FACTS:
Ruthie Lim-Santiago filed a disbarment complaint against Atty. Carlos B. Sagucio for violating Rule 15.03 of the Code of Professional Responsibility and for defying the prohibition against private practice of law while working as government prosecutor.
The complainant is the daughter of one of the stockholder and former President of Taggat Industries Inc where the respondent worked as a Personnel Manager and Retained Counsel before his appointment as Assistant Provincial Prosecutor.
Sometime in July 1997, 21 employees of Taggat filed a criminal complaint. They alleged that complainant, who took over the management and control of Taggat after the death of her father, withheld payment of their salaries and wages without valid cause from 1 April 1996 to 15 July 1997.
Respondent, as Assistant Provincial Prosecutor, was assigned to conduct the preliminary investigation. He resolved the criminal complaint by recommending the filing of 651 Informations for violation of Article 288 in relation to Article 116 of the Labor Code of the Philippines.
Complainant now charges respondent with the following violations:
1. Rule 15.03 of the Code of Professional Responsibility
Complainant contends that respondent is guilty of representing conflicting interests. Respondent, being the former Personnel Manager and Retained Counsel of Taggat, knew the operations of Taggat very well and should have inhibited himself from hearing, investigating and deciding the case filed by Taggat employees.
2. Engaging in the private practice of law while working as a government prosecutor
Complainant also contends that respondent is guilty of engaging in the private practice of law while working as a government prosecutor. Complainant presented evidence to prove that respondent received retainer's fee.
On the other hand, respondent claims that when the criminal complaint was filed, he is no longer part of Taggat. He contends that complainant failed to establish lack of impartiality when he performed his duty. He points out that complainant did not file a motion to inhibit respondent from hearing the criminal complaint but instead complainant voluntarily executed and filed her counter-affidavit without mental reservation. Respondent asserts that no conflicting interests exist because he was not representing Taggat employees or the complainant and he was merely performing his official duty as Assistant Provincial Prosecutor.
The Integrated Bar of the Philippines, after their investigation found that respondent is guilty of conflict of interests, failure to safeguard a former client’s interest, and violating the prohibition against the private practice of law while being a government prosecutor.
ISSUE:
1. Whether or not being a former lawyer of Taggat conflicts with his role as Assistant Provincial Prosecutor in deciding the labor case filed against the complainant.
2. Whether or not respondent engaged in the private practice of law while working as a government prosecutor
HELD:
1. The court found no conflict of interests when respondent handled the preliminary investigation of the criminal complaint filed by Taggat employees in 1997. The issue in the criminal complaint pertains to non-payment of wages. Clearly, respondent was no longer connected with Taggat during that period since he resigned sometime in 1992.
In order to charge respondent for representing conflicting interests, evidence must be presented to prove that respondent used against Taggat, his former client, any confidential information acquired through his previous employment. The only established participation respondent had with respect to the criminal complaint is that he was the one who conducted the preliminary investigation. The fact alone that respondent was the former Personnel Manager and Retained Counsel of Taggat and the case he resolved as government prosecutor was labor related is not a sufficient basis to charge respondent for representing conflicting interests.
A lawyer’s immutable duty to a former client does not cover transactions that occurred beyond the lawyer’s employment with the client. The intent of the law is to impose upon the lawyer the duty to protect the client’s interests only on matters that he previously handled for the former client and not for matters that arose after the lawyer-client relationship has terminated. Further, complainant failed to present a single iota of evidence to prove her allegations. Thus, respondent is not guilty of violating Rule 15.03 of the Code.
2. The Court has defined the practice of law broadly as any activity, in or out of court, which requires the application of law, legal procedure, knowledge, training and experience. "To engage in the practice of law is to perform those acts which are characteristics of the profession. Generally, to practice law is to give notice or render any kind of service, which device or service requires the use in any degree of legal knowledge or skill. Respondent argues that he only rendered consultancy services to Taggat intermittently and he was not a retained counsel of Taggat from 1995 to 1996 as alleged. This argument is without merit because the law does not distinguish between consultancy services and retainer agreement. For as long as respondent performed acts that are usually rendered by lawyers with the use of their legal knowledge, the same falls within the ambit of the term "practice of law."
