G.R. No.
L-65594 July 9, 1986
MAHARLIKA PUBLISHING CORPORATION, ANGELA CALICA, ADOLFO CALICA and the HEIRS OF THE
LATE PIO CALICA, petitioners,
vs.
SPOUSES LUZ R. TAGLE and EDILBERTO TAGLE and the GOVERNMENT SERVICE INSURANCE SYSTEM and
the HONORABLE INTERMEDIATE APPELLATE COURT, respondents.
GUTIERREZ, JR., J.:
The Government Service Insurance System (GSIS) was the registered owner of a parcel of land consisting of 1,373 square
meters situated in the district of Paco and covered by Transfer Certificate of Title No. 5986 of the Registry of Deeds of Manila.
On June 4, 1963, the GSIS entered into a conditional contract to sell the parcel of land to petitioner Maharlika Publishing
Corporation (Maharlika for short) together with the building thereon as well as the printing machinery and equipment therein.
Among the conditions of the sale are that the petitioner shall pay to the GSIS monthly installments of P969.94 until the total
purchase price shall have been fully paid and that upon the failure of petitioner to pay any monthly installment within ninety (90)
days from due date, the contract shall be deemed automatically cancelled.
After Maharlika failed to pay the installments for several months, the GSIS, on June 7, 1966, notified Maharlika in writing of its
arrearages and warned Maharlika that the conditions of the contract would be enforced should Maharlika fail to settle its account
within fifteen (15) days from notice. Because of Maharlika's failure to settle the unpaid accounts, the GSIS notified Maharlika in
writing on June 26, 1967 that the conditional contract of sale was annulled and cancelled and required Maharlika to sign a lease
contract. Maharlika refused to vacate the premises and to sign the lease contract.
Sometime later, the GSIS published an invitation to bid several acquired properties, among which was the property in question,
to be held at the Office of the General Manager, second floor, GSIS Building, Arroceros Street, Manila, from 9:00 a.m. to 3:00
p.m. on February 12, 1971.
Meanwhile, on February 11, 1971, or one day before the scheduled public bidding, Maharlika represented by its president Adolfo
Calica addressed to GSIS a letter-proposal to repurchase their foreclosed properties proposing that they be allowed to pay
P11,000.00 representing ten percent (10%) of their total account; that they be allowed to pay P18,300.00 as balance to complete
the twenty-five percent (25%) of their total arrearages( P117,175.00) not later than February 28, 1971 and the remaining seventy-
five percent (75%) to be paid in twenty four (24) months.
This letter-proposal was discussed by Adolfo Calica with GSIS Board Vice-Chairman Leonilo Ocampo, who wrote a note to the
General Manager Roman Cruz, Jr., the last paragraph of which reads as follows:
It sounds fair and reasonable subject to your wise judgment, as usual. (Exhibit 4, Maharlika)
Said letter-proposal and Ocampo's note were taken by Calica to General Manager Cruz, Jr., who, in turn, wrote on the face of
Exhibit 4-Maharlika a note to one Mr. Ibaez which reads: "Hold Bidding. Discuss with me." The letter-proposal together with
two (2) checks amounting to P11,000.00 were submitted to the office of General Manager Cruz, Jr. and were received by his
Secretary.
On February 12, 1971, however, the public bidding of this particular property was held as scheduled prompting Adolfo Calica to
submit his bid to the Bidding Committee with a deposit of P11,000.00 represented by the same two checks submitted to General
Manager Cruz, Jr., together with his letter-proposal. His bid proposal reads: "I bid to match the highest bidder."
The bidding committee rejected Maharlika's bid as an imperfect bid and recommended acceptance of private respondent Luz
Tagle's bid of P130,000.00 with a ten percent (10%) deposit of P13,000.00.
On February 19, 1971, the GSIS addressed a letter to Adolfo Calica informing him of the non-acceptance of his bid and returning
his two checks.
After approval and confirmation of the sale of the subject property to Luz Tagle on April 20, 1971, the GSIS executed a Deed of
Conditional Sale in favor of the Tagles on June 8, 1971.
Due to the refusal of petitioners to surrender the possession of the property in question, respondent spouses Luz R. Tagle and
Edilberto Tagle filed a case for Recovery of Possession with Damages with the Court of First Instance of Manila which rendered
the following decision on May 15, 1974:"
IN VIEW OF THE FOREGOING CONSIDERATIONS, the Court hereby renders judgment:
(a) declaring the letter-proposal (Exh.. 3-Maharlika) ineffective and without any binding effect, being
imperfect to create any contractual relation between GSIS and defendants Maharlika and Adolfo Calica;
(b) declaring plaintiffs and (sic) entitled to the possession of the properties in question and directing,
therefore, defendants Maharlika and Adolfo Calica, or any person or persons holding or possessing the
properties in their behalf, to forthwith vacate the properties in question and to surrender the same to the
plaintiffs;"
(c) dismissing the complaint as against defendants 'Heirs of the deceased Pio Calica' (except Angela
Calica) it appearing that they were not properly summoned and represented in the instant suit:"
(d) directing the defendants Maharlika, Adolfo Calica and Angela Calica, to pay jointly and severally the
plaintiffs a monthly rental of the properties in question in the sum of P976.00 a month commencing 12
February 1971, until the said properties are vacated by said defendants, with legal interest of all sums due
from 12 Feb. 1971 up to the rendition of this judgment in this instant suit, such interest to commence from
the filing of the complaint until the same is fully paid; and that such monthly rentals commencing from the
date of this judgment, shall also earn interest at the legal rate unless paid within the first ten days of the
current month for the rental of the preceding month;"
(e) dismissing the counterclaim of defendants Maharlika and the Calicas against plaintiffs;
(f) dismissing the cross-claim of defendants Maharlika and the Calicos against defendant GSIS;"
(g) dismissing all other claims which the parties may have against each other; and
(h) directing defendants Maharlika, Adolfo Calica and Angela Calica to pay the costs of this suit.
After a motion to set aside judgment and grant a new trial was denied by the trial court for lack of merit, the case was brought on
appeal to the former Court of Appeals on April 8, 1976. On March 2, 1983, the Intermediate Appellate Court affirmed the
decision of the trial court, stating as follows:
xxx xxx xxx
The mere offer to repurchase of the subject property and the deposit of the amount of P11,000.00 by the
defendants on February 11, 1971, does not have the effect of reviving the conditional deed of sale (Exhibit
4-GSIS, Ibid, p. 29) executed by the GSIS and the defendants. To revive the said contract, and for the
defendants to be deemed to have repurchased the subject property, there should have been payment in
favor of the GSIS of all the installments due and interests thereon in the total amount of P117,175.00 as of
February 11, 1971
But the defendants insist that the notations of Leonilo M. Ocampo, Vice-Chairman of the GSIS Board of
Trustees, to GSIS General Manager Roman Cruz, Jr. (Exhibits 4-A and 4-B Maharlika, Ibid, p. 76) as well
as the notation of GSIS General Manager Roman Cruz, Jr.' to hold bidding. Discuss with me' (Exhibit 4-C
Maharlika, Ibid, p. 76) means that the GSIS had accepted defendants' offer and had revived the conditional
contract of sale dated June 4, 1963.
This interpretation is far-fetched. The notations referred to by the defendants do not show acceptance of
defendants' offer to repurchase the subject property. In fact, the defendants themselves were aware that
their offer was not accepted at all because they submitted to and participated in the bidding of the subject
property on February 12,1971 (Exhibits K, K-1, 6, 6-A, Ibid, pp. 16-34), using its letter- proposal as
deposit for its bid. But defendants' bid was rejected because it was imperfect and not accompanied with a
deposit of 10% of the highest bid (Exhibits B-1, 7 GSIS, 7-A Maharlika, Ibid, pp. 5, 35), and that
defendants' bid did not contain a specific bid price proposal (Exhibit 7 GSIS, Ibid, p. 35).
The consequent auction sale of the property on February 12, 1971 and execution of the conditional deed of
sale in favor of the plaintiffs (Exhibit A, Ibid, p. 1) is valid. The plaintiffs are entitled to the possession of
the subject property.
xxx xxx xxx
A motion for reconsideration and/or new trial was filed by petitioners. The motion was denied by the respondent Appellate
Court.
Hence, this petition for review on certiorari filed on December 16,1983.
On January 9, 1984, we resolved to deny in a minute resolution, the petition for lack of merit. A timely motion for
reconsideration was filed by the petitioners which contained the following reasons to warrant review of the case:
It is apparent that petitioners will suffer serious injustice, consisting in the loss of the subject property, by
reason of the failure of respondent Court to decide questions of substance involved herein in a way not in
accord with law and the applicable decisions of this Honorable Court, such questions being the following:
(1) Whether or not respondent Edilberto Tagle's being a GSIS officer at the time of the sale by the GSIS of
the subject property to his wife should be allowed to be introduced as newly discovered evidence or at any
rate received in the interest of justice;"
(2) Whether or not respondent Court acted with grave abuse of discretion in ignoring the irregular
appearance of respondent Luz Tagle's bid and the inference of fraud flowing therefrom in the context of
surrounding circumstances;
(3) Whether or not the auction sale in question is void for having been conducted despite the directive of
the GSIS General Manager to suspend the same in virtue of petitioners' offer to repurchase the subject
property and their payment of P11,000.00 in checks as earnest money which he accepted.
1
Significantly, on September 21, 1984, the GSIS filed a Supplemental Memorandum submitting for resolution of this Court the
matter of whether the respondent spouses Luz and Edilberto Tagle can still enforce their claim as winning bidders considering
the fact that they have so far made only two payments to the GSIS amounting to P32,500.00 in violation of the terms and
conditions of the conditional sale executed in their favor and which provides for its automatic cancellation in such case, or
whether the petitioners can still repurchase the property in question as original owners thereof.
We find the petitioners' motion for reconsideration impressed with merit.
