sales batch 1 of assigned cases
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This is the full text version of the Cases assigned in Sales and LeaseTRANSCRIPT
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THIRD DIVISION
[G.R. No. 59266. February 29, 1988.]
SILVESTRE DIGNOS and ISABEL
LUMUNGSOD, petitioners, vs. HON. COURT OF APPEALS and
ATILANO G. JABIL, respondents.
SYLLABUS
1.CIVIL LAW; CONTRACTS; DEED OF SALE; ABSOLUTE IN NATURE WHERE
THERE IS NO PROVISION THAT TITLE IS RESERVED TO THE VENDOR OR
UNILATERALLY GIVING THE VENDOR THE RIGHT TO RESCIND
CONTRACT. It has been held that a deed of sale is absolute in nature
although denominated as a "Deed of Conditional Sale" where nowhere in the
contract in question is a proviso or stipulation to the effect that title to the property
sold is reserved in the vendor until full payment of the purchase price, nor is
there a stipulation giving the vendor the right to unilaterally rescind the contract
the moment the vendee fails to pay within a fixed period (Taguba v. Vda. de
Leon, 132 SCRA 722; Luzon Brokerage Co., Inc. v. Maritime Building Co., Inc.,
86 SCRA 305). A careful examination of the contract shows that there is no such
stipulation reserving the title ofthe property on the vendors nor does it give them
the right to unilaterally rescind the contract upon non-payment of the balance
thereof within a fixed period.
2.ID.; ID.; SALE; ELEMENTS. On the contrary, all the elements of a valid
contract of sale under Article 1458 of the Civil Code, are present, such as: (1)
consent or meetingof the minds; (2) determinate subject matter; and (3) price
certain in money or its equivalent.
3.ID.; ID.; OWNERSHIP IS TRANSFERRED BY DELIVERY OF THE THING
SOLD. In addition, Article 1477 of the same Code provides that "The
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ownership of the thing sold shall be transferred to the vendee upon actual or
constructive delivery thereof." As applied in the case of Froilan v. Pan Oriental
Shipping Co., et al. (12 SCRA 276), this Courtheld that in the
absence of stipulation to the contrary, the ownership of the thing sold passes to
the vendee upon actual or constructive delivery thereof.
4.ID.; ID.; ID.; ID.; ACTUAL DELIVERY IN CASE AT BAR. While it may be
conceded that there was no constructive delivery of the land sold in the case at
bar, as subject Deed of Sale is a private instrument, it is beyond question that
there was actual delivery thereof. As found by the trial court, the Dignos spouses
delivered the possession ofthe land in question to Jabil as early as March 27,
1965 so that the latter constructed thereon Sally's Beach Resort also known as
Jabil's Beach Resort in March, 1965; Mactan White Beach Resort on January 15,
1966 and Bevirlyn's Beach Resort on September 1, 1965. Such facts were
admitted by petitioner spouses (Decision, Civil Case No. 23-L; Record
on Appeal, p. 108).
5.ID.; ID.; ID.; SLIGHT DELAY IN THE PERFORMANCE OF OBLIGATION, NOT
SUFFICIENT GROUND FOR RESCISSION. It has been ruled, however, that
"where time is notof the essence of the agreement, a slight delay on the
part of one party in the performance of his obligation is not a sufficient ground for
the rescission of the agreement" (Taguba v. Vda. de Leon, supra). Considering
that private respondent has only a balance of P4,000.00 and was delayed in
payment only for one month, equity and justice mandate as in the aforecited case
that Jabil be given an additional period within which to complete payment of the
purchase price.
D E C I S I O N
BIDIN, J p:
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This is a petition for review on certiorari seeking the reversal of the: (1)
Decision* of the 9th Division, Court of Appeals dated July 31, 1981, affirming with
modification the Decision** dated August 25, 1972 of the Court of First
Instance of Cebu in Civil Case No. 23-L entitled Atilano G. Jabil vs. Silvestre
T. Dignos and Isabela Lumungsod deDignos and Panfilo Jabalde, as Attorney-in-
Fact of Luciano Cabigas and Jovita L. de Cabigas; and (2) its Resolution dated
December 16, 1981, denying defendant-appellant's (Petitioner's) motion for
reconsideration, for lack of merit.
The undisputed facts as found by the Court of Appeals are as follows:
"The Dignos spouses were owners of a parcel of land, known as Lot No.
3453, of the cadastral survey of Opon, Lapu-Lapu City. On June 7, 1965,
appellants (petitioners)Dignos spouses sold the said parcel of land to
plaintiff-appellant (respondent Atilano J. Jabil) for the
sum of P28,000.00, payable in two installments, with an
assumption of indebtedness with the First Insular Bank of Cebu in the
sum of P12,000.00, which was paid and acknowledged by the vendors in
the deed of sale (Exh. C) executed in favor of plaintiff-appellant, and the
next installment in the sum of P4,000.00 to be paid on or before
September 15, 1965.
"On November 25, 1965, the Dignos spouses sold the same land in
favor of defendants spouses, Luciano Cabigas and Jovita L. De
Cabigas, who were then U.S. citizens, for the price of P35,000.00. A
deed of absolute sale (Exh. J, also marked Exh. 3) was executed by
the Dignos spouses in favor of the Cabigas spouses, and which was
registered in the Office of the Register of Deeds pursuant to the
provisions of Act No. 3344.
"As the Dignos spouses refused to accept from plaintiff-appellant the
balance of the purchase price of the land, and as plaintiff- appellant
discovered the second sale made by defendants-appellants to the
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Cabigas spouses, plaintiff-appellant brought the present suit." (Rollo, pp.
27-28)
After due trial, the Court of First Instance of Cebu rendered its Decision on
August 25, 1972, the decretal portion of which reads:
"WHEREFORE, the Court hereby declares the deed of sale executed on
November 25, 1965 by defendant Isabela L. de Dignos in
favor of defendant Luciano Cabigas, a citizen of the United
States of America, null and void ab initio, and the deed of sale executed
by defendants Silvestre T. Dignos and Isabela Lumungsod
de Dignos not rescinded. Consequently, the plaintiff Atilano G. Jabil is
hereby ordered to pay the sum, of Sixteen Thousand Pesos
(P16,000.00) to the defendants-spouses upon the execution of the
Deed of Absolute Sale of Lot No. 3453, Opon Cadastre and when the
decision of this case becomes final and executory.
"The plaintiff Atilano G. Jabil is ordered to reimburse the defendants
Luciano Cabigas and Jovita L. de Cabigas, through their attorney-in-fact,
Panfilo Jabalde, reasonable amount corresponding to the expenses or
costs of the hollow block fence, so far constructed.
"It is further ordered that defendants-spouses Silvestre T. Dignos and
Isabela Lumungsod de Dignos should return to defendants-spouses
Luciano Cabigas and Jovita L. de Cabigas the sum of P35,000.00, as
equity demands that nobody shall enrich himself at the
expense of another.
"The writ of preliminary injunction issued on September 23, 1966,
automatically becomes permanent in virtue of this decision.
"With costs against the defendants."
From the foregoing, the plaintiff (respondent herein) and defendants-spouses
(petitioners herein) appealed to the Court of Appeals, which appeal was
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docketed therein as CA-G.R. No. 54393-R, "Atilano G. Jabil v. Silvestre
T. Dignos, et al."
On July 31, 1981, the Court of Appeals affirmed the decision of the
lower court except as to the portion ordering Jabil to pay for the expenses
incurred by the Cabigas spouses for the building of a fence upon the land in
question. The dispositive portion of said decision of the Court of Appeals reads:
"IN VIEW OF THE FOREGOING CONSIDERATIONS, except as to the
modification of the judgment as pertains to plaintiff-appellant above
indicated, the judgmentappealed from is hereby AFFIRMED in all other
respects.
"With costs against defendants-appellants.
"SO ORDERED.
"Judgment MODIFIED."
A motion for reconsideration of said decision was filed by the defendants-
appellants (petitioners) Dignos spouses, but on December 16, 1981, a resolution
was issued by theCourt of Appeals denying the motion for lack of merit.
Hence, this petition.
In the resolution of February 10, 1982, the Second Division of this Court denied
the petition for lack of merit. A motion for reconsideration of said resolution was
filed on March 16, 1982. In the resolution dated April 26, 1982, respondents were
required to comment thereon, which comment was filed on May 11, 1982 and a
reply thereto was filed on July 26, 1982 in compliance with the resolution of June
16, 1982 . On August 9, 1982, acting on the motion for reconsideration and on all
subsequent pleadings filed, this Courtresolved to reconsider its
resolution of February 10, 1982 and to give due course to the instant petition. On
September 6, 1982, respondents filed a rejoinder to reply ofpetitioners which was
noted on the resolution of September 20, 1982.
