NAVAL vs. ENRIQUEZ - G.R. No. 1318

PRISCA NAVAL, ET AL. vs. FRANCISCO ENRIQUEZ, ET AL.

G.R. No. 1318 

April 12, 1904

Don Jorge Enriquez, as heir of his deceased parents, Antonio Enriquez and Doña Ciriaca Villanueva, whose estates were at that time still undistributed, by public instrument sold to Don Victoriano Reyes his interest in both estates, equivalent to a tenth part thereof. By another instrument executed, Don Enrique Barrera, Don Victoriano Reyes sold to Doña Carmen de la Cavada his interest in the estate of Don Antonio Enriquez and Doña Ciriaca Villanueva, which he had acquired from Don Jorge Enriquez. The purchaser, Doña Carmen, was the wife of Don Francisco Enriquez, who was the executor and administrator of the testamentary estate of Don Antonio Enriquez at the dates of the execution of the two mentioned. The plaintiffs demand that these deeds be declared null and void, as well as the contracts evidenced thereby, apparently solely so far as they refer to the estate of Don Antonio Enriquez, no mention being made of the estate of Doña Ciriaca Villanueva in the complaint. This relief is prayed for upon the grounds that the deeds in question were consummated and were executed for the purpose of deceiving and defrauding Don Jorge Enriquez and his family, and such executor Don Francisco Enriquez was unable to acquire by his own act or that of any intermediary the said hereditary portion of Don Jorge Enriquez under the provisions of paragraph 3 of article 1459 of the Civil Code.

ISSUE:

            Whether or not the deeds executed are null and void.

HELD:

            No. The date of those contracts down to the death of Jorge Enriquez, which occurred July 6, 1891, more than five year had passed and more than fifteen before the filing of the complaint on January 9, 1902, nothing having been done in the meantime on the part of the plaintiffs or the person under whom they claim to interrupt the running of the statute. The action of nullity only lasts four years, counted from the date of the consummation of the contract, when the action is based, as in this case, upon the absence of consideration. (Art. 1301 of the Civil Code.) The contract of sale is consummated by the delivery of the purchase money and of the thing sold.(Art. 1462, par. 2, Civil Code.)

Article 1464 provides that "With respect to incorporeal property, the provisions of par. 2 of Art. 1462 shall govern." In the deeds of sale executed by Victoriano Reyes in favor of Doña Carmen de la Cavada, in consequence he (the vendor) by virtue of this title cedes and conveys all rights which he has or may have to the part of the inheritance which is the object of this sale may exercise all the acts of ownership corresponding to her right, to which end by means of the delivery of this instrument and of his other title deeds he makes the transfer necessary to consummate the contract, which upon his part he declares to be perfect and consummated from this date.

ROMAN vs. GRIMALT - G.R. No. L-2412

PEDRO ROMAN vs. ANDRES GRIMALT

G.R. No. L-2412           

April 11, 1906

Grimalt and Roman, through one Fernando Agustin Pastor, verbally agreed upon the sale of a schooner. Roman accepted the plan of payment suggested and that from that date the vessel was at his disposal, and offered to deliver the same at once to defendant if he so desired. The contract having been closed and the vessel being ready for delivery to the purchaser, it was sunk about in the harbor of Manila and is a total loss, as a result of a severe storm. Demand was made upon the defendant for the payment of the purchase price of the vessel in the manner stipulated and defendant failed to pay. Plaintiff finally prayed that judgment be rendered in accordance with the prayer of his previous complaint. Defendant alleged that plaintiff personally proposed to the defendant the sale of the said vessel, the plaintiff stating that the vessel belonged to him and that it was then in a sea worthy condition. Defendant accepted the offer of sale on condition that the title papers were found to be satisfactory, also that the vessel was in a seaworthy condition. The plaintiff promised to perfect his title and called on defendant to close the sale. The defendant believing that plaintiff had perfected his title, wrote to him and set for the execution of the contract, but, upon being informed that plaintiff had done nothing to perfect his title, he insisted that he would buy the vessel only when the title papers were perfected and the vessel duly inspected.

ISSUE:

Whether or not the sale has been perfected that the buyer should bear the loss.’

HELD:

            No. The sale of the schooner was not perfected and the purchaser did not consent to the execution of the deed of transfer for the reason that the title of the vessel was in the name of one Paulina Giron and not in the name of Pedro Roman, the alleged owner. Roman promised, however, to perfect his title to the vessel, but he failed to do so. The papers presented by him did not show that he was the owner of the vessel. If no contract of sale was actually executed by the parties the loss of the vessel must be borne by its owner and not by a party who only intended to purchase it and who was unable to do so on account of failure on the part of the owner to show proper title to the vessel and thus enable them to draw up the contract of sale.

A sale shall be considered perfected and binding as between vendor and vendee when they have agreed as to the thing which is the object of the contract and as to the price, even though neither has been actually delivered. (Art. 1450 of the Civil Code.) When the sale is made by means of a public instrument the execution thereof shall be equivalent to the delivery of the thing which is the object of the contract. (Art. 1462 of the Civil Code.)

OCEJO, PEREZ & CO. vs. THE INTERNATIONAL BANKING CORPORATION - G.R. No. L-10658

OCEJO, PEREZ & CO. vs.