Nonetheless, respondent admitted that he rendered his legal services to complainant while working as a government prosecutor. Even the receipts he signed stated that the payments by Taggat were for "Retainer’s fee." Thus, as correctly pointed out by complainant, respondent clearly violated the prohibition in RA 6713.
Here, respondent’s violation of RA 6713 also constitutes a violation of Rule 1.01 of Canon 1, which mandates that "[a] lawyer shall not engage in unlawful, dishonest, immoral or deceitful conduct." Respondent’s admission that he received from Taggat fees for legal services while serving as a government prosecutor is an unlawful conduct, which constitutes a violation of Rule 1.01.
Under Civil Service Law and rules, the penalty for government employees engaging in unauthorized private practice of profession is suspension for six months and one day to one year. The court finds this penalty appropriate for respondent’s violation in this case of Rule 1.01, Canon 1 of the Code of Professional Responsibility.
DECISION:
WHEREFORE, the court finds that respondent Atty. Carlos B. Sagucio GUILTY of violation of Rule 1.01, Canon 1 of the Code of Professional Responsibility. Accordingly, we SUSPEND respondent Atty. Carlos B. Sagucio from the practice of law for SIX MONTHS effective upon finality of this Decision.
Sunday, November 25, 2018
CAYETANO v MONSOD
G.R. No. 100113. September 3, 1991
FACTS:
In 1991, Christian Monsod was appointed by President Corazon Aquino as the Chairman of the Commission on Elections. His appointment was affirmed by the Commission on Appointments. Monsod’s appointment was opposed by Renato Cayetano on the ground that he does not qualify for he failed to meet the Constitutional requirement which provides that the chairman of the COMELEC should have been engaged in the practice law for at least ten years.
Monsod’s track record as a lawyer:
1. Passed the bar in 1960 with a rating of 86.55%.
2. Immediately after passing, worked in his father’s law firm for one year.
3. Thereafter, until 1970, he went abroad where he had a degree in economics and held various positions in various foreign corporations.
4. In 1970, he returned to the Philippines and held executive jobs for various local corporations until 1986.
5. In 1986, he became a member of the Constitutional Commission.
ISSUE:
1. Whether or not Monsod qualifies as chairman of the COMELEC.
2. What constitutes practice of law?
RATIO DECIDENDI:
1. Yes. Atty. Monsod’s past work experiences as a lawyer-economist, a lawyer-manager, a lawyer-entrepreneur of industry, a lawyer-negotiator of contracts, and a lawyer-legislator of both the rich and the poor — verily more than satisfy the constitutional requirement — that he has been engaged in the practice of law for at least ten years. The Commission on the basis of evidence submitted during the public hearings on Monsod’s confirmation, implicitly determined that he possessed the necessary qualifications as required by law. The judgment rendered by the Commission in the exercise of such an acknowledged power is beyond judicial interference except only upon a clear showing of a grave abuse of discretion amounting to lack or excess of jurisdiction. (Art. VIII, Sec. 1 Constitution). Thus, only where such grave abuse of discretion is clearly shown shall the Court interfere with the Commission’s judgment. In the instant case, there is no occasion for the exercise of the Court’s corrective power, since no abuse, much less a grave abuse of discretion, that would amount to lack or excess of jurisdiction and would warrant the issuance of the writs prayed, for has been clearly shown.
2. Practice of law means any activity, in or out of court, which requires the application of law, legal procedure, knowledge, training and experience. “To engage in the practice of law is to perform those acts which are characteristics of the profession. Generally, to practice law is to give notice or render any kind of service, which device or service requires the use in any degree of legal knowledge or skill.