Petitioners raised the following assignment of errors:
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I
THE COURT OF APPEALS COMMITTED A GRAVE ERROR OF LAW
IN GROSSLY, INCORRECTLY INTERPRETING THE TERMS OF THE
CONTRACT, EXHIBIT C, HOLDING IT AS AN ABSOLUTE SALE,
EFFECTIVE TO TRANSFER OWNERSHIP OVER THE PROPERTY IN
QUESTION TO THE RESPONDENT AND NOT MERELY A
CONTRACT TO SELL OR PROMISE TO SELL; THE COURT ALSO
ERRED IN MISAPPLYING ARTICLE 1371 AS WARRANTING
READING OF THE AGREEMENT, EXHIBIT C, AS ONE OF ABSOLUTE
SALE, DESPITE THE CLARITY OF THE TERMS THEREOF SHOWING
IT IS A CONTRACT OF PROMISE TO SELL.
II
THE COURT OF APPEALS COMMITTED AN ERROR OF LAW IN
INCORRECTLY APPLYING AND OR IN MISAPPLYING ARTICLE
1592 OF THE NEW CIVIL CODE AS WARRANTING THE
ERRONEOUS CONCLUSION THAT THE NOTICE OF RESCISSION,
EXHIBIT G, IS INEFFECTIVE SINCE IT HAS NOT BEEN JUDICIALLY
DEMANDED NOR IS IT A NOTARIAL ACT.
III
THE COURT OF APPEALS COMMITTED AN ERROR OF LAW IN
REJECTING THE APPLICABILITY OF ARTICLES 2208, 2217 and
2219 OF THE NEW CIVIL CODE AND ESTABLISHED
JURISPRUDENCE AS TO WARRANT THE AWARD OF DAMAGES
AND ATTORNEY'S FEES TO PETITIONERS.
IV
PLAINTIFF'S COMPLAINT FOR SPECIFIC PERFORMANCE SHOULD
HAVE BEEN DISMISSED, HE HAVING COME TO COURT WITH
UNCLEAN HANDS.
V
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BY AND LARGE, THE COURT OF APPEALS COMMITTED AN ERROR
IN AFFIRMING WITH MODIFICATION THE DECISION OF THE
TRIAL COURT DUE TO GRAVE MISINTERPRETATION,
MISAPPLICATION AND MISAPPREHENSION OF THE
TERMS OF THE QUESTIONED CONTRACT AND THE LAW
APPLICABLE THERETO.
The foregoing assignment of errors may be synthesized into two main issues, to
wit:
I.Whether or not subject contract is a deed of absolute sale or a contract
to sell.
II.Whether or not there was a valid rescission thereof.
There is no merit in this petition.
It is significant to note that this petition was denied by the Second
Division of this Court in its Resolution dated February 10, 1982 for lack of merit,
but on motion for reconsideration and on the basis of all subsequent pleadings
filed, the petition was given due course.
I.
The contract in question (Exhibit C) is a Deed of Sale, with the following
conditions:
"1.That Atilano G. Jabil is to pay the amount of Twelve Thousand Pesos
(P12,000.00) Philippine Currency as advance payment;
"2.That Atilano G. Jabil is to assume the balance of Twelve Thousand
Pesos (P12,000.00) Loan from the First Insular Bank of Cebu;
"3.That Atilano G. Jabil is to pay the said spouses the balance of Four
Thousand Pesos (P4,000.00) on or before September 15, 1965.
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"4.That the said spouses agreed to defend the said Atilano G. Jabil from
other claims on the said property;
"5.That the spouses agrees to sign a final deed of absolute sale in
favor of Atilano G. Jabil over the above-mentioned property upon the
payment of the balance ofFour Thousand Pesos." (Original Record, pp.
10-11)
In their motion for reconsideration, petitioners reiterated their contention that the
Deed of Sale (Exhibit "C") is a mere contract to sell and not an absolute sale; that
the same is subject to two (2) positive suspensive conditions, namely: the
payment of the balance of P4,000.00 on or before September 15, 1965 and the
immediate assumption of the mortgage of P12,000.00 with the First Insular
Bank of Cebu. It is further contended that in said contract, title or ownership over
the property was expressly reserved in the vendor, the Dignos spouses, until the
suspensive condition of full and punctual payment of the balance of the purchase
price shall have been met. So that there is no actual sale until full payment is
made (Rollo, pp. 51-52).
In bolstering their contention that Exhibit "C" is merely a contract to sell,
petitioners aver that there is absolutely nothing in Exhibit "C" that indicates that
the vendors thereby sell, convey or transfer their ownership to the alleged
vendee. Petitioners insist that Exhibit "C" (or 6) is a private instrument and the
absence of a formal deed of conveyance is a very strong indication that the
parties did not intend "transfer of ownership and title but only a transfer after full
payment" (Rollo, p. 52). Moreover, petitioners anchored their contention on the
very terms and conditions of the contract, more particularly paragraph four which
reads, "that said spouses has agreed to sell the herein mentioned property to
Atilano G. Jabil . . ." and condition number five which reads, "that the spouses
agrees to sign a final deed of absolute sale over the mentioned property upon the
payment of the balance of four thousand pesos."
Such contention is untenable.
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By and large, the issues in this case have already been settled by this Court in
analogous cases.
Thus, it has been held that a deed of sale is absolute in nature although
denominated as a "Deed of Conditional Sale" where nowhere in the contract in
question is a proviso or stipulation to the effect that title to the property sold is
reserved in the vendor until full payment of the purchase price, nor is there a
stipulation giving the vendor the right to unilaterally rescind the contract the
moment the vendee fails to pay within a fixed period (Taguba v. Vda. de Leon,
132 SCRA 722; Luzon Brokerage Co., Inc. v. Maritime Building Co., Inc., 86
SCRA 305).
A careful examination of the contract shows that there is no such stipulation
reserving the title of the property on the vendors nor does it give them the right to
unilaterally rescind the contract upon non-payment of the balance thereof within
a fixed period.
On the contrary, all the elements of a valid contract of sale under Article
1458 of the Civil Code, are present, such as: (1) consent or meeting of the
minds; (2) determinate subject matter; and (3) price certain in money or its
equivalent. In addition, Article 1477 of the same Code provides that "The
ownership of the thing sold shall be transferred to the vendee upon actual or
constructive delivery thereof. As applied in the case of Froilan v. Pan Oriental
Shipping Co., et al. (12 SCRA 276), this Court held that in the
absence of stipulation to the contrary, the ownership of the thing sold passes to
the vendee upon actual or constructive delivery thereof.
While it may be conceded that there was no constructive delivery of the land sold
in the case at bar, as subject Deed of Sale is a private instrument, it is beyond
question that there was actual delivery thereof. As found by the trial court,
the Dignos spouses delivered the possession of the land in question to Jabil as
early as March 27, 1965 so that the latter constructed thereon Sally's Beach
Resort also known as Jabil's Beach Resort in March, 1965; Mactan White Beach
Resort on January 15, 1966 and Bevirlyn's Beach Resort on September 1, 1965.
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Such facts were admitted by petitioner spouses (Decision, Civil Case No. 23-L;
Record on Appeal, p. 108).
Moreover, the Court of Appeals in its resolution dated December 16, 1981 found
that the acts of petitioners, contemporaneous with the contract, clearly show that
an absolute deed of sale was intended by the parties and not a contract to sell.
Be that as it may, it is evident that when petitioners sold said land to the Cabigas
spouses, they were no longer owners of the same and the sale is null and void.
II.
Petitioners claim that when they sold the land to the Cabigas spouses, the
contract of sale was already rescinded.
Applying the rationale of the case of Taguba v. Vda. de Leon (supra) which is on
all fours with the case at bar, the contract of sale being absolute in nature is
governed by Article 1592 of the Civil Code. It is undisputed that petitioners never
notified private respondents Jabil by notarial act that they were rescinding the
contract, and neither did they file a suit in court to rescind the sale. The most that
they were able to show is a letter of Cipriano Amistad who, claiming to be an
emissary of Jabil, informed the Dignos spouses not to go to the house of Jabil
because the latter had no money and further advised petitioners to sell the land
in litigation to another party (Record on Appeal, p. 23). As correctly found by
the Court of Appeals, there is no showing that Amistad was properly authorized
by Jabil to make such extra judicial rescission for the latter who, on the contrary,
vigorously denied having sent Amistad to tell petitioners that he was already
waiving his rights to the land in question. Under Article 1358 of the Civil Code, it
is required that acts and contracts which have for their object the
extinguishment of real rights over immovable property must appear in a public
document.
Petitioners laid considerable emphasis on the fact that private respondent Jabil
had no money on the stipulated date of payment on September 15, 1965 and
was able to raise the necessary amount only by mid-October, 1965.
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It has been ruled, however, that "where time is not of the essence of the
agreement, a slight delay on the part of one party in the performance of his
obligation is not a sufficient ground for the rescission of the agreement"
(Taguba v. Vda. de Leon, supra). Considering that private respondent has only a
balance of P4,000.00 and was delayed in payment only for one month, equity
and justice mandate as in the aforecited case that Jabil be given an additional
period within which to complete payment of the purchase price.
WHEREFORE, the petition filed is hereby Dismissed for lack of merit and the
assailed decision of the Court of Appeals is Affirmed in toto.
SO ORDERED
Fernan, Gutierrez, Jr., Feliciano and Cortes, JJ., concur.
