1.

Right to Transfer Ownership (1459)

Article 1459

- The thing must be licit and the vendor must have a right to transfer the ownership
thereof at the time it is delivered.

Note :

i. The word licit means lawful (within the commerce of man)

ii. Things may be illicit:

ii.a ) per se (of its nature)

Example: Sale of human flesh for human pleasure.

ii.b) per accidens (made illegal by provision of the law)

Examples: Sale of land to an alien after the effective date of the Constitution;
sale of illegal lottery tickets.

iii. If the object of the sale is illicit, the contract is null and void (Art. 1409), and cannot,
therefore, be ratified.

iv. The right of redemption may be sold. So also may literary, artistic, and scientific
works. A usufruct may also be sold.
 a.

GR 178523
June 16, 2010

Makati Sports Club, Inc., vs. Cecile H. Cheng and Ramon Sabarre

Facts :

On October 20, 1994, plaintiff's Board of Directors adopted a resolution authorizing the sale of
19 unissued shares.

Defendant Cheng was a Treasurer and Director of plaintiff in 1985. Hodreal expressed his
interest to buy a share, for this purpose he sent a letter, requesting his name to be on the list.

McFoods expressed interest in acquiring a share of the plaintiff, and one was acquired with the
payment to the plaintiff by McFoods of P1,800,000.

It appears that while the sale between the plaintiff and McFoods was still under negotiations,
there were negotiations between McFoods and Hodreal for the purchase by the latter of a share
of the plaintiff. On November 24, 1995, Hodreal paid McFoods P1,400,000. Another payment of
P1,400,000 was made by Hodreal to McFoods on December 27, 1995, to complete the purchase
price of P2,800,000.

On February 7, 1996, plaintiff was advised of the sale by McFoods to Hodreal of the share for
P2.8 Million. In 1997, an investigation was conducted and the committee held that there is prima
facie evidence to show that defendant Cheng profited from the transaction because of her
knowledge.

Issue :

Whether or not the defendant committed fraud in transacting the stock transfers

Held :

No.

Fraud is deemed to comprise anything calculated to deceive, including all acts, omissions, and
concealment involving a breach of legal or equitable duty, trust or confidence justly reposed,
resulting in the damage to another or by which an undue and unconscionable advantage is taken
of another. It is a question of fact that must be alleged and proved. It cannot be presumed and
must be established by clear and convincing evidence, not by mere preponderance of evidence.
The party alleging the existence of fraud has the burden of proof. On the basis of the above
disquisitions, this Court finds that petitioner has failed to discharge this burden. No matter how
strong the suspicion is on the part of petitioner, such suspicion does not translate into tangible
evidence sufficient to nullify the assailed transactions.

. Undeniably, on December 27, 1995, when Mc Foods offered for sale one Class "A" share of
stock to MSCI for the price of P2,800,000.00 for the latter to exercise its pre-emptive right as
required by Section 30(e) of MSCI's Amended By-Laws, it legally had the right to do so since it
was already an owner of a Class "A" share by virtue of its payment on November 28, 1995, and
the Deed of Absolute Share dated December 15, 1995, notwithstanding the fact that the stock
certificate was issued only on January 5, 1996. A certificate of stock is the paper representative
or tangible evidence of the stock itself and of the various interests therein. The certificate is not a
stock in the corporation but is merely evidence of the holder's interest and status in the
corporation, his ownership of the share represented thereby. It is not in law the equivalent of
such ownership. It expresses the contract between the corporation and the stockholder, but is not
essential to the existence of a share of stock or the nature of the relation of shareholder to the
corporation.

Moreover, MSCI's ardent position that Cheng was in cahoots with Mc Foods in depriving it of
selling an original, unissued Class "A" share of stock for P2,800,000.00 is not supported by the
evidence on record. The mere fact that she performed acts upon authority of Mc
Foods, i.e., receiving the payments of Hodreal in her office and claiming the stock certificate on
behalf of Mc Foods, do not by themselves, individually or taken together, show badges of fraud,
since Mc Foods did acts well within its rights and there is no proof that Cheng personally
profited from the assailed transaction. Even the statement of MSCI that Cheng doctored the
books to give a semblance of regularity to the transfers involving the share of stock covered by
Certificate A 2243 remains merely a plain statement not buttressed by convincing proof.

b.

