CORONEL VS CA

[G.R. No. 103577. October 7, 1996]

ROMULO A. CORONEL, ALARICO A. CORONEL, ANNETTE A.

CORONEL, ANNABELLE C. GONZALES (for herself and on
behalf of Floraida C. Tupper, as attorney-in-fact), CIELITO A.
CORONEL, FLORAIDA A. ALMONTE, and CATALINA BALAIS
MABANAG, petitioners, vs. THE COURT OF APPEALS,
CONCEPCION D. ALCARAZ and RAMONA PATRICIA ALCARAZ,
assisted by GLORIA F. NOEL as attorney-in-fact, respondents.

DECISION
MELO, J.:

The petition before us has its roots in a complaint for specific performance
to compel herein petitioners (except the last named, Catalina Balais
Mabanag) to consummate the sale of a parcel of land with its improvements
located along Roosevelt Avenue in Quezon City entered into by the parties
sometime in January 1985 for the price of P1,240,000.00.
The undisputed facts of the case were summarized by respondent court in
this wise:

On January 19, 1985, defendants-appellants Romulo Coronel, et. al. (hereinafter

referred to as Coronels) executed a document entitled Receipt of Down Payment
(Exh. A) in favor of plaintiff Ramona Patricia Alcaraz (hereinafter referred to as
Ramona) which is reproduced hereunder:

RECEIPT OF DOWN PAYMENT

P1,240,000.00 - Total amount

50,000.00 - Down payment

------------------------------------------

P1,190,000.00 - Balance
Received from Miss Ramona Patricia Alcaraz of 146 Timog, Quezon City, the sum of
Fifty Thousand Pesos purchase price of our inherited house and lot, covered by TCT
No. 119627 of the Registry of Deeds of Quezon City, in the total amount
of P1,240,000.00.

We bind ourselves to effect the transfer in our names from our deceased father,
Constancio P. Coronel, the transfer certificate of title immediately upon receipt of the
down payment above-stated.

On our presentation of the TCT already in or name, We will immediately execute the
deed of absolute sale of said property and Miss Ramona Patricia Alcaraz shall
immediately pay the balance of the P1,190,000.00.

Clearly, the conditions appurtenant to the sale are the following:

1. Ramona will make a down payment of Fifty Thousand (P50,000.00) pesos upon
execution of the document aforestated;

2. The Coronels will cause the transfer in their names of the title of the property
registered in the name of their deceased father upon receipt of the Fifty Thousand
(P50,000.00) Pesos down payment;

3. Upon the transfer in their names of the subject property, the Coronels will execute
the deed of absolute sale in favor of Ramona and the latter will pay the former the
whole balance of One Million One Hundred Ninety Thousand (P1,190,000.00) Pesos.

On the same date (January 15, 1985), plaintiff-appellee Concepcion D. Alcaraz

(hereinafter referred to as Concepcion), mother of Ramona, paid the down payment of
Fifty Thousand (P50,000.00) Pesos (Exh. B, Exh. 2).

On February 6, 1985, the property originally registered in the name of the Coronels
father was transferred in their names under TCT No. 327043 (Exh. D; Exh 4)

On February 18, 1985, the Coronels sold the property covered by TCT No. 327043 to
intervenor-appellant Catalina B. Mabanag (hereinafter referred to as Catalina) for One
Million Five Hundred Eighty Thousand (P1,580,000.00) Pesos after the latter has paid
Three Hundred Thousand (P300,000.00) Pesos (Exhs. F-3; Exh. 6-C)

For this reason, Coronels canceled and rescinded the contract (Exh. A) with Ramona
by depositing the down payment paid by Concepcion in the bank in trust for Ramona
Patricia Alcaraz.
On February 22, 1985, Concepcion, et. al., filed a complaint for a specific
performance against the Coronels and caused the annotation of a notice of lis
pendens at the back of TCT No. 327403 (Exh. E; Exh. 5).

On April 2, 1985, Catalina caused the annotation of a notice of adverse claim covering
the same property with the Registry of Deeds of Quezon City (Exh. F; Exh. 6).

On April 25, 1985, the Coronels executed a Deed of Absolute Sale over the subject
property in favor of Catalina (Exh. G; Exh. 7).

On June 5, 1985, a new title over the subject property was issued in the name of
Catalina under TCT No. 351582 (Exh. H; Exh. 8).

(Rollo, pp. 134-136)

In the course of the proceedings before the trial court (Branch 83,
RTC, Quezon City) the parties agreed to submit the case for decision solely
on the basis of documentary exhibits. Thus, plaintiffs therein (now private
respondents) proffered their documentary evidence accordingly marked as
Exhibits A through J, inclusive of their corresponding submarkings. Adopting
these same exhibits as their own, then defendants (now petitioners)
accordingly offered and marked them as Exhibits 1 through 10, likewise
inclusive of their corresponding submarkings. Upon motion of the parties, the
trial court gave them thirty (30) days within which to simultaneously submit
their respective memoranda, and an additional 15 days within which to submit
their corresponding comment or reply thereto, after which, the case would be
deemed submitted for resolution.
On April 14, 1988, the case was submitted for resolution before Judge
Reynaldo Roura, who was then temporarily detailed to preside over Branch 82
of the RTC of Quezon City. On March 1, 1989, judgment was handed down by
Judge Roura from his regular bench at Macabebe, Pampanga for the Quezon
City branch, disposing as follows:

WHEREFORE, judgment for specific performance is hereby rendered ordering

defendant to execute in favor of plaintiffs a deed of absolute sale covering that parcel
of land embraced in and covered by Transfer Certificate of Title No. 327403 (now
TCT No. 331582) of the Registry of Deeds for Quezon City, together with all the
improvements existing thereon free from all liens and encumbrances, and once
accomplished, to immediately deliver the said document of sale to plaintiffs and upon
receipt thereof, the plaintiffs are ordered to pay defendants the whole balance of the
purchase price amounting to P1,190,000.00 in cash. Transfer Certificate of Title No.
331582 of the Registry of Deeds for Quezon City in the name of intervenor is hereby
canceled and declared to be without force and effect. Defendants and intervenor and
all other persons claiming under them are hereby ordered to vacate the subject
property and deliver possession thereof to plaintiffs. Plaintiffs claim for damages and
attorneys fees, as well as the counterclaims of defendants and intervenors are hereby
dismissed.

No pronouncement as to costs.

So Ordered.

Macabebe, Pampanga for Quezon City, March 1, 1989.

(Rollo, p. 106)

A motion for reconsideration was filed by petitioners before the new

presiding judge of the Quezon City RTC but the same was denied by Judge
Estrella T. Estrada, thusly:

The prayer contained in the instant motion, i.e., to annul the decision and to render
anew decision by the undersigned Presiding Judge should be denied for the following
reasons: (1) The instant case became submitted for decision as of April 14, 1988 when
the parties terminated the presentation of their respective documentary evidence and
when the Presiding Judge at that time was Judge Reynaldo Roura. The fact that they
were allowed to file memoranda at some future date did not change the fact that the
hearing of the case was terminated before Judge Roura and therefore the same should
be submitted to him for decision; (2) When the defendants and intervenor did not
object to the authority of Judge Reynaldo Roura to decide the case prior to the
rendition of the decision, when they met for the first time before the undersigned
Presiding Judge at the hearing of a pending incident in Civil Case No. Q-46145 on
November 11, 1988, they were deemed to have acquiesced thereto and they are now
estopped from questioning said authority of Judge Roura after they received the
decision in question which happens to be adverse to them; (3) While it is true that
Judge Reynaldo Roura was merely a Judge-on-detail at this Branch of the Court, he
was in all respects the Presiding Judge with full authority to act on any pending
incident submitted before this Court during his incumbency. When he returned to his
Official Station at Macabebe, Pampanga, he did not lose his authority to decide or
resolve cases submitted to him for decision or resolution because he continued as
Judge of the Regional Trial Court and is of co-equal rank with the undersigned
Presiding Judge. The standing rule and supported by jurisprudence is that a Judge to
whom a case is submitted for decision has the authority to decide the case
notwithstanding his transfer to another branch or region of the same court (Sec. 9,
Rule 135, Rule of Court).

Coming now to the twin prayer for reconsideration of the Decision dated March 1,
1989 rendered in the instant case, resolution of which now pertains to the undersigned
Presiding Judge, after a meticulous examination of the documentary evidence
presented by the parties, she is convinced that the Decision of March 1, 1989 is
supported by evidence and, therefore, should not be disturbed.

IN VIEW OF THE FOREGOING, the Motion for Reconsideration and/or to Annul

Decision and Render Anew Decision by the Incumbent Presiding Judge dated March
20, 1989 is hereby DENIED.

SO ORDERED.

Quezon City, Philippines, July 12, 1989.

(Rollo, pp. 108-109)

Petitioners thereupon interposed an appeal, but on December 16, 1991,

the Court of Appeals (Buena, Gonzaga-Reyes, Abad-Santos (P), JJ.)
rendered its decision fully agreeing with the trial court.
Hence, the instant petition which was filed on March 5, 1992. The last
pleading, private respondents Reply Memorandum, was filed on September
15, 1993. The case was, however, re-raffled to undersignedponente only
on August 28, 1996, due to the voluntary inhibition of the Justice to whom the
case was last assigned.
While we deem it necessary to introduce certain refinements in the
disquisition of respondent court in the affirmance of the trial courts decision,
we definitely find the instant petition bereft of merit.
The heart of the controversy which is the ultimate key in the resolution of
the other issues in the case at bar is the precise determination of the legal
significance of the document entitled Receipt of Down Payment which was
offered in evidence by both parties. There is no dispute as to the fact that the
said document embodied the binding contract between Ramona Patricia
Alcaraz on the one hand, and the heirs of Constancio P. Coronel on the other,
pertaining to a particular house and lot covered by TCT No. 119627, as
defined in Article 1305 of the Civil Code of the Philippines which reads as
follows:
Art. 1305. A contract is a meeting of minds between two persons whereby one binds
himself, with respect to the other, to give something or to render some service.

While, it is the position of private respondents that the Receipt of Down

Payment embodied a perfected contract of sale, which perforce, they seek to
enforce by means of an action for specific performance, petitioners on their
part insist that what the document signified was a mere executory contract to
sell, subject to certain suspensive conditions, and because of the absence of
Ramona P. Alcaraz, who left for the United States of America, said contract
could not possibly ripen into a contract of absolute sale.
Plainly, such variance in the contending parties contention is brought
about by the way each interprets the terms and/or conditions set forth in said
private instrument. Withal, based on whatever relevant and admissible
evidence may be available on record, this Court, as were the courts below, is
now called upon to adjudge what the real intent of the parties was at the time
the said document was executed.
The Civil Code defines a contract of sale, thus:

Art. 1458. By the contract of sale one of the contracting parties obligates himself to
transfer the ownership of and to deliver a determinate thing, and the other to pay
therefor a price certain in money or its equivalent.

Sale, by its very nature, is a consensual contract because it is perfected

by mere consent. The essential elements of a contract of sale are the
following:

a) Consent or meeting of the minds, that is, consent to transfer ownership in exchange
for the price;

b) Determinate subject matter; and

c) Price certain in money or its equivalent.

Under this definition, a Contract to Sell may not be considered as a

Contract of Sale because the first essential element is lacking. In a contract to
sell, the prospective seller explicitly reserves the transfer of title to the
prospective buyer, meaning, the prospective seller does not as yet agree or
consent to transfer ownership of the property subject of the contract to sell
until the happening of an event, which for present purposes we shall take as
the full payment of the purchase price. What the seller agrees or obliges
himself to do is to fulfill his promise to sell the subject property when the entire
amount of the purchase price is delivered to him. In other words the full
payment of the purchase price partakes of a suspensive condition, the non-
fulfillment of which prevents the obligation to sell from arising and thus,
ownership is retained by the prospective seller without further remedies by the
prospective buyer. In Roque vs. Lapuz (96 SCRA 741 [1980]), this Court had
occasion to rule:

Hence, We hold that the contract between the petitioner and the respondent was a
contract to sell where the ownership or title is retained by the seller and is not to pass
until the full payment of the price, such payment being a positive suspensive condition
and failure of which is not a breach, casual or serious, but simply an event that
prevented the obligation of the vendor to convey title from acquiring binding force.

Stated positively, upon the fulfillment of the suspensive condition which is

the full payment of the purchase price, the prospective sellers obligation to sell
the subject property by entering into a contract of sale with the prospective
buyer becomes demandable as provided in Article 1479 of the Civil Code
which states:

Art. 1479. A promise to buy and sell a determinate thing for a price certain is
reciprocally demandable.

An accepted unilateral promise to buy or to sell a determinate thing for a price certain
is binding upon the promissor of the promise is supported by a consideration distinct
from the price.

A contract to sell may thus be defined as a bilateral contract whereby the

prospective seller, while expressly reserving the ownership of the subject
property despite delivery thereof to the prospective buyer, binds himself to sell
the said property exclusively to the prospective buyer upon fulfillment of the
condition agreed upon, that is, full payment of the purchase price.
A contract to sell as defined hereinabove, may not even be considered as
a conditional contract of sale where the seller may likewise reserve title to the
property subject of the sale until the fulfillment of a suspensive condition,
because in a conditional contract of sale, the first element of consent is
present, although it is conditioned upon the happening of a contingent event
which may or may not occur. If the suspensive condition is not fulfilled, the
perfection of the contract of sale is completely abated (cf. Homesite and
Housing Corp. vs. Court of Appeals, 133 SCRA 777 [1984]). However, if the
suspensive condition is fulfilled, the contract of sale is thereby perfected, such
that if there had already been previous delivery of the property subject of the
sale to the buyer, ownership thereto automatically transfers to the buyer by
operation of law without any further act having to be performed by the seller.
In a contract to sell, upon the fulfillment of the suspensive condition which
is the full payment of the purchase price, ownership will not automatically
transfer to the buyer although the property may have been previously
delivered to him. The prospective seller still has to convey title to the
prospective buyer by entering into a contract of absolute sale.
It is essential to distinguish between a contract to sell and a conditional
contract of sale specially in cases where the subject property is sold by the
owner not to the party the seller contracted with, but to a third person, as in
the case at bench. In a contract to sell, there being no previous sale of the
property, a third person buying such property despite the fulfillment of the
suspensive condition such as the full payment of the purchase price, for
instance, cannot be deemed a buyer in bad faith and the prospective buyer
cannot seek the relief of reconveyance of the property. There is no double
sale in such case. Title to the property will transfer to the buyer after
registration because there is no defect in the owner-sellers title per se, but the
latter, of course, may be sued for damages by the intending buyer.
In a conditional contract of sale, however, upon the fulfillment of the
suspensive condition, the sale becomes absolute and this will definitely affect
the sellers title thereto. In fact, if there had been previous delivery of the
subject property, the sellers ownership or title to the property is automatically
transferred to the buyer such that, the seller will no longer have any title to
transfer to any third person. Applying Article 1544 of the Civil Code, such
second buyer of the property who may have had actual or constructive
knowledge of such defect in the sellers title, or at least was charged with the
obligation to discover such defect, cannot be a registrant in good faith. Such
second buyer cannot defeat the first buyers title. In case a title is issued to the
second buyer, the first buyer may seek reconveyance of the property subject
of the sale.
With the above postulates as guidelines, we now proceed to the task of
deciphering the real nature of the contract entered into by petitioners and
private respondents.
It is a canon in the interpretation of contracts that the words used therein
should be given their natural and ordinary meaning unless a technical
meaning was intended (Tan vs. Court of Appeals, 212 SCRA 586
[1992]). Thus, when petitioners declared in the said Receipt of Down Payment
that they --
Received from Miss Ramona Patricia Alcaraz of 146 Timog, Quezon City, the sum of
Fifty Thousand Pesos purchase price of our inherited house and lot, covered by
TCT No. 1199627 of the Registry of Deeds of Quezon City, in the total amount
of P1,240,000.00.