THE INTERNATIONAL BANKING CORPORATION

G.R. No. L-10658            February 14, 1918

Chua Teng Chong gave a promissory note to International Banking Corporation. 5000piculs of sugar, located in a warehouse in Calle Toneleros, was put up as security for the note. It seems that Ocejo, Perez and Co. entered into contract with Chua Teng Chong for the sale of some sugar. The sugar was brought to Manila and 5,000 piculs were delivered by to Chua Teng Chong whereupon it was stored in a warehouse at No. 119, Muelle de la Industria. The next day, petitioners attempted to collect the purchase price of the sugar, but the buyer refused to make payment. In the written contract between them, nothing was said concerning the time and place for payment. When the promissory note executed had fallen due and was unpaid, the bank made the effort to exercise active ownership over the sugar it discovered that the amount of sugar in his warehouse was less than the 5,000 piculs. Chua Teng Chong said that the rest of the sugar was in a warehouse at No. 119, Muelle de la Industria. The bank’s representatives then went to this warehouse and found some 3,200 piculs which they immediately seized, closing the warehouse with the bank's padlocks. Ocejo demand the bank to return the sugar, which the latter refused. Petitioners filed a complaint, with the bank as defendant, alleging that the bank was unlawfully holding the property of the plaintiff firm.

ISSUE:

Whether or not Chua Teng Chong failure to pay the purchase price authorize the seller to rescind the sale.

HELD:

Yes. There can be no doubt that the parties agreed in regard to the quantity of the sugar which the seller was to deliver and the price which the buyer was to pay, the contract was perfected. (Civil Code, Art. 1450.) It is also clear that the obligation of the seller to make delivery of the thing sold was not subject to the condition that the buyer was to pay the price before delivery. The sugar was delivered to the buyer. The seller delivered it into the buyer's warehouse, leaving it entirely subject to his control. Article 1462 of the Civil Code provides that the thing sold is deemed to be delivered "when it passes into the possession and control of the buyer." It is difficult to see how the seller could have divested himself more completely of the possession of the sugar, or how he could have placed it more completely under the control of the buyer. On the day following the delivery of the sugar the seller presented his bill to the buyer, but the latter failed and refused to make payment. The seller was entitled to demand payment of the sugar at any time after the delivery. No term having been stipulated within which the payment should be made, payment was demandable at the time and place of the delivery of the thing sold. (Civil Code, Art. 1500.)

EASTON vs. E. DIAZ & COMPANY - G.R. No. 10012

WALTER EASTON vs. E. DIAZ & COMPANY

and THE PROVINCIAL SHERIFF OF ALBAY

G.R. No. 10012                        November 9, 1915

The counsel for Walter Easton filed a written complaint in the CFI alleging that he was the sole and exclusive owner of a still bearing the trade-mark "Ecrot" installed on a piece of land occupied by Smith, Bell & Co., Ltd., and in charge of Jose Parlade. As a result of the civil case of said court brought by E. Diaz and company against Jose Parlade, in spite of defendant knowing that this still did not belong to Parlade, sought in bad faith to have it attached. The plaintiff presented to the sheriff a third party claim of ownership, setting forth therein that damages to the extent of not less that P100 a day were being caused the claimant for each day the sheriff retained the still in his possession because this was the season for the distillation of ilang-ilang. But the defendant company gave bond to secure the sheriff in order that he might proceed to sell the still at public auction. The latter's counsel, therefore, prayed the court that a preliminary injunction issue against the defendant company, its attorneys, agents and employees, and the provincial sheriff, restraining them from performing any act whatever which might prevent the plaintiff from using the said distilling apparatus, to order the sheriff to make immediate return of the still to the place where it had been installed, upon the furnishing of such bond as the court might consider sufficient, to declare that the said still is the exclusive property of the plaintiff, and to sentence the defendant company to pay to the plaintiff the sum of at least P100 for each day that has elapsed or may elapse from the date of the attachment of the still to that of its return, with the costs against the defendant.

ISSUE:

Whether or not the alleged conveyance of the still by Parlade to Easton actually took place.

HELD:

No. The fact that the still was never delivered to the purchaser is a circumstance which, in view of the evidence adduced by the defendant company, strengthens the conviction that no such sale took place and that the still continues to belong to Parlade. For the legal acquisition and transfer of ownership and other property rights, the thing transferred must be delivered, inasmuch as, according to settled jurisprudence the tradition of the thing is a necessary and indispensable requisite in the acquisition of said ownership by virtue of a contract.

For the acquisition and transmission by law of ownership and other property rights, delivery of the things transferred is indispensable. (Art. 609, Civ. Code.) It is a doctrine established by jurisprudence, that the delivery of a thing is a necessary and indispensable requisite in order to acquire its ownership by virtue of a contract.