The certification secured by the petitioners from GSIS on April 28, 1983 shows that Edilberto Tagle was Chief, Retirement
Division, GSIS, from 1970 to 1978. He worked for the GSIS since 1952. Strictly speaking, the evidence of Mr. Tagle's being a
GSIS official when his wife bid for the disputed property is not newly discovered evidence. However, we cannot simply ignore
the fact that on February 12, 1971 when Adolfo Calica was desperately trying to retrieve the property foreclosed against him,
after receiving assurances from the highest GSIS officials that his letter- proposal would be accepted and after the sale at public
auction of the property was, in fact, ordered to be stopped, the wife of a GSIS official would be allowed to bid for that property
and would actually win in the bidding.
As stated by the petitioners, this important factor implicit in good government, should have been considered in the interest of
justice. It was incumbent under the law for GSIS to have rejected the bid of the wife of a GSIS official and to have refused to
enter into the deed of conditional sale with the respondents Tagle.
The petitioners bank on the allegation that the indirect participation of Edilberto Tagle in the public bidding creates a "conflict of
interests situation" which invalidates the aforesaid transaction under the precept laid down in Article 1409 paragraph (1) of the
Civil Code making his participation void for being contrary to morals, good customs, and public policy.
The Supreme Court has ample authority to go beyond the pleadings when in the interest of justice and the promotion of public
policy there is a need to make its own finding to support its conclusions. In this particular case, there is absolutely no doubt that
Mr. Edilberto Tagle was a GSIS Division Chief when his wife bid for the property being sold by GSIS. The only issue is whether
or not to consider this fact because it surfaced only after trial proper.
We declare it to be a policy of the law that public officers who hold positions of trust may not bid directly or indirectly to acquire
prop properties foreclosed by their offices and sold at public auction.
Article XIII, Section 1 of our Constitution states that:
Public office is a public trust. Public officers and employees shall serve with the highest degree of
responsibility, integrity, loyalty and efficiency, and shall remain accountable to the people.
We stated in Ancheta vs. Hilario (96 SCRA 62);
xxx xxx xxx
...A public servant must exhibit at all times the highest sense of honesty and integrity. ...
Under Article 1491 of the Civil Code the following persons cannot acquire by purchase, even at a public or judicial auction,
either in person or through the mediation of another:
(1) The guardian, the property of the person or persons who may be under his guardianship;
(2) Agents, the property whose administration or sale may have been intrusted to them, unless the consent
of the principal has been given;
(3) Executors and administrators, the property of the estate under administration;
(4) Public officers and employees, the property of the State or of any subdivisions thereof, or of any
government owned or controlled corporation, or institution, the administration of which has been intrusted
to them; this provision shall apply to judges and government experts who, in any manner whatsoever, take
part in the sale;
(5) Justices, judges, prosecuting attorneys, clerk of superior and inferior courts, and other officers and
employees connected with the administration of justice, the property and rights in litigation or levied upon
an execution before the court within whose jurisdiction or territory they exercise their respective
functions; this prohibition includes the act of acquiring by assignment and shall apply to lawyers, with
respect to the property and rights which may be the object of any litigation in which they may take part by
virtue of their profession;
(6) Any others specially disqualified by law.
In so providing, the Code tends to prevent fraud, or more precisely, tends not to give occasion for fraud, which is what can and
must be done (Francisco, Sales, p. 111). We, therefore, reject the contention of respondents that the fact that Edilberto Tagle was,
at the time of the public bidding, a GSIS official, will not alter or change the outcome of the case.
A Division Chief of the GSIS is not an ordinary employee without influence or authority. The mere fact that he exercises ample
authority with respect to a particular activity, i.e., retirement, shows that his influence cannot be lightly regarded.
The point is that he is a public officer and his wife acts for and in his name in any transaction with the GSIS. If he is allowed to
participate in the public bidding of properties foreclosed or confiscated by the GSIS, there will always be the suspicion among
other bidders and the general public that the insider official had access to information and connections with his fellow GSIS
officials as to allow him to eventually acquire the property. It is precisely the need to forestall such suspicions and to restore
confidence in the public service that the Civil Code now declares such transactions to be void from the beginning and not merely
voidable (Rubias vs. Batiller, 51 SCRA 120). The reasons are grounded on public order and public policy. We do not comment
on the motives of the private respondents or the officers supervising the bidding when they entered into the contract of sale.
Suffice it to say that it fags under the prohibited transactions under Article 1491 of the Civil Code and, therefore, void under
Article 1409.
In the case of Garciano vs. Oyao (102 SCRA 195), this Court held:
xxx xxx xxx
...We need not exaggerate the importance of being absolutely free from any suspicion which may
unnecessarily erode the faith and confidence of the People in their government. As the Constitution
categorically declared: 'Public office is a public trust. Public officers and employees shall serve with the
highest degree of responsibility, integrity, loyalty and efficiency, and shall remain accountable to the
people' (Art. XIII, Sec. 1, Constitution).
xxx xxx xxx
Respondent Wilfredo Oyao, should avoid so far as reasonably possible a situation which would normally
tend to arouse any reasonable suspicion that he is utilizing his official position for personal gain or
advantage to the prejudice of party litigants or the public in general. In the language of then Justice, now
Chief Justice Enrique M. Fernando in the case of Pineda vs. Claudio (28 SCRA 34, 54): 'There may be
occasion then where the needs of the collectivity that is the government may collide with his private
interest as an individual.
In Mclain vs. Miller County (23 SW 2d. 2-4; 255) the Court ruled that:
As the efficiency of the public service is a matter of vital concern to the public, it is not surprising that
agreements tending to injure such service should be regarded as being contrary to public policy. It is not
necessary that actual fraud should be shown, for a contract which tends to the injury of the public service
is void, although the parties entered into it honestly, and proceeded under it in good faith. The courts do
not inquire into the motives of the parties in the particular case to ascertain whether they were corrupt or
not, but stop when it is ascertained that the contract is one which is opposed to public policy. Nor is it
necessary to show that any evil was in fact, done by or through the contract. The purpose of the rule is to
prevent persons from assuming a position where selfish motives may impel them to sacrifice the public
good to private benefit.
There is no need, therefore, to pass upon the issue of irregularity in the appearance of the private respondents' bid and the alleged
inference of fraud flowing therefrom.
We reiterate that assuming the transaction to be fair and not tainted with irregularity, it is still looked upon with disfavor because
it places the officer in a position which might become antagonistic to his public duty.
There are other grounds which contain us to grant this petition.
We now come to the issue whether or not there was a repurchase of the property in question from the GSIS effected by the
petitioners the day before the public bidding.
In Article 1475 of the Civil Code, we find that "the contract of sale is perfected at the moment there is a meeting of minds upon
the thing which is the object of the contract and upon the price. From that moment, the parties may reciprocally demand
performance, subject to the law governing the form of contracts. "
This Court in the case of Central Bank of the Philippines vs. Court of Appeals (63 SCRA 431) ruled on the perfection of
government contracts in the following manner:
We are not persuaded that petitioner's posture conforms with law and equity. According to Paragraph IB
114.1 of the Instructions to Bidders, Ablaza was 'required to appear in the office of the Owner (the Bank)
in person, or, if a firm or corporation, a duly authorized representative (thereof )and to execute the contract
within five (5) days after notice that the contract has been awarded to him. Failure or neglect to do so
shall constitute a breach of agreement effected by the acceptance of the Proposal. There can be no other
meaning of this provision than that the Bank's acceptance of the bid of respondent Ablaza effected an
actionable agreement between them. We cannot read it in the unilateral sense suggested by petitioner that
it bound only the contractor, without any corresponding responsibility or obligation at all on the part of the
Bank. An agreement presupposed a meeting of minds and when that point is reached in the negotiations
between two parties intending to enter into a contract, the purported contract is deemed perfected and none
of them may thereafter disengage himself therefrom without being liable to the other in an action for
specific performance. "
2
In American Jurisprudence, 2d., Section 73 (pp. 186-187), we read: Chua Ngo delivered, in Manila, to the Universal Trading Company, Inc., a local corporation, the price 300 boxes of Sunkist
The principle is fundamental that a party cannot be held to have contracted if there was no assent, and this oranges to be gotten from the United States. The latter ordered the said boxes from Gabuardi Company of San Francisco, and in
is so both as to express contracts and contracts implied in fact. There must be mutual assent or a meeting due course, the goods were shipped from that port to Manila "F. O. B. San Francisco." One hundred eighty boxes were lost in
of minds in all essential elements or terms in order to form a binding contract. However, ordinarily no transit, and were never delivered to Chua Ngo.
more is meant by this than an expression or manifestation of mutual assent, as an objective thing, is This suit by Chua Ngo is to recover the corresponding price he had paid in advance.
necessary, and that is generally deemed sufficient in the formation of a contract ... In other words, Universal Trading Company refused to pay, alleging it merely acted as agent of Chua Ngo in purchasing the oranges. Chua Ngo
appropriate conduct by the parties may be sufficient to establish an agreement, and there may be instances maintains he bought the oranges from Universal Trading Company, and, therefore, is entitled to the return of the price
where interchanged correspondence does not disclose the exact point at which the deal was closed, but the corresponding to the undelivered fruit.
actions of the parties may indicate that a binding obligation has been undertaken. From a judgment for plaintiff, the defendant appealed.