without any reservation of title until full payment of the entire purchase price,
the natural and ordinary idea conveyed is that they sold their property.
When the Receipt of Down payment is considered in its entirety, it
becomes more manifest that there was a clear intent on the part of petitioners
to transfer title to the buyer, but since the transfer certificate of title was still in
the name of petitioners father, they could not fully effect such transfer
although the buyer was then willing and able to immediately pay the purchase
price. Therefore, petitioners-sellers undertook upon receipt of the down
payment from private respondent Ramona P. Alcaraz, to cause the issuance
of a new certificate of title in their names from that of their father, after which,
they promised to present said title, now in their names, to the latter and to
execute the deed of absolute sale whereupon, the latter shall, in turn, pay the
entire balance of the purchase price.
The agreement could not have been a contract to sell because the sellers
herein made no express reservation of ownership or title to the subject parcel
of land. Furthermore, the circumstance which prevented the parties from
entering into an absolute contract of sale pertained to the sellers themselves
(the certificate of title was not in their names) and not the full payment of the
purchase price. Under the established facts and circumstances of the case,
the Court may safely presume that, had the certificate of title been in the
names of petitioners-sellers at that time, there would have been no reason
why an absolute contract of sale could not have been executed and
consummated right there and then.
Moreover, unlike in a contract to sell, petitioners in the case at bar did not
merely promise to sell the property to private respondent upon the fulfillment
of the suspensive condition. On the contrary, having already agreed to sell the
subject property, they undertook to have the certificate of title change to their
names and immediately thereafter, to execute the written deed of absolute
sale.
Thus, the parties did not merely enter into a contract to sell where the
sellers, after compliance by the buyer with certain terms and conditions,
promised to sell the property to the latter. What may be perceived from the
respective undertakings of the parties to the contract is that petitioners had
already agreed to sell the house and lot they inherited from their father,
completely willing to transfer ownership of the subject house and lot to the
buyer if the documents were then in order. It just so happened, however, that
the transfer certificate of title was then still in the name of their father. It was
more expedient to first effect the change in the certificate of title so as to bear
their names. That is why they undertook to cause the issuance of a new
transfer of the certificate of title in their names upon receipt of the down
payment in the amount of P50,000.00. As soon as the new certificate of title is
issued in their names, petitioners were committed to immediately execute the
deed of absolute sale. Only then will the obligation of the buyer to pay the
remainder of the purchase price arise.
There is no doubt that unlike in a contract to sell which is most commonly
entered into so as to protect the seller against a buyer who intends to buy the
property in installment by withholding ownership over the property until the
buyer effects full payment therefor, in the contract entered into in the case at
bar, the sellers were the ones who were unable to enter into a contract of
absolute sale by reason of the fact that the certificate of title to the property
was still in the name of their father. It was the sellers in this case who, as it
were, had the impediment which prevented, so to speak, the execution of an
contract of absolute sale.
What is clearly established by the plain language of the subject document
is that when the said Receipt of Down Payment was prepared and signed by
petitioners Romulo A. Coronel, et. al., the parties had agreed to a conditional
contract of sale, consummation of which is subject only to the successful
transfer of the certificate of title from the name of petitioners father,
Constancio P. Coronel, to their names.
The Court significantly notes that this suspensive condition was, in fact,
fulfilled on February 6, 1985 (Exh. D; Exh. 4). Thus, on said date, the
conditional contract of sale between petitioners and private respondent
Ramona P. Alcaraz became obligatory, the only act required for the
consummation thereof being the delivery of the property by means of the
execution of the deed of absolute sale in a public instrument, which petitioners
unequivocally committed themselves to do as evidenced by the Receipt of
Down Payment.
Article 1475, in correlation with Article 1181, both of the Civil Code, plainly
applies to the case at bench. Thus,

Art. 1475. 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
provisions of the law governing the form of contracts.

Art. 1181. In conditional obligations, the acquisition of rights, as well as the

extinguishment or loss of those already acquired, shall depend upon the happening of
the event which constitutes the condition.

Since the condition contemplated by the parties which is the issuance of a

certificate of title in petitioners names was fulfilled on February 6, 1985, the
respective obligations of the parties under the contract of sale became
mutually demandable, that is, petitioners, as sellers, were obliged to present
the transfer certificate of title already in their names to private respondent
Ramona P. Alcaraz, the buyer, and to immediately execute the deed of
absolute sale, while the buyer on her part, was obliged to forthwith pay the
balance of the purchase price amounting to P1,190,000.00.
It is also significant to note that in the first paragraph in page 9 of their
petition, petitioners conclusively admitted that:
3. The petitioners-sellers Coronel bound themselves to effect the transfer in our names
from our deceased father Constancio P. Coronel, the transfer certificate of title
immediately upon receipt of the downpayment above-stated". The sale was still
subject to this suspensive condition. (Emphasis supplied.)

(Rollo, p. 16)

Petitioners themselves recognized that they entered into a contract of sale

subject to a suspensive condition. Only, they contend, continuing in the same
paragraph, that:

. . . Had petitioners-sellers not complied with this condition of first transferring the
title to the property under their names, there could be no perfected contract of
sale. (Emphasis supplied.)

(Ibid.)

not aware that they have set their own trap for themselves, for Article 1186 of
the Civil Code expressly provides that:

Art. 1186. The condition shall be deemed fulfilled when the obligor voluntarily
prevents its fulfillment.

Besides, it should be stressed and emphasized that what is more

controlling than these mere hypothetical arguments is the fact that
the condition herein referred to was actually and indisputably fulfilled on
February 6, 1985, when a new title was issued in the names of petitioners as
evidenced by TCT No. 327403 (Exh. D; Exh. 4).
The inevitable conclusion is that on January 19, 1985, as evidenced by the
document denominated as Receipt of Down Payment (Exh. A; Exh. 1), the
parties entered into a contract of sale subject to the suspensive condition that
the sellers shall effect the issuance of new certificate title from that of their
fathers name to their names and that, on February 6, 1985, this condition was
fulfilled (Exh. D; Exh. 4).
We, therefore, hold that, in accordance with Article 1187 which pertinently
provides -

Art. 1187. The effects of conditional obligation to give, once the condition has been
fulfilled, shall retroact to the day of the constitution of the obligation . . .

In obligations to do or not to do, the courts shall determine, in each case, the
retroactive effect of the condition that has been complied with.

the rights and obligations of the parties with respect to the perfected contract
of sale became mutually due and demandable as of the time of fulfillment or
occurrence of the suspensive condition on February 6, 1985. As of that point
in time, reciprocal obligations of both seller and buyer arose.
Petitioners also argue there could been no perfected contract on January
19, 1985 because they were then not yet the absolute owners of the inherited
property.
We cannot sustain this argument.
Article 774 of the Civil Code defines Succession as a mode of transferring
ownership as follows:

Art. 774. Succession is a mode of acquisition by virtue of which the property, rights
and obligations to the extent and value of the inheritance of a person are transmitted
through his death to another or others by his will or by operation of law.

Petitioners-sellers in the case at bar being the sons and daughters of the
decedent Constancio P. Coronel are compulsory heirs who were called to
succession by operation of law. Thus, at the point their father drew his last
breath, petitioners stepped into his shoes insofar as the subject property is
concerned, such that any rights or obligations pertaining thereto became
binding and enforceable upon them. It is expressly provided that rights to the
succession are transmitted from the moment of death of the decedent (Article
777, Civil Code; Cuison vs. Villanueva, 90 Phil. 850 [1952]).
Be it also noted that petitioners claim that succession may not be declared
unless the creditors have been paid is rendered moot by the fact that they
were able to effect the transfer of the title to the property from the decedents
name to their names on February 6, 1985.
Aside from this, petitioners are precluded from raising their supposed lack
of capacity to enter into an agreement at that time and they cannot be allowed
to now take a posture contrary to that which they took when they entered into
the agreement with private respondent Ramona P. Alcaraz. The Civil Code
expressly states that:

Art. 1431. Through estoppel an admission or representation is rendered conclusive

upon the person making it, and cannot be denied or disproved as against the person
relying thereon.

Having represented themselves as the true owners of the subject property at

the time of sale, petitioners cannot claim now that they were not yet the
absolute owners thereof at that time.
Petitioners also contend that although there was in fact a perfected
contract of sale between them and Ramona P. Alcaraz, the latter breach her
reciprocal obligation when she rendered impossible the consummation thereof
by going to the United States of America, without leaving her address,
telephone number, and Special Power of Attorney (Paragraphs 14 and 15,
Answer with Compulsory Counterclaim to the Amended Complaint, p. 2; Rollo,
p. 43), for which reason, so petitioners conclude, they were correct in
unilaterally rescinding the contract of sale.
We do not agree with petitioners that there was a valid rescission of the
contract of sale in the instant case. We note that these supposed grounds for
petitioners rescission, are mere allegations found only in their responsive
pleadings, which by express provision of the rules, are deemed controverted
even if no reply is filed by the plaintiffs (Sec. 11, Rule 6, Revised Rules of
Court). The records are absolutely bereft of any supporting evidence to
substantiate petitioners allegations. We have stressed time and again that
allegations must be proven by sufficient evidence (Ng Cho Cio vs. Ng Diong,
110 Phil. 882 [1961]; Recaro vs. Embisan, 2 SCRA 598 [1961]). Mere
allegation is not an evidence (Lagasca vs. De Vera, 79 Phil. 376 [1947]).
Even assuming arguendo that Ramona P. Alcaraz was in the United
States of America on February 6, 1985, we cannot justify petitioners-sellers
act of unilaterally and extrajudicially rescinding the contract of sale, there
being no express stipulation authorizing the sellers to extrajudicially rescind
the contract of sale. (cf. Dignos vs. CA, 158 SCRA 375 [1988]; Taguba vs.
Vda. De Leon, 132 SCRA 722 [1984])
Moreover, petitioners are estopped from raising the alleged absence of
Ramona P. Alcaraz because although the evidence on record shows that the
sale was in the name of Ramona P. Alcaraz as the buyer, the sellers had
been dealing with Concepcion D. Alcaraz, Ramonas mother, who had acted
for and in behalf of her daughter, if not also in her own behalf. Indeed, the
down payment was made by Concepcion D. Alcaraz with her own personal
Check (Exh. B; Exh. 2) for and in behalf of Ramona P. Alcaraz. There is no
evidence showing that petitioners ever questioned Concepcions authority to
represent Ramona P. Alcaraz when they accepted her personal
check. Neither did they raise any objection as regards payment being effected
by a third person. Accordingly, as far as petitioners are concerned, the
physical absence of Ramona P. Alcaraz is not a ground to rescind the
contract of sale.
Corollarily, Ramona P. Alcaraz cannot even be deemed to be in default,
insofar as her obligation to pay the full purchase price is
concerned. Petitioners who are precluded from setting up the defense of the
physical absence of Ramona P. Alcaraz as above-explained offered no proof
whatsoever to show that they actually presented the new transfer certificate of
title in their names and signified their willingness and readiness to execute the
deed of absolute sale in accordance with their agreement. Ramonas
corresponding obligation to pay the balance of the purchase price in the
amount of P1,190,000.00 (as buyer) never became due and demandable and,
therefore, she cannot be deemed to have been in default.
Article 1169 of the Civil Code defines when a party in a contract involving
reciprocal obligations may be considered in default, to wit:

Art. 1169. Those obliged to deliver or to do something, incur in delay from the time
the obligee judicially or extrajudicially demands from them the fulfillment of their
obligation.

xxx

In reciprocal obligations, neither party incurs in delay if the other does not comply
or is not ready to comply in a proper manner with what is incumbent upon
him. From the moment one of the parties fulfill his obligation, delay by the other
begins. (Emphasis supplied.)
 There is thus neither factual nor legal basis to rescind the contract of sale
between petitioners and respondents.
With the foregoing conclusions, the sale to the other petitioner, Catalina B.
Mabanag, gave rise to a case of double sale where Article 1544 of the Civil
Code will apply, to wit:

Art. 1544. If the same thing should have been sold to different vendees, the
ownership shall be transferred to the person who may have first taken possession
thereof in good faith, if it should be movable property.

Should it be immovable property, the ownership shall belong to the person acquiring
it who in good faith first recorded it in the Registry of Property.

Should there be no inscription, the ownership shall pertain to the person who in good
faith was first in the possession; and, in the absence thereof to the person who presents
the oldest title, provided there is good faith.

The record of the case shows that the Deed of Absolute Sale dated April
25, 1985 as proof of the second contract of sale was registered with the
Registry of Deeds of Quezon City giving rise to the issuance of a new
certificate of title in the name of Catalina B. Mabanag on June 5, 1985. Thus,
the second paragraph of Article 1544 shall apply.
The above-cited provision on double sale presumes title or ownership to
pass to the buyer, the exceptions being: (a) when the second buyer, in good
faith, registers the sale ahead of the first buyer, and (b) should there be no
inscription by either of the two buyers, when the second buyer, in good faith,
acquires possession of the property ahead of the first buyer. Unless, the
second buyer satisfies these requirements, title or ownership will not transfer
to him to the prejudice of the first buyer.
In his commentaries on the Civil Code, an accepted authority on the
subject, now a distinguished member of the Court, Justice Jose C. Vitug,
explains:

The governing principle is prius tempore, potior jure (first in time, stronger in
right). Knowledge by the first buyer of the second sale cannot defeat the first buyers
rights except when the second buyer first registers in good faith the second sale
(Olivares vs. Gonzales, 159 SCRA 33). Conversely, knowledge gained by the second
buyer of the first sale defeats his rights even if he is first to register, since knowledge
taints his registration with bad faith (see alsoAstorga vs. Court of Appeals, G.R. No.
58530, 26 December 1984). In Cruz vs. Cabana (G.R. No. 56232, 22 June 1984, 129
SCRA 656), it was held that it is essential, to merit the protection of Art. 1544, second
paragraph, that the second realty buyer must act in good faith in registering his deed
of sale (citing Carbonell vs. Court of Appeals, 69 SCRA 99, Crisostomo vs. CA, G.R.
No. 95843, 02 September 1992).
(J. Vitug, Compendium of Civil Law and Jurisprudence, 1993 Edition, p. 604).
Petitioners point out that the notice of lis pendens in the case at bar was
annotated on the title of the subject property only on February 22, 1985,
whereas, the second sale between petitioners Coronels and petitioner
Mabanag was supposedly perfected prior thereto or on February 18,
1985. The idea conveyed is that at the time petitioner Mabanag, the second
buyer, bought the property under a clean title, she was unaware of any
adverse claim or previous sale, for which reason she is a buyer in good faith.
We are not persuaded by such argument.
In a case of double sale, what finds relevance and materiality is not
whether or not the second buyer in good faith but whether or not said second
buyer registers such second sale in good faith, that is, without knowledge of
any defect in the title of the property sold.
As clearly borne out by the evidence in this case, petitioner Mabanag
could not have in good faith, registered the sale entered into on February 18,
1985 because as early as February 22, 1985, a notice of lis pendens had
been annotated on the transfer certificate of title in the names of petitioners,
whereas petitioner Mabanag registered the said sale sometime in April,
1985. At the time of registration, therefore, petitioner Mabanag knew that the
same property had already been previously sold to private respondents, or, at
least, she was charged with knowledge that a previous buyer is claiming title
to the same property.Petitioner Mabanag cannot close her eyes to the defect
in petitioners title to the property at the time of the registration of the property.
This Court had occasions to rule that:

If a vendee in a double sale registers the sale after he has acquired knowledge that
there was a previous sale of the same property to a third party or that another person
claims said property in a previous sale, the registration will constitute a registration in
bad faith and will not confer upon him any right. (Salvoro vs. Tanega, 87 SCRA 349
[1978]; citing Palarca vs. Director of Land, 43 Phil. 146; Cagaoan vs. Cagaoan, 43
Phil. 554; Fernandez vs. Mercader, 43 Phil. 581.)

Thus, the sale of the subject parcel of land between petitioners and
Ramona P. Alcaraz, perfected on February 6, 1985, prior to that between
petitioners and Catalina B. Mabanag on February 18, 1985, was correctly
upheld by both the courts below.
Although there may be ample indications that there was in fact an agency
between Ramona as principal and Concepcion, her mother, as agent insofar
as the subject contract of sale is concerned, the issue of whether or not
Concepcion was also acting in her own behalf as a co-buyer is not squarely
raised in the instant petition, nor in such assumption disputed between mother
and daughter. Thus, We will not touch this issue and no longer disturb the
lower courts ruling on this point.
WHEREFORE, premises considered, the instant petition is hereby
DISMISSED and the appealed judgment AFFIRMED.