GONZALES vs. ROJAS - G.R. No. 5449

MARIANO GONZALES ET AL. vs. ALEJANDRO ROJAS

G.R. No. 5449

March 22, 1910

The subject land of fishery belonged to the sisters Juliana Samonte and Atanasia Samonte, during their lifetime, who are said to have inherited it from their grandfather, Jose Samonte. These sisters leased the property to Mamerto Siaoson under a contract for 12 years. The first sale was made by the Juliana Samonte to Alejandro Rojas, on February 2, 1900. Juliana Samonte died on March 10 of the same year. From March 21, 1895, to the same date of 1907, Mamerto Siaoson was entitled to the possession and lease of the fishery. For this reason, Juliana Samonte, on February 24, 1900, said that the lease still had six years to run. Juliana Samonte and Alejandro Rojas expressly stipulated, in the document of contract, Exhibit No. 1, that as soon as the said six years of the lease should have expired "and this land is returned to us — Juliana’s words-immediately and without delay we will deliver the same to this married couple. On November 14, 1907, the delivery of this land had not yet been made to Alejandro Rojas; hence, by means of a notarial proceeding, the latter demanded of two sons of Juliana Samonte, Brigido and Matias Villanueva, the said delivery.

ISSUE:

Whether or not the sale made by Juliana Samonte to Alejandro Rojas in 1900 remained in a state of dependency on the completion of the contract and was not consummated.

HELD:

            Yes. Article 1462 of the Civil Code provides that, a thing sold shall be considered as delivered when it is placed in the hands of the vendee. When the sale is made by means of a public instrument, the execution thereof shall be equivalent to the delivery of the thing which is the object of the contract, if in said instrument the contrary does not appear or may be clearly inferred. No actual delivery was made of the possession of the reality in question. There was no public instrument, the execution of which could have constituted a form of delivery of the thing sold. On the contrary, from the instrument executed, which is only a private one, it clearly appears that the delivery of the fishery was postponed to a fixed date.

            Juliana Samonte’s heirs, having no knowledge of this obligation and making the fishery materially a part of the inheritance left by their mother, conveyed the property that had been held by her and which had been transferred to her successors in interests, without any complaint from a third party. It must be concluded that the sales effected by the heirs of Juliana Samonte to the petitioners were true, valid, and efficacious.

KUENZLE & STREIFF vs. MACKE & CHANDLER - G.R. No. L-5295

KUENZLE & STREIFF vs. MACKE & CHANDLER, ET AL.

G.R. No. L-5295

December 16, 1909

            The plaintiff alleges that it was the owner of the Oregon Saloon consisting of bar, furniture, furnishings, and fixtures in which the Jose Desiderio, as sheriff, levied upon by virtue of an execution issued upon a judgment secured by the defendant Macke & Chandler, against Stanley & Krippendorf. Said plaintiff notified the sheriff that it was the owner of said goods and forbade the sale thereof under said execution. The sheriff sold said goods under said execution and the firm of Macke & Chandler was the purchaser of said goods. Bachrach, Elser, and Gale, were the sureties upon the bond given to the sheriff by Macke & Chandler before said goods were sold. The defendants in this case allege that the property described by the plaintiff and sold at the execution sale referred to was not the property of the plaintiff at the time of said levy and sale, but was the property of Stanley & Krippendorf, who were in possession of the same at the time of such levy. They further allege that Stanley & Krippendorf, being indebted in a considerable sum to the plaintiff in this case, attempted to sell to the said plaintiff by an instrument in writing the property in question which was never recorded and was a private document. The said property was not delivered to the plaintiff but that property remained from the time of sale forward in the exclusive possession and control of said Stanley & Krippendorf, and that they conducted the business.

ISSUE:

Whether or not there is an effect in the said instrument of sale in transferring the property in question from Stanley & Krippendorf to the plaintiff.

HELD:

No. The ownership of personal property can not be transferred to the prejudice of third persons except by delivery of the property itself; and that a sale without delivery gives the would-be purchaser no rights in said property except those of a creditor. The bill of sale in the case at bar could have no effect against a person dealing with the property upon the faith of appearances. It is evident that the bill of sale was in no sense a conditional sale of property. Possession of the property in suit was not taken at any time by the plaintiff. The defendant Macke & Chandlre, having purchased the property at an execution sale, property conducted, obtained a good title to the property in question as against the plaintiff in this case.

RUFINA YATCO vs. JESUALDO GANA - G.R. No. L-3876

RUFINA YATCO vs. JESUALDO GANA

G.R. No. L-3876

March 27, 1909

The plaintiff, as heir to her father, Isidro Yatco, among other properties, received the lands in controversy. In consequence of proceedings in execution brought in by the late Yatco against the spouses Eugenio Andal and Gregoria Faciolco, the said lands were attached and as no bidders appeared at the public auction, they were adjudicated in payment to the execution creditor by an order of the lower court. The corresponding instrument of sale was not executed nor was the execution creditor put in possession of the property until 1902, in compliance with an order issued upon request of the said creditor. The credit of the execution creditor, Yatco, is not recorded in the registry of property, nor were the attached properties charged in the payment of any debts, or entered in the register. The defendant debtor, Andal, had informed the officer who was sent to enforce the order of attachment, that the property now in question had already been sold by him to the defendant, Jesualdo Gana, prior to the date of the attachment. Gana, acquired the said lands from Eugenio Andal by means of a public instrument of purchase and sale. The said instrument was lost during the late insurrection, but appears on the index of the notarial acts executed in La Laguna, on file at the office of the clerk of the Supreme Court. Since 1894, the defendant has been in possession of the said properties and has held them as owner until the present day and defendant was not required by the sheriff to deliver the possession of the lands to the representative of the late Yatco.

ISSUE:

Whether or not the purchasers had acquired the ownership and dominion over the purchased thing in accordance with article 1473 of the Civil Code.