GR 126444

December 4, 1998

Alfonso Quijada, et al., vs. CA, Regalado Mondejar, et. al.,

Petitioners, as heirs of the late Trinidad Quijada, filed a complaint against private respondents for
quieting of title, recovery of possession and ownership of parcels of land with claim for
attorney’s fees and damages.

"Plaintiffs-appellees (petitioners) are the children of the late Trinidad Corvera Vda. de Quijada.
Trinidad was one of the heirs of the late Pedro Corvera and inherited from the latter the two-
hectare parcel of land subject of the case, situated in the barrio of San Agustin, Talacogon,
Agusan del Sur. On April 5, 1956, Trinidad Quijada together with her sisters and brother
executed a conditional deed of donation of the two-hectare parcel of land subject of the case in
favor of the Municipality of Talacogon, the condition being that the parcel of land shall be used
solely and exclusively as part of the campus of the proposed provincial high school in
Talacogon.

Apparently, Trinidad remained in possession of the parcel of land despite the donation. On July
29, 1962, Trinidad sold one (1) hectare of the subject parcel of land to defendant-appellant
Regalado Mondejar . Subsequently, Trinidad verbally sold the remaining one (1) hectare to
defendant-appellant (respondent) Regalado Mondejar without the benefit of a written deed of
sale and evidenced solely by receipts of payment. In 1980, the heirs of Trinidad, who at that time
was already dead, filed a complaint for forcible entry against Regalado Mondejar, which
complaint was, however, dismissed for failure to prosecute . In 1987, the proposed provincial
high school having failed to materialize, the Sangguniang Bayan of the municipality of
Talacogon enacted a resolution reverting the two (2) hectares of land donated back to the
donors .In the meantime,  Regalado Mondejar sold portions of the land to defendants-appellants
(respondents) Fernando Bautista , Rodolfo Goloran , Efren Guden and Ernesto Goloran.

"On July 5, 1988, plaintiffs-appellees (petitioners) filed this action against defendants-appellants
(respondents). In the complaint, plaintiffs-appellees (petitioners) alleged that their deceased
mother never sold, conveyed, transferred or disposed of the property in question to any person or
entity much less to Regalado Mondejar save the donation made to the Municipality of Talacogon
in 1956; that at the time of the alleged sale to Regalado Mondejar by Trinidad Quijada, the land
still belongs to the Municipality of Talacogon, hence, the supposed sale is null and void.

Issue :

Whether or not the sale was valid.

Held :

The sale made by Trinidad Quijada to respondent Mondejar was valid as the former retained an
inchoate interest on the lots by virtue of the automatic reversion clause in the deed of donation.

The donation made on April 5, 1956 by Trinidad Quijada and her brother and sisters was subject
to the condition that the donated property shall be "used solely and exclusively as a part of the
campus of the proposed Provincial High School in Talacogon." The donation further provides
that should "the proposed Provincial High School be discontinued or if the same shall be opened
but for some reason or another, the same may in the future be closed" the donated property shall
automatically revert to the donor. Such condition, not being contrary to law, morals, good
customs, public order or public policy was validly imposed in the donation.

Sale, being a consensual contract, is perfected by mere consent, which is manifested the moment
there is a meeting of the minds as to the offer and acceptance thereof on three (3) elements:
subject matter, price and terms of payment of the price. Ownership by the seller on the thing sold
at the time of the perfection of the contract of sale is not an element for its perfection. What the
law requires is that the seller has the right to transfer ownership at the time the thing sold is
delivered.   A perfected contract of sale cannot be challenged on the ground of non-ownership on
the part of the seller at the time of its perfection; hence, the sale is still valid.
tual

c.