PEOPLE VS LICHAUCO

G.R. No. L-21436 August 18, 1972

REPUBLIC OF THE PHILIPPINES (Represented by the Land

Tenure Administration, substituted by the Land
Authority), plaintiff and appellant, vs. MARIANO F. LICHAUCO,
ET AL., defendants. JOSE M. LICHAUCO, TRINIDAD
GONZALES, FRANCISCO CASTILLO and JOSE
CASTILLO, defendants and appellants.

Pablo and Gancia Legal Staff, LTA for plaintiff-appellant.

Rafael Dinglasan for defendants-appellants.

ZALDIVAR, J.:

The Republic of the Philippines, by authority of Republic Act No.

1400, represented by the Land Tenure Administration, filed on
December 2, 1957, in the Court of First Instance of Pangasinan a
complaint against the defendants for the expropriation of the lands
of the "Hacienda El Porvenir", having an area of 1,352.84245
hectares, situated in the municipalities of Tayug, Natividad, San
Quintin and Sta. Maria, province of Pangasinan. In the complaint it
was alleged, among other things, that the aggregate assessed value
of the property was P434,440.00, and that the continuous agrarian
conflicts between defendants and their tenants could be solved only
through the purchase of said property by the government.
Defendants, in their amended motion to dismiss, sought the
dismissal of the complaint, alleging that the hacienda was no longer
a co-ownership but had been partitioned among the several heirs of
Crisanto Lichauco, and that Republic Act No. 1400 was
unconstitutional.chanro blesvi rt uala wlibra rycha nrob les vi rtual law lib rary

On March 23, 1961, the plaintiff and the defendants filed in court an
"Agreement and Joint Motion 2, as follows:

COMES NOW the plaintiff, represented by the Land Tenure

Administration, and the defendants (Mariano) F. Lichauco, Macario
M. H. Lichauco, represented by Romeo Lichauco as Administrator
and Guardian ad litem, Renato P. Lichauco, Francisco and Jose
Castillo (minors) represented by their mother and legal guardian,
Olga Gonzales Castillo, and Trinidad Castillo; Amanda L. De la Cruz
and Jose Manuel Lichauco, assisted by their respective counsels,
and to this Honorable Court most respectfully state: chanroble s virtua l law lib rary

1. The defendant-co-owners do hereby agree, as evidenced by their

signature affixed hereto, to the expropriation of their property
known as the "HDA. EL PORVENIR" described in Pars. II and III of
the complaint, comprising the southern one half () of that parcel
or agricultural land covered by Original Certificate of Title No. 7 of
the land records of the Province of Pangasinan, situated in the
municipalities of Tayug, Natividad, San Quintin and Sta. Maria; chanroble s virtual law l ibra ry

2. That the defendant-co-owners have agreed to the condemnation

of their property in view of the conformity of the plaintiff to grant
them the right of retention of the areas stated below and further
reflected on the sketch plan hereto attached and made an integrate
part hereof as Annex "A"; and the defendant-co-owners who are the
heirs of the property have among themselves agreed and have
adjudicated the retained areas corresponding to the persons whose
names appear below:

Lot 3 - Amanda de la Cruz 132.7732 Has. More

or less

Lot 4 - Renato Lichauco 144.1449 Has. More

 or less

Lot 8 - Amanda de la Cruz 6.8980 Has. More or

less

Lot 9 - Amanda de la 5.3164 Has. More or

Cruz(Mariano) less

Lot 10 - Amanda de la Cruz 4.8811 Has. More or

(Macario) less

Lot 12 - Amanda de la Cruz 5.8811 Has. More or

(Ranato) less

Lot 2 - Trinidad Castillo 51.3100 Has. More

(portion) or less

Lot 11 - Trinidad Castillo & 6.7955 Has. More or

minors Francisco & Jose less
Castillo

Lot 13 - Jose Manuel Lichauco 5.5375 Has. More or

less

TOTAL 362.6700 Has. More

or less

leaving a total area of approximately 990.1725 hectares subject to

expropriation. chanroblesv irtualawli bra rycha nrob les vi rtua l law lib rary

3. That the plaintiff and the defendant-co-owners have agreed to

survey and segregate the retained areas by the surveyors of the
Land Tenure Administration, with the assistance of the defendant-
co-owners or their authorized representative in order to pinpoint
and delineate more or less the boundaries on the ground of the
retained areas, at the expense of the Land Tenure Administration; chanrobles vi rtua l law lib rary

4. That the defendant-co-owners hereby waive their right to contest

the expropriation by the Republic of the Philippines of the property
mentioned in Pars. Il and III of the complaint, excluding the
portions to be retained by them, as to which the plaintiff agrees to
dismiss the expropriation proceedings in the above-mentioned
case;chanrobles vi rtua l law li bra ry
5. That while it is true that these expropriation proceedings are
based on Original Certificate of Title No. 7, one half () of which is
more or less 1,352.8425 hectares, the survey on the ground as per
G. L. R. 0. No. 1 shows an increase in area of about 144.0681
hectares which is still subject to judicial determination in G. L. R. 0.
Case No. 1 and in the event the difference in area is adjusted
and/or adjudicated in favor on the defendant-co-owners, the
plaintiff shall have the option buy the said portions in question as
adjudicated and to pay the corresponding price as in this
expropriation case. However should there be an official devaluation
of the Philippine Currency the price of the disputed area, as well as
the balance of the price of the portion of land expropriated herein,
shall be computed in accordance with the value of the currency at
the time of the Court's adjudication in each case. chanroblesv irt ualawli bra rycha nrob les vi rt ual law lib rary

6. That the defendant-co-owners have agreed that payments shall

be made to them separately. In regard to liens and encumbrances,
payment shall be made to the creditor banks out of the provisional
value to be paid to each defendant-co-owners by the Land Tenure
Administration with the Court which shall be deducted from the
corresponding amounts due each of the defendant-co-owners who
are the debtors. That payment to each co-owner by each of them,
including that portion sold by Mariano Lichauco to the late Maria
Vda. de Gonzales and now owned by her heirs, Trinidad Castillo and
the minor Francisco and Jose Castillo, and also that portion sold
directly to Trinidad Castillo as follows:

Area sold by Mariano Lichauco to the late Maria Lichauco Vda. de

Gonzales - ONE HUNDRED SIXTY SIX THOUSAND ONE HUNDRED
EIGHTY SQUARE METERS (166,180) more or less. Dated July 29,
1954. Francisco de la Fuente, Notary Public, City of Manila, Doc. No.
39; Page No. 89; Book No. II; Series of 1954. chanroblesvi rtua lawlib rary chan robles v irt ual law l ibra ry

NINETY THOUSAND SIX HUNDRED SQUARE METERS (90,600) more

or less. Dated April 28, 1955; City of Manila; SERVILLANO DE LA
CRUZ, Notary Public; Doc. No. 79; Page No. 94, Book No.II; Series
of 1955.chanroble svirtualawl ibraryc hanrobles vi rt ual law li bra ry

Sold by Mariano Lichauco to Trinidad G. Castillo TWENTY

THOUSAND EIGHT HUNDRED SQUARE METERS (20,800) more or
less. Dated Dec. 17, 1956. Notary Public Jose Aligayan, City of
Manila.

From the amounts due Mariano F. Lichauco and Macario M. H.

Lichauco, represented by Romeo Lichauco as administrator, the
amounts of P5,000.00 and P32,800.00, respectively corresponding
to their personal accounts with Amanda L. de la Cruz shall be paid
directly to the latter;
chan robles v irt ual law l ibra ry

7. That the provisional value corresponding to ten (10) hectares of

first class land due each of the defendant-co-owners, Macario M. H.
Lichauco, Mariano Lichauco and Jose Manuel Lichauco, and the
value corresponding to seven (7) hectares of first class land due to
Francisco and Jose Castillo shall be deducted from the share of each
of the said defendants, as well as from all subsequent payments
corresponding to said area, and the said deductions shall be paid
directly to Amanda de la Cruz who shall deposit same in a bank so
as to earn interest, under the name of each depositor separately in
trust for the remaining land owners to answer for the liability of the
said defendant-co-owners in the event G.L.R.O. Case No. 1 should
be decided adversely against them; otherwise all such amounts
deposited with Amanda L. de la Cruz shall be paid or delivered by
her to the said defendants, Macario, Mariano, Jose Manuel Lichauco
and Francisco and Jose Castillo immediately after the termination of
such case; provided, however, that no payment or delivery of the
said amounts shall be made, until and unless said G.L.R.O. Case No.
1 and its related cases shall have been terminated; and provided
further that should the liability of each of the defendant-co-owners
exceed the value of said ten hectares, all of them shall be liable for
their proportionate share of said excess, but in no case shall the
liability of Amanda de la Cruz, Renato P. Lichauco, the heirs of Maria
L. Vda. de Gonzales and all other defendant-co-owners shall exceed
their proportionate shares should G. L. R. O. Case No. 1 be decided
adversely against them, and likewise the liability of Trinidad G.
Castillo shall not exceed her proportionate share as stipulated in the
supplemental agreement entered into between Olga Gonzales de
Castillo and Trinidad Gonzales de Castillo dated January 18, 1957
and notarized by Notary Public Stella D. Dadivas on July 23, 1960;
libra ry
chanrobles vi rtu al law
8. That the defendant-co-owners shall be paid according to the
areas they have agreed to sell under 0. C. T. No. 7 as well as for the
disputed area, should the same be adjudicated to the estimated as
follows:

Area Provisional Disputed

(O.C.T.
No.7)
Value Excess
Value
Amanda L. de la 80.48615 80,486.15 24,01135
Cruz Has. Has.
MarianoLichauco 197.71575 107,715.75 24.01135
Has. Has.
Jose M. 212- 212,113.55 24.01135
Lichauco 11355 Has.
Has.
Heirs of M. H. 220.59265 220,592.65 24.01135
Lichauco Has. Has.
Renato Lichauco 84.13815 84,138.15 24.01135
Has. Has.
Trinidad Castillo 79.07462 79,074.62 8.00378
Has. Has.
Francisco & Jose 116.05163 116,051.63 16.00757
Castillo Has. Has.
990.17250 P990,172.50 144.065810
Has. Has.

In the event that G.L.R.O. Case No. 1 is decided against the herein
owners and in favor of the adverse claimants regarding the total
disputed excess area of 144.06810 and any of the herein co-owners
is found to have included in his lot more than his share of the
disputed excess area so that he has to deliver more than his said
share, the other co-owners shall proportionately pay him the value
of the area in excess of his said share. chanrob lesvi rtualaw lib raryc han robles v irt ual law li bra ry

9. That upon the issuance of the order of condemnation the Land

Tenure Administration shall deposit with the Court the amount of
P990,172.50, which shall be considered as the provisional value of
the expropriated portion of the "Hda. El Porvenir," to be paid to the
defendant-co-owners and their creditors separately in the manner
and proportion herein stipulated provided that this agreed
provisional value shall in no way be taken or understood as
indicative or determinative of the actual reasonable value which the
plaintiff should pay for the defendant co-owners for the land subject
of expropriation in this case which shall not be less than the
provisional value of P990,172.50 as herein before stated; provided
that any of the parties hereto may appeal to the higher Courts from
said determination if he should so desire; cha nrob les vi rtua l law lib rary

10. That the final basis of condemnation and payment shall be the
area by actual survey by the Land Tenure Administration of the land
to be expropriated by and transferred to the said Office, after
deducting the retentions by the defendants-owners as hereinabove
specified; and the Land Tenure Administration shall give priority to
the survey to be conducted; chanrob les vi rtual law lib rary

11. That all payments by the Land Tenure Administration for the
expropriated portion of the "Hda. El Porvenir" shall be strictly on
cash basis.chanroble svirtualawl ibra rycha nro bles vi rtua l law lib ra ry

WHEREFORE, it is respectfully prayed that this Honorable Court: chanrobles vi rtual law lib rary

1. Issue the corresponding order of condemnation and fix a

provisional value of P990,172.50, ordering the deposit thereof with
the Court within a reasonable time from the issuance of said order
of condemnation and forthwith the payment by the Clerk of Court of
the same separately and proportionately to the defendants-co-
owners and to the banks and other parties as stated hereinabove;
and the issuance of the corresponding writ of possession in favor of
the plaintiff upon making of said deposit; chanroble s virtual law l ibra ry
2. Appoint a committee to receive evidence on the fair and
reasonable compensation which the Government; represented by
the plaintiff, shall pay to the corresponding defendant-co-owners
and which should not be less than the provisional value of
P990,172.50 as hereinbefore stated; provided any of the parties
hereto may appeal to the higher courts from said determination if
he should so desire; chan robles v irt ual law l ibra ry

3. Order the dismissal of the expropriation case as against the area

retained by the defendant-co-owners specified hereinabove; chanrobles vi rtua l law lib rary

4. Order the priority survey of the hacienda by and at the expense

of the Land Tenure Administration, with the assistance of the
defendant co-owners, to segregate the areas retained by the
defendant-co-owners; chanrobles vi rtu al law li bra ry

5. Provide by order for such other matters as will best insure the full
implementation of and compliance with the above terms and
conditions agreed to by the parties. chanrob lesvi rtua lawlib rary chan roble s virtual law l ibra ry

Manila for Lingayen, Pangasinan, March 23, 1961.

Acting on the foregoing Agreement and Joint Motion, the Court of

First Instance of Pangasinan issued, on March 23, 1961, the order of
condemnation of the property sought to be expropriated and set the
provisional value of the property at P990,172.50. chanroble svirtualawl ibra ryc hanro bles vi rt ual law li brary

Inasmuch as the defendants were not agreeable to the price of

P1,787,048.80, or an average of P1,945.36 per hectare offered by
the plaintiff in its memorandum-report dated June 15, 1961 (Exhibit
A), the court created a Committee on Appraisal and appointed as
members thereof Atty. Rodolfo E. Vinluan, to represent the Court;
Mr. Alfredo Balingao of Tayug, Pangasinan, to represent the
plaintiff; and Mr. Hermenegildo Acosta, also of Tayug, to represent
the defendants. chanroblesvi rtua lawlib rary chan robles v irt ual law l ibra ry

Upon motion of the plaintiff, after it had deposited with the clerk of
court the provisional value of the property, the court issued, on July
3, 1961, the writ of possession in favor of the plaintiff, and an alias
writ on August 30, 1961. This writ was served on September 10,
1961, and on said date plaintiff was placed in possession of the
property.chanroble svirtualawl ibra ryc hanro bles vi rtu al law li bra ry

On November 29,1961 Commissioners Rodolfo E. Vinluan and

Hermenegildo Acosta submitted the majority report of the
Committee on Appraisal. The other commissioner submitted on
December 2, 1961 the minority report. The recommended fair
market values of the different kinds of lands in the two reports were
as follows:

Recommended value per hectare as per.