HELD:

Yes. The main point is the legitimacy of the sale made by Eugenio Andal to Jesualdo Gana, and the fact that this contract was executed even before the lands that were sold had been judicially attached. The trial court has not committed any error by declaring that Eugenio Andal could validly sell them to Jesualdo Gana and the circumstance that they were subject to the credit of Isidro Yatco against the spouses Andal and Faciolco was not an obstacle to the validity of the sale because they were not subject to the security of the credit as by a real right formally attached to the said lands, but by the mere delivery of the title deeds that the debtors made to the creditors.

There was no bad faith on the part of the purchaser even though it be supposed such existed on the part of the vendor, because it has not been shown in any manner that the purchaser was aware of any impediment to the vendor's lawfully effecting the sale of a thing that belonged to him.

THE FIDELITY AND DEPOSIT COMPANY OF MARYLAND vs. WILLIAM A. WILSON, ET AL. - G.R. No. 2684

THE FIDELITY AND DEPOSIT COMPANY OF MARYLAND vs.

WILLIAM A. WILSON, ET AL.

G.R. No. 2684            March 15, 1907

The plaintiff filed a complaint against Wilson and The American Surety Company asking that judgment be rendered against Wilson for the amount having been paid by plaintiff to the Government under plaintiff's surety bond, that there be applied to the payment of said judgment the said amount found in possession of Wilson and that said plaintiff be preferred in its right to the said money and to receive the same; and that a depositary be named by the court for the purpose of caring for and administering said amount during the pendency of the case. H.D. Terrell filed a complaint as intervenor in the case, alleging that the defendant Wilson had ceded and transferred to the said Terrell all of his rights. Terrell claims the right of ownership in and to the said sum and asks that the same be delivered to him as the legitimate owner to the exclusion of the other parties in the case. The Fidelity and Deposit Company of Maryland, the plaintiff in the principal cause, and The American Surety Company of New York together in cooperation and against the claim of the intervenor Terrell, alleging on their part, better right that the intervenor to receive the sum in question, asked that the said sum be delivered to them in equal shares and portions as part payment and on account of the amounts which they had paid respectively to the Government as sureties on the bond of Wilson.

ISSUE:

Whether or not the said sum be delivered to the plaintiff in equal shares and portions as part payment and on account of the amounts which they had paid respectively to the Government as sureties on the bond of Wilson.

HELD:

Yes. The transfer by itself did not produce nor could it produce the effect of transfer to Terrell of the ownership of the funds so transferred and which were then in the possession of the said Treasurer. To have this effect, it would have been necessary that the delivery of the funds had been made directly Terrell, which fact has not been proved at any time. The funds were in the possession of Treasurer Branagan and afterwards were transferred to the possession of the depositary appointed, by the court where such funds now are, and this without their ever having been taken possession of the intervenor Terrell. It is not alleged, nor it is claimed by Terrell, that the delivery of the funds was ever made in any manner recognized by the law.

Neither of the two creditors should enjoy preference with regard to the other. Preference is determined by the nature of the credit in some cases and by the priority of date in others. The two creditors should be paid of pro rata from the funds in question and without consideration of the dates.

LEOQUINCO vs. THE POSTAL SAVINGS BANK - G.R. No. L-23630

TIBURCIO LEOQUINCO vs. THE POSTAL SAVINGS BANK, ET AL.

G.R. No. L-23630

August 25, 1925

            Plaintiff alleged that he was the highest bidder at a public auction held by the defendants on for the sale of a piece or parcel of land belonging to the Bank. In Resolution No. 31 of the board of directors of the Bank, the sale of said property at public auction was authorized, as well as in the public notice announcing said sale. The board of directors have expressly reserved to themselves the right to reject any and all bids. A letter to the defendants was sent advising that the plaintiff was ready to tender payment for the land as soon as the deed of sale of the same in his favor is executed and delivered by the defendants. The defendants refused to execute the deed in spite of requests made therefor by him. Plaintiff prayed that said defendants be ordered to execute and deliver the deed of sale of said land in his favor, and to pay him damages and the costs. The defendants admitted the allegations of the complaint, except the conclusions of law set forth and the damages alleged to have been suffered by plaintiff. As a special defense, the defendants alleged that in Resolution No. 31 of the board of directors of the Postal Savings Bank, the defendants expressly reserved to themselves "the right to reject any and all bids," and that they never accepted the bid or offer of the plaintiff. The defendants prayed for relief from the complaint, with costs against the plaintiff.

ISSUE:

Whether or not defendants may refuse to execute the deed as it is expressed in Resolution No. 31 of the board of directors of the Postal Savings Bank, that the defendants has reserved to themselves "the right to reject any and all bids,"

HELD:

Yes. The plaintiff has no ground of action to compel defendants to execute a deed of sale of the land in his favor, nor to compel them to accept his bid or offer. "The owner of property offered for sale at auction has the right to prescribe the manner, conditions and terms of sale, and where these are reasonable and are made known to the buyer, they are binding upon him, and he cannot acquire a title in opposition to them, and against the consent of the owner. The owner of property offered for sale either at public or private auction has the right to prescribe the manner, conditions and terms of such sale. He may provide that all of the purchase price shall be paid at the time of the sale or any portion thereof, or that time will be given for the payment. The conditions of a public sale announced by an auctioneer or the owner of the property at the time and place of the sale, are binding upon a purchaser, whether he knew them or not.