Footnotes
*Penned by Justice Elias B. Asuncion and concurred by Justices Porfirio V. Sison and
Vicente V. Mendoza.
**Penned by Judge Ramon E. Nazareno.
||| (Dignos v. Court of Appeals, G.R. No. 59266, February 29, 1988)
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FIRST DIVISION
[G.R. No. L-29421. January 30, 1971.]
LINO ARTATES & MANUELA POJAS, plaintiffs-
appellants, vs. DANIEL URBI, CRISANTO SOLIVEN, assisted by
his Guardian 'ad litem,' MARCELA B. SOLIVEN, REMEGIO
BUTACAN and NEMESIO OATE, in their private capacities
and/or as Ex-Oficio Provincial Sheriff and Deputy Sheriff of
Cagayan, respectively, and BIENVENIDO CACATIAN, as
Deputy Register of Deeds of Cagayan, defendants-appellees.
Bienvenido J. Jimenez for plaintiffs-appellants.
Rogelio Re. Ubarde for defendants-appellees Daniel Urbi and Crisanto Soliven.
Alfredo J. Donato for defendant-appellee Nemesio Oate.
The Provincial Fiscal (Cagayan) for defendants-appellees Provincial Sheriff and
Deputy Register of Deeds.
D E C I S I O N
REYES, J.B.L., J p:
This is an appeal from the decision of the Court of First Instance of
Cagayan (Civil Case No. 116-T), involving the public sale of a homestead to
satisfy a civil judgment against the grantee.
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The records show that in an action filed in the Court of First Instance of Cagayan,
the spouses Lino Artates and Manuela Pojas sought annulment of the execution
of a homestead 1 covered by Patent No. V-12775 issued to them by the proper
land authorities on 23 September 1952, and duly registered in their names (OCT
No. P-572). The public sale, conducted by the Provincial Sheriff of Cagayan on 2
June 1962, was made to satisfy a judgment against Lino Artates in the amount of
P1,476.35, and awarded to Daniel Urbi by the Justice of the Peace Court of
Camalaniugan, Cagayan, in its Civil Case No. 40, for physical injuries inflicted
by Artates upon Urbi on 21 October 1955. In the execution sale, the property was
sold to the judgment creditor, the only bidder, for P1,476.35. In their complaint,
the plaintiffs spouses alleged that the sale of the homestead to satisfy an
indebtedness of Lino Artates that accrued on 21 October 1955, violated the
provision of the Public Land law exempting said property from execution for any
debt contracted within five years from date of the issuance of the patent; that
defendant Urbi, with the intention of defrauding the plaintiffs, executed on 26
June 1961 a deed for the sale of the same parcel of land to defendant Crisanto
Soliven, a minor, supposedly for the sum of P2,676.35; that as a result of the
aforementioned transactions, defendants Urbi and Soliven entered into the
possession of the land and deprived plaintiffs of the owners' share in the rice
crops harvested during the agricultural year 1961-1962. Plaintiffs, therefore,
prayed that the public sale of the land to defendant Urbi, as well as the deed of
sale executed by the latter in favor of defendant Soliven, be declared null and
void; that defendants be ordered to deliver to plaintiffs possession of the land;
and to pay to plaintiffs compensatory damages at the rate of P1,000.00 per
agricultural year until possession is finally restored to them, the sum of P2,000.00
as damages for maliciously casting cloud upon plaintiffs' title on the land, plus
attorneys' fees and costs.
The defendants 2 filed separate answers disputing the averments of the
complaint. On 29 March 1963, the court rendered judgment upholding the
regularity and validity of the execution conducted by the defendant Provincial
Sheriff, but finding that the sale of the lands by defendant Urbi to the minor
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Soliven was simulated, intended to place the property beyond the reach of the
judgment debtor, and that plaintiffs had offered to redeem the land within the 5-
year period allowed by Section 119 of the Public Land law for reacquisition
thereof by the grantee. Consequently, the court declared the sale of the land by
defendant Daniel Urbi to defendant Crisanto Soliven null and void; and
DanielUrbi was ordered to reconvey the property to the plaintiffs upon the latter's
payment (to Urbi) of the sum of P1,476.35 plus the sheriff's fee incident to the
sale at public auction, with interest thereon at the rate of 12% per annum from 2
June 1961 until said amount shall have been fully paid, and the further sum of
P783.45 representing the amount paid by defendant Daniel Urbi to the Philippine
National Bank for the release of the real estate mortgage on the land, contracted
by Lino Artates, with legal rate of interest thereon from 29 June 1961.
From this decision, the plaintiffs interposed the present appear assigning several
errors allegedly committed by the court below, all hinged on the validity or
invalidity of the public sale of the lot involved herein.
Section 118 of the Public Land law (Commonwealth Act 141) provides as follows:
"Sec. 118.Except in favor of the Government or any of its branches,
units, or institution, or legally constituted banking corporations, lands
acquired under free patent or homestead provisions shall not be subject
to encumbrance or alienation from the date of the approval of the
application and for a term of five years from and after the date of
issuance of the patent or grant, nor shall they become liable to the
satisfaction of any debt contracted prior to the expiration of said period,
but the improvements or crops on the land may be mortgaged or
pledged to qualified persons, associations or corporations."
xxx xxx xxx
As thus prescribed by law, for a period of five years from the date of the
government grant, lands acquired by free or homestead patent shall not only be
incapable of being encumbered or alienated except in favor of the government
itself or any of its institutions or of duly constituted banking corporations, but also,
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they shall not be liable to the satisfaction of any debt contracted within the said
period. 3 whether or not the indebtedness shall mature during or after the
prohibited time. 4 This provision against the alienation or encumbrance of public
lands granted with in five years from the issuance of the patent, it has been held,
is mandatory; 5 a sale made in violation thereof is null and void 6 and produces no
effect whatsoever. Though it may be a limitation on the right of ownership of the
grantee, the sanitary purpose of the provision cannot be denied: it is to preserve
and keep for the homesteader or his family the land given to him gratuitously by
the State, 7 so that being a property owner, he may become and remain a
contented and useful member of our society. 8
In the case at bar, the homestead patent covering the land in question (No. V-
12775) was issued to appellants on 23 September 1952, and it was sold at public
auction to satisfy the civil liability of appellant Lino Artates to Daniel Urbi,
adjudged in the 14 March 1956 decision of the Justice of the Peace Court of
Camalaniugan, Cagayan. There can be no doubt that the award of damages
to Urbi created for Artates a civil obligation, an indebtedness, that commenced
from the date such obligation was decreed on 14 March 1956.Consequently, it is
evident that it can not be enforced against, or satisfied out of, the sale of the
homestead lot acquired by appellants less than 5 years before the obligation
accrued. And this is true even if the sale involved here is not voluntary. For
purposes of complying with the law, it is immaterial that the satisfaction of the
debt by the encumbrancing or alienation of the land grant was made voluntarily,
as in the case of an ordinary sale, or involuntarily, such as that effected through
levy on the property and consequent sale at public auction. In both instances, the
spirit of the law would have been violated. 9
Doubts have been expressed as to whether the words "debt contracted prior to
the expiration of said period" (of 5 years from and after the grant) would include
the civil liability arising from a crime committed by the homesteader. While there
is no direct Philippine precedent on this point, there are various reasons why the
non-liability of the homestead grant should be extended to extra-contractual
obligations. First and foremost, whether it be viewed as an exemption or as a
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condition attached to the grant to encourage people to settle and cultivate public
land, the immunity in question is in consonance with the definite public policy
underlying these grants, which is to "preserve and keep in the family of the
homesteader that portion of public land which the State has given to him" so he
may have a place to live with his family and become a happy citizen and a useful
member of society, 10 and the exemption should not be given restrictive
application. 11 A levy and sale of the homestead on account of extra-contractual
liability incurred would uproot the homesteader and his family and turn them into
homeless waifs as effectively as a levy for non-payment of a contractual debt.
Secondly, the word "debt" in exemption statutes,
"in its wider sense, (it) includes all that is due to a man under any
form or obligation or promise, and covers not only obligations
arising under contract, but also those imposed by law without
contract." 12
Considering the protective policy of the law, it becomes apparent that "debt
contracted" was used in it in the sense of "obligation incurred," since Webster
gives the verb to "contract" the meaning of "to bring on; incur; acquire."
Finally, our public land laws being copied from America legislation, 13 resort to
American precedents reveals that, under the weight of authority, exemption
from "debts contracted" by a homesteader has been held to include freedom
from money liabilities, from torts or crimes committed by him, such as from
bigamy (State vs. O'Neil, 7 Ore. 141, 11 Words and Phrases 318) or slander
(Conway vs. Sullivan, 44 Ill. 451, 452), breach of contract (Flanagan vs.
Forsythe, 50 Pac. 152, 153) or other torts (In Re Radway, 20 Fed. Cas. 154,
162).