GR 179743, 626 SCRA 300

August 2, 2010,

Hadja Fatima Gaguil Magoya vs. Hadji Abubacar Maruhom, GR 179743, August 2,
2010, 626 SCRA 300

Facts :

On December 20, 1982, respondent Hadji Abubacar Maruhom was awarded a market stall at the
Reclamation Area by the Islamic City of Marawi.

On December 1, 1985, respondent orally sold his stall to petitioner for P20,000.00. Later, on
December 10, 1985, respondent executed a Deed of Assignment, confirming the oral sale;
assigning, selling, transferring, and conveying his market stall to petitioners for a consideration
of P20,000.00.  In the same Deed of Assignment,  petitioners leased the subject stall to respondent
for a monthly rental of P250.00, beginning December 1, 1985, renewable every year at the
option of petitioners.  Respondent undertook to pay in advance the rentals for six months
amounting to P1,500.00 on or before December 1, 1985.

Respondent religiously paid the monthly rentals of P250.00, which was increased to P300.00 on
December 1, 1988; and to P400.00 beginning December 1, 1991.  However, on June 1, 1993,
respondent simply stopped paying the rentals. Respondent promised to settle his unpaid account,
but he failed to make good his promise.  Petitioner then demanded that respondent vacate the
property, but the demand just fell on deaf ears.

Accordingly, on August 22, 1994, petitioners filed a complaint for recovery of possession and
damages, with prayer for issuance of a temporary restraining order (TRO), with the Regional
Trial Court (RTC) of Marawi City.

In his Answer, respondent admitted selling the subject stall for P20,000.00 to petitioners, but
averred that the sale was with right to repurchase; and on condition that he would remain in
possession of the subject stall as long as he wants.  He signed the Deed of Assignment on
petitioners' assurance that the conditions they earlier agreed upon were contained in the deed.
Being illiterate, he just relied on petitioners' assurances. Respondent denied that he refused to
pay the agreed monthly rentals; alleging that petitioners were the ones who refused to receive the
rental payments and instead demanded payment of P150,000.00. The Deed of Assignment, he
added, failed to express the true intent and agreement of the parties; and his signature thereon
was procured by fraud, deceit, and misrepresentation; hence, void ab initio. 

Issue :

Whether or not the Deed of Assignment was void ab initio

Held :

Yes.

A void contract is equivalent to nothing; it produces no civil effect. It does not create, modify, or
extinguish a juridical relation.  Parties to a void agreement cannot expect the aid of the law; the
courts leave them as they are, because they are deemed in pari delicto or in equal fault.

The records show that Market Stall No. CTD 1583 is owned by the City Government of
Marawi.  Indeed, that it was the City Government of Marawi, not respondent, that owned Market
Stall No. CTD 1583. Respondent, as a mere grantee of the subject stall, was prohibited from
selling, donating, or otherwise alienating the same without the consent of the City Government;
violation of the condition shall automatically render the sale, donation, or alienation null and
void.

Respondent was well aware that as mere grantee of the subject stall, he cannot sell it without the
consent of the City Government of Marawi.  Yet, he sold the same to petitioners.  The records,
however, are bereft of any allegation and proof that petitioners had actual knowledge of the
status of respondent's ownership of the subject stall. Petitioners can, therefore, recover the
amount they had given under the contract.

The Deed of Assignment dated December 10, 1985 is declared void ab initio.  Respondent Hadji

2. Object of Sale(1460-1465)
a.

GR 118357 , 272 SCRA 291

May 6, 1997,

Philippine national Bank v. Court of Appeals and Industrial Enterprises, Inc.

Facts :
Issue :
Held :

b.

GR 190823,
 April 4, 2011, 647 SCRA 200

Domingo Carabeo vs. Sps Norberto and Susan Dingco

Facts :
Issue :
Held :

c.

GR 178523

June 16, 2010, 621 SCRA 103

Makati Sports Club, Inc., vs. Cecile H. Cheng and Ramon Sabarre

Facts :
Issue :
Held :

3. Agency to Sell(1466)

38 Phil. 501 (1918)

Facts :
Issue :
Held :
4. Price (1469-1474)