As noted by various authorities, the practice of law is not limited to court appearances. The members of the bench and bar and the informed laymen such as businessmen, know that in most developed societies today, substantially more legal work is transacted in law offices than in the courtrooms. General practitioners of law who do both litigation and non-litigation work also know that in most cases they find themselves spending more time doing what is loosely described as business counseling than in trying cases. In the course of a working day the average general practitioner wig engage in a number of legal tasks, each involving different legal doctrines, legal skills, legal processes, legal institutions, clients, and other interested parties. Even the increasing numbers of lawyers in specialized practice wig usually perform at least some legal services outside their specialty. By no means will most of this work involve litigation, unless the lawyer is one of the relatively rare types — a litigator who specializes in this work to the exclusion of much else. Instead, the work will require the lawyer to have mastered the full range of traditional lawyer skills of client counseling, advice-giving, document drafting, and negotiation.
FALLO:
The petition is DISMISSED.
In 1991, Christian Monsod was appointed by President Corazon Aquino as the Chairman of the Commission on Elections. His appointment was affirmed by the Commission on Appointments. Monsod’s appointment was opposed by Renato Cayetano on the ground that he does not qualify for he failed to meet the Constitutional requirement which provides that the chairman of the COMELEC should have been engaged in the practice law for at least ten years.
Monsod’s track record as a lawyer:
1. Passed the bar in 1960 with a rating of 86.55%.
2. Immediately after passing, worked in his father’s law firm for one year.
3. Thereafter, until 1970, he went abroad where he had a degree in economics and held various positions in various foreign corporations.
4. In 1970, he returned to the Philippines and held executive jobs for various local corporations until 1986.
5. In 1986, he became a member of the Constitutional Commission.
ISSUE:
1. Whether or not Monsod qualifies as chairman of the COMELEC.
2. What constitutes practice of law?
RATIO DECIDENDI:
1. Yes. Atty. Monsod’s past work experiences as a lawyer-economist, a lawyer-manager, a lawyer-entrepreneur of industry, a lawyer-negotiator of contracts, and a lawyer-legislator of both the rich and the poor — verily more than satisfy the constitutional requirement — that he has been engaged in the practice of law for at least ten years. The Commission on the basis of evidence submitted during the public hearings on Monsod’s confirmation, implicitly determined that he possessed the necessary qualifications as required by law. The judgment rendered by the Commission in the exercise of such an acknowledged power is beyond judicial interference except only upon a clear showing of a grave abuse of discretion amounting to lack or excess of jurisdiction. (Art. VIII, Sec. 1 Constitution). Thus, only where such grave abuse of discretion is clearly shown shall the Court interfere with the Commission’s judgment. In the instant case, there is no occasion for the exercise of the Court’s corrective power, since no abuse, much less a grave abuse of discretion, that would amount to lack or excess of jurisdiction and would warrant the issuance of the writs prayed, for has been clearly shown.
2. Practice of law means any activity, in or out of court, which requires the application of law, legal procedure, knowledge, training and experience. “To engage in the practice of law is to perform those acts which are characteristics of the profession. Generally, to practice law is to give notice or render any kind of service, which device or service requires the use in any degree of legal knowledge or skill.
As noted by various authorities, the practice of law is not limited to court appearances. The members of the bench and bar and the informed laymen such as businessmen, know that in most developed societies today, substantially more legal work is transacted in law offices than in the courtrooms. General practitioners of law who do both litigation and non-litigation work also know that in most cases they find themselves spending more time doing what is loosely described as business counseling than in trying cases. In the course of a working day the average general practitioner wig engage in a number of legal tasks, each involving different legal doctrines, legal skills, legal processes, legal institutions, clients, and other interested parties. Even the increasing numbers of lawyers in specialized practice wig usually perform at least some legal services outside their specialty. By no means will most of this work involve litigation, unless the lawyer is one of the relatively rare types — a litigator who specializes in this work to the exclusion of much else. Instead, the work will require the lawyer to have mastered the full range of traditional lawyer skills of client counseling, advice-giving, document drafting, and negotiation.
FALLO:
The petition is DISMISSED.
Saturday, July 21, 2018
CHENG v GENATO G.R. No. 129760. December 29, 1998
FACTS
Respondent Ramon B. Genato is the owner of two parcels of land located at Paradise Farms, San Jose Del Monte, Bulacan. Respondent entered a contract to sell to spouses Da Jose pertaining to his property in Bulacan. The contract made in public document states that the spouses shall pay the down payment and 30 days after verifying the authenticity of the documents, they shall pay the remaining purchase price. The Da Jose spouses, not having finished verifying the titles mentioned in clause 3 as aforequoted, asked for and was granted by respondent Genato an extension of another 30 days or until November 5, 1989. However, according to Genato, the extension was granted on condition that a new set of documents is made seven (7) days from October 4, 1989. This was denied by the Da Jose spouses.