The execution sale in this case being null and void, the possession of the land
should be returned to the owners, the herein appellants. There would even be no
need order appellee Urbi to execute a deed of reconveyance thereof of to the
owners. It appears that what was issued here to the judgment creditor/purchaser
was only the sheriff's provisional certificate, under which he derived no definite
title or right until the period for redemption has expired, without a redemption
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having been made, 14 or issuance of a final deed or certificate of sale. In other
words, the purchaser herein has not acquired an absolute ownership or title in
fee over the land that would necessitate a deed of reconveyance to revert
ownership back to the appellant spouses. As things now stand, title to the
property covered by OCT No. P-572 remains with the appellants, but
LinoArtates shall continue to be under obligation to satisfy the judgment debt to
Daniel Urbi in the sum of P1,476.35, with legal interest thereon accruing from the
date the writ of execution was first returned unsatisfied. It appearing also that
appellee Daniel Urbi paid to the Philippine National Bank the sum of P783.45 to
release the mortgage on the land, appellants should reimburse him of said
amount or of whatever amount appellants have actually been benefited by the
said payment.
FOR THE FOREGOING CONSIDERATIONS, the decision appealed from is
hereby reversed, and appellants are declared entitled to the return and
possession of the lot covered by Original Certificate of Title No. P-572, without
prejudice to their continuing obligation to pay the judgment debt, and expenses
connected therewith. No costs.
Concepcion, C.J., Dizon, Zaldivar, Fernando and Makasiar, JJ., concur.
Makalintal, J., concurs with Mr. Justice Teehankee in a separate opinion.
Castro, J., concurs in the dissenting opinion of Mr. Justice Teehankee.
Teehankee, J., concurs and dissents in a separate opinion.
Barredo, J., dissents in separate opinion.
Villamor, J., concurs in the separate concurring and dissenting opinion of Mr.
Justice Teehankee.
Separate Opinions
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MAKALINTAL, J., concurring:
I concur in the opinion of Justice Teehankee, and vote for the affirmance of the
appealed judgment in toto. The date of the issuance of the homestead patent to
appellants was September 23, 1952. Under Section 118 of the Public Land Law
the homestead could not be held liable for the satisfaction of any debt contracted
during a period of five years thereafter, or up to September 23, 1957. The opinion
of the majority holds that since the civil obligation of appellant Artates was
adjudged on March 14, 1956, or within the said period, the homestead cannot be
held liable for its satisfaction. The obvious implication is that if the judgment had
been delayed if for instance it had been rendered on September 24, 1957
the result would have been otherwise. I do not believe that such a difference
should be made to depend upon the more or less fortuitous and irrelevant
circumstance of when the judgment decreeing the obligation was rendered. I am
for giving the word "contracted," as used in the law, its ordinary meaning, for after
all one who contracts with a homestead patentee during the five-year period and
accepts an obligation from him does so with full knowledge of the law's
exempting provision, which is deemed in effect a part of the agreement. The
same, however, is not true of the victim of a tort or a crime, as in the present
case, for here his volition does not come into play, the obligation being imposed
entirely by law.
TEEHANKEE, J., concurring and dissenting:
I vote for the affirmance in toto of the judgment appealed from. Hence, I concur in
that portion of the decision decreeing that appellants should reimburse
appellee Urbi for the sums that Urbi had paid to the Philippine National Bank to
release the mortgage previously executed by appellants on the subject
homestead land, but I dissent from the principal decree thereof that "title to the
property . . . remains with the appellants, but (appellant) Lino Artates shall
continue to be under obligation to satisfy the judgment debt to Daniel Urbi in the
sum of P1,476.35, legal interest thereon accruing from the date the writ of
execution was first returned unsatisfied."
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The issue at bar is whether the execution sale conducted in 1962 by the sheriff
of Artates' homestead lot acquired in 1952 to satisfy a 1956 judgment
against Artates in favor of Urbi (for physical injuries inflicted
by Artates upon Urbi in 1955), at which public sale the homestead lot was sold
to Urbi as the only bidder for the amount of his judgment credit in the sum of
P1,476.35 should be held null and void, as the majority would now hold, by virtue
of the prohibitory provisions of Section 118 of the Public Land Law. The key
provision cited is that providing that such homesteads "shall not be subject to
encumbrance or alienation from the date of the approval of the application
and for a term of five years from and after the date of issuance of the patent or
grant, nor shall they become liable to the satisfaction of any debt contracted prior
to the expiration of said period . . ."
Under the cited provision, all sales and alienations of the homestead property
made by the homesteader within the 5-year prohibition are null and void.
Similarly, the homestead is held not liable to the satisfaction of any
debt contracted by the homesteader within the said period, even though it
be contracted that the indebtedness shall mature after the prohibited period. The
law's purpose is clear and salutary: to preserve and keep for the homesteader
the land given to him gratuitously by the State and to protect him from his own
weakness and improvidence.
But in the case at bar, the judgment debt of the homesteader in favor
of Urbi * was not contracted but duly adjudicated by a competent
by Artates upon Urbi in 1955, which, gauging the same from the substantial
amount of P1,476.35 awarded, must have been quite serious. The happenstance
that Artates' assault on Urbi and the judgment award occurred within the
prohibitory period should not be construed beyond the law's text and intent to
favor the wrongdoer Artates as against his victim Urbi.
We would have the anomalous situation thereby where, while recognizing
that Artates has a just and continuing obligation to pay Urbi the judgment debt,
the debt would in effect be nullified. The judgment debt was awarded
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since 1956 and would by now have prescribed, but the majority decision would
nullify the levy and public sale of the land to satisfy Urbi's judgment credit
conducted in 1966 long after the expiration of the statutory five-year prohibitory
period. The majority decision bars Urbi forever from looking toArtates homestead
property for the satisfaction of his judgment credit. Artates' evasion of his
judgment debt to Urbi is thereby made certain. Any later creditor of Artates, real
or simulated, from one day after the expiration on 23 September 1957 of the said
five-year prohibitory period is given sole and exclusive preference to look to the
said property for satisfaction as against Urbi beyond whose reach it is placed,
contrary to the priority and preference that Urbi would lawfully be entitled to as
a bona fide judgment creditor.
Finally, pursuant to Artates' offer to redeem the property from Urbi within the 5-
year redemption period allowed by section 119 of the Public Land Law, the lower
court in its appealed judgment so ordered such redemption and reconveyance.
This strikes me as an eminently fair an just judgment which should be
upheld. Artates, the homesteader, is thus assured of keeping and preserving his
homesteader, is thus assured of keeping and preserving his homestead in
accordancer ** with the spirit of the law and the lawful judgment credit
of Urbi against him is at the same time duly satisfied.
BARREDO, J., dissenting:
I regret I am unable to concur in the ruling in this decision that the provision of
Section 118 of the Public Land which says that "lands acquired under free patent
homestead provisions shall not . . . become liable to the satisfaction of any debt
contracted prior to the expiration of five years from and after the date of issuance
of the patent or grant" contemplates inclusively "the civil liability arising from a
crime committed by the homesteader" within said period. Indeed, I do not feel it is
necessary I deep into the Webster's dictionary meaning of the verb "to contract"
or to look for state court decisions in America which could be isolated and based
on statutes not similarly phrased and oriented as Ours, to resolve the legal issue
before Us, it being sufficient, towards that end, to consider only the basic
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principles that underlie the disposition of public lands under our own laws on the
matter.
I understand that the ultimate reason behind the exceptions contained in the
cited provision of the Public Land Law is to insure the accomplishment of the
double purpose of a homestead grant, which is to encourage the development of
arable lands and enhance their productivity in the interest of the national
economy and, at the same time, provide qualified citizens with a piece of land
which they and their families may call their own, on which they can live and which
they can work and thereby become useful members of society. Accordingly, the
homesteader is safeguarded against his own weaknesses, imprudence and
improvidence by making it impossible for him to directly or indirectly, by his
voluntary ad, dispose of or lose the land in favor of others. So also do the
exceptions make it impossible for him to allow himself to be utilized as dummy of
opportunists. If this understanding of mine is correct, it should follow necessarily
that for these purposes to be achieved, a homesteader must be, during the
exempt period, in physical condition to work the land granted to him. I cannot
help wondering how a person who has been convicted of a crime, the penalty for
which is most likely to include a period of incarceration can work on and develop
his homestead in the manner conceived in the law. That such a contingency may
not be true in all instances, for there may be punishment of crimes with
imprisonment of insignificantly short duration or even fines only, does not affect
the general principle involved. I consider it implicit in all land grants by the State
that the grantees bind themselves to be loyal and useful members of society, at
least, during the period of development thereof that the law contemplates,
namely, the first five years from the grant. Surely, one who commits an offense
against the State and his fellow-citizens or other inhabitants in this country is far
from being a useful member of society. To be sure his act of committing an
offense is voluntary, but this is not the voluntary act of imprudence and
improvidence against which the law guards the homesteader even against
himself. Crime is an assault upon the sovereign people and the social order,
even if not always directly against the national security. and it is my considered
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view that, in principle, one who is guilty thereof forfeits whatever rights he might
have acquired by virtue of the State's generosity, particularly, when, as in this
case, it is a grant of a special privilege under specified circumstances and not
generally and commonly enjoyed by all citizens/inhabitants of the country.