It is undisputed that when the letter-proposal of petitioners was presented to GSIS General Manager Roman Cruz, Jr., he wrote It appears that on January 14, 1946, the herein litigants signed the document Exhibit 1, which reads as follows:
on the face of such letter the words "Hold Bidding. Discuss with me." These instructions were addressed to one Mr. Ibaez who UNIVERSAL TRADING COMPANY, INC.
was in-charge of public bidding. Thereafter, a deposit of P11,000.00 in checks was accepted by the Secretary of Mr. Roman Far Eastern Division
Cruz, Jr. In the light of these circumstances an inference may be made that General Manager Cruz, Jr. had already accepted the R-236-238 Ayala Building
petitioners' offer of repurchase or at the very least had led them to understand that he had arrived at a decision to accept it. Juan Luna, Manila
It should also be noted that there is no serious denial as to General Manager Cruz, Jr.'s capacity to enter into binding contractual CONTRACT NO. 632 14 January 1946
obligations for GSIS without the prior approval of the Board of Trustees. Agreement is hereby made between Messrs. Chua Ngo of 753 Folgueras, Manila, and the Universal Trading
On the other hand, the letter of endorsement made by the GSIS Board Vice-Chairman Leonilo Ocampo which states ...subject to Company, Inc., Manila, for order as follows and under the following terms:
your wise judgment, as usual leads one to conclude that it has been the practice of GSIS to permit the General Manager to do Quantity Merchandise and description Unit Unit price Amount
acts within the scope of his apparent authority. 300 Sunkist oranges, wrapped
In the case of Francisco vs. Government Service Insurance System (7 SCRA 577), we held that: Grade No. 1 .................... .......... ................ .................
xxx xxx xxx Navel, 220 to case ............ Case $6.30 $1,890.00
... Corporate transactions would speedily come to a standstill were every person dealing with a corporation 300 Onions, Australian
held duty-bound to disbelieve every act of its responsible officers, no matter how regular they should Browns, 90 lbs. to case Case $6.82 $2,046.00
appear on their face. This Court has observed in Ramirez vs. Orientalist Co., 38 Phil. 634, 654-655, that We are advised by the supplier that the charges to bring these goods to Manila are:
In passing upon the liability of a corporation in cases of this kind it is always well to keep in mind the
situation as it presents itself to the third party with whom the contract is made. Naturally he can have little Oranges......................................................... $3.06 per case
or no information as to what occurs in corporate meetings; and he must necessarily rely upon the external
manifestation of corporate consent. The integrity of commercial transactions can only be maintained by Onions ......................................................... $1.83 per case.
holding the corporation strictly to the liability fixed upon it by its agents in accordance with law; and we ..
would be sorry to announce a doctrine which would permit the property of a man in the city of Paris to be Deposit of 40% of the contract price plus the above charges to be payable immediately upon receipt of telegraphic
whisked out of his hands and carried into a remote quarter of the earth without recourse against the confirmation. Balance payable upon arrival of goods in Manila. If balance is not paid within 48 hours of notification
corporation whose name and authority had been used in the manner disclosed in this case. As already merchandise may be resold by Universal Trading Co., Inc. and the deposit forfeited.
observed, it is familiar doctrine that if a corporation knowingly permits one of its officers, or any other NOTE:
agent, to do acts within the scope of an apparent authority, and thus holds him out to the public as Onions canceled by supplier.
possessing power to do those acts, the corporation will, as against any one who has in good faith dealt (Initialed) R. E. H.
with the corporation through such agent, be estopped from denying his authority; and where it is said if the Total amount of order .................................................................................. $3,936
corporation permits' this means the same as 'if the thing is permitted by the directing power of the Agreed and accepted:
corporation. (Sgd.) CHUA NGO
We note that the petitioners are not complete strangers entering into a contract with respondent GSIS for the first time. There was Confirmed and approved:
an earlier contract to sell the same properties to the petitioners. That contract was perfected and there had been partial (Sgd.) RALPH E. HOLMES
compliance with its terms. The transaction now under question in this case merely referred to the curing of certain defects which Sales manager
led to the cancellation of the earlier contract by GSIS. Under the peculiar circumstances of this case, therefore, the acceptance of Universal Trading Company, Inc.
the petitioners' letter-proposal by Mr. Roman Cruz, Jr., the person with authority to do so, and his order to his subordinates to (See terms of agreement on reverse side.)
stop the bidding so that they could first discuss the matter with him, created an agreement of binding nature with the petitioners. On the same date, the defendant forwarded and order to Gabuardi Company of San Francisco, U. S. A., which in part says:
WHEREFORE, the decision and resolution of the Intermediate Appellate Court subject of the instant petition for review on ORDER NO. 707
certiorari are hereby SET ASIDE. The conditional sale entered into between public respondent GSIS and private respondents Luz TO GABUARDI COMPANY OF CALIFORNIA
and Edilberto Tagle is declared NULL and VOID for being contrary to public policy. The prayer of petitioners for the repurchase 258 Market Street
of the subject property in an amount equal to the amount offered by private respondents and to retain ownership a San Francisco, California
G.R. No. L-2870 September 19, 1950 Please send for our account, subject to conditions on the back of this order, the following merchandise enumerated
CHUA NGO, plaintiff-appellee, below:
vs. Shipping instructions
UNIVERSAL TRADING CO., INC., defendant-appellant. Via San Francisco, California
Manuel O. Chan and H.B. Arandia for appellant. Terms: F. O. B.
Arsenio Sy Santos for appellee. San Francisco
BENGZON, J.:

3
 Quantity Articles Unit Unit price Total price
300 Sunkist oranges wrapped
Grade No 1 ............... ............ ..........
Navel, 220 to case ...... Case $6.00 $1,800.00.
xxx xxx xxx
Approved:
Universal Trading Company, Inc.
(Sgd.) RALPH R. HOLMES
Sales Manager
xxx xxx xxx
On January 16 and January 19, 1946, the Universal Trading Co., Inc., wrote Chua Ngo two letters informing him that the
contract for oranges (and onions) had been confirmed by the supplier i. e., could be fulfilled and asking for deposit of 65%
of the price and certain additional charges.
On January 21, 1946, Chua Ngo deposited with the defendant, on account of the Sunkist oranges, the amount of P3,650, and
later (March 9, 1946), delivered the additional sum of P2,822.43 to complete the price, as follows:
300 cases of oranges at $9.36.................................. P6,616.00
Bank charges ................................................................ 196.56
Custom charges, etc. .................................................. 270.00
Delivery charges .......................................................... 171.00
3 percent sales tax ................................................... 218.00
P6,253.56
Less deposit R. No. 1062 ................ 3,650.00
P2,822,43
=========
The 300 cases of oranges ordered by the defendant from Gabuardi Company were loaded in good condition on board the S/S
Silversandal in the port of San Francisco, together with other oranges (totaling 6,380 cases) for other customers. They were all
marked "UTC Manila" and were consigned to defendant. The Silversandal arrived at the port of Manila on March 7, 1946. And
out of the 6,380 boxes of oranges, 607 cases were short short landed for causes beyond defendant's control. Consequently,
defendant failed to deliver to Chua Ngo 180 cases of the 300 cases contracted for. The total cost of such 180 cases (received by
defendant) is admittedly P3,882.60.
The above are the main facts according to the stipulation of the parties. Uncontradicted additional evidence was introduced that
the mark "UTC Manila" written on all the boxes means "Universal Trading Company, Manila"; that the defendant paid in its own
name to Gabuardi Company the shipment of oranges, and made claims for the lost oranges to the steamship company that
insured the shipment company and the insurance company that insured the shipment; and finally, that in the transaction between
plaintiff and defendant, the latter received no commission.
The crucial question is: Did Universal Trading Company merely agree to buy for and on behalf of Chua Ngo the 300 boxes of
oranges, or did it agree to sell and sold the oranges to Chua Ngo? If the first, the judgment m ust be reversed; if the latter,
it should be affirmed.
In our opinion, the circumstances of record sufficiently indicate a sale. First, no commission was paid. Second, Exhibit 1 says
that "if balance is not paid within 48 hours of notification, merchandise may be resold by the Universal Trading Company and
the deposit forfeited." "Resold" implies the goods had been sold to Chua Ngo. And forfeiture of the deposit is incompatible with
a contract of agency. Third, immediately after executing Exhibit 1 wherein oranges were quoted at $6.30 per box, Universal
Trading placed an order for purchase of the same with Gabuardi Company at $6 per box. If Universal Trading Gabuardi
Company was agent of Chua Ngo, it could not properly do that. Inasmuch as good faith is to be presumed, we must hold that
Universal Trading acted thus because it was not acting as agent of Chua Ngo, but as independent purchaser from Gabuardi
Company. Fourth, the defendant charged the plaintiff the sum of P218.87 for 3 percent sales tax, thereby implying that their
transaction was a sale. Fifth, if the purchase of the oranges had been made on behalf of Chua Ngo, all claims for losses thereof
against the insurance company and against the shipping company should have been assigned to Chua Ngo. Instead, the defendant
has been pressing such claims for itself.
In our opinion, the arrangement between the parties was this: Chua Ngo purchased from Universal Trading Company, 300 boxes
of oranges at $6.30 plus. In turn, the latter purchased from Gabuardi Company at $6 plus, sufficient fruit to comply with its
contract with Chua Ngo.
Unfortunately, however, part of the orange consignment from San Francisco was lost in transit. Who is to suffer that loss?
Naturally, whoever was the owner of the oranges at the time of such loss. It could not be Chua Ngo because the fruit had not
been delivered to him. As between Gabuardi and the Universal Trading, inasmuch as the goods had been sold "F. O. B. San
Francisco", the loss must be borne by the latter, because under the law, said goods had been delivered to the purchaser at San
Francisco on board the vessel Silversandal.1 That is why the Universal has been trying to recover the loss from both the
steamship company and the insurer.
Now, as Chua Ngo has paid for 300 boxes and has received 120 boxes only, the price of 180 boxes undelivered must be paid
back to him.
It appears that whereas in the lower court defendant sustained the theory that it acted as agent of plaintiff, in this Court the
additional theory is advanced that it acted as agent of Gabuardi Company. This obviously has no merit.
As to the contention that defendant incurred no liability because it is admitted that the oranges were lost due to causes beyond
the control of the defendant, and the oranges were shipped "F. O. B. San Francisco, the answer is that such contention is based on
the assumption which we reject that defendant merely acted as agent of plaintiff in the purchase of the oranges from
Gabuardi.
In view of the foregoing, the appealed judgment for plaintiff in the sum of P3,882.60 is affirmed with costs.
G.R. No. L-17150 June 20, 1922
ANDRES SOLER, plaintiff-appellee,
vs.
EDWARD CHESLEY, defendant-appellant.
Kincaid, Perkins and Kincaid for appellant.