Kind of land Majority Minority Report

Report

First class irrigated

riceland P5,500.00 P4,500.00

Lots 7-D & 7-E 4,000.00

Lots 7-A, 7-B & 7-C 3,500

Second class irrigated

riceland 4,500.00

Third class irrigated

riceland 4,000.00 3,000.00

First class sugar cane

land 5,500.00

Lot 7-E (6-AM) 4,500.00

Fourth class sugar

cane

land 3,000.00

Lots 7-D (A-8) &

7-E (A-Z) 3,500.00

Lots 6, 7-D, 7-E 3,500.00

 Lots 5, 7-A, 7-B, 7-C 3,000.00

First class upland 4,000.00

Second class upland 3,500.00

Lots 7-A, 7-B & 7-C 2,500.00

Rolling lands 2,000.00

Lots 7-A, 7-B & 7-C 1,500.00

Residential land 1.00 per sq. 1.00 per sq.m.

m.
chanrobles vi rt ual law li bra ry

On December 8, 1961, defendants, Jose Manuel Lichauco, Trinidad

Gonzales Castillo, and minors Francisco and Jose Castillo, excepted
to the majority report insofar as it affected their lots for which they
claimed a price higher than what was recommended. chanroble svirtualawl ibra ryc hanro bles vi rt ual law li bra ry

Plaintiff, on the other hand, presented its "Consolidated Objections

to the Majority and Minority Reports of the Commissioners", dated
December 14, 1961, upon the grounds that the reports were not in
accordance with the provisions of Section 8, Rule 69 of the Rules of
Court; that the conclusions and findings made by the commissioners
were contrary to law, and not supported by the evidence on the
record; and that the prices recommended therein did not represent
the "market value" or "just compensation" of the property
expropriated. chanroblesvi rt ualawlib ra rychan roble s vi rtual law lib rary

Acting on a joint agreement and motion, dated January 2, 1962, the

Court ordered the plaintiff to deposit P500,000 as additional
provisional value of the property, with the understanding that
plaintiff would be relieved from paying 6% interest on said amount
of P500,000 from the date of the delivery of possession of the
expropriated property and that the then standing crops would
belong to the plaintiff. chanroble svi rtualawl ib raryc hanrobles vi rt ual law li bra ry

After hearing on the reports, the Court rendered its decision on

October 26, 1962, the dispositive portion of which reads as follows:
IN VIEW OF THE FOREGOING, decision is hereby rendered
confirming the order of this Court, dated March 23, 1961, decreeing
the condemnation of the properties of the defendants covered by
certificate of title No. 7 of the Land Records of the Province of
Pangasinan to the extent of 990 hectares, 17 ares and 25 centares
situated in the municipalities of Tayug, Sta.Maria, San Quintin, and
Natividad, province of Pangasinan declaring the plaintiff to be the
owner of said portion of 990 hectares, 17 ares, and 25 centares
upon previous payment to the defendants the following sums: chanrobles vi rtua l law lib ra ry

To:

Amanda L. de la Cruz P243,211.93

Mariano Lichauco 812,711.09
Jose M. Lichauco 630,906.55
Heirs of M. H. Lichauco 864,015.40
Heirs of Renato Lichauco 233,399.40
Trinidad, Francisco and Jose 685,135.30
Castillo

and to pay an interest of 6% per annum on each and every sum

indicated above to the respective defendants from August 30, 1962,
up to the time the whole amounts are paid; to pay 6% interest a
year from September 10, 1961 to August 30, 1962 on the
respective amounts mentioned in paragraph 1, page 21 of the
decision to each of the defendants; and ordering the plaintiff to
exclude the retained areas of the defendants at the extremities of
each of the respective lots of the defendants; without special
pronouncement as to costs.

From this decision, plaintiff appealed, by reason of the amount

involved, directly to this Court.
chanroblesv irt ualawli bra rycha nrob les vi rtual law lib rary

Defendants Jose Manuel Lichauco, Trinidad Gonzales Castillo, and

Francisco and Jose Castillo moved for the reconsideration of the
decision in connection with the areas possessed by them, with (1)
respect to the valuation and (2) the areas expropriated under their
different classifications. In its order dated November 19, 1962, the
court denied the motion for reconsideration with respect to the
value of the land, and in its order dated February 9, 1963, the court
amended the decision, such that:

In the dispositive part, page 23, decision, delete the last two lines
under "To" and insert the following:

Trinidad Castillo P286,034.30

Francisco and Jose 398,460.74.

Castillo
chanrobles vi rt ual law li bra ry

From this order dated February 9, 1963, as well as from the order
dated November 19, 1962 and the decision of October 26, 1962,
defendants Trinidad Gonzales, Francisco and Jose Castillo, and Jose
M. Lichauco appealed directly to this Court. chanroble svirtualawl ibra ryc hanro bles vi rtua l law li bra ry

Another motion for reconsideration filed by defendant Amanda L. de

la Cruz, asking an additional amount of P4,500.00 as value of a
sugar cane mill, was denied on January 17, 1963. chanroblesvi rtua lawlib rarychanro bles vi rtua l law li bra ry

On February 22, 1964, plaintiff moved that the Land Tenure

Administration be substituted by the Land Authority. chanroble svirt ualawli bra rycha nrob les vi rtual law lib rary

A motion, dated October 4, 1965 for an additional advance payment

of P490,172.50, filed by counsel for defendants with the conformity
of plaintiff, was granted by this Court in its resolution dated October
12, 1965. A motion was filed by Atty. Rafael Dinglasan, counsel for
defendants-appellants Jose Manuel Lichauco, Trinidad Gonzales
Castillo and Francisco and Jose Castillo, praying that said amount of
P490,172.50 be ordered paid separately to each of the defendants,
pro-rata, based on the respective areas of the properties they have
agreed to sell to the government, and that from the shares of his
clients, defendants-appellees Jose M. Lichauco, Trinidad G. Castillo,
Francisco and Jose Castillo, his 5% attorney's fees be deducted and
paid to him, which motion was granted by this Court in its resolution
of April 20, 1966. chanro blesvi rtualaw lib raryc han robles vi rt ual law li bra ry
By resolution of June 15, 1970, and of June 23, 1970, this Court,
upon motions by counsel for the defendants-appellees, with the
written conformity of the Governor of the Land Authority, ordered
the Land Authority to give advanced payment in the amount of
P500.00 per hectare of the expropriated lands belonging to the
defendants-appellees in the manner agreed upon by them. On July
8, 1970 this Court issued a supplemental resolution directing that
the additional advanced payment of P500.00 per hectare be paid
separately to each of the defendants-appellees based on the
respective areas possessed by each of them pursuant to the
Agreement and Joint Motion of the parties dated March 23, 1961,
and that of the amount to be paid each to defendants-appellees
Jose M. Lichauco, Trinidad G. Castillo, Francisco Castillo and Jose
Castillo the attorney's fee of Atty. Rafael Dinglasan, equivalent to
5% of the amount paid to each of them, be paid to said attorney as
per the contract of professional services entered into between said
defendants-appellees and the attorney. Pursuant to the resolutions
of this court of June 15 and June 23, 1970, and of July 8, 1970, the
sum of P495,086.20 was released by the Secretary of Finance in
April 1971 and paid by the Land Authority to the defendants-
appellees. 3chan robles v irt ual law li bra ry

The issues raised by plaintiff-appellant will first be discussed,

followed by those raised by defendants-appellants. chanroblesv irt ualawli bra ry chanrobles vi rt ual law li bra ry

Plaintiff-appellant, in its brief, submits that the trial court committed

ten errors in its decision, as follows:

1. In considering as a guide in endeavoring to fix the resonable and

fair market value of the lands now under expropriation the case of
"Municipality of Bustos vs. Natividad Santos et al., CA-G.R. No.
22547-R; the case of "Commonwealth of the Philippines vs. Pedro
de Guzman," Civil Case No. 8425 of the Court of First Instance of
Pangasinan, Lingayen Branch, and CA-G.R. No. 20358-R; and the
case of "Republic of the Philippines vs. Irene R. Ombac," Civil Case
No. 13555 of the same Court of First Instance of Pangasinan,
without basis in fact and in law and contrary to existing
jurisprudence. chanroblesvi rtua lawlib rary chan robles v irt ual law l i brary
2. In concurring with the findings of the majority report of the
Commissioners of Appraisal as to the classifications of the lots
involved in this expropriation which is not sustained by the evidence
on record and which is contrary to law. chanrob lesvi rtualaw lib raryc han robles v irt ual law l ibra ry

3. In finding and fixing the reasonable and fair market value of the
lands under expropriation as - P5,500.00 per hectare of 1st class
irrigated ricelands; P4,500.00 per hectare of 2nd class irrigated
ricelands; P4,000.00 per hectare of 3rd class irrigated ricelands;
P4,500.00 per hectare of 1st class sugarcane land; P3,000.00 per
hectare of 4th class sugarcane land; P4,000.00 per hectare of 1st
class upland; P3,500.00 per hectare of 2nd class upland; P1,500.00
per hectare of rolling lands and P1.00 per square meter of
residential land thus giving a total just compensation to the land-
owners for the 990 hectares, 17 ares and 25 centares of land
expropriated the amount of P4,957,601.86 and net P1,980,345.00
which is the fair market value of the property expropriated and
should be its "just compensation." chanrobles vi rtual law li bra ry

4. In not finding that the valuation made by the defendant

landowners of their property as demanded by them in their "Motion
to Dismiss" (Answer) is an admission and evidence of the highest
order so much so that their demand of P4,000.00 per hectare in
their answer, should set the ceiling price for the just compensation
to be awarded them. chanroble svirtualawl ibra ryc hanro bles vi rt ual law li bra ry

5. In considering the property under expropriation as subdivided

among the heirs and thus made a lot by lot classification and
valuation of the property without considering the said property as
one whole mass owned by several co-owners, without basis in law
and in contravention of accepted principles of evaluation. chanroble svirtualawl ibra rycha nro bles vi rtua l law lib ra ry

6. In not providing in the decision, as stipulated by the parties in

the "Agreement and Joint Motion" that in case an increase in area in
G.L.R.O. No. 1 is adjusted and/or adjudicated in favor of the
defendant co-owners, "the plaintiff shall have the option to buy the
said portions in question as adjudicated and to pay the
corresponding price as in this expropriation case." chanroble s virtual law lib rary
7. In not deducting from the total valuation of the property the
value for two parcels of land, namely; one hectare for the school
site at barrio Saleng and 1.8 hectare for the school site at barrio C.
Lichauco, which were previously donated by the landowners to the
municipal government of Tayug, Pangasinan. chanroblesvi rtua lawlib rary chan roble s virtual law l ib rary

8. In finding and holding that the plaintiff does not have the right
and option to choose where the retained areas should be taken from
the whole property, contrary to established jurisprudence. chanroblesvi rtua lawlib rary chan roble s virtual law l ibra ry

9. In not providing that the amount of P500,000.00 additional

provisional value should be deducted from the total balance due the
defendants, and should not earn legal interest from the date of
plaintiffs possession of the property, in accordance with the motion
of the parties and the order of the trial court dated January 3,
1962. chanroblesv irt ualawli bra rychan rob les vi rtual law lib rary

10. In not providing in the decision that payment be made to

creditor banks, as stipulated by the parties in the "Agreement and
Joint Motion," in order that all liens and encumbrances be cancelled,
so that title to the property be transferred to the government free
and clear thereof.

1. Regarding the first error assigned, plaintiff contends that the trial
court erred in considering as a guide in fixing the fair market value
of the lands under expropriation the cases of Municipality of Bustos
v. Natividad Santos, et al., CA-G.R. No. 22547-R; Civil Case No.
8425 of the Court of First Instance of Pangasinan, and CA-G.R. No.
20358-R; and Republic of the Philippines v. Irene R. Ombac, Civil
Case No. 13555 also of the Court of First Instance of Pangasinan,
upon the grounds that the lands expropriated in said cases,
respectively, being: a small parcel of land with an area of 4,626.6
square meters located in Barrio Bonga Mayor, Bustos, Bulacan; a
parcel of land situated in Barrio, Balbalino, San Carlos, Pangasinan,
with an area of 98,970 square meters; and two parcels of land
situated in the poblacion of Bugallon Pangasinan - those lands being
situated in places different from those where the lands included in
the Hacienda El Porvenir are located, so that their values can not be
considered evidentiary facts of the value of the lands comprised in
the Hacienda El Porvenir. chanro blesvi rt ualawlib ra rychan roble s virtual law lib rary
On the other hand, defendants-appellees Maria Lichauco and
Amanda de la Cruz contend that the trial court did not make as
basis, much less as the sole basis, the cases mentioned, but
considered them simply as a guide. 4 chanro bles vi rtua l law lib ra ry

We find plaintiff-appellant's first assigned error untenable. We

gather, upon reading the decision, that the trial court did not base
the market value of the Hacienda El Porvenir on the prices of the
land expropriated in the cases mentioned by the plaintiff-appellant.
The trial court simply considered the principles enunciated in those
cases as guided in fixing the market value of the lands sought to be
expropriated in the present case. The principles regarding
evaluation enunciated in the Bustos case, namely: that the
reasonable market value of a property is what it would bring when
offered for sale by one who desires but is not obliged to sell, and is
purchased by one who is under no necessity of having it; that the
value of the property should be fixed as of the date of proceedings;
and that the sales of properties in the same locality are creditable in
determining the market value of lots in that vicinity, can not be said
to be erroneous and without basis in law, as claimed by plaintiff-
appellant, because said principles are taken from the decisions of
this Court in the cases of Manila Railroad Co. vs. Caligsahan, 40
Phil. 326; and Manila Railroad Co. vs. Fabie, 17 Phil. 206. The trial
court, therefore, did not err when it relied on the principles
enunciated in those cases. chanroblesvi rtualaw lib raryc han robles v irt ual law l ibra ry

2. Plaintiff-appellant discusses jointly the second and third errors

assigned. Regarding the second error assigned, plaintiff-appellant
contends that the trial court erred in concurring with the majority
report on the classification of the lots involved; and regarding the
third error assigned, plaintiff-appellant contends that the trial court
erred in fixing the fair market value of the different classes of land,
giving a total compensation of P4,957,601.86, instead of
Pl,980,345.00. chanroblesvi rtua lawlib rary chan roble s virt ual law libra ry

Regarding lot 7-E, owned by defendant-appellee Amanda L. de la

Cruz, plaintiff-appellant claims that the upgrading to second class of
the irrigated land, which was classified by Mr. Juvenal Raguini, Real
Estate Appraiser of the Land Tenure Administration, as third class,
was not supported by the evidence; that the upgrading and
reclassification of the 20.1478 hectares classified as hill by Raguini
to first class sugarland, and the 21.2260 hectares classified as first
class upland by Raguini to first class sugar land, was an error, upon
the ground that those lands did not have sugar quotas; that the
portion classified by Raguini as creeks and canals was erroneously
classified by the court as first and second class riceland, because
creeks and canals did not produce crops and should not have been
given any valuation for purposes of determining the fair market
value. 5
chanrobles v irt ual law l ibra ry

Defendants-appellees Maria Lichauco and Amanda de la Cruz, on

the contrary, contend that the Commissioners on Appraisal were
unanimous in the reclassification of the area marked Exhibit 6-AM in
Exhibit A-1 as first class sugar land, and the areas marked Exhibits
A-2 and A-8 in Exhibit A-l as fourth class sugar land as could be
seen in the Minority Report 6 and in the Majority Report 7; that
even the government expert Raguini testified that the area marked
Exhibit 6-AM of Lot 7-E was more adopted to sugar cane such that
he would classify it as first class sugar cane land8; that by soil
composition and the use to which they are put, the areas marked
Exh. 6-AM and Exhs. A-2 and A-8 were actually first class and
fourth class sugar cane lands and actually planted to sugar cane,
that during the ocular inspection by the Commissioners, they found
that the creek itself was planted to palay; that the river bed
mentioned by the plaintiff-appellant was an abandoned river bed,
actually a dry land planted to sugar cane, peanuts, mongo and
others; that the roads were dirt roads, at the same level as the
residential lots and equally suitable for residential purposes; that
the valuation of the different kinds of lands was based on the
evidence presented; and that neither in the Commissioners' report
nor in the decision of the trial court can it be shown that the
classification action and valuation of the Hacienda El Porvenir was
not made at the proper time according to law. 6 chanroble s virtual law l ibra ry

Regarding the property owned by Jose M. Lichauco, plaintiff-

appellant also contends that the upgrading to first class irrigated
land of the 1.3861 hectares in Lot 1, which was classified by the
government expert as creeks and canals, was erroneous because
creeks and canals can not be used for production; that the
reclassification to first class upland of the 48.2220 hectares of Lot
7-B which was classified by the government expert as second class
upland, and to rolling land of 29.6741 which was classified as hill by
the said expert, was without evidentiary support. 10 chanro bl es virt ual law li bra ry

On the other hand, defendants-appellees Jose M. Lichauco, Trinidad

G. Castillo and Francisco and Jose Castillo contend that creeks and
canals have beds and form part of the irrigated land; consequently,
they should have the same classification as the land in which they
are found; that it is not true that said creeks and canals are not
used for production, because it is a fact that they increase the yield
of the land.chanroblesv irtualawli bra rycha nrob les vi rtua l law lib rary