AUYONG HIAN (HONG WHUA HANG) vs. CTA - G.R. No. L-28782

AUYONG HIAN (HONG WHUA HANG) vs.

COURT OF TAX APPEALS, ET AL.

G.R. No. L-28782         November 27, 1981

The 600 hogs heads of Virginia type tobacco were stored at Customs Bonded Warehouse No. 81, operated by Consolidated Terminals, Inc. In 1962, seizure proceedings was instituted against the tobacco as an illegal importation pursuant to Republic Acts No. 698 and 1194. A decision on the seizure case was rendered by the collector, Port of Manila, declaring the 600 hogs heads of tobacco forfeited in favor of the government. The Special Committee which was created for the disposal of the forfeited tobacco ordered and scheduled the sale thereof through public bidding wherein the terms and condition of the sale were specified. At the scheduled sale of the forfeited tobacco, Consolidated Tobacco Industries Of The Philippines, Inc. (CTIP) turned out to be the 'highest bidder'. The Collector approved the final sale subject to the condition that the balance of the purchase price should be paid within five (5) days from receipt thereof and that the said tobacco will be released in favor of CTIP upon the posting of a surety bond to guarantee CTIP's undertaking to export locally grown tobacco. However, movant was unable to secure delivery of the tobacco purchased by it in view of the pendency of several court proceedings filed by petitioner, Auyong Hian wherein such delivery was judicially enjoined. When the last of those injunctions was lifted and before another one could be obtained by said petitioner, movant demanded delivery of the tobacco but the Consolidated Terminals, Inc. (or Luzon Stevedoring Co., Inc.) in whose warehouses the tobacco was stored, refused to release the same without its being paid the storage fees due as of then. Apprehensive that a new injunction might be secured by Auyong Hian, which would further delay its getting delivery of the tobacco, and because the Bureau of Customs could not immediately make the corresponding payment, movant paid the Consolidated Terminals, Inc. the storage fees demanded under an express understanding, with the Bureau of Customs that the same would be refunded to it.

ISSUE:

Whether the sale of the tobacco from the public auction to CTIP was valid.

HELD:

Yes. The sale of the tobacco from the public auction to CTIP was valid. Even if the consideration paid for the forfeited tobacco was inadequate, it is not a ground for the invalidity of a contract. Article 1355 of the Civil Code provides the law for this matter. It was not shown that the instant sale is a case exempted by law from the operation of Art. 1355. Neither has the petitioner shown that there was fraud, mistake or undue influence in the sale. Therefore, there is no reason to invalidate the sale of said tobacco to CTIP.

THE ASIATIC PETROLEUM COMPANY (LTD.) vs. THE INSULAR COLLECTOR OF INTERNAL REVENUE - G.R. No. L-12687

THE ASIATIC PETROLEUM COMPANY (LTD.) vs.

THE INSULAR COLLECTOR OF INTERNAL REVENUE

G.R. No. L-12687            August 27, 1918

The defendant, under threat of penalty, compelled the plaintiff to pay the internal revenue tax provided for under above Section 17 of Act No. 2432 upon all such oils which the plaintiff had on hand on the first day of January, 1915, whether or not the same had been sold theretofore or not. The tax was paid under protest. The plaintiff contends that the tax collected was illegal, for the reason that the law had expressly relieved him from the necessity of paying the same on all such oils which he had "disposed of to consumers or persons other then manufacturers or wholesale dealers, prior to January 1, 1915”. Inasmuch as he had made a valid and legal sale of such oils before January 1, 1915, even though the same had not been actually delivered, they had been "disposed of" and he was therefore relieved from the necessity of paying the tax imposed by said Act. No contention is made that the oils "disposed of" had been disposed of to "manufacturers or wholesale dealers." Section 17 (paragraph 72a) of Act No. 2432, among other things, provides that "no tax (imposed by law) shall be collected on such articles have been disposed of to consumers or persons other than manufacturers or wholesale dealers. Said Act took effect upon the first day of January, 1915.

ISSUE:

Whether or not a dealer is required to pay the internal revenue tax, provided for under section 17, (par. 72a) of Act No. 2342, upon mineral oils, but not delivered, prior to the first day of January, 1915.

HELD:

No. Section 17 (par. 72a) of Act No. 2432, among other things, provides that "no tax shall be collected on such articles have been disposed of to consumers or persons other than manufacturers or wholesale dealers. Said Act took effect upon the first day of January, 1915. It is clear that the plaintiff could not be compelled to pay the tax imposed by said Act upon mineral oils which had been disposed of to consumers or persons, etc., prior to the first day of January, 1915. The oils in question which plaintiff had sold, but which he had not delivered, prior to the first day of January, 1915, disposed of, so as to relieve him from the necessity of paying tax.

Merchandise may be "disposed of" even though the price has not been paid nor the same delivered. A sale may be perfected between vendor and vendee and may be binding on both of them, if they have agreed upon the thing, the object of the contract and the price, even though the price had not been paid nor the merchandise delivered. The plaintiff had "disposed of" the mineral oils in question before the first day of January, 1915, and was therefore relieved from the necessity of paying the internal revenue tax imposed by the defendant.