For these reasons, I vote to affirm the judgment of the court a quo which, after
all, recognizes the appellants' right to redeem the land in question under Section
119 of the Public Land Law, which is the most they should expect from the State,
as thus, their right to the land is reinstated without practically depriving the
innocent victims of the crime herein involved of their remedy for the private injury
they have suffered. In other words, under the trial court's decision, all the ends of
justice and equity are subserved, whereas it is difficult to say the same of the
decision of this Court.
Footnotes
1.Lot No. 151 of the Allacapan Public Land Subdivision, situated in barrio Allig,
municipality of Allacapan, province of Cagayan.
2.Defendant Crisanto Soliven, a minor, was represented by Marcela B. Soliven, who
was appointed by the court as his guardian ad litem.
3.Francisco vs. Parsons Hardware, 67 Phil 234.
4.Bautista vs. Marcos, L-17072, 31 October 1961.
5.Republic vs. Ruiz, L-23712, 29 April 1968, 23 SCRA 348.
6.Eugenio vs. Perdido, 97 Phil. 41; Angeles vs. Court of Appeals, 102 Phil. 1006;
Cadiz vs. Nicolas, 102 Phil. 1032; Santander vs. Villanueva, 103 Phil. 1; Felices
vs. Iriola, 103 Phil. 125; Del Rosario vs. Abad, L-10881, 30 Sept. 1958;
Republic vs. Garcia, 105 Phil. 826; Republic vs. Ruiz, supra.; Baje vs. Court of
Appeals, L-18783, 25 May 1964.
7.Manzano vs. Ocampo, L-14778, 28 February 1961, 1 SCRA 691.
8.Cadiz vs. Nicolas, supra.
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9.Beach vs. Pacific Commercial Co., 49 Phil. 765; Francisco vs. Parsons Hardware
Co., 67 Phil. 234; Gonzalo Puyat & Sons vs. De las Ama, 74 Phil. 3; Cadiz vs.
Nicolas, 102 Phil. 1032, 1039.
10.Pascual vs. Talens, 80 Phil. 792; Santos vs. Roman Catholic Church, 94 Phil. 406,
409; Cadiz vs. Nicolas, 102 Phil. 1039; Jocson vs. Soriano, 45 Phil. 375;
Beniga vs. Bugas, L-28918, 29 September 1970.
11.Duling vs. Salaz, 26 Pac. 2d. 1069; 22 Am. Jur. 80 793, 795.
12.Duling vs. Salaz, 26 Pac. 2d. 1069; 22 Am. Jur. 80.
13.Jocson vs. Soriano, 45 Phil. 375, 379.
14.Section 26, Revised Rule 39: 2 Moran's Comments on the Rules of Court, 1970
ed., page 327.
*Editor's Note: Should be read "Urbi."
**Editor's Note: Should be read "accordance."
||| (Artates v. Urbi, G.R. No. L-29421, January 30, 1971)
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FIRST DIVISION
[G.R. No. L-54070. February 28, 1983.]
HEIRS OF ENRIQUE ZAMBALES and
JOAQUINA ZAMBALES, petitioners, vs. THE COURT OF APPEA
LS, NIN BAY MINING CORPORATION, ANGELA C. PREYSLER
and JOAQUIN B. PREYSLER, respondents.
Reynaldo S. Yap for petitioners.
Benjamin T. Garcia for respondents.
SYLLABUS
1.REMEDIAL LAW; APPEAL; FACTUAL
FINDING OF THE COURT OF APPEALS, SUSTAINED IN THE CASE AT BAR.
The Court sustains the finding of the Court of Appeals that fraud and
misrepresentation did not vitiate petitioners' consent to the Agreement when it
observed: Taking into account the foregoing observations, this Court is not
convinced that indeed appellees were victims of a fraudulent scheme employed
upon them by their former counsel by reason of their alleged illiteracy and
ignorance. The evidence discloses that appellees, although unschooled, are
intelligent, well-informed and intelligent people. They are not the kind of persons
who could easily be fooled oftheir rights and interests.
2.ID.; ID.; AUTHORITY OF THE SUPREME COURT TO REVIEW MATTERS
NOT ASSIGNED AS ERRORS IN THE APPEAL. The fact that the issue was
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not raised in the Courtsbelow is not a deterrent factor considering that the
question affects the validity of the agreement between the parties. The
Supreme Court has the authority to review matters even if they are not assigned
as errors in the appeal, if it is found that their consideration is necessary in
arriving at a just decision of the case. (Saura Import & Export Co., Inc. vs. Phil.
International Surety Co., Inc., 8 SCRA 143 [1963]; Miguel vs. Court of Appeals,
29 SCRA 760 [1969]).
3.ID.; ID.; CHANGE IN LEGAL THEORY ALLOWED IF ON THE FACTUAL
BASES THEREOF, PRESENTATION OF FURTHER EVIDENCE NOT
REQUIRED. A party may change his legal theory on appeal only when the
factual bases thereof would not require presentation of any further evidence by
the adverse party in order to enable it to properly meet the issue raised in the
new theory. (Lianga Lumber Company vs. Lianga Timber Co., Inc., 76 SCRA 197
[1977]).
4.CIVIL LAW; HOMESTEAD; SALE WITHIN THE PROHIBITORY PERIOD,
ILLEGAL AND VOID. The sale of a homestead lot within the five-year
prohibitory period is illegal and void. The law does not distinguish between
executory and consummated sales. The bilateral promise to buy and sell the
homestead lot at a price certain, which was reciprocally demandable (Article
1479. Civil Code), was entered into within the five-year prohibitory period and is
therefore, illegal and void. Further, the agency to sell the homestead lot to a third
party was coupled with an interest inasmuch as a bilateral contract was
dependent on it and was not revocable at will by any of the parties. (Article 1927,
ibid.) To all intents and purposes, therefore, there was an actual executory sale
perfected during the period of prohibition except that it was reciprocally
demandable thereafter and the agency to sell to any third party was deferred until
after the expiration of the prohibitory period. That "rentals" were ostensibly to be
paid during the five-year prohibitory period, and the agency to sell made effective
only after the lapse of the said period, was merely a devise to circumvent the
prohibition. The Court holds, therefore, that the bilateral promise to buy and sell,
and the agency to sell, entered into within five years from the date of the
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homestead patent, was in violation of Section 118 of the Public Land Law,
although the executed sale was deferred until after the expiration of the five-year-
prohibitory period.
5.ID.; ID.; ID.; ACTION FOR DECLARATION OF ITS INEXISTENCE,
IMPRESCRIPTIBLE. As the contract is sold from the beginning, for being
expressly prohibited by law (Article 1409, ibid.) the action for the declaration of its
inexistence does not prescribe. (Article 1410, ibid.) Being absolutely void, it is
entitled to no authority or respect, the sale may be impeached in a collateral
proceeding by any one with whose rights and interest it conflicts. There is no
presumption of its validity. (Inton vs. Quintana, 81 Phil. 97 [1948].) The
approval of the sale by the Secretary of Agriculture and Natural Resources after
the lapse of five years from the date of the patent would neither legalize the sale.
(Santander vs. Villanueva, 103 Phil. 1 [1958]; Cadiz vs. Nicolas, 102 Phil. 1032
[1958]; cited in Mansano vs. Ocampo, 1 SCRA 691 [1961]).
6.ID.; ID.; ID.; ACTION FOR REVERSION NOT DISCOUNTED. The
homestead in question should be returned to the Zambaleses, petitioners herein,
who are, in turn, bound to restore to the Corporation the sum of P8,923.70 as the
price thereof. This is without prejudice to the corresponding action on the
part of the State for reversion ofthe property and its improvements, if any, under
Section 124 of the Public Land Act.
D E C I S I O N
MELENCIO-HERRERA, J p:
The Decision of respondent Court of Appeals in the case entitled
"Enrique Zambales and Joaquina Zambales, Plaintiffs-appellees vs. Atty.
Perfecto de los Reyes, Nin Bay Mining Corporation and Joaquin B. Preysler,
Defendants-appellants" (CA-G.R. No. 59386-R), setting aside the
judgment of the Court of First Instance of Palawan in Civil Case No. 678 for
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Annulment of a Deed of Sale with Recovery of Possession and Ownership with
Damages", is the subject of this Petition for Review on Certiorari. LLjur
Joaquin B. Preysler is now deceased and was substituted by Angela C. Preysler,
his widow.
Atty. Perfecto de los Reyes was originally a defendant in Civil Case No. 678 but
he did not appeal from the Decision of the lower Court.
The Zambales spouses (Zambaleses, for brevity) were the homestead
patentees of a parcel of land with an area of 17.8474 hectares situated in the
Municipality of Del Pilar, Roxas, Palawan, covered by Original Certificate of Title
No. G-1193 of the Registry of Deeds for the Province of Palawan, issued
pursuant to Homestead Patent No. V-59502 dated September 6, 1955.