Recto and Casal and Angel Roco for appellee.
ROMUALDEZ, J.:
The plaintiff had agreed with Wm. H. Anderson and Co., for the purchase of certain machinery, as evidenced by the document
Exhibit A, of which the following is an exact copy:
This agreement made and entered into by and between Wm. H. Anderson and Co., party of the first part, and Andres Soler, party
of the second part, Witnesseth:
The party of the first part hereby agrees to deliver to the party of the second part the herein described coconut oil machinery
which was ordered by cable by the party of the first part on March 4, 1918, and the party of the second part agrees to purchase
the said machinery from the party of the first part on the terms and conditions given below:
1. 4 Anderson oil expellers No. 1, side drive complete with stationary strainer, and fitted with a 15-h. p. motor, the same mounted
on a special base on the expeller and connected to the expeller by a suitable silent chain drive.
2. 4 Rotary pumps (oil) attached to and driven from expeller.
3. Sufficient 6" and 9" metal conveyor, etc., for the 4 expellers to make complete conveyor line with supports for securing to
expeller.
4. 1 Vertical triplex pump, 2 " x 4", 1 suction and discharge, capacity 12 gallons per minute, belt drive.
5. 1 Bauer ball-bearing motor-driven attrition mill, 22", fitted with 2 15-h. p. electric motors, 220 volt, 2 phase, 60 cycle, direct-
connected and complete with automatic starter,
6. 1 Shriver filter press, 30", 36 plates, complete with one extra set of filter cloths.
7. 1 Buckeys cooker, 62", 3 high, direct-connected by silent chain drive to a 15-h. p., 220 volt, 2 phase, 60 cycle, alternating
current motor.
8. Sufficient meters of standard chain elevator, etc.
Terms and conditions: The foregoing machinery is to be invoiced at manufacturers' price, plus all charges such as freight,
insurance, interest and exchange, arrastre, landing charges, delivery, internal revenue, etc., plus a buying commission of 5 per
cent.
The terms of payment are fifty per cent (50%) deposit to be made upon arrival of the machinery, and the balance ninety (90) days
after delivery of the machinery.
4
In the event that the party of the second part shall fail to live up to the terms of this agreement, such failure by the party of the
second part will be sufficient cause to terminate this contract, and any payments made by the party of the second part under and
by virtue of this contract shall be and remain the exclusive property of the party of the first part. The title of the machinery in
question is to remain in the name of the party of the first part until payment in full has been made, at which time transfer of all
right and title to the above mentioned machinery will be made to the party of the second part.
This agreement is contingent upon strikes, fire, accidents, extraordinary shipping and other conditions imposed on account of
war and other causes unavoidable or beyond the control of the party of the first part.
It is strictly understood that the quotations made to Mr. Andres Soler under date of February 27, 1919, were approximated and
were subject to change without notice. We can therefore make no guarantee as to prices and delivery, it being understood that
prices charged will be those shown on the invoices of the manufacturers, and shipment will be made by first possible
opportunity.
Dated Manila, P.I., March ___, 1918.
(Sgd.) WM. H. ANDERSON and CO.,
By P. A. THOMPSON,
Party of the first part.
(Sgd.) ANDRES SOLER,
Party of the second part.
Witness:
(Sgd.) W. JENUDE,
FERNANDO COUTME
On November 16, 1918, the plaintiff sold the defendant all his rights and interest in the aforesaid contract of sale, the document
executed to that end, Exhibit B, being as follows:
This agreement made in Manila, Philippine Islands, by and between Mr. Andres Soler, of age, and resident of the municipality of
Naga, Province of Ambos Camarines, party of the first part; and Mr. Edward Chesley, of age, and resident of this city of Manila,
party of the second part, . . .
WITNESSETH
First. That Mr. Andres Soler has an agreement in due form with Messers. Wm. H. Anderson and Co. for the purchase of a
coconut oil machinery, more particularly described in the said agreement as follows: * * *.
1. 4 Anderson oil expellers No. 1, side drive complete with stationary strainer, and fitted with the 15-h. p. motor, the same
mounted on a special base on the expeller and connected to the expeller by a suitable silent chain drive, * * *.
2. 4 Rotary pumps (oil) attached to and driven from expeller . . . .
3. Sufficient 6" and 9" metal conveyor, etc., for the 4 expellers to make complete conveyor line with supports for securing to
expeller * * *.
4. 1 Vertical triplex pump, 2 x 4", 1 " suction and discharge, capacity 12 gallons per minute, belt drive * * *.
5. 1 Bauer ball-bearing motor-driven attrition mill, 22" fitted with 2 15-h. p. electric motors, 220 volt, 2 phase, 60 cycle, direct-
connected and complete with automatic starter * * *.
6. 1 Shriver filter press, 30", 36 plates, complete with one extra set of filter cloths * * *.
7. 1 Buckeys cooker, 62", 3 high, direct-connected by silent chain drive to a 15-h. p., 220 volt, 2 phase, 60 cycle, alternating
current motor * * *.
8. Sufficient meters of standard chain elevator, etc., * * *.
Second. That a part of the aforesaid machinery is at this time on the way, the other part being already in this city of Manila, the
price of which has not as yet been paid by Mr. Soler to Messrs. Wm. H. Anderson and Co. * * *.
Third. That being interested in acquiring the aforesaid machinery, Mr. Edward Chesley has made Mr. Soler a proposition
whereby the latter should transfer it to him, and he should assume the obligation to pay Messrs. Wm. H. Anderson and Co. the
amount of the invoices thereof, Mr. Soler to be relieved from his contract with Messrs. Wm. H. Anderson and Co., which
proposition has been agreed to as hereinbelow set forth, and to have an evidence of the agreement this contract is made and
entered into by them in the following terms and conditions:
(a) Mr. Andres Soler conveys and transfers to Mr. Edward Chesley all the rights and interest which he may have in his agreement
with Messrs. Wm. H. Anderson and Co. for the purchase of the oil machinery, more particularly described in the first paragraph
hereof; Mr. Chesley being subrogated, therefore, to whatever rights and obligations Mr. Soler may have acquired and contracted
under the aforesaid agreement. * * *.
(b) This sale of the said machinery is for the price of one hundred thousand pesos, Philippine currency, the same to be paid by
Mr. Chesley by paying Messrs. Wm. H. Anderson and Co. the amount of the invoices of said machinery, and Mr. Andres Soler
the difference which may be found to exist between the amount of said invoices and the above mentioned sum of one hundred
thousand pesos, said payment to be secured by a personal or corporation bond to the satisfaction of Mr. Soler. * * *.
(c) In subrogating himself to the right and obligations which Mr. Soler may have under his agreement with Messrs. Wm. H.
Anderson and Co. for the purchase of the aforesaid machinery, Mr. Chesley relieves Mr. Soler from whatever obligation he has,
or may have, under the aforesaid agreement with Wm. H. Anderson and Co., concerning the machinery hereinbefore more
particularly described. * * *.
(d) Messrs. Soler and Chesley declare that Messrs. Wm. H. Anderson and Co. have actual knowledge of this sale of the
machinery, as well as of Mr. Chesley being subrogated to the rights and obligations created by the agreement entered into by and
between Mr. Soler and Messrs. Wm. H. Anderson and Co., the latter being in absolute conformity therewith. * * *.
And (e) Mr. Chesley shall pay Mr. Soler the difference which may be found to exist between the amount of the invoices of the
machinery and the sum of one hundred thousand pesos immediately upon the arrival of said machinery at this city of Manila;
provided that if any part of the machinery not affecting the expellers is found lacking, a proportional deduction shall be made
from the amount which Mr. Soler may have received from Mr. Chesley. * * *.
And fourth. That Messrs. Soler and Chesley solemnly make and enter into this contract on the terms and conditions hereinbefore
set forth. * * *.
In testimony whereof, the parties have hereunto set their hands at Manila, this sixteenth day of November, nineteen hundred and
eighteen.
(Sgd.) ED. CHESLEY.
(Sgd.) ANDRES SOLER.
Signed in the presence of:
(Sgd.) MANUEL SANSANO.
P. BLANC.
UNITED STATES OF AMERICA
CITY OF MANILA, PHILIPPINE ISLANDS
At the city of Manila, Philippine Islands, this 16th day of November 1918, before me, Enrique Barrera y Caldes, notary public in
and for the said city, personally appeared Mr. Andres Soler and Mr. Edward Chesley known to me to be the persons who
executed the foregoing instrument, and acknowledged that the same is their free act and deed. They exhibited their cedulas Nos.
220440 and 2074, issued at the municipality of Naga, Province of Ambos Camarines and at this city of Manila on the 2d and 3d
of January, 1918, respectively.
This document is No. 526 of my notarial register, and is entered on page 4 of said register.
Before me,
DON ENRIQUE BARRERA Y CALDES,
Notary Public.
My commission expires December 31, 1918.
Notarial seal.
I, manager of the firm of Anderson and Co., am agreeable to the transfer of the machinery which Mr. Soler has purchased
through our firm on the conditions stipulated in our contract.
WM. H. ANDERSON AND CO.,
By ---------------------
Vice-President.
Of the parts of the machinery covered by these contracts, only the "filter press," the "cooker" and the "chains" were in Manila on
November 16, 1918, the date of Exhibit B, but the most important parts, such as the "oil expellers" and the "grinding mills" were
not then yet in this city.
These "oil expellers" were shipped for Manila on the 12th of December, 1918, the motors on the 8th of January, 1919, the
machinery on the 16th of January 1919 and the grinding mills on the 21st of February, 1919, all of which arrived at Manila on
February 13, March 8, April 27, and August 23, 1919, respectively.
These effects were received and paid for by the defendant under protest, on account of the fact that they were not delivered
within the period stipulates in the contract.
5
On April 25, 1919, the defendant's attorney-in-fact, Fred A. Leas, through Attorney Francisco A. Delgado, wrote the plaintiff the
letter, Exhibit 2, advising him that he contract above referred to was rescinded, it appearing that the parts of the machinery,
which the plaintiff asserted in said contract were on the way, were not at the time and it was only several days later that they
were shipped for Manila. In this letter the parts received were placed at the plaintiff's disposal upon the repayment of the sums
advanced by the defendant to Messrs. Anderson and Co.