TAN LEONCO vs. GO INQUI - G.R. No. L-3383

TAN LEONCO vs. GO INQUI

G.R. No. L-3383

September 13, 1907

In 1897, prior to the plaintiff’s departure to China, he turned over to Tan Tonguan, for his management, the plantations of abaca (hemp). Tan Tonguan worked the abaca and obtained 800 pesos worth of fiber, which he caused to be stored, by direction of the defendants, in a warehouse in Buhang, and after storing the draft or check in question, handing it to the plaintiff, who in the mean time had returned from China. The plaintiff then, desiring to leave again for China, presented the draft for payment in Manila, but as the defendants had suspended the payment of the same, the plaintiff was unable to collect the amount thereof. When the said abaca was stored by Tan Tonguan in Buhang it became the property of the defendants and on the face of the draft they acknowledge having received the amount of said draft. In the years 1896 and 1897, the plaintiff entered into an agreement to transfer the shop at San Isidro to the Chinaman Tan Tonguan, and the shop of Buhang to the Chinaman Lim Joco and Tim Bico. By reason by such transfers, the said Chinamen would become liable for the debt of the plaintiff directly in connection with the said two shops. The plaintiff can not now be held to the liable for the debt claimed by the defendants in their counterclaim. They must look for payment of this sum to the Chinamen in whose favor the two shops were transferred.

ISSUE:

    Whether or not the plaintiff should be relieved from the formalities of the protest for want of payment of the said draft or check, as provided for with regard to bills of exchange.

HELD:

Yes. The warehouse in which the hemp was deposited was the warehouse of the defendant. The hemp became the property of the defendant upon the delivery thereof in the warehouse of the defendant (arts. 1462 and 1463, Civil Code), and was property of the defendant at the time a complete delivery of the said abaca to the defendant. The loss occurring thereafter, without any fault of the plaintiff, was loss of the defendant. The delivery of the hemp was duly made to the defendant and constituted a valuable consideration for the said bill of exchange or check. 

It was alleged that the said bill of exchange, after being presented to the drawee in Manila, was not protested and that there is some question of the right of the plaintiff to recover upon said bill of exchange without the same having been duly protested. The action was not brought upon the bill of exchange. The bill of exchange was used only as evidence of the indebtedness. Inasmuch as the defendant had himself ordered the drawee not to pay the said bill of exchange, that protest and notice of nonpayment under these conditions was unnecessary in order to render the drawer, or defendant in this case, liable.

BORROMEO vs.FRANCO - G.R. No. 1698

JULIAN BORROMEO vs. JOSE FRANCO Y FRANCO, ET AL.

G.R. No. 1698           September 26, 1905

Jose Franco, Cesar Franco, Antonio Franco, Manuel Franco, Soledad Franco, and Catalina Franco, declare themselves to be the joint owners of the frame houses, with nipa roofs built upon lots belonging to the said parties. No description is given of the said property for lack of the necessary date. They have agreed to sell the said property to Borromeo y Galan, and executed the present instrument under the terms and conditions. Jose Maria Rosado y Calvo, as counsel for Julian Borromeo y Galan, filed a complaint in the CFI praying that judgment be rendered in his favor compelling the said defendants to sell to him the property in question under the terms of the agreement entered into, and also to pay the costs of proceedings and such damages as the plaintiff may have sustained and that, in case the property had been transferred to a third party, a notice of the pendency of this action be served, and alleging that the plaintiff, under the terms of the aforesaid agreement, had taken some judicial and extra-judicial steps and defrayed the necessary expenses for the completion of the papers and other documents relating to the property which the defendant had agreed to sell to him. Defendants refused to comply with their aforesaid promise to sell by executing to him the necessary deed, alleging that he had not completed the documents in question for this purpose.

ISSUE:

Whether or not the defendants can properly refuse so to sell for the reason that the purchaser has failed to complete the documents as stipulated in the conditions of the agreement.

HELD:

No. When the plaintiff, Borromeo, demanded the execution of the sale, even though the documents were not in proper shape, it must be assumed that he was willing to buy the property even with a defective title, the perfection of which he expressly undertook to obtain. The contract in question contains various clauses and stipulations but the defendants refused to fulfill their promise to sell on the ground that the vendee had not perfected the title papers to the property in question within the six months agreed upon in. That stipulation was not an essential part of the contract and a failure to comply therewith is no obstacle to the fulfillment of the promise to sell.

            Article 1451 of the Civil Code provides as that, a promise to sell or buy, there being an agreement as to the thing and price, gives a right to the contracting parties to mutually demand the fulfillment of the contract. Whenever the promise to purchase and sell can not be fulfilled, the provisions relating to obligations and contracts of the Civil Code shall be observed by the vendor and by the vendee, as the case may be.