Anent plaintiff-appellant's contention that the classification by the

government expert of the hill should have been maintained,
defendants-appellees Jose M. Lichauco, Trinidad Castillo and
Francisco and Jose Castillo contend that the classification made by
the government expert was, besides being incompetent, not
authorized by the court; that there was testimonial evidence
showing that the portions, classified as hill are really low elevated
portions. 11
chanro bles vi rtua l law lib ra ry

Regarding Lot 6, owned by the heirs of Macario H. Lichauco,

plaintiff-appellant contends that the upgrading by the trial court to
first class irrigated land of the portions classified by the government
expert as second class (47.8669 hectares) and third class (47.6852
hectares) was not supported by the evidence; that the upgrading to
residential land of the portion (9.0786 hectares) classified by the
government expert as roads, as well as that portion (2.4380
hectares) classified as creeks and canals to first class irrigated, was
not reasonable; and that the roads and canals as public easements
should not be paid for. 12 chanrob les vi rtual law lib rary

Counsels for defendants-appellees Mariano F. Lichauco and the heirs

of Macario H. Lichauco contends, in connection with Lot 6 owned by
the Heirs of Macario H. Lichauco, that the trial court did not in fact
upgrade the creeks and canals, but only recognized their inherent
quality when they were classified as first class irrigated land; that
the feeder roads (which do not include the Tayug-San Quintin
provincial road) are privately owned, that they form part of the
private property of defendants-appellees and were considered by
both patties as portions of the total area under expropriation that
plaintiffs counsel did not interpose any objection, during the field
hearings and ocular inspections conducted by the Commissioners, to
the upgrading of portions of Lot 6; that the trial court classified Lot
6 on the basis of the findings and recommendations of the
Commitee on Appraisal, and plaintiff-appellant did not make an
objection, neither in its pleadings nor in its consolidated objection to
the majority and minority reports, to the classification of the
portions marked on Exhibit A-1 as 1-RM 3-RM6-RM, 7-RM, 9-RM,
10-RM, 16-RM and 17-RM. 13 chan robles v irt ual law li bra ry

But plaintiff-appellant urges that even if the irrigation canals might

be considered registerable, they still form part of the amenities
already included in the valuation of the property and that without
them the valuation of the property should have been lower; that the
17 hectares occupied by roads refer only to provincial and feeder
roads excluding the hacienda roads. 14 chanro bles vi rtua l law lib ra ry

Regarding Lot 7-D,,property of the heirs of Renato Lichauco

plaintiff-appellant contends that the reclassification of the portions
classified by the government expert as creek and canals to first,
second and third class irrigated land the upgrading of the roads to
residential land, and of the river bed to fourth class sugar land, was
not justifiable. 15
chan roble s virtual law libra ry

Regarding the portions belonging to Trinidad Castillo Francisco and

Jose Castillo, plaintiff-appellant contends that the evidence did not
support the upgrading of the second class irrigated ricelands and
creeks and canals in Lot 2 tofirst class irrigated land; that what was
stated in the order of the court of February 9, 1963 as referring to
Lot 5 should refer to Lot 7-C, and what was stated to refer Lot 7-C
really referred to Lot 5; that regarding Lot 7-C, the upgrading of the
3rd class irrigated land as well as the creeks and canals to first class
irrigated land; the upgrading of the 9.2771 hectares of second class
upland together with the .5823 hectares of roads to first class
upland; the upgrading of the hill with an area of 24.2374 hectares
to second class upland; as well as the upgrading of the 23.6284
hectares of river bed as rolling land, were not supported by the
evidence. 16chanrob les vi rtual law lib rary

Defendants-appellees Jose M. Lichauco, Trinidad G. Castillo and

Francisco and Jose Castillo contend, however, that the
reclassification made by the trial court of the areas in Lot 2 was
supported by sufficient evidence. 17Anent plaintiff-appellant's claim
that the roads could not be considered residential land because they
were not registrable, defendants-appellees contend that the area
occupied by the roads had not been previously expropriated or paid
for by the government, and their acreage is included in the
certificate of title covering the hacienda. Regarding the
reclassification of portions of Lot 7-C, defendants-appellees argue
that said reclassification was resorted to by the trial court "in order
to cure the defect in both the majority and minority reports which
do not mention any river bed, hill or roads." Defendants- appellees
further contend that the 23.6284 hectares of river bed was
reclassified as rolling lands because such portion is found in the
area classified as rolling lands, suitable for sugar cane or other
crops production; that the roads were classified as first class
irrigated riceland because they were found in first class irrigated rice
lands. The alleged "error" pointed to by plaintiff-appellant, stating
that while the order of February 9, 1963 states that the amendment
on paragraph 23, page 18 of the decision refers to Lot 5 it should
actually refer to Lot 7-C and that the amendment on paragraph 19,
page 18 of the decision while referring to 7-C should actually refer
to Lot 5, is simply a clerical error committed by the typist and not a
mistake of fact committed by the trial court, hence there is
absolutely no basis for plaintiff-appellant's imputation of "lack of
care and scrutiny and failure of the trial court to fully appreciate the
matter presented before it for determination." 18 chanrob les vi rtual law lib rary

Regarding the share of Mariano Lichauco in Lot 5, plaintiff-appellant

contends that the upgrading made by the court of the 15.4957
hectares of second class irrigated land to first class irrigated land,
and the 6.8362 hectares of roads to first class irrigated land, as well
as the 3.9545 canals and creeks into first class irrigated land, was
without basis. Regarding the portion of Lot 7-A of Mariano Lichauco,
plaintiff-appellant contends that the evidence does not support the
reclassification by the court of the 10.7734 hectares second class
upland as first class upland, and the 10.7757 hill as rolling land. 19 chanrob les vi rtua l law lib rary

Counsel for the heirs of Macario M. H. Lichauco contends that the

reclassification of Lots 7-A and the bigger northern portion of Lot 5
belonging to said heirs was correct, based on the evidence on
record regarding the actual description and productive capabilities
as verified during the field hearings and ocular inspection held by
the Committee on Appraisal; that the classification made by
plaintiff-appellant was vitally defective in that it was based upon
land capability for rice production alone instead of considering all
the legitimate uses to which the land might be put that the
parcellary plan proposed by plaintiff-appellant did not reflect the
true nature of the land at the time of the expropriation, because
said plan had been made many years previous to the expropriation
and did not take into account the improvements introduced. 20 chanroble s virtual law lib rary

Anent the valuation of the different classes of land, plaintiff-

appellant contends that the valuation made by the trial court was
not fair because the court took into consideration the following: the
sale of two parcels of land which were very far from the hacienda,
the valuation of property as of 1961 when hearings before the
Commissioners were made, instead of December 2, 1957, which
was the date of the filing of the complaint, pursuant to Section 5 of
Rule 69 of the old Rules of Court; and the decreasing purchasing
power of the peso. Plaintiff's-Appellant insists that the appraisal of
the government expert should be maintained. 21 chanroble s virtual law l ibra ry

Regarding the valuation of the property, counsel for defendants-

appellees Jose M. Lichauco, Trinidad Castillo and Francisco and Jose
Castillo maintains that it was not a mistake for the commissioners
on appraisal to consider the valuation as of 1961, that is, at the
time of the taking, instead of at the time of the filing of the
complaint, and in support thereof cites, among others, the decisions
in the cases of Manila Railroad Co. v. Caligsahan, 40 Phil.
326; Provincial Government of Rizal vs. Caro de Araullo, 58 Phil.
308; Republic of the Philippines vs. Narciso, et al., No. L- 6594, May
18, 1956; and Municipal Government of Sagnay v. Jison, et al., No.
L-10484, December 29, 1958.22. chanroblesv irt ualawli bra rycha nrobles vi rtual law lib rary
3. In discussing the fourth assigned error plaintiff-appellant
contends that the trial court erred in not finding that the valuation
of P4,000.00 per hectare demanded by the defendant landowners in
their "motion to dismiss" which value included sentimental value,
should set the ceiling price for the just compensation to be awarded
them, citing the rulings of this Court in Republic vs. Narciso,
supra and in Republic vs. Yaptinchay, et al., No. L-13684, July 26,
1960. Plaintiff-appellant points out that as per decision of the lower
court the total value fixed is P4,957,601.86 for the 990.1725
hectares, which gives a value of P5,006.80 per hectare, a price that
is more than the P4,000.00 demanded by the
defendants. 23chanro bles vi rtua l law lib ra ry

Counsel for defendants-appellees Jose M. Lichauco, Trinidad G.

Castillo and Francisco and Jose Castillo con. tends that defendants-
appellees did not demand in their motion to dismiss P4,000.00 per
hectare, but a higher price, as shown by their prayer wherein they
ask that, after excluding Lots 8, 9 and 12, plaintiff be ordered to
pay defendants the amount of P6,378,000.00 for the land and the
improvements thereon 24; that the case of Republic vs. Narciso
supra, cited by plaintiff- appellant, is not applicable to their case
because herein defendants-appellees testified on the prices
demanded by them which were higher than the average price of
P4,000.00 per hectare. 25 chanrob les vi rtua l law lib rary

Defendants-appellees Mariano F. Lichauco and the Heirs of Macario

M. H. Lichauco contend that although defendants-appellees had
mentioned in their motion to dismiss P4,000.00 as the value per
hectare, that tentative price was superseded by the "Agreement and
Joint Motion" of March 23, 1961, and that to consider that amount
as the ceiling price in determining the value of the property would
be a violation of the agreement. 26 chanrob les vi rtual law li bra ry

Defendants-appellees Maria Lichauco and Amanda de la Cruz

contend that all the pleadings, the issues raised and allegations
made by the parties, have been superseded by the "Agreement and
Joint Motion" which was approved by the trial court. The parties had
set a minimum price - the provisional value of P990,172.50 - but no
maximum price; that the "Agreement and Joint Motion" was a
binding compromise between the parties, and any matter alleged in
their previous pleadings which are omitted in the "Agreement and
Joint Motion" must be taken to have been intentionally omitted, and
that the parties agreed further that the valuation was to be left to
the court. 27
chanrob les vi rtua l law lib rary

4. In discussing the fifth and sixth assigned errors, plaintiff-

appellant contends that the trial court erred in not considering the
property being expropriated as one whole mass owned by several
co-owners, but instead made a lot by lot classification and
evaluation; and that the trial court erred in not providing in the
decision that the plaintiff shall have the right to buy any increase in
area in G.L.R.O. No. 1 as adjusted and/or adjudicated in favor of
the defendants-co-owners. chanroblesvi rtualaw lib raryc han robles v irt ual law li bra ry

Plaintiff-appellant argues that in the "Agreement and Joint Motion"

signed by the parties on March 23, 1961,the defendants-appellees
considered themselves as co-owners of the property being
expropriated, and so they should be considered not as owners in fee
simple of separate parcels which are not covered by separate titles,
but only as owners of certain rights and interests in the property, in
which case the appraisal should have been made of the property as
a whole without regard to the separate individual interests of each
of the defendants-appellees. Moreover, plaintiff-appellant asserts
that an area of about 144.0681 hectares, which was still the subject
of judicial determination in G.L.R.O. Case No. 1, might be added to
the area of 990.17250 hectares which is being expropriated, and in
the event said additional area is adjudicated to defendants-
appellees the plaintiff-appellant, by the express terms of the
"Agreement and Joint Motion" has the right to buy the same at the
expropriation price, but this price cannot be known as the
classification of the probable excess area is also unknown. Plaintiff-
appellant, therefore, submits that the whole property should have
been valued in its entirety and a lump sum valuation per hectare
should have been given so that plaintiff-appellant would know at
what price it would buy the excess portions, if adjudicated in favor
of defendants-appellees. 28 cha nrob les vi rtua l law lib rary
Defendants-appellees Jose M. Lichauco, Trinidad G. Castillo and
Francisco and Jose Castillo contend that the "entity or unit theory of
evaluation" proposed by plaintiff-appellant is not tenable in the
instant case because the stipulation of the parties in the
"Agreement and Joint Motion" provides precisely for separate sale of
the alloted parcels and separate payment to the individual owners
thereof. 29 chanrob les vi rtual law lib rary

Defendants-appellees Maria Lichauco and Amanda de la Cruz argue

that the plaintiff-appellant objects to lot by lot classification, and yet
it submitted a lot by lot classification of the Hacienda El
Porvenir 30which was later incorporated in its brief; that the parties
agree that the defendant-co-owners should be paid according to the
areas they agreed to sell; 31 that on pages 19 and 20 of its brief
plaintiff-appellant made classifications of portions of Lot 7-E, and on
page 31, of Lot 7-D.32 chan roble s virtual law l ibra ry

In reply, plaintiff-appellant argues that while it was true that it

submitted a lot by lot classification, it did so upon the instance of
the trial court as shown in the latter's order of April 11, 1962. 33 chanro bles vi rtua l law lib ra ry

Defendants-appellees Maria Lichauco and Amanda de la Cruz offer

no objection to the sixth assigned error, although they believe that
the inclusion in the decision of the lower court of the matter treated
in the sixth assigned error might be premature, because the option
to buy depend upon a condition, that is, in the event the increase in
area be adjudicated to defendants - which event had not yet
happened when the decision was
made. 34 chanroble s virtual law l ibra ry

We shall now resolve the issues raised in the second, third, fourth,
fifth and sixth errors assigned. chanroble svi rtualaw lib raryc han robles vi rt ual law li bra ry

We find to be untenable the contention of plaintiff-appellant that the

trial court erred in making a classification of every lot owned by
each of the owners of the hacienda rather than considering the
whole hacienda as one whole mass owned by several co-owners.
The record clearly shows that the hacienda had already been
partitioned among the several heirs such that each one of the
defendants-appellees owned his/her portion separate and distinct
from that of the others. In this connection, the following ruling is
pertinent:

It has been held to be wrong to value three separate owned parcels

as one and allocate the amount among the owner even though the
parcels had originally been in single ownership and were thereafter
divided among the owners, who were members of one family. (27
Am Jur 2d p. 17, citing Kessler v. States, 21 App Div 2d 568, 251
NYS 2nd 487, the court saying that there was not the necessary
unity of ownership for lumping the parcels together for evaluation.)