Pending the effectivity of the aforesaid extension period, and without due notice to the Da Jose spouses, Genato executed an Affidavit to Annul the Contract to Sell, for the vendee has committed a breach of contract for not having complied with the obligation as provided in their Contract.
Petitioner Ricardo Cheng (Cheng) went to Genatos residence and expressed interest in buying the subject properties. On that occasion, Genato showed to Ricardo Cheng copies of his transfer certificates of title and the annotations at the back thereof of his contract to sell with the Da Jose spouses. Genato also showed him the aforementioned Affidavit to Annul the Contract to Sell which has not been annotated at the back of the titles.
Later on, Da Jose spouses discovered about the affidavit to annul their contract. The latter were shocked at the disclosure and protested against the rescission of their contract. After being reminded that he (Genato) had given them (Da Jose spouses) an additional 30-day period to finish their verification of his titles, that the period was still in effect, and that they were willing and able to pay the balance of the agreed down payment, later on in the day, Genato decided to continue the Contract he had with them. The agreement to continue with their contract was formalized in a conforme letter.
Respondent advised petitioner of his decision to continue his contract with the Da Jose spouses and completely returned to Chengs the checks for their payments and expressed regret for his inability to consummate his transaction with him. After having received the letter of Genato, Cheng, however, returned the said check to the former. Cheng instituted a complaint for specific performance to compel Genato to execute a deed of sale to him of the subject properties plus damages and prayer for preliminary attachment. In his complaint, Cheng averred that the P50,000.00 check he gave was a partial payment to the total agreed purchase price of the subject properties and considered as an earnest money for which Genato acceded. Thus, their contract was already perfected. In Answer, thereto, Genato alleged that the agreement was only a simple receipt of an option-bid deposit, and never stated that it was a partial payment, nor is it an earnest money and that it was subject to the condition that the prior contract with the Da Jose spouses be first cancelled. The Da Jose spouses, in their Answer in Intervention,[18] asserted that they have a superior right to the property as first buyers. They alleged that the unilateral cancellation of the Contract to Sell was without effect and void. They also cited Chengs bad faith as a buyer being duly informed by Genato of the existing annotated Contract to Sell on the titles.
HELD:
The contract between Genato and spouses Da Jose was a contract to sell which is subject to a suspensive condition. Thus, there will be no contract to speak of, if the obligor failed to perform the suspensive condition which enforces a juridical relation. Obviously, the foregoing jurisprudence cannot be made to apply to the situation in the instant case because no default can be ascribed to the Da Jose spouses since the 30-day extension period has not yet expired.
Even assuming that the spouses defaulted, the contract also cannot be validly rescinded because no notice was given to them. Thus, Cheng's contention that the Contract to Sell between Genato and the Da Jose spouses was rescinded or resolved due to Genato's unilateral rescission finds no support in this case.
The contract between Genato and Cheng is a contract to sell not a contract of sale. But But even assuming that it should be treated as a conditional contract of sale, it did not acquire any obligatory force since it was subject to a suspensive condition that the earlier contract to sell between Genato and the Da Jose spouses should first be cancelled or rescinded.
Art.1544 should apply because for not only was the contract between herein respondents first in time; it was also registered long before petitioner's intrusion as a second buyer (PRIMUS TEMPORE, PORTIOR JURE). (Spouses made annotation on the title of Genato). Since Cheng was fully aware, or could have been if he had chosen to inquire, of the rights of the Da Jose spouses under the Contract to Sell duly annotated on the transfer certificates of titles of Genato, it now becomes unnecessary to further elaborate in detail the fact that he is indeed in bad faith in entering into such agreement.