KATIGBAK vs. CA - G.R. No. L-16480

ARTEMIO KATIGBAK vs. CA,

DANIEL EVANGELISTA and V. K. LUNDBERG

G.R. No. L-16480             January 31, 1962

Artemio Katigbak upon reading an advertisement for the sale of the winch placed by V. K. Lundberg, owner and operator of the International Tractor and Equipment Co., Ltd., went to see Lundberg and inspected the equipment. Desiring a reduction of the quoted price, Katigbak was referred to Daniel Evangelista, the owner. After the meeting, it was agreed that Katigbak was to purchase the winch for P12,000.00, payable at P5,000.00 upon delivery and the balance of P7,000.00 within 60 days. The condition of the sale was that the winch would be delivered in good condition. Katigbak was apprised that the winch needed some repairs, which could be done in the shop of Lundberg. It was then stipulated that the amount necessary for the repairs will be advanced by Katigbak but deductible from the initial payment of P5,000.00. The sale was not consummated and Katigbak sued Evangelista, Lundberg and the latter's company, for the refund of such amount. Lundberg alleged the non-liability for the amount since it was purely a personal account between defendant Evangelista and plaintiff Katigbak. Evangelista claimed that Katigbak refused to comply with his contract to purchase the winch so he was forced to sell the same to a third person.

ISSUE:

Whether or not the petitioner is entitled to a refund for the repairs undertaken, despite the fact that the breach of contract was committed by him.

HELD:

Yes. Notwithstanding the breach of contract committed by him, appellee has a right to a refund, but equally undeniable is appellant Evangelista's right to recover from him his loss of P2,000.00, which is the difference between the contract price for the sale of the winch between him and appellee and the actual price for which it was sold after the latter had refused to carry out his agreement. If the purchaser fails to take delivery and pay the purchase price of the subject matter of the contract, the vendor, without the need of first rescinding the contract judicially, is entitled to resell the same, and if he is obliged to sell it for less than the contract price, the buyer is liable for the difference. This loss, which is the subject matter of Evangelista's main counterclaim, should therefore be set off against the sum claimed by appellee. Considering that it was appellee who committed a breach of contract, it follows that the present action was unjustified and he must be held liable to appellant Evangelista for attorney's fees.

CHRYSLER PHILIPPINES CORPORATION vs. CA - G.R. No. L-55684

CHRYSLER PHILIPPINES CORPORATION vs. CA

and SAMBOK MOTORS CO. (BACOLOD)

G.R. No. L-55684         December 19, 1984

Petitioner is a domestic corporation engaged in the assembling and sale of motor vehicles and other automotive products. Respondent Sambok Motors Co., a general partnership, was its dealer for automotive products with offices at Bacolod and Iloilo. The two offices were run by relatives. Miguel Ng was Assistant Manager for Sambok, Bacolod, while an elder brother, Pepito Ng, was the President. Petitioner filed with the CFI a Complaint for Damages against Allied Brokerage Corporation, Negros Navigation Company and Sambok, Bacolod, alleging that petitioner delivered automotive products which Sambok, Bacolod ordered, to its forwarding agent, Allied Brokerage Corporation, for shipment. Allied Brokerage loaded the goods on a vessel owned and operated by Negros Navigation Company, for delivery. When petitioner tried to collect from the amount representing the price of the spare parts plus handling charges, Sambok, Bacolod, refused to pay claiming that it had not received the merchandise. Petitioner also demanded the return of the merchandise or their value from Allied Brokerage and Negros Navigation, but both denied any liability. Sambok, Bacolod professed that they have no knowledge of having ordered from petitioner said articles.

ISSUE:

Whether or not the matter of misdelivery is a decisive factor for relieving Sambok, Bacolod, of liability herein.

HELD:

No. While it may be that the Parts Order Form specifically indicated Iloilo as the destination, as testified to by Ernesto Ordonez, Parts Sales Representative of petitioner, Sambok, Bacolod, and Sambok, Iloilo, are actually one. In fact, admittedly, the order for spare parts was made by the President of Sambok, Pepito Ng, through its marketing consultant. The petitioner's Complaint should be dismissed since the petitioner had not performed its part of the obligation under the contract by not delivering the goods at Sambok, Iloilo, the place designated in the Parts Order Form, and must, therefore, suffer the loss. In other words, that there was a non-delivery since the merchandise was never placed in the control and possession of Sambok, Bacolod, the vendee.

Under the circumstances, Sambok, Bacolod, cannot be faulted for not accepting or refusing to accept the shipment from Negros Navigation four years after shipment. The evidence is clear that Negros Navigation could not produce the merchandise nor ascertain its whereabouts at the time Sambok, Bacolod, was ready to take delivery. Where the seller delivers to the buyer a quantity of goods less than he contracted to sell, the buyer may reject them.

NATIVIDAD GEMPESAW vs. CA and PHILIPPINE BANK OF COMMUNICATIONS - G.R. No. 92244

NATIVIDAD GEMPESAW vs. CA and PHILIPPINE BANK OF COMMUNICATIONS

G.R. No. 92244            February 9, 1993

Natividad Gempesaw issued checks, prepared by her bookkeeper, a total of 82 checks in favor of several supplies. Most of the checks for amounts in excess of actual obligations as shown in their corresponding invoices. It was only after the lapse of more than 2 years did she discovered the fraudulent manipulations of her bookkeeper. It was also learned that the indorsements of the payee were forged, and the checks were brought to the chief accountant of Philippine Bank of Commerce (the Drawee Bank, Buendia Branch) who deposited them in the accounts of Alfredo Romero and Benito Lam. Gempesaw made demand upon the bank to credit the amount charged due the checks. The bank refused. Hence, the present action.

Issue: Who shall bear the loss resulting from the forged indorsements.