Claiming that the Nin Bay Mining Corporation (Corporation, for short) had
removed silica sand from their land and destroyed the plants and others
improvements thereon, the Zambaleses instituted, on November 10, 1958, Civil
Case No. 316 before the Court of First Instance of Palawan claiming damages in
the total sum of P48,000.00.
The Corporation denied having caused any damages and claimed that it had
excavated and extracted silica sand only from its own mining claims and on
which it had mining lease contracts with the Philippine Government.
On October 29, 1959, the Zambaleses, duly assisted by their counsel, Atty.
Perfecto de los Reyes, and the Corporation, entered into a Compromise
Agreement, the portions ofwhich, pertinent to this case, read:
"1.DEFENDANT shall pay the PLAINTIFFS a rental of TWENTY
(P20.00) PESOS per hectare per year from September 9, 1955 to
September 30, 1960, or a total rental price of ONE THOUSAND SEVEN
HUNDRED EIGHTY-FOUR PESOS AND SEVENTY-FOUR CENTAVOS
(P1,784.74), Philippine currency, in lieu of all damages . . .
"2.The payment to the PLAINTIFFS of the above-mentioned rental price
shall be considered full, absolute and final payment and indemnity for all
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the alleged damages to PLAINTIFFS' property and its improvements, or
any other actual, moral, exemplary or other damages that PLAINTIFFS
may have suffered or will suffer in connection with the mining
operations of DEFENDANT on the property in question, which property,
by virtue of the terms of this Agreement shall be used by DEFENDANT
as occupant thereof until September 30, 1960.
"3.PLAINTIFFS hereby agree and bind themselves to sell, transfer and
convey, and DEFENDANT or its assigns, qualified to acquire or hold
lands of the public domain, hereby agrees to purchase and pay for, the
aforesaid property of the PLAINTIFFS, containing an area of 17.8474
hectares, situated in the Municipality of Del Pilar, Roxas, Palawan, and
covered by Original Certificate of Title No. G-1193 of the
Registry of Deeds of Palawan, at the fixed selling price of FIVE
HUNDRED (P500.00) PESOS per hectare or a total purchase
price of EIGHT THOUSAND NINE HUNDRED TWENTY THREE
PESOS and SEVENTY CENTAVOS (P8,923.70), Philippine currency.
The contract to purchase and sell herein provided for, shall be
reciprocally demandable and enforceable by the parties hereto on
September 10, 1960. PLAINTIFFS hereby irrevocably constitute and
appoint DEFENDANT, its successors and/or assigns their true and
lawful attorney-in-fact with full power and authority to sell, transfer and
convey on September 10, 1960 or at any time thereafter the whole or
any part of PLAINTIFFS' property hereinabove mentioned to the
DEFENDANT, its successors and/or assigns, or to any third party, and to
execute and deliver all instruments and documents whatsoever
necessary for the purpose, and all acts done and to be done by
DEFENDANT, its successors and/or assigns in conformity with the
powers herein granted are hereby ratified and confirmed by the
PLAINTIFFS. . . ."
"4.In consideration of the payment of the amount of P1,784.74 by
DEFENDANT, and of other good and valuable consideration,
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PLAINTIFFS, jointly and severally, do hereby forever release, fully and
completely, said DEFENDANT, its successors and/or assigns in interest,
from any and all liabilities, whether arising from past, present or future
excavation or removal of silica sand from the property in question or
otherwise, and from all the other claims against the DEFENDANT
contained in their Complaint in Civil Case No. 316 of the Court of First
Instance of Palawan." 1
The Trial Court rendered judgment on October 29, 1959 based on the
Compromise Agreement. The document was duly annotated an OCT No. G-1193
(Exhibit "A") the day after, or on October 30, 1959 (Exhibit "10-A"). prcd
On September 10, 1960, the Corporation, as attorney-in-fact for the Zambaleses,
as Vendors, sold the disputed property to Joaquin B. Preysler for the
sum of P8,923.70 fixed in the Compromise Agreement (Exhibit "11"). Transfer
Certificate of Title No. T-970 was issued in the vendee's name on December 19,
1960 (Exhibit "12").
The Deed of Sale to Preysler contained the following proviso:
"The VENDORS hereby represent and warrant that the five-year
restrictive period on alienation of lands acquired under the homestead
provisions of Commonwealth Act No. 141, as amended, otherwise
known as the Public Land Act, has already expired, the
date of issuance of the herein homestead patent to the VENDORS as
aforesaid being September 6, 1955 as shown in Original
Certificate of Title No. G-1193."
On October 18, 1960, the Secretary of Agriculture and Natural Resources
approved the sale to Preysler of the subject property (Exhibit "13").
On December 6, 1969, or ten (10) years after the Trial Court's Decision based on
the Compromise Agreement, and nine (9) years after the sale to Preysler, the
Zambaleses filed Civil Case No. 678 before the Court of First
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Instance of Palawan for "Annulment of a Deed of Sale with
Recovery of Possession and Ownership with Damages". They contended that it
was their lawyer who prevailed upon them to sign the Compromise Agreement;
that they are unschooled and did not understand the contents thereof; that they
were made to understand that they would receive the sum of P10,700.00, only as
payment for damages sustained by the land from 1955 to 1960; that through
fraud, deceit and manipulation by their lawyer and the Corporation, they were
made to agree to appoint the Corporation as their attorney-in-fact with full power
and authority to sell; that it was never their intention to sell the land; that in
September 1969, they were surprised to learn that the land was already titled in
the name of Joaquin B. Preysler; that the land was acquired and registered in the
latter's name through fraud and deceit. The Zambaleses then prayed that the
deed of sale and the title in Preysler's name be annulled on the ground of fraud
and that the property be reconveyed to them.
In their Answer, the Corporation denied all allegations that the Zambaleses had
signed the Compromise Agreement without understanding the contents thereof,
the truth being that it was read to them by their counsel, Atty. Perfecto de los
Reyes, who explained thoroughly the full implication and legal
consequence of each and every provision, which was then submitted and
approved by then Presiding Judge Juan L. Bocar; and that the Corporation had
sold the property to Preysler as a duly constituted attorney-in-fact pursuant to the
Compromise Agreement. LLjur
After trial, the lower Court rendered judgment in favor of the Zambaleses, the
dispositive part of which reads:
"WHEREFORE, judgment is hereby rendered in favor of the plaintiffs
and against the defendants as follows:
1)That the deed of sale executed by Nin Bay Mining Corporation through
its president, to Joaquin B. Preysler is hereby declared null and void;
2)That the defendant Joaquin B. Preysler is hereby ordered to reconvey
the land subject matter of this litigation to the plaintiffs;
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3)That the defendants Nin Bay Mining Corporation and Joaquin B.
Preysler shall pay the plaintiffs the sum of P85,000.00 as actual
damages plus the legal rate ofinterest from September 30, 1960 up to
the time the amount is fully paid;
4)That the defendants to pay the sum of FIVE THOUSAND (P5,000.00)
PESOS as attorneys fees; and
5)The defendants to pay the costs."
On appeal by the Corporation, the Court of Appeals reversed the Trial Court,
after finding that the alleged fraud or misrepresentation in the execution of the
Compromise Agreement had not been substantiated by evidence.
The case is now before us on review.
The controversy revolves around the issue of due execution and validity of the
Compromise Agreement (Exhibit "8") dated October 29, 1959, and of the
subsequent Deed ofSale (Exhibit "11"), dated 10 September 1960.
I.
The general rule is that whoever alleges fraud or mistake must substantiate his
allegation, since the presumption is that a person takes ordinary care of his
concerns and that private transactions have been fair and regular. The rule
admits of an exception in Article 1332 of the Civil Code which provides:
"When one of the parties is unable to read, or if the contract is in a
language not understood by him, and mistake or fraud is alleged, the
person enforcing the contract must show that the terms thereof have
been fully explained to the former."
For the proper application of said provision, it has first to be established
convincingly that the illiterate or the party at a disadvantage could not read or
understand the language in which the contract was written. 2 The evidence
discloses that the spouses Zambales are unschooled. They cannot read, speak,
much less understand English or write, except to sign their names. 3 The
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Zambaleses alleged in their Complaint that the Compromise Agreement (Exhibit
"8") was executed through fraud by the Corporation and by their counsel Atty.
