palma Central was in competition with the Bearin Central, and Zayco has been the subject of solicitations of both centrals. Serra offered to give him 60 per cent of the sugar of his cane milled in the Palma Central. Zayco decided to become as upporter of the Palma Central. Zayco's support to the Palma Central was a prestation of thing or service which positively benefited Serra. Zayco prays in this action that Serra be compelled to sell to him the Palma Central in accordance with the contract to sell. It having been determined that there exists a consideration for this contract, the same is binding upon the parties.

It was, at least, an offer to sell, which was accepted by letter, and of this acceptance the offerer had knowledge before said offer was withdrawn. The concurrence of both acts could at all events have generated a contract, if none there was before. However, Zayco's acceptance indicates, could not, in itself, convert the offer of sale made by Serra into a perfect contract. In order for the acceptance to have this effect, it must be plain and unconditional, and it will not be so if it involves any new proposal, for in that case it would not mean conformity with the offer, which is what gives rise to the generation of the contract. The letter of acceptance of Zayco lacks these requisites. There was no concurrence of offer and acceptance. Serras offer did not state the amount of first payment. When Zayco accepted the offer, tendering the sum of P100,000 as first payment, his acceptance involved a proposal, not contained in the offer, that this precisely, and not any other, should be the amount of the first payment.Luis Asiain vs Benjamin Jalandoni (Chip)

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October 23, 1923 Malcolm *Neighboring hacienderos enter into a sale in gross.

Facts:1. Luis Asiain Benjamin Jalandoni owned adjacent tracts of land in La Carlota, Negros Occidental. They once met and talked about the land of Asiain, where the latter waved his hand in the direction of his land and made a sweeping claim that it had was between 25 to 30 hectares. He also said that it would produce not less than 2,000 piculs of sugar.2. Jalandoni was quite doubtful of the claim, so Asiain sent him a letter saying that although he (Asiain) was not a surveyor, he knows the area more or less. In the letter, he also assured Jalandoni that the tract had the right size and was going to produce enough piculs (2,000). He even said that there was a possibility of excess production, all of which should be returned to him in case.3. Later on, the two met in Iloilo and signed a memorandum of agreement, showing the sale between them regarding the parcel of land. The MOA said that the land contains 25 hectares and is capable of producing 2,000 piculs of sugar. It also contained all the other obligations that Asiain would assume, like taking care of the lot while the sugar is being planted. Jalandoni then made an advance payment of P30,000.4. After this, Jalandoni remained doubtful, he also continually suggested that the size of the land and the crop was overestimated. This led to another agreement, which added some stipulations to the original MOA to put Jalandonis mind at ease. It said that if Asiain withdrew from the sale, he would have to return the P30,000 advance made by Jalandoni, and a P15,000 penalty. If Jalandoni refused, he would forfeit all the money he had advanced so far.5. Upon receiving the land, Jalandoni did two things: He had the cane ground in the sugar central and found that it only produced 800 piculs of sugar. He had the l