We made a careful study of the record and the evidence, and it is

Our considered view that the findings and conclusion of the lower
court regarding the classification of the different portions of the
lands belonging to the defendants-appellees and the value for each
kind of land should not be disturbed. 35The lower court says:

The commissioners of appraisal, more particularly, the members

who signed the majority report, have not only based their report on
the different deeds of sale presented during the hearings, but upon
the actual inspections made by all the members of the committee
on appraisal. The Court, after having reviewed the evidence
presented during the hearings of the said committee, and taking
into consideration the various deeds of sale presented by the
defendants, the fact that the purchasing power of the peso has been
going down from the time the complaint for eminent domain was
filed by the plaintiff, the majority report of the commissioners, as
well as that of the minority and the cases decided heretofore cited,
hereby, fixes as the reasonable and fair market value of the land
under the present expropriation proceedings as follows: chanrob les vi rtua l law lib rary

1st class irrigated riceland ......................... P5,500.00 per ha. chanroblesv irt ualawli bra rychan rob les vi rtual law lib rary

2nd class irrigated riceland ........................ 4,500.00 per ha. chanroblesv irt ualawli bra rychan rob les vi rtual law lib rary

3rd class irrigated riceland ......................... 4,000.00 per ha. chanroble svi rtualawl ib raryc hanrobles vi rt ual law li bra ry

1st class sugarcane land ............................ 4,500.00 per ha. chanroblesv irt ualawli bra rychan rob les vi rtual law lib rary

4th class sugarcane land ............................ 3,000.00 per ha. chanroblesv irt ualawli bra rychan rob les vi rtual law lib rary
1st class upland ........................................... 4,000.00 per ha.
law libra ry
chanroblesvirtualawlibrarychanrobles virtual

2nd class upland .......................................... 3,500.00 per ha.

law libra ry
chanroble svi rtualawl ib raryc hanrobles vi rt ual

Rolling lands ................................................. 1,500.00 per

ha. chanroblesvi rtua lawlib rary chan roble s virtual law l ibra ry

Residential land ............................................ 1.00 per sq. m. 36

libra ry
chan robles v irt ual law

It cannot be said that the lower court erred in not adopting the price
proposed by plaintiff-appellant, because the preliminary estimate of
value made upon filing a declaration of taking, in expropriation
proceeding, is not conclusive as to value. The deposit of estimated
compensation by the Government is not evidence of value and said
deposit of estimated compensation does not establish a minimum
for an award. 37 chanroble s virtual law l ibra ry

It cannot be said, either, that the lower court erred in not adopting
the P4,000.00 per hectare allegedly asked by the owners in their
amended motion to dismiss the complaint. The sentimental value of
the property to its owners is not an element in the determination of
damages. 38The defendants-appellees simply made an estimate of
the price of their lands. Such estimate can not be considered as the
maximum price that the defendants-appellees ask, as the motion
itself states that the defendants "have no data at this moment upon
which to base their computation of the market value of the land",
and in the prayer of the same motion the price asked - which was
P6,878,000.00 for the whole property - was certainly more than
P4,000.00 per hectare. Anent the price asked by the owners, it has
been said that -

Neither the price that the owners ask for their property, nor the
assessed value thereof, is relevant in determining the reasonable
market value." (Manila Railroad vs. Mitchell, 49 Phil. 801;
Municipality of Tarlac vs. Besa, 55 Phil. 423; Republic v. Lara, et al.,
96 Phil. 170.)

and, as this Court has already said, in cases of expropriations for

the benefit of a few a more liberal interpretation of just
compensation may be adopted. Thus, in the case of Republic v.
Gonzales, 94 Phil. 956, 961, this Court said:

Parenthetically, in expropriations like this - for the benefit of other

individuals, not directly benefitting the public - it might be
interesting to inquire whether a more liberal interpretation of 'just
compensation' should be adapted in favor of the owner who is
compelled to part with his private property for the exclusive benefit
of the few. Consider that unlike other eminent domain proceedings,
this does not directly benefit him as part of the "public"....

Anent the sixth error assigned by plaintiff-appellant, it cannot be

denied that plaintiff-appellant has a right to buy any increase in
area in G.L.R.O. No. 1 that might be finally adjudicated by the court
to defendants-appellees, because it was expressly stipulated in
paragraph 5 of the "Agreement and Joint Motion" of March 23, 1961
that in the event that the difference in area in G.L.R.O. No. 1 still
subject of judicial determination is adjusted and/or adjudicated in
favor of defendant-co-owners, "the plaintiff shall have the option to
buy the said portions in question as adjudicated and pay the
corresponding price as in this expropriation case". This stipulation
has the force of law between the contracting parties and should be
complied with. 39chanrob les vi rt ual law lib rary

In this connection, this Court takes judicial notice of the fact that on
December 29, 1971 it rendered a decision in the case of "Benito
Ylarde et al., petitioners vs. Crisanto Lichauco, et al., etc.,
respondents", G. R. No. L-22115, 40 which settled the question
regarding the claim of certain parties of portions of the Hacienda El
Porvenir that were allegedly in excess of the lands covered by the
survey plan which was the basis of Original Certificate of Title No. 7
that was issued pursuant to the decree of registration No. 1178 in
G.L.R.O. No. 1. The decision in the Ylarde case relates to the area
mentioned in paragraph 5 of the "Agreement and Joint Motion" of
March 23, 1961 41and in the sixth error assigned by the plaintiff-
appellant in the present case. This decision in the Ylarde case,
however, does not determine the definite area that was the subject
of controversy, because this Court simply ruled that the decree of
registration in G.L.R.O. No. 1 had become final and absolute and
could no longer be reopened, and so the survey plan that served as
the basis of the decree of registration was thereby upheld. The
increase in area contemplated in the "Agreement and Joint Motion"
is a matter that has yet to be the subject of a hearing before the
Court of First Instance of Pangasinan to determine the exact extent
of that "increased area" to be expropriated. There is also a need of
determining the classification of the lands included in the "increased
area", as well as the value of that increased area", and the
proportion that should correspond to each defendants-appellees
and/or their successors in interest. It must be stated, that the trial
court should be guided by the classification and evaluation adopted
by it in deciding this case in the first instance, with particular
observance of the stipulations in the "Agreement and Joint Motion"
of March 23, 1961. The hearing in the court regarding the
"increased area", however, should not delay the finality and
execution of the judgment in the present case in so far as the
990.17250 hectares of the Hacienda El Porvenir are concerned. chanroblesv irt ualawli bra rychan rob les vi rtual law lib rary

5. Plaintiff-appellant, in discussing the seventh assigned error,

claims that the trial court erred in not deducting from the total
valuation of the property the value of two school sites previously
donated by the landowners to the municipal government of Tayug,
Pangasinan, namely: one hectare for the school site at barrio Saleng
within Lot 5 which belongs to Mariano Lichauco; and 1.8 hectares
for the school site at barrio C. Lichauco, found in Lot 2 which
belongs to Trinidad G. Castillo, Francisco Castillo and Jose Castillo.
Plaintiff-appellant contends that the Committee on Appraisal ruled
that said school sites should be excluded in the computation of the
price of the expropriated lands 42; that the school sites had in fact
existed for several years; that the donation of the site at Barrio
Saleng is evidenced by Exhibit 4, but that the trial attorney failed to
present the deed of donation of the school site at Barrio C.
Lichauco, which would have been Exhibit K. 43 chanrob les vi rtua l law lib rary

Regarding the 1.8 hectares school site at Barrio C. Lichauco,

defendants-appellees Jose M. Lichauco, Trinidad G. Castillo and
Francisco Castillo contend that said school site is within the lot that
belongs to Trinidad Castillo only; that there was no evidence
presented to show the donation thereof; but that, on the contrary,
there was never any intention to donate that lot for use as a school
site; that said lot had never been expropriated or paid for; that the
owner has been trying to collect the price thereof from the
government; and that the presence of the school therein was
merely tolerated by the
owner. 44chanro bles vi rtua l law lib ra ry

In connection with the seventh assigned error, it appears in Exh.

"J", which is a Deed of Donation dated October 5, 1953, that
Mariano F. Lichauco donated for school purposes 5,000 square
meters of Lot No. 5, situated in the district of Saleng, to the
Municipality of Tayug and that the donation was accepted by the
Municipal Mayor in representation of the Municipal Council of Tayug.
Said school site, therefor, belongs to the Municipality of Tayug, and
is no longer a Part of the Hacienda El Porvenir. Consequently, it
should not be considered as part of the lands sought to be
expropriated, and the lower court should have deducted its value
from the expropriation price. chanroble svirtualawl ibra ryc hanro bles vi rtua l law li bra ry

It is not disputed between the parties that the 1.8 hectare school
site at Barrio C. Lichauco is part of the Hacienda El Porvenir. One of
the characteristics of ownership is perpetuity. Ownership lasts for as
long as the thing owned lasts, and it is not extinguished by non-
user but only by adverse possession when ownership is transferred
to another. 45Moreover, lands covered by a Torrens title, as in the
case of this school site which is a part of Lot 2 of the Hacienda El
Porvenir, cannot be the subject of prescription. 46 Plaintiff-appellant
claims that this school site had been donated to the Municipality of
Tayug. However, no public instrument has been presented by
plaintiff-appellant to prove that it had been donated to the
Municipality of Tayug. A donation of a piece of land is effected only
through a public document executed in accordance with law. 47 It
cannot, therefore, be said that the lower court erred in not
deducting from the expropriation price of the Hacienda El Porvenir
the value of the 1.8-hectare school site at Barrio C. Lichauco. chanroble svirtualawl ibra rycha nro bles vi rtua l law lib ra ry

6. In discussing the eighth error assigned, plaintiff-appellant

contends that the trial court erred in holding that the plaintiff-
appellant did not have the right and option to choose where the
areas to be retained by defendants-appellees should be taken out of
the whole property. Plaintiff-appellant argues that it should have
been given the right to choose because certain areas of the property
were occupied by tenants for whose benefit the expropriation was
instituted, and if said occupied areas were the ones segregated
more serious problems would arise. 48 chan roble s virt ual law l ibra ry

Defendants-appellees Maria Lichauco and Amanda de la Cruz

contend that the plaintiff did not have the option to choose where
the retained areas should be taken from, because, as plaintiff-
appellant says in its brief, "there is an agreement on the general
configuration of the area, and the location of the lands that are to
be retained by the defendant-landowners". 49 chan robles v irt ual law li bra ry

This Court has ruled that as regards the area to be retained by the
owner of the property under expropriation, the parties are expected
to come to an agreement on the portion to be exempt from
expropriation, and that in case the parties cannot agree the court
shall settle the issue. Thus, in the case of Land Tenure
Administration vs. Ceferino Ascue, et al., L-14969, April 29,
1961, 50it was held that since Republic Act No. 1400 is silent on how
the portion exempt from expropriation should be determined, the
procedure in the Rules of Court on eminent domain should be
applied. The one seeking to exercise the right of eminent domain
should initially determine the property or portion to be expropriated.
The owner of the property may in turn object thereto for valid
reasons. Once the issues have been joined, the court shall settle the
same in accordance with law. This Court said:

It is, therefore, our considered opinion that Congress did not intend
to give the landowner the power to choose, either what portion shall
be expropriated or what portion shall be exempt from expropriation
that, initially, the parties are, therefore, expected to try to reach an
agreement, if they can, on the area to be expropriated and/or the
area to be excluded from exropriation proceedings; and that, in the
event or disagreement, the courts of justice shall settle the issue,in
accordance with the spirit and purpose of the law and the demands
of justice, equity and fair play.
It appears in the "Agreement and Joint Motion" of March 23, 1961
that the parties had agreed that the different owners retain certain
portions "reflected on the sketch plan hereto attached and made an
integral part hereof as Annex "A". 51The parties having agreed on
the area to be retained and the location thereof, plaintiff-appellant
cannot claim that it had the right to choose where the retained
areas should be taken, but should comply with the agreement. The
trial court simply gave effect to that agreement. chanroblesvi rtualaw lib raryc han robles v irt ual law li bra ry

7. Regarding the ninth assigned error, plaintiff-appellant contends

that the trial court erred in not providing that the additional
provisional payment of P500,000.00 should be deducted from the
total balance due to defendants-appellees and that said amount
should not earn interest from September 10, 1961 when plaintiff-
appellant took possession of the property to August 30, 1962 when
said amount was paid, because that was the agreement of the
parties as evidenced by motion of the parties and the order of the
court dated January 3, 1962. 52 chanroble s virtual law lib rary

Defendants-appellees Jose M. Lichauco, Trinidad Gonzales Castillo

and Francisco and Jose Castillo agree that the plaintiff- appellant is
relieved of the payment of interest on the additional provisional
payment of P500,000.00 from September 10, 1961 to August 30,
1962. 53chanroble s virtual law l ibra ry

Plaintiff-appellant's contention in the ninth assignment of error is

meritorious. There is no question that the additional provisional
payment of P500,000.00 ordered by the trial court on January 3,
1962, 54and complied with by plaintiff-appellant on August 30,
1962, 55should be deducted from the total balance of the value of
the property expropriated and should not earn interest. Said
amount should have earned interest from the date plaintiff-
appellant took possession of the property on September 10, 1961
until the date it was paid on August 30, 1962, had it not been for
the waiver of said interest, as appears in paragraph of the "Joint
Agreement and Motion" dated January 2, 1962. 56Consequently said
amount of P500,000.00 should not earn interest from September
10, 1961 to August.30, 1962. chanroble svi rtualawl ib raryc hanrobles vi rt ual law li bra ry
8. Regarding the tenth assigned error, plaintiff-appellant claims that
the trial court erred in not providing in the decision that payment be
made to the creditor banks in order that all liens and encumbrances
on the property be cancelled, inasmuch as that was the agreement
of the parties as evidenced by the "Agreement and Joint Motion". 57
virtua l law lib rary
chanro bles

The tenth error assigned by plaintiff-appellant is also meritorious.

The lower court should really have approved in the decision that the
mortgages on the expropriated lands should be paid to the creditor
banks out of the value of the expropriated lands, for it is but right
that the government acquires the lands free from all liens and
encumbrances. 58 chanro bles virtual law lib rary

We now take up the errors assigned by some of the defendants. chanroblesvi rtua lawlib rary chan robles v irt ual law l ibra ry

Defendants Jose M. Lichauco, Trinidad Gonzales Castillo, and

Francisco and Jose Castillo, as appellants, contend that the trial
court committed the following errors:

1. In following the "Supplementary Report to Exh. A" in deciding

this case insofar as it affected Lots No. 1, 2, portions of 5, 7-B and
7-C of defendants-appellants herein. chanroblesv irt ualawli bra rycha nrob les vi rtua l law lib rary

2. In not finding and holding that Lots Nos. 1 and 2 and portions of
Lot No. 5 belonging to defendants-appellants are first class naturally
irrigated rice lands yielding annually from 60 to 85 cavanes per
hectare; and that the true, correct and fair market value thereof is
P6,500.00 per hectare and that of the residential land is Pl.20 per
sq. m. which values plaintiff-appellee should pay. chanroblesvi rtua lawlib rary chan robles v irt ual l aw libra ry

3. In not finding and holding that 18.67 hectares of Lot No. 7-B and
37.18 hectares of Lot No. 7-C belonging to defendants-appellants
are first class naturally irrigated rice lands yielding annually from 40
to 60 cavanes of palay per hectare, and that the true, correct, fair
and reasonable market value thereof is P5,500 per hectare and that
of the residential land is Pl.20 per sq. m. which plaintiff-appellee
should pay. chanroblesv irt ualawli bra rychan rob les vi rtual law lib rary

4. In not finding and holding that the 15.85 hectares of non-

irrigated rice land and 65.80 hectares of sugar upland of Lot No. 7-B
has a true, correct, fair and reasonable market value of P4,500 per
hectare as sugar cane land or P4,000 as first class rice upland which
plaintiff-appellee should pay.
chanroblesv irt ualawli bra rychan rob les vi rtual law lib rary

5. In not finding and holding that the 37.7912 hectares of rice land
or sugar cane upland of Lot No. 7-C has a true, correct, fair and
reasonable value of P4,500 per hectare as sugar land or P3,000 per
hectare as rice upland which plaintiff-appellee should pay. chanroblesvi rtua lawlib rary chan roble s virtual law l ibra ry

6. In not fixing and determining the true, correct, and fair market
values of the disputed excess areas separately owned by the
defendants-appellants which should be paid to them respectively
should the same be adjudicated to them.