Perfecto de los Reyes, whom they included as a defendant. The burden of proof,
therefore, shifted to the Corporation to show that the compromise agreement had
been fully explained to the plaintiffs. prcd
In refuting the allegation that plaintiffs were misled into signing the compromise
agreement, their former counsel, Atty. Perfecto de los Reyes, and the notary,
Atty. Salomon Reyes, a lawyer for Nin Bay Mining Corporation, established that
the terms and conditions of the Compromise Agreement were thoroughly
explained and fully understood by the spouses Zambales in accordance with
their proposal to sell the land at P500.00 a hectare; that before the signing of the
Compromise Agreement, the notary requested Atty. de los Reyes to read and
explain each and every provision to the spouses, and with the help of Ricardo
Nuala, Atty. de los Reyes did so in their dialect (Cuyuno). Thereafter, the parties
went to Judge Juan Bocar, who was assured that the
spouses Zambales understood and signed the Compromise Agreement. 4
We sustain the finding of the Court of Appeals that fraud and misrepresentation
did not vitiate petitioners' consent to the Agreement when it observed:
"Taking into account the foregoing observations, this Court is not
convinced that indeed appellees were victims of a fraudulent scheme
employed upon them by their former counsel by reason of their alleged
illiteracy and ignorance. The evidence discloses that appellees, although
unschooled, are intelligent, well-informed and intelligent people. They
are not the kind of persons who could easily be fooled of their rights and
interests. Even as commented by the court a quo, which had a chance to
observe the demeanor of the witness, it had no observation that the
witness, Joaquina Zambales, is ignorant. As correctly observed by
appellants, appellees 'are political leaders and chief campaigners; they
speak in the platform during political rallies; and they are widely
travelled' (p. 28, Appellants' Brief). As a matter of fact they are
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knowledgeable of the right connections in the government. They had
approached former Sen. Rogelio de la Rosa, no less, the congressman
and the governor. Even the lawyers they have retained previous to their
present counsel are the Padilla Law Office and the Diokno Law Office. It
is common knowledge that these law offices are among the established
law offices in Manila. It is far convincing that an ignorant couple would
have knowledge of these law firms. All these are obvious
manifestations of their being well-informed and the way they have
conducted their way of living apparently is inconsistent with the
plea of being illiterate and/or ignorant. They cannot capitalize on the fact
that they are uneducated only because they had no formal schooling
inasmuch as one's knowledge of the facts of life is not dependent on
whether one had formal schooling or not and it does not necessarily
follow always that if one is unschooled he is ignorant.
Furthermore, when plaintiffs-appellees signed the questioned
compromise agreement they were duly assisted and represented by
their counsel, Atty. de los Reyes. When Atty. de los Reyes testified
in court he categorically declared that it was to the best interest of his
clients that they compromise Civil Case No. 316. This declaration finds
support in Joaquina Zambales' testimony wherein she stated thus:
ATTY. SEMBRANO:
Q.Except for this present case, would you say to the Court that Atty. de
los Reyes extended to you legal assistance to your satisfaction?
A.Yes, sir, he is good to us.
xxx xxx xxx
Q.So these people never gave their services to you?
A.Nobody was able to help us except Atty. de los Reyes. (Tsn., pp. 29,
31 & 32, June 19, 1974).
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. . . Thus, it having been established that appellees could not have
been misled by their former counsel into signing the compromise
agreement and taking into account the acts of the appellees and
their children subsequent to the execution of the compromise
agreement perforce the court a quo erred in not giving credence to
the clear and convincing testimonies of Atty. Perfecto de los Reyes
and Atty. Salomon Reyes anent the execution of the compromise
agreement." 5
However, although we find that the Zambaleses were not misled into signing the
Compromise Agreement, we hold that there has been violation of the Public Land
Act. The evidence on record shows that the land in question was awarded to the
Zambaleses as a homestead on September 6, 1955 (Exhibit "A"), Before us, the
Zambaleses now argue that the Compromise Agreement executed on October
29, 1959 is in violation of the Public Land Act, which prohibits alienation and
encumbrance of a homestead lot within five years from the issuance of the
patent. 6
We sustain that contention. The fact that the issue was not raised in
the Courts below is not a deterrent factor considering that the question affects
the validity of the agreement between the parties. The Supreme Court has the
authority to review matters even if they are not assigned as errors in the appeal,
if it is found that their consideration is necessary in arriving at a just
decision of the case. 7 Moreover, a party may change his legal theory
on appeal only when the factual bases thereof would not require
presentation of any further evidence by the adverse party in order to enable it to
properly meet the issue raised in the new theory. 8 In the case at bar it is
indisputable that Homestead Patent No. V-59502 was issued on September 6,
1955 as shown in Original Certificate of Title No. 1193 (Exhibit "A"). LLpr
The sale of a homestead lot within the five-year prohibitory period is illegal and
void. The law does not distinguish between executory and consummated sales.
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"The law prohibiting any transfer or alienation of homestead land within
five years from the issuance of the patent does not distinguish between
executory and consummated sales; and it would hardly be in keeping
with the primordial aim of this prohibition to preserve and keep in the
family of the homesteader the piece ofland that the state had gratuitously
given to them, to hold valid a homestead sale actually perfected during
the period of prohibition but with the execution of the formal
deed of conveyance and the delivery of possession of the land sold to
the buyer deferred until after the expiration of the prohibitory period,
purposely to circumvent the very law that prohibits and declares invalid
such transaction to protect the homesteader and his family." 9
In the compromise agreement executed between the parties, (1) the Zambaleses
promised to sell and the Corporation agreed to buy the disputed lot at P500.00
per hectare, the contract to be reciprocally demandable and enforceable on
September 10, 1960; and as a substitute procedure, (2) an irrevocable agency
was constituted in favor of the Corporation as attorney-in-fact to sell the land to
any third person on September 10, 1960 or any time thereafter.
Clearly, the bilateral promise to buy and sell the homestead lot at a price certain,
which was reciprocally demandable 10 , was entered into within the five-year
prohibitory period and is therefore, illegal and void. Further, the agency to sell the
homestead lot to a third party was coupled with an interest inasmuch as a
bilateral contract was dependent on it and was not revocably at will by any of the
parties. 11 To all intents and purposes, therefore, there was an actual executory
sale perfected during the period ofprohibition except that it was reciprocally
demandable thereafter and the agency to sell to any third party was deferred until
after the expiration of the prohibitory period. That "rentals" were ostensibly to be
paid during the five-year prohibitory period, and the agency to sell made effective
only after the lapse of the said period, was merely a devise to circumvent the
prohibition.
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To hold valid such an arrangement would be to throw the door wide open to all
possible subterfuges that persons interested in homesteads may devise to defeat
the legal prohibition against alienation within five years from the issuance of the
patent. LibLex
We hold, therefore, that the bilateral promise to buy and sell, and the agency to
sell, entered into within five years from the date of the homestead patent, was in
violation ofsection 118 of the Public Land Law, although the executed sale was
deferred until after the expiration of the five-year-prohibitory period.
As the contract is void from the beginning, for being expressly prohibited by
law 12 the action for the declaration of its inexistence does not prescribe. 13 Being
absolutely void, it is entitled to no authority or respect, the sale may be
impeached in a collateral proceeding by any one with whose rights and interest it
conflicts. There is no presumption ofits validity. 14 The approval of the sale by the
Secretary of Agriculture and Natural Resources after the lapse of five years from
the date of the patent would neither legalize the sale. 15
The homestead in question should be returned to the Zambaleses, petitioners
herein, who are, in turn, bound to restore to the Corporation the
sum of P8,923.70 as the price thereof. The actual damages awarded by the
Trial Court of P85,000.00 have not been adequately substantiated. Moreover,
under the agreement, the total rental price ofP1,784.74 was intended to be "in
lieu of all damages, or any other actual, moral, exemplary or other damages."
This is without prejudice to the corresponding action on the part of the State for
reversion of the property and its improvements, if any, under Section 124 of the
Public Land Act. 16
WHEREFORE, the judgment under review is hereby REVERSED, and another
one entered (1) declaring null and void a) the bilateral promise to buy and sell
entered into between Enrique Zambales and Joaquina Zambales, on the one
hand, and the Nin Bay Mining Corporation on the other, and b) the sale executed
by Nin Bay Mining Corporation in favor of Joaquin B. Preysler; (2) ordering
Angela C. Preysler to reconvey the land subject; matter of this litigation to
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petitioners upon refund by the latter to the Nin Bay Mining Corporation of the
sum of P8,923.70, all expenses for the reconveyance to be borne by private
respondents; (3) ordering Nin Bay Mining Corporation to pay rentals to
petitioners at the price of P20.00 per hectare per year from December 6, 1969,
the date of the institution of the Complaint, till the date that possession is turned
over to petitioners; and (4) ordering the Register of Deeds for the
Province of Palawan to cancel Transfer Certificate of Title No. T-970 of his
Registry, and reissue to the Heirsof Enrique Zambales and
Joaquina Zambales the title to the homestead in question.
Let a copy of this Decision be served on the Solicitor General.
No costs. llcd
SO ORDERED.
Teehankee, Plana, Vasquez, Relova and Gutierrez, Jr., JJ., concur.
Footnotes
1.Annex "E", pp. 88-90, Rollo.
2.Bunyi vs. Reyes, 39 SCRA 504 (1971).
3.T.s.n., February 23, 1972, p. 18; t.s.n., January 8, 1973, pp. 4, 20 & 26; t.s.n., June
19, 1974, p. 30.
4.T.s.n., July 28, 1975, pp. 23-27; Deposition of Atty. Salomon F. Reyes (Exhibit "18"),
pp. 27-33.
5.Pp. 61-63, Rollo.
6.Sec. 118, Commonwealth Act No. 141, as amended.
7.Saura Import & Export Co., Inc. vs. Phil. International Surety Co., Inc., 8 SCRA 143
(1963); Miguel vs. Court of Appeals, 29 SCRA 760 (1969).