On the 14th of October, 1919, the plaintiff commenced this action in which, basing himself on the contract Exhibit B and on the
facts set forth in his complaint, he prayed that the defendant be sentenced to pay him the sum of P30,546.03 with interest
thereon, which sum was the difference between the P100,000, the consideration of the contract, Exhibit B, and the price of the
aforesaid machinery which had been paid by the defendant, plus the incidental expenses, as stipulated in the said contract.
The defendant answered, denying generally and specifically the allegations of the complaint and setting up a special defense and
a counterclaim. In his special defense, he alleges that he had accepted and signed the contract Exhibit B on the assertion therein
contained that of the machinery, which was the subject matter of the said contract, a part was already in Manila, and the other
part on the way, and also on the promises, assertions, and contemporary and previous acts of the plaintiff to the same effect, by
means of which the latter succeeded in inducing the defendant to make and sign the aforesaid contract; that the parts of the
machinery which, on the date of the contract, were said to be on the way, were not in fact in, and did not arrive at, Manila but
long thereafter; that if he signed the contract, it was because he was desirous of having the machinery, and the defendant assured
him that it would be delivered to him, immediately or within a short time; that otherwise he would not have signed the contract;
that the prepared in a shed the necessary compartments to install the machinery on or before the 1st day of January, 1919; that on
April 25, 1919, he advised the plaintiff that he regarded the contract as rescinded; that he had complied with his part of the
contract, having paid Messrs. Anderson and Co. the sum of P69,453.97; that he suffered damages in the sum of P120,000.
In his counterclaim, the defendant alleges that the giving of a bond in favor of plaintiff being one of the conditions of the
contract, he (the defendant) gave such bond, having paid the Philippine Guaranty Co. a premium of P400 for the quarter
beginning with November 16, 1918.
The defendant prays in his answer that he be absolved from the complaint, the aforesaid contract declared rescinded, and the
plaintiff compelled to receive the machinery in question, to pay the defendant P69,453.97, and be sentenced to pay P120,000 as
damages.
Trial having been held, the lower court sentenced the defendant to pay the plaintiff P30,546.03, with legal interest thereon from
October 16, 1919, and the costs, and absolved the plaintiff from the set-off and the counterclaim.
From this judgment the defendant has appealed to this court, making the following assignments of error:
1. The trial court erred in not holding that time was an essential element of the contract Exhibit B.
2. The trial court erred in giving judgment in favor of the plaintiff, and
3. The trial court erred in dismissing the counterclaim of the defendant.
The defendant, testifying as witness, said that he had asked the plaintiff and his broker, Mr. Bank, whether at that time the
machinery had already left the factory, and that they answered yes. True, the plaintiff denies in his testimony having made such a
statement, but Mr. Blanc does not deny it, and it is a fact that in the contract in question was inserted the following:
Second. That a part of the aforesaid machinery is at this time on the way, the other part being already in this city of Manila, the
price of which has not as yet been paid by Mr. Soler to Messrs. Wm. H. Anderson and Co.
It appears sufficiently established in the record that if the plaintiff gave his consent to this contract, it was because he expected
that said machinery would arrive within a short time, the time reasonably necessary for such machinery to reach Manila from
America, as the plaintiff asserted in the document itself that said machinery was then on the way. The act of the defendant in
insisting that this guaranty as to the arrival of the machinery be stated in the contract, his repeated complaints and protests when
he afterwards made payments as the parts arrived, and his letter of April 25, 1919, leave no room for doubt that the arrival of said
machinery within a reasonably short time was one of the determining elements of his consent. These acts of the defendant
disclose the fact that he intented the arrival of the machinery to be an essential element of the contract (art. 1282, Civil Code).
We hold that in the case at bar the arrival of the machinery within a reasonable time was an essential element of the contract,
such time to be determined by taking into account the fact that is was then on the way to Manila.
The defendant had no reason to doubt the veracity of the plaintiff's assertion that said machinery was then on the way. The
plaintiff himself testified that he had showed the letters, copies of which are Exhibits X, Y, and Z, in the last of which Messrs.
Anderson and Co. stated that according to the information received, the expellers had already been sent out by the
manufacturers.
The fact that the plaintiff had no control of the prompt transportation of the said machinery to Manila, does not relieve the
plaintiff from making good the guaranty inserted in the contract that said machinery was already on the way to Manila. The
plaintiff elected to bind himself in that way, although he knew, as he ought to have known that, had his rights not been
transferred to the defendant, he could not have charged Messrs. Anderson and Co. so much, who in the contract Exhibit A did not
guarantee the delivery nor the amount of the price. The plaintiff having bound himself in favor of the defendant for more than
what Messrs. Anderson and Co. had bound themselves for in hi favor, we entertain no doubt that he acted in good faith,
encouraged by the information of Messrs. Anderson and Co. (although the most that the expellers, only the expellers, had
been sent out by the factory), but it was he, not Messrs. Anderson and Co., who contracted the obligation, and, therefore, he is
the only one to be responsible for the obligation arising from the contract. He who contracts and assumes an obligation is
presumed to know the circumstances under which said obligation can be complied with (Ferrer vs. Ignacio, 39 Phil., 446).
It cannot be said that such a statement of the plaintiff that the machinery was on the way is not one of the conditions of the
contract Exhibit B. It is true that it is only in the third paragraph of the said contract that the terms and conditions were thereof
are set out in detail, but such terms and conditions were stipulated upon the understanding that the machinery is that described in
the first paragraph of the contract and that a part thereof was already in Manila and the other part on the way.
True, the plaintiff id not specify the date or time of the arrival of said mechanical devices; but he did assert that they were on the
way on the date of the contract, that is, the 16th of November, 1918, which is tantamount to saying that they would arrive early
in January, 1919, under normal condition, taking into account that the expellers, which were shipped on December 12, 1918,
arrived at Manila on February 13, 1919. But it did not happen as asserted, the last parts of the machinery, to wit, the grinding
mills not having arrived at Manila until the 23rd of August, 1919, they not having been shipped until as late as the 21st of
February of that year.
Clause (c) of the third paragraph of the contract Exhibit B, discharged the plaintiff from all the obligations contracted by him
under the agreement Exhibit A made with Messrs. Anderson and Co., relative to the payment of the price of the machinery; buy
him under the contract Exhibit B, for he has no such an obligation cannot be that referred to in clause ( c) of the third paragraph
of Exhibit A, but Messrs. Anderson and Co.
We find that the plaintiff has failed to carry out his obligation incurred under the second paragraph of the contract. Exhibit B, and
has, therefore, no right to compel the defendant to comply with his obligation to pay the plaintiff the sum claimed in the
complaint (art. 1124, Civil Code).
With regard to the counterclaim set up by the defendant, it appears from the record that he sold the aforesaid machinery to a third
person, the Philippine Refining Co. In cases like this, the rescission of the contract does not lie (art. 1295, Civil Code).
As to the damages claimed by the defendant, we find that the evidence adduced on this point is insufficient to fix the true amount
thereof.
The judgement appealed from is reversed, and the defendant absolved from the complaint, and the plaintiff from the
counterclaim and other claims of the defendant without special pronouncement as to costs. So ordered.
[No. L-8420. May 31, 1956] LUCENA MASICLAT, ET AL., petitioner, vs. NATALIA CENTENO, respondent.
Appeal by certiorari from the decision of the Court of Appeals reversing the judgment of the Court of First Instance of Pampanga
and awarding the rice in question to the defendant. 1044 The appealed decision is correct, first, because the evidence does not
clearly show the identity of the pferson who tried to buy the rice from the respondent, and neither does it show that the same
person was the one who sold the commodity to Ramon Masiclat; and, second, although a cojitraet of sale is perfected upon the
parties having agreed as to the thing which is the subject matter of the contract and the price (Warner, Barnes & Co. vs. Inza, 43
Phil., 505; Article 1475, Civil Code), ownership is not considered transmitted until the property is actually delivered and the
purchaser has taken possession thereof and has paid the price agreed upon (Roman vs. Grimalt, 6 Phil., 96; Article 1524, Civil
Code). Judgment appealed from affirmed, without pronouncement as to the costs.
EN BANC
[G.R. No. 4389. November 10, 1908. ]
6

GLICERIA MARELLA, Plaintiff-Appellant, v. VICENTE REYES, administrator of the intestate estate of Filomeno
Encarnacion, and JOSE T. PATERNO, Defendants-Appellees.
Vicente Ilustre, for Appellant.
Gabriel & Borbon, for Appellees.
SYLLABUS
1. ESTATES; INTERVENTION ON MOTION. Intervention, as a defendant, may be permitted in an action upon motion and
without a cross-complaint, following Behn, Meyer & Co. v. Banco Espaol-Filipino (11 Phil. Rep., 253).
2. ID.; ORAL CONTRACT FOR CONVEYANCE OF REALTY; CIVIL CODE. A contract, made before the Code of Civil
Procedure, between a deceased person and his wife on the one part, and the plaintiff on the other, involving real estate and not in
writing, held valid, and that the delivery of the title deeds of the property was equivalent to the delivery of the property itself,
which should therefore have been excluded from the inventory of the estate. (Arts. 1280 and 1464, Civil Code; Soriano v. Cortes,
8 Phil. Rep., 459; Guerrero v. Miguel, 10 Phil. Rep., 52.)
3. PLEADING AND PRACTICE; INCOMPETENT WITNESS; OBJECTION; WAIVER. The acceptance of an incompetent
witness in a civil suit, as well as the allowance of improper questions that may be put to him while on the stand, is a matter
within the discretion of the opposing litigant, who may assert his right by timely objection or he may waive it. Failure to object
operates as a waiver. Once admitted, the testimony is in the case for what it is worth, and the judge has no power to disregard it
for the sole reason that it could have been excluded if objected to, nor can he strike it out on his own motion.