9. In support of their first assigned error, herein defendants-

appellants contend that the trial court ordered on April 11, 1962 the
Land Tenure Administration, more particularly Mr. Juvenal R.
Raguini, to submit a report supplementary to Exhibit A indicating
what lots the irrigated lst class and the irrigated 2nd class lands
were found, etc., and in compliance therewith Mr. Raguini submitted
on October 1, 1962 the "Memorandum of Mr. Juvenal Raguini, Lot
by Lot Area and Classification of Hda. El Porvenir", against which
memorandum herein defendants-appellants filed their opposition. In
its decision, the lower court stated that Mr. Raguini, on complying
with the order of the court, exceeded his authority "because he had
reclassified the land not in accordance with the report of the
commissioners but, perhaps, in accordance with his opinion."
Notwithstanding said observation, however, the trial court
followed in toto the classification made by Mr. Raguini in the
Supplementary Report, Exh. A-1 Supplement, and it thus erred
when it found that in Lot No. 7-B only 2.4696 hectares are first
class irrigated riceland, 4.1865 hectares are second class irrigated
riceland, 48.2220 are first class upland, and 29.6741 hectares are
rolling land; and that in Lot No. 7-C there are 21.3487 hectares of
first class riceland, 9.8595 of first class upland, 24.2378 hectares of
second class upland, and 23.6286 hectares rolling land. These
defendants-appellants further contend that said supplementary
report was not presented as evidence during the hearings before
the Commissioners, and did not, therefore, form part of the
competent evidence to be considered by the court. 59 chan roble s virtual law l ibra ry

Plaintiff as appellee, on the other hand, contends that although

defendants-appellants considered the presentation of
Supplementary Report to Exh. A as an error committed by the trial
court, it appears that defendants-appellants adopted the same and
contest only the correctness of the respective classification of the
land made by Mr. Raguini. 63 chanro bles vi rtua l law lib ra ry

In reply, defendants-appellants state that they did not adopt the

Supplementary Report to Exh. A, as shown by the fact that they
submitted their own parcellary plans, Exhibits "1" and "1-A, Trinidad
Manolo and Minors." 61 chanroble s virtual law lib rary

10. Regarding the second, third, fourth, and fifth errors assigned,
defendants-appellants Jose M. Lichauco, etc., argue that Mr. Raguini
classified Lots Nos. 1, 2 and 5 of plan Exhibit "1", from which plan
Exh. "A-1" was copied, as first class irrigated land, but he opined
that the productivity per hectare was only from 40 to 60 cavanes
per hectare basing his opinion on the rates of production found for
the different kinds of soil in the books of the College of Agriculture
of the University of the Philippines, as set by the Bureau of Lands.
These appellants, however, claim that the uncontradicted
testimonies of witnesses for the defendants-appellants was that the
actual production was from 60 to 85 cavanes per hectare. Mr.
Raguini also classified portions of Lots 7-B and 7-C basing their
productivity in the books of the College of Agriculture as against the
uncontradicted testimonies of defendants-appellants, which parcels
are naturally irrigated, unlike the Hacienda Gonzales which was
irrigated by pump. 62chan roble s virt ual law l ibra ry

Plaintiff as appellee maintains that defendants-appellants do not

claim that the classification by the trial court of Lot 1 owned by Jose
Manuel Lichauco as first class land irrigated was erroneous, but only
that it should be a special kind of first class irrigated land which
should be evaluated at P6,500.00 per hectare, allegedly because the
actual production is from 60 to 85 cavanes per heetare. 63 chan roble s virtual law l ibra ry
Regarding Lot 7-B, plaintiff as appellee contends that it was at a
loss as to how defendants-appellants arrive at their conclusion and
claim that an area of 18.67 hectares should be classified as first
class irrigated riceland, to be valued at P5,500 per hectare, and that
15.85 hectares should be considered non-irrigated riceland to be
valued at P4,000 per hectare. In relation to Lot 7-C, plaintiff as
appellee also claims that it does not know how defendants-
appellants arrived at the size of 37.7912 hectares which the latter
claimed either to be sugar land to be valued at P4,500 per hectare,
or rice upland to be valued at P3,000 per hectare. 64Furthermore,
the demand of the defendants-appellants in their motion to dismiss
was only P4,000 per hectare. The average price of P5,006.80 given
by the trial court for the expropriated lands was already far in
excess of the P4,000 per hectare demanded by the defendants-
appellants.chanroblesv irtualawl ibra rycha nrob les vi rtua l law lib rary

The first to the fifth errors assigned by defendants-appellants Jose

M. Lichauco, Trinidad Gonzales and Francisco and Jose Castillo
question the correctness of the finding of the lower court regarding
the valuation of the lands owned by them. We have already ruled
that the lot classification and the valuation made by the lower court
of the lands sought to be expropriate are reasonable and fair, and
should not be disturbed. chanroble svirtualawl ibra ryc hanro bles vi rtua l law li bra ry

11. Regarding the sixth error assigned by the defendants-

appellants, that the trial court should have fixed and determined the
fair market value of the disputed excess area, We have already
adverted to that the matter of determining the exact area of that
excess or "increased area", its classification, its valuation, and the
proportionate share of the defendants-appellees are matters that
should be determined by the lower court in a hearing specially held
for the purpose. 65 chan roble s virtual law l ibra ry

We find that the findings of the lower court regarding the areas of
the portions or lots belonging to each of the defendants-appellees
and/or their successors in interest, the classification of the lands
and the value of the lands according to classification, are supported
by the evidence. Excepting possible errors in mathematical
computation, the following, based on the findings of the lower court
as regards the area, land classification, and valuation per hectare as
classified, should be the amounts representing the value of the
portions of the Hacienda El Porvenir respectively owned by the
defendants-appellees and/or their successors in interest which are
expropriated by the plaintiff-appellant:

A. OF AMANDA DE LA CRUZ

Kind Area in Price

per

hectare hectare Value

1st class riceland 24.0721 P5,500 P132,396.55

2nd class riceland 12.4740 P4,500 56,133.00

1st class 21.2260 P4,500 95,517.00

sugarcane land

4th class 20.1487 P3,000 60,446.10

sugarcane land

1st class .3806 P5,500 2,093.30

riceland(creeks &
canals)

2nd class riceland .1902 P4,500 855.90

(creeks & canals)

Residential 1.9946 Pl/sq.m. 19,946.00

______
virtua l law lib rary
chanroble s ________ chanrobles vi rtual law lib rary

80.4862 P367,387.85.
chanrobles vi rt ual law li bra ry

B. OF JOSE M. LICHAUCO

Kind Area sold Price

in per
hectares hectares Value
Lot 1 -
1st
class
irrigated 121.9865 P5,500 P670,925.75
Lot 7-B
- 1st
class
irrigated 2.4696 P5,500 13,582.20
2nd 4.1865 P4,500 18,839.25
class
irrigated
3rd 5.3748 P4,000 21,499.20
class
irrigated
1st 48.2220 P4,000 192,888.00
class
upland
Rolling 29.6741 P1,500 44,511.15
land
______
libra ry
chanrobles v irt ual law ________ chanroble s virt ual law l ibra ry

211.9135 P962,246.15

C. OF THE HEIRS OF MACARIO H. LICHAUCO namely, Romeo,

Lourdes, Mauricio, Narcisa, Walter, Daisy, Herminia, Orlando,
Titania, Norman, Jesus, Salvador, Mario, Helena, and Arturo, all
surnamed Lichauco and Modesto Cabato.

Kind Area sold Price per

in

hectares hectare Value

1st class
irrigated
 riceland 145.0072 P5,500 P797,539.60

1st class 57.7698 P4,000 231,079.20

upland

Residential 15.3777 Pl/sq.m. 153,777.00

1st class
irrigated

(creeks & 2.4380 P5,500 13,409.00

canals)

_______
virtua l law lib rary
chanrobles __________
libra ry
chanrobles vi rtua l law

220.5927 P1,195,804.80

D. OF THE HEIRS OF RENATO (RENE) LICHAUCO, namely, Maria R.

Vda. de Lichauco, Crisanto Lichauco, and Marieta Lichauco.

Kind Area in Price per

hectares hectare Value

Irrigated first 18.8845 P5,500 P103,864.75

class

Irrigated second 5.9578 P4,500 26,810.10

class

Irrigated third 15.6157 P4,000 62,462.80

class

Residential .9463 P1/sq.m. 9,463.00

First class 27.2508 P4,000 109,003.20

upland

Fourth class 15.4831 P3,000 46,449.80

sugarland

84.1382 P358,053.15
chanrobles vi rt ual law li bra ry

E. OF MARIANO LICHAUCO
 Kind Area in Price
per

hectares hectare Value

Lot 5:

1st class 129.27935 P5,500 P711,036.43

irrigated

1st class 4.3765 P4,000 17,506.00

upland

Lot 7-A:

1st class 31.1835 P5,500 171,509.25

irrigated

2nd class 11.3272 P4,500 50,972.40

irrigated

1st class 10.7734 P4,000 43,093.64

upland

Rolling land 10.7757 P1,500 16,163.55

_______
libra ry
chanrobles vi rt ual law __________
libra ry
chanrobles vi rtua l law

197.71565 P1,010,281.23
chanrobles vi rt ual law li bra ry

From the value of Mariano Lichauco's land is to be deducted the

value of 5000 square meters in Lot No. 5 donated to the
Municipality of Tayug for school purposes in Barrio Saleng. The
evidence does not disclose where this school site is located, whether
in the first class irrigated or in the first class upland. Instead of
having the value of this school site determined by the lower court in
a hearing for the purpose, in order to avoid delay, We may just as
well compute the value of the 5000 square meter on the basis of
the average value of the hectare in Lot No. 5. The portion of Lot No.
5 pertaining to Mariano Lichauco is 133,65585 hectares, having a
value of P728,542.43, thus giving P5450.88 as the value per
hectare. The 5000 sq.m., or hectare, will then be valued at
P2725.44; and deducting this P2725.44 from Pl,010,281.23 there
will remain Pl,007,555.79 as the total value of the land
corresponding to Mariano Lichauco.

F. OF TRINIDAD CASTILLO GONZALES

Kind Area in Price per

hectares hectare Value

Lot 2:

1st class 15.056 P5,500 P82,808.00

irrigated

Residential 6.7382 Pl/Sq.m. 67,382.00

Lot 7-C:

1st class 10.6743 P5,500 58,708.65

irrigated

1st class upland 4.0000 P4,000 16,000.00

2nd class upland 21.447226 P3,500 75,065.29

Rolling land 5.2074084 Pl,500

7,811.11

Lot 5:

1st class 10.61356 P5,500 58,374.58

irrigated

Residential 3.8944 P1/sq.m. 28,944.00

________
libra ry
chanrobles vi rtual law _________
libra ry
chanroble s virt ual law

77.6310944 P405,093.63.
chanrobles vi rt ual law li bra ry

G. PORTION OF FRANCISCO & JOSE CASTILLO

Kind Area in Price per

hectares hectare Value

Lot 2:
 1st class 67.7104 P5,500 P372,407.20
irrigated

Residential .40 P1/sq.m. 4,000.00

Lot 7-C:

1st class 10.6743 P5,500 58,708.65

irrigated

1st class 5.8595 P4,000 23,438.00

upland

2nd class 2.621772 P3,500 9,176.20

upland

Rolling 18.42119160 Pl,500 27,631.79

land

Lot 5:

1st class 8.49759 P5,500 46,736.75

irrigated

Residential 3.1340 P1/sq.m. 31,340.59

117.31875360 P573,348.59
chanrobles vi rt ual law li bra ry

It results that the total value of the lands in the Hacienda El

Porvenir that are being expropriated is P4,872,305.40 which,
divided by 990.1725, gives P4,920.66 as the average value per
hectare. chanroblesvi rtua lawlib rary chan roble s virtual law l ibra ry

As shown in the record, the following payments have been made by

the plaintiff-appellant to the defendants-appellees and/or their
successors in interest:

(1) The provisional payment of P990,172.50, deposited in court on

July 1, 1961. chanroble svirtualawl ibra ryc hanro bles vi rt ual law li bra ry

(2) The additional provisional payment of P500,000.00, deposited in

court on August 30, 1962. By agreement of the parties, approved
by the court, this sum of P500,000.00 should not earn interest from
September 10, 1961, when plaintiff-appellant took possession of the
lands being expropriated, to August 30, 1962 when payment was
made. 66This would give a total of P1,490,172.50 paid as of August
30, 1962 - which did not earn interest. chanroblesvi rt ualawlib ra rychan roble s virtual law lib rary

(3) The sum of P490,172.50, authorized by this Court in

itsresolution of October 12, 1965. 67The record does not show when
this sum was actually paid to the defendants-appellees and/or their
successors in interest. At any rate, the plaintiff-appellant should pay
interest at the legal rate on this amount from September 10, 1961
up to the time when said amount was paid. This would give a total
of P1,980,345.00 thus paid, as of the time the P490,172.50 was
actually paid to the defendants-appellees and/or their successors in
interest.
chanroble svirtualawl ibra ryc hanro bles vi rtua l law lib ra ry

(4) The sum of P495,086.20, representing the advance payment of

P500.00 per hectare, as authorized by the resolutions of this Court
of June 15 and 23, 1970 and July 8, 1970. 68 The record shows that
the Secretary of Finance released said amount sometime in April
1971, although it does not appear when said amount was actually
paid to the defendants-appelees and/or their, successors in interest.
At any rate, the plaintiff-appellant must also pay interest at the
legal rate on this sum of P495,086.20 from September 10, 1961 up
the time said sum was paid. This would give a total P2,475,431.20
thus paid as of the time the P495,086.20 was actually paid to the
defendants-appellees and/or their sucessors in interest.

As We have hereinbefore indicated, the total value the lands in the

Hacienda El Porvenir being expropriated is P4,872,305.40.
Considering that the sum of P2,475,431.2 had already been paid by
plaintiff-appellant, it results that there still remains the balance of
P2,396,874.20 that the plaintiff-appellant should pay to the
defendants-appellants and/or their successors in interest. The
defendant-appellant should pay interest at the legal rate on this
sum P2,396,874.20 from September 10, 1961 until complete
payment is made. 69 chan roble s virtual law l ibra ry

The record shows that the provisional payments of P990,172.50 and

P500,000.00 were divided among the defendant-appellees and/or
their corresponding successors in interest in the manner as provided
in the "Agreement and Joint Motion" of March 23, 1961". 70The
record does not show the subsequent payments of P490,172.50 and
P495,086.20 were divided among the defendants-appellees and/or
their successors in interest, but it is assumed that those sums were
divided among them also in the manner as provided in the
"Agreement and Joint Motion" of March 23, 1961. The balance of
P2,396,874.20 and all the accrued interests, when paid, must be
divided among the defendants-appellees and/or their successors in
interest, also in the manner as provided in the "Agreement and
Joint Motion" of March 23, 1961. 71 chanro bles vi rtual law lib rary

From the amount due to each of the defendants-appellees and/or

their successors in interest must be taken and paid directly to the
creditor banks such amount as may still be due for any mortgage
obligation affecting any parcel of the lands being expropriated, in
order that the government would acquire title to these lands free of
all liens and encumbrances. chanroble svi rtualaw lib raryc han robles v irt ual law li bra ry

WHEREFORE, with modifications as stated in this opinion, the

decision, dated October 26, 1962, and the order, dated February 9,
1963, appealed from, are, in all other respects, affirmed. chanroble svi rtualaw lib raryc hanrobles vi rt ual law li bra ry

Let the record of this case be remanded to the court of origin for the
determination of the exact area, land classification, value and the
division among defendants-appellees and/or their successors in
interest, of the additional area that may still be the subject of
expropriation by the plaintiff-appellant as a result of the decision of
this Court in the case of "Ylarde, et al. vs. Crisanto Lichauco, et al.,
(G.R. No. L-22115). chanrob lesvi rtualaw lib raryc han robles v irt ual law l ibra ry

The attorney's lien of Atty. Rafael Dinglasan, representing 5% of

whatever payment is due to his clients, the defendants-appellees
Jose M. Lichauco, Trinidad G. Castillo, Francisco Castillo and Jose
Castillo, as previouslymade of record in this case by said attorney,
is ordered enforced

DIZON VS CA

[G.R. No. 122544. January 28, 1999]

REGINA P. DIZON, AMPARO D. BARTOLOME, FIDELINA D. BALZA,
ESTER ABAD DIZON and JOSEPH ANTHONY DIZON, RAYMUND
A. DIZON, GERARD A. DIZON, and JOSE A. DIZON, JR., petitioners,
vs. COURT OF APPEALS and OVERLAND EXPRESS LINES,
INC., respondents.

[G.R. No. 124741. January 28, 1999]

REGINA P. DIZON, AMPARO D. BARTOLOME, FIDELINA D. BALZA,

ESTER ABAD DIZON and JOSEPH ANTHONY DIZON, RAYMUND
A. DIZON, GERARD A. DIZON, and JOSE A. DIZON, JR., petitioners,
vs. COURT OF APPEALS, HON. MAXIMIANO C. ASUNCION, and
OVERLAND EXPRESS LINES, INC., respondents.

DECISION
MARTINEZ, J.:

Two consolidated petitions were filed before us seeking to set aside and annul the decisions
and resolutions of respondent Court of Appeals. What seemed to be a simple ejectment suit was
juxtaposed with procedural intricacies which finally found its way to this Court.