8.Lianga Lumber Company vs. Lianga Timber Co., Inc., 76 SCRA 197 (1977).
9.Manzano vs. Ocampo, 1 SCRA 691, 697 (1961).
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10.Article 1479, Civil Code.
11.Article 1927, ibid.
12.Article 1409, ibid.
13.Article 1410, ibid.
14.Inton vs. Quintana, 81 Phil. 97 (1948).
15.Santander vs. Villanueva, 103 Phil. 1 (1958); Cadiz vs. Nicolas, 102 Phil. 1032
(1958); cited in Manzano vs. Ocampo, 1 SCRA 691 (1961).
16.SEC. 124.Any acquisition, conveyance, alienation, transfer, or other contract made
or executed in violation of any of the provisions of sections one hundred and
eighteen, one hundred and twenty, one hundred and twenty-one, one hundred
and twenty-two, and one hundred and twenty-three of this Act shall be unlawful
and null and void from its execution and shall produce the effect of annulling
and cancelling the grant, title, patent, or permit originally issued, recognized or
confirmed, actually or presumptively, and cause the reversion of the property
and its improvements to the State.
||| (Heirs of Zambales v. Court of Appeals, G.R. No. L-54070, February 28, 1983)
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EN BANC
[G.R. No. 11491. August 23, 1918.]
ANDRES QUIROGA, plaintiff-appellant, vs. PARSONS
HARDWARE CO., defendant-appellee.
Alfredo Chicote, Jose Arnaiz and Pascual B. Azanza, for appellant.
Crossfield & O'Brien, for appellee.
SYLLABUS
1.SALES; INTERPRETATION OF CONTRACT. For the classification
of contracts, due regard must be paid to their essential clauses. In the
contract in the instant case, what was essential, constituting its cause and
subject matter, was that the plaintiff was to furnish the defendant with the
beds which the latter might order, at the stipulated price, and that the
defendant was to pay this price in the manner agreed upon. These are
precisely the essential features of a contract of purchase and sale. There was
the obligation on the part of the plaintiff to supply the beds, and, on that of the
defendant, to pay their price. These features exclude the legal conception of
an agency or older to sell whereby the mandatary or agent receives the thing
to sell it, and does not pay its price, but delivers to the principal the price he
obtains from the sale of the thing to a third person, and if he does not succeed
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in selling it, he returns it, Held: That this contract is one of purchase and sale,
and not of commercial agency.
2.ID., ID. The testimony of the person who drafted this contract, to
the effect that his purpose was to be an agent for the beds and to collect a
commission on the sales, is of no importance to prove that the contract was
one of agency, inasmuch as the agreements contained in the contract
constitute, according to law, covenants of purchase and sale, and not of
commercial agency. It must be understood that a contract is what the law
defines it to be, and not what it is called by the contracting parties.
3.ID.; ID. The fact that the contracting parties did not perform the
contract in accordance with its terms, only shows mutual tolerance and gives
no right to have the contract considered, not as the parties stipulated it, but as
they performed it.
4.ID.; ID. Only the acts of the contracting parties, subsequent to and
in connection with, the performance of the contract must be considered in the
interpretation of the contract when such interpretation is necessary, but not
when, as in the instant case its essential agreements are clearly set forth and
plainly show that the contract belongs to a certain kind and not to another
5.ID.; ID. The defendant obligated itself to order the beds from the
plaintiff by the dozen. Held: That the effect of a breach of this clause by the
defendant would only entitle the plaintiff to disregard the orders which the
defendant might place under other conditions, but if the plaintiff consents to fill
them, he waives his right and cannot complain for having acted thus at his
own free will.
D E C I S I O N
AVANCEA, J p:
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On January 24, 1911, in this city of Manila, a contract in the following
tenor was entered into by and between the plaintiff, as party of the first part,
and J. Parsons (to whose rights and obligations the present defendant later
subrogated itself), as party of the second part:
CONTRACT EXECUTED BY AND BETWEEN ANDRES
QUIROGA AND J. PARSONS, BOTH MERCHANTS ESTABLISHED IN
MANILA FOR THE EXCLUSIVE SALE OF QUIROGA BEDS IN THE
VISAYAN ISLANDS.
"ARTICLE 1.Don Andres Quiroga grants the exclusive right to sell
his beds in the Visayan Islands to J. Parsons under the following
conditions:
"(A)Mr. Quiroga shall furnish beds of his manufacture to Mr.
Parsons for the latter's establishment in Iloilo, and shall invoice them at
the same price he has fixed for sales, in Manila, and, in the invoices,
shall make an allowance of a discount of 25 per cent of the invoiced
prices, as commission on the sales; and Mr. Parsons shall order the
beds by the dozen, whether of the same or of different styles.
"(B)Mr. Parsons binds himself to pay Mr. Quiroga for the beds
received, within a period of sixty days from the date of their shipment.
"(C)The expenses for transportation and shipment shall be borne
by M. Quiroga, and the freight, insurance, and cost of unloading from the
vessel at the point where the beds are received, shall be paid by Mr.
Parsons.
"(D)If, before an invoice falls due, Mr. Quiroga should request its
payment, said payment when made shall be considered as a prompt
payment, and as such a deduction of 2 per cent shall be made from the
amount of the invoice.
"The same discount shall be made on the amount of any invoice
which Mr. Parsons may deem convenient to pay in cash.
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"(E)Mr. Quiroga binds himself to give notice at least fifteen days
before hand of any alteration in price which he may plan to make in
respect to his beds, and agrees that if on the date when such alteration
takes effect he should have any order pending to be served to Mr.
Parsons, such order shall enjoy the advantage of the alteration if the
price thereby be lowered, but shall not be affected by said alteration if
the price thereby be increased, for, in this latter case, Mr. Quiroga
assumed the obligation to invoice the beds at the price at which the
order was given.
"(F)Mr. Parsons binds himself not to sell any other kind except the
'Quiroga' beds.
"ART. 2.In compensation for the expenses of advertisement
which, for the benefit of both contracting parties, Mr. Parsons may find
himself obliged to make, Mr. Quiroga assumes the obligation to offer and
give the preference to Mr. Parsons in case anyone should apply for the
exclusive agency for any island not comprised within the Visayan group.
"ART. 3.Mr. Parsons may sell, or establish branches of his
agency for the sale of 'Quiroga' beds in all the towns of the Archipelago
where there are no exclusive agents, and shall immediately report such
action to Mr. Quiroga for his approval.
"ART. 4.This contract is made for an unlimited period, and may be
terminated by either of the contracting parties on a previous notice of
ninety days to the other party "
Of the three causes of action alleged by the plaintiff in his complaint,
only two of them constitute the subject matter of this appeal and both
substantially amount to the averment that the defendant violated the following
obligations: not to sell the beds at higher prices than those of the invoices; to
have an open establishment in Iloilo; itself to conduct the agency; to keep the
beds on public exhibition, and to pay for the advertisement expenses for the
same; and to order the beds by the dozen and in no other manner. As may be
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seen, with the exception of the obligation on the part of the defendant to order
the beds by the dozen and in no other manner, none of the obligations
imputed to the defendant in the two causes of action are expressly set forth in
the contract. But the plaintiff alleged that the defendant was his agent for the
sale of his beds in Iloilo, and that said obligations are implied in a contract of
commercial agency. The whole question, therefore, reduces itself to a
determination as to whether the defendant, by reason of the contract
hereinbefore transcribed, was a purchaser or an agent of the plaintiff for the
sale of his beds.
In order to classify a contract, due regard must be given to its essential
clauses. In the contract in question, what was essential, as constituting its
cause and subject matter, is that the plaintiff was to furnish the defendant with
the beds which the latter might order, at the price stipulated) and that the
defendant was to pay the price in the manner stipulated. The price agreed
upon was the one determined by the plaintiff for the sale of these beds in
Manila, with a discount of from 20 to 25 per cent, according to their class.
Payment was to be made at the end of sixty days, or before, at the plaintiff's
request, or in cash, if the defendant so preferred, and in these last two cases
an additional discount was to be allowed for prompt payment. These are
precisely the essential features of a contract of purchase and sale. There was
the obligation on the part of the plaintiff to supply the beds, and, on the part of
the defendant, to pay their price. These features exclude the legal conception
of an agency or order to sell whereby the mandatory or agent received the
thing to sell it, and does not pay its price, but delivers to the principal the price
he obtains from the sale of the thing to a third person, and if he does not
succeed in selling it, he returns it. By virtue of the contract between the
plaintiff and the defendant, the latter, on receiving the beds, was necessarily
obliged to pay their price within the term fixed, without any other consideration
and regardless as to whether he had or had not sold the beds.
It would be enough to hold, as we do, that the contract by and between
the defendant and the plaintiff is one of purchase and sale, in order to show
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that it was not one made on the basis of a commission on sales, as the
plaintiff claims it was, for these contracts are incompatible with each other.
But, besides, examining the clauses of this contract, none of them is found
that substantially supports the plaintiff's contention. Not a single one of these
clauses necessarily conveys the idea of an