DECISION
TRACEY, J. :
In the inventory of the estate of Filomeno Encarnacion there were included the four parcels of land which are the subject of this
action, which is brought against his administrator to have them excluded from the inventory as being the property of the plaintiff.
The administrator did not oppose the relief asked for, but Jose T. Paterno, who was a creditor of the deceased for a claim allowed
by the commissioners in the amount of P51,595.02, made two motions one to be substituted in the administrators place as
defendant, and the other to be allowed to intervene as a codefendant. The intervention was allowed and judgment was rendered
in the Court of First Instance of Batangas adverse to the plaintiff.
The case presents two questions. First, was the intervention proper? Second, should the real property claimed by the plaintiff
have been excluded from the inventory?
The appellant attacks the procedure for intervention, which was merely upon motion and not by a cross-complaint, as apparently
required by a literal reading of section 121 of the Code of Civil Procedure.
Since the decision by this court of the case of Behn, Meyer & Co. v. Banco Espaol-Filipino, 1 on September 9, 1908, where it
appears from the record, as it may be inferred from the decision a similar procedure was sustained, it must be understood that
this court allows such an intervention, accepting, in the case of a defendant who unites in the defense, an answer instead of a
complaint in accordance with the nature of the remedy, rather than with the literal wording of the section.
The intervener did not lose the benefit of the order of intervention by reason of his subsequent motion to be substituted, which
was properly denied.
In refusing to order the exclusion of this land from the inventory, the judge based his decision largely upon the rejection of what
he considered decisive testimony given by the plaintiff in person. She presented herself at the trial as a witness, was sworn,
examined and cross-examined without objection as to her competency, nor does that question appear to have been raised until
stated by the judge in his decision. He says:jgc:chanrobles.com.ph
"The evidence given by the plaintiff in this suit can not be considered. (See subdivision 7 of section 383, Act No. 190.) All of the
acts sworn to by her took place before the death of Filomeno Encarnacion, and the fact that his wife was present and is still
living is not sufficient to render the plaintiff a competent witness, because it has not been shown that the widow of the deceased
herself took part in the liquidation of accounts or was a party to the transaction, inasmuch as the money which the plaintiff lent
she lent to the deceased and not his Wife, Andrea Goco."cralaw virtua1aw library
The section cited from the Code of Civil Procedure reads as follows:jgc:chanrobles.com.ph
"SEC. 383. . . .
"7. Parties or assignors of parties to an action or proceeding, or persons in w hose behalf an action or proceeding is prosecuted,
against an executor or administrator or other representative of a deceased person, or against a person of unsound mind, upon a
claim or demand against the estate of such deceased person or against such person of unsound mind, can not testify as to any
matter of fact occurring before the death of such deceased person or before such person became of unsound mind."cralaw
virtua1aw library
Had the opposing party interposed an objection to this witness on the ground of incompetency, her testimony could not have
been received. His omission to object to her operated as a waiver. The acceptance of an incompetent witness to testify in a civil
suit, as w ell as the allowance of improper questions that may be put to him while on the stand is a matter resting in the
discretion of the litigant. He may assert his right by timely objection or he may waive it, either expressly or by silence. In any
case the option rests with him. Once admitted, the testimony is in the case for what it is-worth and the judge has no power to
disregard it for the sole reason that it could have been excluded, if it had been objected to, nor to strike it out on his own motion.
The disqualification of witnesses found in rules of evidence of this character, is one not founded on public policy but for the
protection and convenience of litigants, and which consequently lies within their control.
Filomeno Encarnacion died in 1901. The plaintiff testified that on different occasions she lent him money and that in 1898 he
and his wife, Andrea Goco, stated their account with her, resulting in a balance in her favor, which they promised to pay and as a
guaranty of payment to give her their title papers consisting of a possessory information; that in 1899 they came to her house
saying that as they had no money to pay their debt, it would be better that she should take the land therefor, permitting them,
however, to continue cultivating it, upon the condition that after deducting the working expenses, one-half of the crop should go
to her; that this was an oral agreement, not reduced to writing on account of the confusion of the revolution and war with the
United States; that thereafter on demanding her one-half of the product of the land, Andrea Goco told her that there had been no
crops owing to the impossibility of farming, on account of the death of their animals; and that, thereafter Andrea Goco, then a
widow, stated the case to the administrator, to whom and to the commissioners, the plaintiff presented her claim, showing a
balance in her favor of P1,814. She also produced before them the possessory information in the name of the deceased. Her
testimony is corroborated and, indeed, her contention is substantially proved independently of what she said, by her brother, Juan
Goco, and Aguedo Cebrera, and is confirmed by Emiliano Encarnacion, who stated that when as a creditor he demanded of the
widow of the deceased the title papers of the land for use in court, she replied that she did not have them for the reason that she
had delivered them to the plaintiff as guaranty of a debt which she and her husband had owed her and that she made no claim to
this land.
Upon the authority of cases heretofore decided in this court, we hold that the contract made between the deceased and his wife,
on one part, and the plaintiff on the other, although not in writing, was valid, and that the delivery of the title deeds of the
property was equivalent in its effect to a delivery of the property itself. (Civil Code, arts. 1280 and 1464; Soriano v. Cortes, 8
Phil. Rep., 459; Guerrero v. Miguel, 10 Phil. Rep., 52.)
Consequently the land should have been excluded from the inventory and the plaintiff should have her relief.
7

The judgment of the Court of First Instance is hereby reversed without the costs of this instance. So ordered.
G.R. No. 8675 September 18, 1914
BARTOLOME TABLANTE, plaintiff-appellee,
vs.
JOSE AQUINO, defendant-appellant.
Fermin Mariano for appellant.
Monico R. Mercado for appellee.
ARELLANO, C.J.:
This case involves a claim of intervention under title of ownership for the recovery of possession of a lot and a warehouse
erected thereon which were sold at public auction by the sheriff of Nueva Ecija as though they were the property of Paulino
Mendiola, which, according to the plaintiff-intervener, they are not.
The facts that occurred are the following:
On May 9, 1904, the said sheriff publicly announced that pursuant to a judgment rendered by the justice of the peace of
Cabanatuan against Paulino Mendiola and his property, a lot and a warehouse situated in Sumacab of the case municipality. The
description of the property is given in the notice and corresponds with that contained in the complaint; it is therefore regarded as
correct and here reproduced, for there is no question as to identity of the property then sold and now demanded (Exhibit 4). At
the auction Emilio Vergara was the highest bidder and the lot and warehouse were knocked down to him. This was on June 2,
1904, the date announced for the sale (Exhibit 6). On February 10, 1906, Emilio Vergara sold the said lot and warehouse
acquired at auction to Maria Ramares (Exhibit 5); and the latter, in turn, sold them, on December 29, 1910, to Jose Aquino, their
present possessor (Exhibit 7).
From Exhibits 1 and 2 it is seen that in 1906 the lot was still assessed as being the property of Paulino Mendiola.
The record in this case shows the following evident facts; (1) That as far back as 1895 the said lot was recorded in the property
registry of Nueva Ecija in the name of owners, who, on December 18, 1894, had conferred upon Mateo del Rosario power to
administer their property and especially to sell it, and, in the exercise of this authority, Mateo del Rosario sold the lot and
warehouse in question to Paulino Mendiola who in turn sold them to Ciriaco Bautista on August 13, 1895, all of which sales
were recorded in the said property registry. (2) That Paulino Mendiola, notwithstanding the sale made to Ciriaco Bautista,
continued in the possession of the lot and warehouse, pursuant to a contract of lease executed between himself and the latter.
Hence, in 1904, when the judgment of the justice of the peace of Cabanatuan was rendered against Mendiola, the said property
was attached as though it still at that time belonged to him.
However, it is not Ciriaco Bautista, the last owner recorded in the registry, but Bartolome Tablante who now intervenes for the
recovery of the said property. The latter averred in his complaint that he purchased it from the former and presented as the only
proof of such purchase his Exhibit B, which is a letter addressed to him by Ciriaco Bautista, couched in the following terms:
CONCEPCION, July 6, 1908.
MR. BARTOLOME TABLANTE.
DEAR SIR: I have taken note of the contents of your letter to Captain Blas relative to the Sumacab warehouse. I would inform
you that this warehouse belongs exclusively to me, as you will see by the title deed that you already have. I have sold it to no one
else but you, nor have I, as regards this warehouse, any agent or authorized representative except Captain Blas, whom I have
entrusted to deliver the title deed to you. Paulino Mendiola begged me to lease to him only the said warehouse, at P100 per
annum; but he has not fulfilled his promise and a long time has elapsed since he have up the warehouse. I hereby grant you full
power to do whatever you please with the warehouse as well as with the land on which it stands . . . .
(Signed) CIRIACO BAUTISTA.
With this proof and the titles aforementioned presented by the plaintiff, Exhibit A, the Court of First Instance of Nueva Ecija
rendered judgment in the case "by sentencing Jose Aquino to deliver the plaintiff, Bartolome Tablante, the property in litigation
and to pay to the said plaintiff the sum of P387.50 with interest thereon at the rate of 6 per cent per annum from this date, and to
pay the costs of this suit."
The defendant appealed to this court and made the following assignments of error: (1) The trial court erred in finding that the
plaintiff is the owner of the real properties in question; (2) the court erred in finding that the defendant's possession was held in
bad faith; and (3) the court erred in holding that the latter was liable for losses and damages and sentencing him to payment of
the sum aforesaid with the interest at 6 per cent annum from the date of the sentence, and the costs.
The last record two assignments of error must of course be sustained. The defendant was a possessor in good faith. "Any person
who is aware that there is in his title or in the manner of acquiring it any flaw invalidating the same shall be considered a
possessor in good faith."(Civil Code, art. 433.) "Good faith is always presumed, and any person alleging bad faith on the part of
the possessor is obliged to prove it." (Civil Code, art. 234.) The plaintiff could not have averred, nor did he aver in his complaint
the defendant was possessor in bad faith, and if he had made such a claim he neither produced nor attempted to produce any
proof whatever of possession in bad faith on the part of the defendant and his predecessors. Consequently, the finding of
possession in bad faith and the award of damages contained in the judgment appealed from are entirely unfounded.