Held: As a rule, a drawee bank who has paid a check on which an indorsement has been forged cannot charge the drawer’s account for the amount of said check. An exception to the rule is where the drawer is guilty of such negligence which causes the bank to honor such checks. Gempesaw did not exercise prudence in taking steps that a careful and prudent businessman would take in circumstances to discover discrepancies in her account. Her negligence was the proximate cause of her loss, and under Section 23 of the Negotiable Instruments Law, is precluded from using forgery as a defense. On the other hand, the banking rule banning acceptance of checks for deposit or cash payment with more than one indorsement unless cleared by some bank officials does not invalidate the instrument; neither does it invalidate the negotiation or transfer of said checks. The only kind of indorsement which stops the further negotiation of an instrument is a restrictive indorsement which prohibits the further negotiation thereof, pursuant to Section 36 of the Negotiable Instruments Law. In light of any case not provided for in the Act that is to be governed by the provisions of existing legislation, pursuant to Section 196 of the Negotiable Instruments Law, the bank may be held liable for damages in accordance with Article 1170 of the Civil Code. The drawee bank, in its failure to discover the fraud committed by its employee and in contravention banking rules in allowing a chief accountant to deposit the checks bearing second indorsements, was adjudged liable to share the loss with Gempesaw on a 50:50 ratio.

MANILA LIGHTER TRANSPORTATION, INC. vs. CA - G.R. No. L-50373

MANILA LIGHTER TRANSPORTATION, INC. vs. CA

and CHINA BANKING CORPORATION

G.R. No. L-50373         February 15, 1990

Manila Lighter Transportation issued 49 checks to its customers in payment of brokerage or lighterage services and were all delivered to its collector, Augusto Perez. Upon forged indorsements of the company’s General Manager, Luis Gaskell, the checks found their way to the accounts of third persons and were later withdrawn. A complaint to recover the value of the checks were filed against China Bank. Bank denied liability.

Issue: Whether or not the bank is negligent as to bear the loss resulting from the checks with forged indorsements.

Held: Since Manila Lighter Transportation was not a client of the bank, the latter had no way of ascertaining the authenticity of its indorsements on the checks which were deposited in the accounts of third persons (Ko Lit and Cao Pek) in said bank. The bank was not negligent because, in accordance with banking practice, it caused the checks to pass through the clearing house before it allowed their proceeds to be withdrawn by the depositors.

REPUBLIC BANK vs. CA and FIRST NATIONAL CITY BANK - G.R. No. 42725

REPUBLIC BANK vs. CA and FIRST NATIONAL CITY BANK

G.R. No. 42725                        April 22, 1991

San Miguel Corporation issued a dividend check for P240 in favor of J. Roberto Delgado, a stockholder. Delgado altered the amount of the check to P9,240. The check was indorsed and deposited by Delgado with Republic Bank. Republic Bank endorsed the check to First National City Bank (FNCB), the drawee bank, by stamping on the back of the check “all prior and / or lack of indorsements guaranteed. Relying on the endorsement, FNCB paid the amount to Republic Bank. Later on, San Miguel informed FNCB of the material alteration of the amount. FNCB recredited the amount to San Miguel’s account, and demanded refund from Republic Bank. Republic Bank refused. Hence, the present action.

Issue: Whether or not the bank shall bear the loss resulting from the altered check.

Held: Yes. When an indorsement is forged, the collecting bank or last indorser, as a general rule, bears the loss. But the unqualified indorsement of the collecting bank on the check should be read together with the 24-hour regulation on clearing house operation. Thus, when the drawee bank fails to return a forged or altered check to the collecting bank within the 24-hour clearing period (as provided by Section 4c of Central Bank Circular 9, as amended), the collecting bank is absolved from liability. The drawee bank, FNCB, should bear the loss for the payment of the altered check for its failure to detect and warn Republic Bank of the fraudulent character of the check within the 24-hour clearing house rule.

METROPOLITAN WATERWORKS AND SEWERAGE SYSTEM vs. CA - G.R. No. L-62943

METROPOLITAN WATERWORKS AND SEWERAGE SYSTEM vs. CA

and THE PHILIPPINE NATIONAL BANK

G.R. No. L-62943         July 14, 1986

By special arrangement with PNB, MWSS used personalized checks in drawing from its account. The checks were printed by its printer, F. Mesina Enterprises. 23 checks were paid and cleared by PNB, and debited against MWSS’ account from March to May 1969. The checks were deposited by payees Raul Dizon, Arturo Sison, and Antonio Mendoza in their account with PCIBank. Said persons were later found to be fictitious. MWSS requested PNB to restore the amount debited due to the 23 checks, allegedly forged, to its account. The bank refused. Hence, the present action.

Issue: Whether or not the bank shall bear the loss resulting from the alleged forged checks.

Held: No. There was no express and categorical finding that the 23 checks were forged or signed by persons other than the authorized MWSS signatories. Forgery is not presumed but should be established by clear, positive and convincing evidence. MWSS is barred from setting up defense of forgery under Section 23 of the Negotiable Instruments Law as MWSS committed gross negligence in the printing of its personalized checks, failed to reconcile its bank statements with its own records, and failed to provide appropriate security measures over its own record. PNB, the drawee bank, had taken necessary measures in the detection of forged checks and the prevention of their fraudulent encashment through constant reminders to all its current account bookkeepers informing them of the activities of forgery syndicates. MWSS’ gross negligence was the proximate cause of the loss (P3 million), and should bear the loss.