G. R. NO. 122544:

On May 23, 1974, private respondent Overland Express Lines, Inc. (lessee) entered into a
Contract of Lease with Option to Buy with petitioners[1] (lessors) involving a 1,755.80 square
meter parcel of land situated at corner MacArthur Highway and South "H" Street, Diliman,
Quezon City. The term of the lease was for one (1) year commencing from May 16, 1974 up to
May 15, 1975. During this period, private respondent was granted an option to purchase for the
amount of P3,000.00 per square meter. Thereafter, the lease shall be on a per month basis with a
monthly rental of P3,000.00.
For failure of private respondent to pay the increased rental of P8,000.00 per month
effective June 1976, petitioners filed an action for ejectment (Civil Case No. VIII-29155) on
November 10, 1976 before the then City Court (now Metropolitan Trial Court) of Quezon City,
Branch VIII. On November 22, 1982, the City Court rendered judgment[2] ordering private
respondent to vacate the leased premises and to pay the sum of P624,000.00 representing rentals
in arrears and/or as damages in the form of reasonable compensation for the use and occupation
of the premises during the period of illegal detainer from June 1976 to November 1982 at the
monthly rental of P8,000.00, less payments made, plus 12% interest per annum from November
18, 1976, the date of filing of the complaint, until fully paid, the sum of P8,000.00 a month
starting December 1982, until private respondent fully vacates the premises, and to
pay P20,000.00 as and by way of attorney's fees.
Private respondent filed a certiorari petition praying for the issuance of a restraining order
enjoining the enforcement of said judgment and dismissal of the case for lack of jurisdiction of
the City Court.
On September 26, 1984, the then Intermediate Appellate Court[3] (now Court of Appeals)
rendered a decision[4] stating that:

"x x x, the alleged question of whether petitioner was granted an extension

of the option to buy the property; whether such option, if any, extended the
lease or whether petitioner actually paid the alleged P300,000.00 to Fidela
Dizon, as representative of private respondents in consideration of the option
and, whether petitioner thereafter offered to pay the balance of the supposed
purchase price, are all merely incidental and do not remove the unlawful
detainer case from the jurisdiction of respondent court. In consonance with the
ruling in the case of Teodoro, Jr. vs. Mirasol (supra), the above matters may be
raised and decided in the unlawful detainer suit as, to rule otherwise, would be
a violation of the principle prohibiting multiplicity of suits. (Original Records,
pp. 38-39)."

The motion for reconsideration was denied. On review, this Court dismissed the petition in a
resolution dated June 19, 1985 and likewise denied private respondent's subsequent motion for
reconsideration in a resolution dated September 9, 1985.[5]
On October 7, 1985, private respondent filed before the Regional Trial Court (RTC) of
Quezon City (Civil Case No. Q-45541) an action for Specific Performance and Fixing of Period
for Obligation with prayer for the issuance of a restraining order pending hearing on the prayer
for a writ of preliminary injunction. It sought to compel the execution of a deed of sale pursuant
to the option to purchase and the receipt of the partial payment, and to fix the period to pay the
balance. In an Order dated October 25, 1985, the trial court denied the issuance of a writ of
preliminary injunction on the ground that the decision of the then City Court for the ejectment of
the private respondent, having been affirmed by the then Intermediate Appellate Court and the
Supreme Court, has become final and executory.
Unable to secure an injunction, private respondent also filed before the RTC of Quezon
City, Branch 102 (Civil Case No. Q-46487) on November 15, 1985 a complaint for Annulment
of and Relief from Judgment with injunction and damages. In its decision[6] dated May 12, 1986,
the trial court dismissed the complaint for annulment on the ground of res judicata, and the writ
of preliminary injunction previously issued was dissolved. It also ordered private respondent to
pay P3,000.00 as attorney's fees. As a consequence of private respondent's motion for
reconsideration, the preliminary injunction was reinstated, thereby restraining the execution of
the City Court's judgment on the ejectment case.
The two cases were thereafter consolidated before the RTC of Quezon City, Branch 77. On
April 28, 1989, a decision[7] was rendered dismissing private respondent's complaint in Civil
Case No. Q-45541 (specific performance case) and denying its motion for reconsideration in
Civil Case No. 46487 (annulment of the ejectment case). The motion for reconsideration of said
decision was likewise denied.
On appeal,[8] respondent Court of Appeals rendered a decision[9] upholding the jurisdiction of
the City Court of Quezon City in the ejectment case. It also concluded that there was a perfected
contract of sale between the parties on the leased premises and that pursuant to the option to buy
agreement, private respondent had acquired the rights of a vendee in a contract of sale. It opined
that the payment by private respondent of P300,000.00 on June 20, 1975 as partial payment for
the leased property, which petitioners accepted (through Alice A. Dizon) and for which an
official receipt was issued, was the operative act that gave rise to a perfected contract of sale, and
that for failure of petitioners to deny receipt thereof, private respondent can therefore assume that
Alice A. Dizon, acting as agent of petitioners, was authorized by them to receive the money in
their behalf. The Court of Appeals went further by stating that in fact, what was entered into was
a "conditional contract of sale" wherein ownership over the leased property shall not pass to the
private respondent until it has fully paid the purchase price. Since private respondent did not
consign to the court the balance of the purchase price and continued to occupy the subject
premises, it had the obligation to pay the amount of P1,700.00 in monthly rentals until full
payment of the purchase price. The dispositive portion of said decision reads:

"WHEREFORE, the appealed decision in Case No. 46487 is

AFFIRMED. The appealed decision in Case No. 45541 is, on the other hand,
ANNULLED and SET ASIDE. The defendants-appellees are ordered to
execute the deed of absolute sale of the property in question, free from any lien
or encumbrance whatsoever, in favor of the plaintiff-appellant, and to deliver to
the latter the said deed of sale, as well as the owner's duplicate of the certificate
of title to said property upon payment of the balance of the purchase price by
the plaintiff-appellant. The plaintiff-appellant is ordered to pay P1,700.00 per
month from June 1976, plus 6% interest per annum, until payment of the
balance of the purchase price, as previously agreed upon by the parties.

SO ORDERED."

Upon denial of the motion for partial reconsideration (Civil Case No. Q-45541) by
respondent Court of Appeals,[10] petitioners elevated the case via petition
for certiorari questioning the authority of Alice A. Dizon as agent of petitioners in receiving
private respondent's partial payment amounting to P300,000.00 pursuant to the Contract of Lease
with Option to Buy. Petitioners also assail the propriety of private respondent's exercise of the
option when it tendered the said amount on June 20, 1975 which purportedly resulted in a
perfected contract of sale.

G. R. NO. 124741:
 Petitioners filed with respondent Court of Appeals a motion to remand the records of Civil
Case No. 38-29155 (ejectment case) to the Metropolitan Trial Court (MTC), then City Court of
Quezon City, Branch 38, for execution of the judgment[11] dated November 22, 1982 which was
granted in a resolution dated June 29, 1992. Private respondent filed a motion to reconsider said
resolution which was denied.
Aggrieved, private respondent filed a petition for certiorari, prohibition with preliminary
injunction and/or restraining order with this Court (G.R. Nos. 106750-51) which was dismissed
in a resolution dated September 16, 1992 on the ground that the same was a refiled case
previously dismissed for lack of merit. On November 26, 1992, entry of judgment was issued by
this Court.
On July 14, 1993, petitioners filed an urgent ex-parte motion for execution of the decision in
Civil Case No. 38-29155 with the MTC of Quezon City, Branch 38. On September 13, 1993, the
trial court ordered the issuance of a third alias writ of execution. In denying private respondent's
motion for reconsideration, it ordered the immediate implementation of the third writ of
execution without delay.
On December 22, 1993, private respondent filed with the Regional Trial Court (RTC) of
Quezon City, Branch 104 a petition for certiorari and prohibition with preliminary
injunction/restraining order (SP. PROC. No. 93-18722) challenging the enforceability and
validity of the MTC judgment as well as the order for its execution.
On January 11, 1994, RTC of Quezon City, Branch 104 issued an order[12] granting the
issuance of a writ of preliminary injunction upon private respondent's posting of an injunction
bond of P50,000.00.
Assailing the aforequoted order after denial of their motion for partial reconsideration,
petitioners filed a petition[13] for certiorari and prohibition with a prayer for a temporary
restraining order and/or preliminary injunction with the Court of Appeals. In its decision,[14] the
Court of Appeals dismissed the petition and ruled that:

"The avowed purpose of this petition is to enjoin the public respondent

from restraining the ejectment of the private respondent. To grant the
petition would be to allow the ejectment of the private respondent. We
cannot do that now in view of the decision of this Court in CA-G.R. CV
Nos. 25153-54. Petitioners' alleged right to eject private respondent has
been demonstrated to be without basis in the said civil case. The petitioners
have been shown, after all, to have no right to eject private respondents.

WHEREFORE, the petition is DENIED due course and is accordingly

DISMISSED.

SO ORDERED."[15]

Petitioners' motion for reconsideration was denied in a resolution[16] by the Court of Appeals
stating that:
 "This court in its decision in CA-G.R. CV Nos. 25153-54 declared that the
plaintiff-appellant (private respondent herein) acquired the rights of a vendee in
a contract of sale, in effect, recognizing the right of the private respondent to
possess the subject premises. Considering said decision, we should not allow
ejectment; to do so would disturb the status quo of the parties since the
petitioners are not in possession of the subject property. It would be unfair and
unjust to deprive the private respondent of its possession of the subject property
after its rights have been established in a subsequent ruling.

WHEREFORE, the motion for reconsideration is DENIED for lack of merit.

SO ORDERED."[17]

Hence, this instant petition.

We find both petitions impressed with merit.
First. Petitioners have established a right to evict private respondent from the subject
premises for non-payment of rentals. The term of the Contract of Lease with Option to Buy was
for a period of one (1) year (May 16, 1974 to May 15, 1975) during which the private respondent
was given an option to purchase said property at P3,000.00 per square meter. After the expiration
thereof, the lease was for P3,000.00 per month.
Admittedly, no definite period beyond the one-year term of lease was agreed upon by
petitioners and private respondent. However, since the rent was paid on a monthly basis, the
period of lease is considered to be from month to month in accordance with Article 1687 of the
New Civil Code.[18] Where the rentals are paid monthly, the lease, even if verbal may be deemed
to be on a monthly basis, expiring at the end of every month pursuant to Article 1687, in relation
to Article 1673 of the Civil Code.[19] In such case, a demand to vacate is not even necessary for
judicial action after the expiration of every month.[20]
When private respondent failed to pay the increased rental of P8,000.00 per month in June
1976, the petitioners had a cause of action to institute an ejectment suit against the former with
the then City Court. In this regard, the City Court (now MTC) had exclusive jurisdiction over the
ejectment suit. The filing by private respondent of a suit with the Regional Trial Court
for specific performance to enforce the option to purchase did not divest the then City Court of
its jurisdiction to take cognizance over the ejectment case. Of note is the fact that the decision of
the City Court was affirmed by both the Intermediate Appellate Court and this Court.
Second. Having failed to exercise the option within the stipulated one-year period, private
respondent cannot enforce its option to purchase anymore. Moreover, even
assuming arguendo that the right to exercise the option still subsists at the time private
respondent tendered the amount on June 20, 1975, the suit for specific performance to enforce
the option to purchase was filed only on October 7, 1985 or more than ten (10) years after
accrual of the cause of action as provided under Article 1144 of the New Civil Code.[21]
In this case, there was a contract of lease for one (1) year with option to purchase. The
contract of lease expired without the private respondent, as lessee, purchasing the property but
remained in possession thereof. Hence, there was an implicit renewal of the contract of lease on a
monthly basis. The other terms of the original contract of lease which are revived in the implied
new lease under Article 1670 of the New Civil Code[22] are only those terms which are germane
to the lessees right of continued enjoyment of the property leased.[23] Therefore, an implied new
lease does not ipso facto carry with it any implied revival of private respondent's option to
purchase (as lessee thereof) the leased premises. The provision entitling the lessee the option to
purchase the leased premises is not deemed incorporated in the impliedly renewed contract
because it is alien to the possession of the lessee. Private respondents right to exercise the option
to purchase expired with the termination of the original contract of lease for one year. The
rationale of this Court is that:

This is a reasonable construction of the provision, which is based on the presumption

that when the lessor allows the lessee to continue enjoying possession of the property
for fifteen days after the expiration of the contract he is willing that such enjoyment
shall be for the entire period corresponding to the rent which is customarily paid in
this case up to the end of the month because the rent was paid monthly. Necessarily, if
the presumed will of the parties refers to the enjoyment of possession the presumption
covers the other terms of the contract related to such possession, such as the amount
of rental, the date when it must be paid, the care of the property, the responsibility for
repairs, etc. But no such presumption may be indulged in with respect to special
agreements which by nature are foreign to the right of occupancy or enjoyment
inherent in a contract of lease.[24]

Third. There was no perfected contract of sale between petitioners and private
respondent. Private respondent argued that it delivered the check of P300,000.00 to Alice A.
Dizon who acted as agent of petitioners pursuant to the supposed authority given by petitioner
Fidela Dizon, the payee thereof. Private respondent further contended that petitioners filing of
the ejectment case against it based on the contract of lease with option to buy holds petitioners in
estoppel to question the authority of petitioner Fidela Dizon. It insisted that the payment
of P300,000.00 as partial payment of the purchase price constituted a valid exercise of the option
to buy.
Under Article 1475 of the New Civil Code, 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
provisions of the law governing the form of contracts. Thus, the elements of a contract of sale are
consent, object, and price in money or its equivalent. It bears stressing that the absence of any of
these essential elements negates the existence of a perfected contract of sale. Sale is a consensual
contract and he who alleges it must show its existence by competent proof.[25]
In an attempt to resurrect the lapsed option, private respondent gave P300,000.00 to
petitioners (thru Alice A. Dizon) on the erroneous presumption that the said amount tendered
would constitute a perfected contract of sale pursuant to the contract of lease with option to
buy. There was no valid consent by the petitioners (as co-owners of the leased premises) on the
supposed sale entered into by Alice A. Dizon, as petitioners alleged agent, and private
respondent. The basis for agency is representation and a person dealing with an agent is put upon
inquiry and must discover upon his peril the authority of the agent.[26] As provided in Article
1868 of the New Civil Code,[27] there was no showing that petitioners consented to the act of
Alice A. Dizon nor authorized her to act on their behalf with regard to her transaction with
private respondent. The most prudent thing private respondent should have done was to ascertain
the extent of the authority of Alice A. Dizon. Being negligent in this regard, private respondent
cannot seek relief on the basis of a supposed agency.
In Bacaltos Coal Mines vs. Court of Appeals,[28] we explained the rule in dealing with an
agent:

Every person dealing with an agent is put upon inquiry and must discover upon his
peril the authority of the agent. If he does not make such inquiry, he is chargeable
with knowledge of the agents authority, and his ignorance of that authority will not be
any excuse. Persons dealing with an assumed agent, whether the assumed agency be a
general or special one, are bound at their peril, if they would hold the principal, to
ascertain not only the fact of the agency but also the nature and extent of the authority,
and in case either is controverted, the burden of proof is upon them to establish it.

For the long years that private respondent was able to thwart the execution of the ejectment
suit rendered in favor of petitioners, we now write finis to this controversy and shun further delay
so as to ensure that this case would really attain finality.
WHEREFORE, in view of the foregoing, both petitions are GRANTED. The decision
dated March 29, 1994 and the resolution dated October 19, 1995 in CA-G.R. CV No. 25153-54,
as well as the decision dated December 11, 1995 and the resolution dated April 23, 1997 in CA-
G.R. SP No. 33113 of the Court of Appeals are hereby REVERSED and SET ASIDE.
Let the records of this case be remanded to the trial court for immediate execution of the
judgment dated November 22, 1982 in Civil Case No. VIII-29155 of the then City Court (now
Metropolitan Trial Court) of Quezon City, Branch VIII as affirmed in the decision dated
September 26, 1984 of the then Intermediate Appellate Court (now Court of Appeals) and in the
resolution dated June 19, 1985 of this Court.
However, petitioners are ordered to REFUND to private respondent the amount
of P300,000.00 which they received through Alice A. Dizon on June 20, 1975.
SO ORDERED.