With respect to the first assignment of error, strictly speaking it also should be sustained, inasmuch as the recovery of possession
was decreed in the judgment without having first set aside the sales consecutively made by the sheriff to Emilio Vergara, by
Vergara to Maria Romares, and by Romares to Jose Aquino, and without any previous pronouncement, made upon petition of
one of the parties, that such sales were null and void. However, since an order to this effect may virtually be understood to be
included in the recognition of ownership in the plaintiff, this first assignment of error will be examined only in connection with
the ground upon which it was specified by the appellant.
This ground is no other than the averment that it was not proved at the trial that the sale, though consented to by Ciriaco Bautista
in favor of Bartolome Tablante, was at any time consummated through the tradition or delivery of the things sold. In fact, the
ownership of things is not transferred from one person to another by mere consent in the contract, but through the delivery of the
thing that is the subject of the contract. In the present case, it is admitted by the appellee that there was no material delivery of
the lot and warehouse by Ciriaco Bautista to Bartolome Tablante, as up to now no proof has been presented of a contract of sale
made between Bautista and Tablante.
Nevertheless, the law prescribes that the "the placing of the titles of ownership in the possession of the vendee or the use which
he may make of his right with the consent of the vendor shall be considered as a delivery." (Civil Code, art. 1464.) The title
deeds form the plaintiff's Exhibit A, and the use of his right by the purchaser who in his complaint lays claim to the lot and the
warehouse, appear to have been consented to by the vendor, by means of the aforementioned Exhibit B. It is the same as though
Ciriaco Bautista were the intervener, and if he had been, there would have been no cause for discussion.
Therefore, after first declaring the sale made by the sheriff, together with the subsequent ones, to be null and void, we declare
Bartolome Tablante to be the owner of the lot and warehouse described in the complaint, and the defendant, Jose Aquino, is
sentenced to restore them to the plaintiff, without special finding as to costs of both instances, affirming the judgment appealed
from in so far as it is in agreement with his decision and reversing it on so far as it is not.
MAHARLIKA PUBLISHING CORP V TAGLE
FACTS:
GSIS owned a parcel of land with a building and printing equipment in Paco, Manila. It was sold to Maharlika in a Conditional
Contract of Sale with the stipulation that if Maharlika failed to pay monthly installments in 90 days, the GSIS would
automatically cancel the contract. Because Maharlika failed to pay several monthly installments, GSIS demanded that Maharlika
vacate the premises. Because of Maharlika's failure to settle the unpaid accounts, the GSIS notified Maharlika in writing on June
26, 1967 that the conditional contract of sale was annulled and cancelled and required Maharlika to sign a lease contract.
Maharlika refused to vacate the premises and to sign the lease contract. Even though Maharlika refused to do so, the GSIS
published an advertisement inviting the public to bid in a public auction. A day before the scheduled bidding, Adolfo Calica, the
President of Maharlika, gave the GSIS head office 2 checks worth 11,000 and a proposal for a compromise agreement. The GSIS
General Manager Roman Cruz gave a note to Maharlika.
On February 12, 1971, however, the public bidding of this particular property was held as scheduled prompting Adolfo Calica to
submit his bid to the Bidding Committee with a deposit of P11,000.00 represented by the same two checks submitted to General
Manager Cruz, Jr., together with his letter-proposal. His bid proposal reads: "I bid to match the highest bidder." The bidding
committee rejected Maharlika's bid as an imperfect bid and recommended acceptance of private respondent Luz Tagle's bid of
P130,000.00 with a ten percent (10%) deposit of P13,000.00. Due to the refusal of petitioners to surrender the possession of the
property in question, respondent spouses Luz R. Tagle and EdilbertoTagle filed a case for Recovery of Possession with Damages
with the Court of First Instance of Manila Maharlika demanded that the sale be considered null and void, as Mrs.Tagle should
have been disqualified from bidding for the GSIS property. RTC and CA both ruled that the Tagles were entitled to the property
and Maharlika should vacate the premises.
ISSUE:
Whether or not Tagle are entitled to the property ?
HELD:
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NO. The sale to them was against public policy. First of all, the GSIS head office was stopped from claiming that they did not
give the impression to Maharlika that they were accepting the proposal for a compromise agreement. The act of the general
manager is binding on GSIS. Second, Article 1491 (4) of the CC provides that public officers and employees are prohibited from
purchasing the property of the state or any GOCC or institution, the administration of which has been entrusted to them cannot
purchase, even at public or judicial auction, either in person or through the mediation of another. The SC held that as an
employee of the GSIS, EdilbertoTagle and his wife are disqualified from bidding on the property belonging to the GSIS because
it gives the impression that there was politics involved in the sale.
It is not necessary that actual fraud be shown, for a contract which tends to injure the public service is void although the parties
entered into it honestly and proceeded under it in good faith A Division Chief of the GSIS is not an ordinary employee without
influence or authority. The mere fact that he exercises ample authority with respect to a particular activity, i.e., retirement, shows
that his influence cannot be lightly regarded. The point is that he is a public officer and his wife acts for and in his name in any
transaction with the GSIS. If he is allowed to participate in the public bidding of properties foreclosed or confiscated by the
GSIS, there will always be the suspicion among other bidders and the general public that the insider official had access to
information and connections with his fellow GSIS officials as to allow him to eventually acquire the property. There is no need,
therefore, to pass upon the issue of irregularity in the appearance of the private respondents' bid and the alleged inference of
fraud flowing therefrom. We reiterate that assuming the transaction to be fair and not tainted with irregularity, it is still looked
upon with disfavor because it places the officer in a position which might become antagonistic to his public duty.
SOLER V CHESLEY 43 PHIL 529 ROMUALDEZ; June 20, 1922
FACTS
Soler had agreed with Wm. H. Anderson and Co., for the purchase of certain machinery agreement. - Terms and
conditions of their agreement: The foregoing machinery is to be invoiced at manufacturers' price, plus all charges
such as freight, insurance, interest and exchange, arrastre, landing charges, delivery, internal revenue, etc., plus a
buying commission of 5 per cent.
Their terms of payment:
50% deposit to be made upon arrival of the machinery, and the balance 90 days after delivery of the machinery. - And in the
event that Soler shall fail to live up to the terms of this agreement, such failure by him will be sufficient cause to terminate the
contract, and any payments made by him under and by virtue of the contract shall be and remain the exclusive property of Wm.
H. Anderson and Co.
The title of the machinery in question is to remain in the name of Wm. H. Anderson and Co. until payment
in full has been made, at which time transfer of all right and title to the above mentioned machinery will
be made to the Soler.
Their agreement is contingent upon strikes, fire, accidents, extraordinary shipping and other conditions
imposed on account of war and other causes unavoidable or beyond the control of the party of the first
part.
It is strictly understood that the quotations made to Mr. Andres Soler under date of February 27, 1919,
were approximated and were subject to change without notice TF there is no guarantee as to prices and
delivery, it being understood that prices charged will be those shown on the invoices of the manufacturers,
and shipment will be made by first possible opportunity.
Nov 16, 1918: Soler sold to the Chesley all his rights and interest in a contract of sale.
At that time, a part of the aforesaid machinery was on the way, the other part being already in the city of
Manila, the price of which has not as yet been paid by Mr.Soler to Messrs. Wm. H.Anderson and Co. - It
was said too in the contract that Chesley made Mr.Soler a proposition whereby the latter should transfer
it(the machineries) to him, and he would assume the obligation to pay Messrs.Wm.H. Anderson and Co.
the amount of the invoices thereof, and that Mr.Soler was to be relieved from his contract with Messrs.
Wm. H.Anderson and Co. (and that the Co. has actual knowledge of this sale of the machinery, as well as
of Mr.Chesley being subrogated to the rights and obligations created by the agreement) - Also, it was
stated that Mr.Chesley shall pay Mr.Soler the difference which may be found to exist between the amount
of the invoices of the machinery and the sum of 100l php immediately upon the arrival of said machinery
at this city of Manila; provided that if any part of the machinery not affecting the expellers is found
lacking, a proportional deduction shall be made from the amount which Mr.Soler may have received from
Mr.Chesley.
Of the parts of the machinery covered by these contracts, only the "filter press," the "cooker" and the
chains" were in Manila on November 16, 1918, but the most important parts, such as the oil expellers"
and the "grinding mills" were not then yet in this city.
These oil expellers" were shipped for Manila on the 12th of December, 1918, the motors on the 8th of
January, 1919, the machinery on the 16th of January 1919 and the grinding mills onthe 21st of February,
1919, all of which arrived at Manila on February 13, March 8, April 27, and August 23, 1919, respectively.
These effects were received and paid for by Chesley under protest, on account of the fact that they were
not delivered within the period stipulates in the contract.
Soler was then advised by Chesleys lawyer that their contract to was rescinded, it appearing that the parts
of the machinery,which the Soler asserted in said contract were on the way, were not at the time and it was
only several days later that they were shipped for Manila.
Soler commenced this action asking that Chesley be sentenced to pay him the sum of P30,546.03 with
interest thereon, which sum was the difference between the P100,000, the consideration of the contract,
and the price of the aforesaid machinery which had been paid by the Chesley, plus the incidental expenses,
as stipulated in the said contract.
The defendant answered, denying generally and specifically the allegations of the complaint and setting up
a special defense and a counterclaim.
In his special defense, Chesley alleges that he had accepted and signed the contract on the assertion therein
contained that of the machinery, which was the subject matter of the said contract, apart was already in
Manila, and the other part on the way, and also on the promises, assertions, and contemporary and
previous acts of the plaintiff to the same effect, by means of which the latter succeeded in inducing the
defendant to make and sign the aforesaid contract; that the parts of the machinery which, on the date of the
contract, were said to be on the way, were not in fact in, and did not arrive at, Manila but long thereafter;
that if he signed the contract, it was because he was desirous of having the machinery, and the defendant
assured him that it would be delivered to him, immediately or within a short time - TC sentenced Chesley
to pay the Soler P30,546.03, with legalinterest thereon from October 16, 1919, and the costs, and absolved
the plaintiff from the set-off and the counterclaim.
ISSUES
1. WON TC erred in not holding that time was an essential element of the contract
2. WON TC erred in giving judgment in favor of the plaintiff
3. WON TC erred in dismissing the counterclaim of the defendant
HELD
1. YES
The arrival of the machinery within a reasonable time was an essential element of the contract, such time
to be determined by taking into account the fact that is was then on the way toManila.
It appears sufficiently established in the record that if the Soler gave his consent to this contract, it was
because he expected that said machinery would arrive within a short time, the time reasonably
necessary for such machinery to reach Manila from America, as the plaintiff asserted in the document
itself that said machinery was then on the way. The act of the defendant in insisting that this guaranty as to
the arrival of the machinery be stated in the contract, his repeated complaints and protests when he
afterwards made payments as the parts arrived, and his letter of April 25, 1919, leave no room for doubt
that the arrival of said machinery within a reasonably short time was one of the determining elements of
his consent.
These acts of the defendant disclose the fact that he intented the arrival of the machinery to be an essential
element of the contract (art. 1282, Civil Code).
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 The fact that the plaintiff had no control of the prompt transportation of the said machinery to Manila,
does not relieve the plaintiff from making good the guaranty inserted in the contract that said machinery
was already on the way to Manila.
The plaintiff elected to bind himself in that way, although he knew, as he ought to have known that, had
his rights not been transferred to the defendant, he could not have charged Messrs.Anderson and Co. so
much, who in the (first) contract did not guarantee the delivery nor the amount of the price.
The plaintiff having bound himself in favor of the defendant for more than what Messrs. Anderson and Co.
had bound themselves for in favor, we entertain no doubt that he acted in good faith, encouraged by the
information of Messrs. Anderson and Co. (although the most that the expellers, only the expellers,
had been sent out by the factory), but it was he, not Messrs. Anderson and Co., who contracted the
obligation,and, therefore, he is the only one to be responsible for the obligation arising from the contract.
He who contracts and assumes an obligation is presumed to know the circumstances under which said
obligation can be complied with (Ferrer vs. Ignacio, 39 Phil., 446).
True, the plaintiff id not specify the date or time of the arrival of said mechanical devices; but he did assert
that they were on the way on the date of the contract. But it did not happen asasserted
2. YES
The plaintiff has failed to carry out his obligation incurred under the contract and has, therefore, no right
to compel the defendant to comply with his obligation to pay the plaintiff the sum claimed in the
complaint (art. 1124, Civil Code).
3. NO
It appears from the record that he sold the aforesaid machinery to a third person, the Philippine
Refining Co. In cases like this, the rescission of the contract does not lie (art. 1295,Civil Code).
CHUA NGO vs. UNIVERSAL TRADING CO., INC.
BENGZON, J.:
FACTS:
Chua Ngo ordered 300 boxes of Sunkist oranges from Universal Trading Company Inc to be gotten from the
United States
The latter ordered the said boxes from Gabuardi Company of San Francisco and in due course, the goods were
shipped from that port to Manila
Only 120 boxes were delivered to Chua Ngo and the 180 were lost in transit
Plaintiff is now asking for reimbursement of the price paid for the lost boxes.
ISSUE:
WON A CONTRACT OF AGENCY EXIST BETWEEN CHUA NGO AND UTC WON UNIVERSAL TRADING CO., INC IS
LIABLE FOR THE PAYMENT FOR THE LOST GOODS
HELD
NO, the court held that the circumstances of record sufficiently indicate a sale.
First, no commission was paid.
Second, Exhibit 1 says that "if balance is not paid within 48 hours of notification, merchandise may be resold
by the Universal Trading Company and the deposit forfeited." "Resold" implies the goods had been sold to
Chua Ngo. and forfeiture of the deposit is incompatible with a contract of agency.
Third, immediately after executing Exhibit 1 wherein oranges were quoted at $6.30 per box, Universal
Trading placed an order for purchase of the same with Gabuardi Company at $6 per box. If Universal Trading
Gabuardi Company was agent of Chua Ngo, it could not properly do that. Inasmuch as good faith is to be presumed,
we must hold that Universal Trading acted thus because it was not acting as agent of Chua Ngo, but as
independent purchaser from Gabuardi Company.
Fourth, the defendant charged the plaintiff the sum of P218.87 for 3 percent sales tax, thereby implying
that their transaction was a sale.
Fifth, if the purchase of the oranges had been made on behalf of Chua Ngo, all claims for losses thereof against the
insurance company and against the shipping company should have been assigned to Chua Ngo. Instead, the
defendant has been pressing such claims for itself.
The appealed judgment for plaintiff in the sum of P3,882.60 is affirmed. In Lim v. Court of Appeals, 254 SCRA
170 (1996), it was held that as a general rule, an agency to sell on commission basis does not belong to any of
the contracts covered by Articles 1357 and 1358 of the Civil Code requiring them to be in a particular
form, and not one enumerated under the Statutes of Frauds in Article 1403. Hence, unlike a sale contract which
must comply with the Statute of Frauds for enforceability, a contract of agency to sell is valid and enforceable
in whatever form it may be entered into.
MASICLAT vs. CENTENO ( 1956 )
NATURE Appeal from CA Decision FACTS Defendant-respondent Centeno owned 15 sacks of rice offered for sale at her store
situated on a street near public market. In the morning of Jan. 21, 1951, a person approached defendant and offered her to
purchase the rice in question. Defendant agreed to sell 15 sacks of rice in question at P26/ sack, which the buyer promised to pay
as soon as he would receive the price of his adobe stones which were being then unloaded from a truck owned Francisco Tan,
then parked at the opposite side of the street in front of the Union Grocery facing the defendants store. Relying on this promise
and upon the request of said purchaser, the defendant ordered the rice in question loaded in the said truck, of which the plaintiff
was the caretaker, expecting that as soon as the adobe stones would be paid, said purchaser would pay her the price of the rice.
While the rice was being loaded on the truck and even thereafter, defendant kept an eye on it waiting for the purchaser to come
to pay her. When the adobe stones were completely unloaded from the truck, the defendant looked for the purchaser, but the
latter was no found. So defendant decided to unload the rice from the truck but to her surprise plaintiff-petitioner Masiclat
objected on the ground that he has bought it at P26/sack from a person whom he did not know and whom he met only that
morning for the first time. Defendant insisted in unloading the rice and the plaintiff objected. Hence, defendant called a
policeman to investigate the matter and the latter brought the rice in question to the Municipal building where it was deposited
pending investigation. Plaintiff then initiated this action for recovery of possession of the rice in question ISSUES
1. WON the contract of sale was consummated between respondent Centeno and unknown purchaser (alleged unknown seller to
plaintiff)
2. WON petitioners have a better title to the rice in question
HELD
A. NO
Ratio: Although a contract of sale is perfected upon the parties having agreed as to the thing which is the subject matter of the
contract and the price, ownership is not considered transmitted until the property is actually delivered and the purchaser has
taken possession and paid the price agreed upon. Reasoning:
1) The evidence does not clearly show the identity of the person who tried to buy the rice in question from the respondent, and
neither does it show that the same person was the one who sold the commodity to Ramon Masiclat.
2) The sale between the respondent Centeno and the unknown purchaser was not consummated because although the former
allowed the rice in question to be loaded in the truck, she did not intend to transfer its ownership until she was paid the stipulated
price; and this is very evident from the fact that respondent continually watched her rice and demanded its unloading as soon as
the unknown purchaser was missing. Respondent thus has not lost ownership and legal possession thereof.
B. NO
The general principle of law as enunciated in A1505 CC that where one of 2 persons must suffer the fraud of a third, the loss
should fall upon him who has enabled the third person to do the wrong, does not apply for the ff. reasons:
1) there was no definite finding that the unknown purchaser was same person who sold the rice to Masiclat,
2) Centeno could not have been so negligent as to allow the unknown purchaser to run away with said rice and enable him to sell
it to Masiclat, it evident that in fact Centeno kept an eye on the rice in question.
Disposition Decision of CA is affirmed.
Facts: Centeno sold sacks of rice at a store on a street near the public market. A person offered to buy 15 sacks of rice, to be paid
as soon as he sold his adobe stone, which was being unloaded, from a truck on the opposite side of the street. Centeno then order
10
the sacks of rice to be loaded onto the truck. Masiclat, loaded the rice while Centeno watched. However the buyer did not come
back. Upon orders of Centeno to unload the rice, Masiclat objected. Masiclat claimed to have bought the rice.
Issue: WON Masiclat had better title to the rice over Centeno (No)
Ruling: Centeno did not lose her ownership over the rice as she did not intend to part with her ownership over the rice until the
price was paid. This was evident by her watching the sacks being loaded in the truck. As Masiclat did not buy the rice from a
merchants store or market, he did not acquire a better title than Centeno.
FACTS: Centeno (defendant) was the owner of 15 sacks of rice, which were for sale at her store near the public market of
Angeles. A stranger approached her and offered to purchase the rice. Centeno agreed to sell the 15 sacks for P26.00 each, which
the stranger promised to pay as soon as he would receive the price of his adobe stones (which were being then unloaded from a
truck parked at the opposite side of the street). Relying on this promise, Centeno ordered the rice loaded in the aforementioned
truck, of which Masiclat (plaintiff) was the caretaker, on the expectation that as soon as the adobe stones would be paid, the
stranger would pay her the price of the rice. While the rice was being loaded, Centeno was keeping an eye on it, waiting for the
stranger to come and pay her. When the stones were completely unloaded, the stranger could nowhere be found. Thereupon,
Centeno decided to unload the rice from the truck, but Masiclat objected on the ground that he has bought it at P26.00 per sack
from a person whom he did not know.

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