Respondent Ramon B. Genato is the owner of two parcels of land located at Paradise Farms, San Jose Del Monte, Bulacan. Respondent entered a contract to sell to spouses Da Jose pertaining to his property in Bulacan. The contract made in public document states that the spouses shall pay the down payment and 30 days after verifying the authenticity of the documents, they shall pay the remaining purchase price. The Da Jose spouses, not having finished verifying the titles mentioned in clause 3 as aforequoted, asked for and was granted by respondent Genato an extension of another 30 days or until November 5, 1989. However, according to Genato, the extension was granted on condition that a new set of documents is made seven (7) days from October 4, 1989. This was denied by the Da Jose spouses.
Pending the effectivity of the aforesaid extension period, and without due notice to the Da Jose spouses, Genato executed an Affidavit to Annul the Contract to Sell, for the vendee has committed a breach of contract for not having complied with the obligation as provided in their Contract.
Petitioner Ricardo Cheng (Cheng) went to Genatos residence and expressed interest in buying the subject properties. On that occasion, Genato showed to Ricardo Cheng copies of his transfer certificates of title and the annotations at the back thereof of his contract to sell with the Da Jose spouses. Genato also showed him the aforementioned Affidavit to Annul the Contract to Sell which has not been annotated at the back of the titles.
Later on, Da Jose spouses discovered about the affidavit to annul their contract. The latter were shocked at the disclosure and protested against the rescission of their contract. After being reminded that he (Genato) had given them (Da Jose spouses) an additional 30-day period to finish their verification of his titles, that the period was still in effect, and that they were willing and able to pay the balance of the agreed down payment, later on in the day, Genato decided to continue the Contract he had with them. The agreement to continue with their contract was formalized in a conforme letter.
Respondent advised petitioner of his decision to continue his contract with the Da Jose spouses and completely returned to Chengs the checks for their payments and expressed regret for his inability to consummate his transaction with him. After having received the letter of Genato, Cheng, however, returned the said check to the former. Cheng instituted a complaint for specific performance to compel Genato to execute a deed of sale to him of the subject properties plus damages and prayer for preliminary attachment. In his complaint, Cheng averred that the P50,000.00 check he gave was a partial payment to the total agreed purchase price of the subject properties and considered as an earnest money for which Genato acceded. Thus, their contract was already perfected. In Answer, thereto, Genato alleged that the agreement was only a simple receipt of an option-bid deposit, and never stated that it was a partial payment, nor is it an earnest money and that it was subject to the condition that the prior contract with the Da Jose spouses be first cancelled. The Da Jose spouses, in their Answer in Intervention,[18] asserted that they have a superior right to the property as first buyers. They alleged that the unilateral cancellation of the Contract to Sell was without effect and void. They also cited Chengs bad faith as a buyer being duly informed by Genato of the existing annotated Contract to Sell on the titles.
HELD:
The contract between Genato and spouses Da Jose was a contract to sell which is subject to a suspensive condition. Thus, there will be no contract to speak of, if the obligor failed to perform the suspensive condition which enforces a juridical relation. Obviously, the foregoing jurisprudence cannot be made to apply to the situation in the instant case because no default can be ascribed to the Da Jose spouses since the 30-day extension period has not yet expired.
Even assuming that the spouses defaulted, the contract also cannot be validly rescinded because no notice was given to them. Thus, Cheng's contention that the Contract to Sell between Genato and the Da Jose spouses was rescinded or resolved due to Genato's unilateral rescission finds no support in this case.
The contract between Genato and Cheng is a contract to sell not a contract of sale. But But even assuming that it should be treated as a conditional contract of sale, it did not acquire any obligatory force since it was subject to a suspensive condition that the earlier contract to sell between Genato and the Da Jose spouses should first be cancelled or rescinded.
Art.1544 should apply because for not only was the contract between herein respondents first in time; it was also registered long before petitioner's intrusion as a second buyer (PRIMUS TEMPORE, PORTIOR JURE). (Spouses made annotation on the title of Genato). Since Cheng was fully aware, or could have been if he had chosen to inquire, of the rights of the Da Jose spouses under the Contract to Sell duly annotated on the transfer certificates of titles of Genato, it now becomes unnecessary to further elaborate in detail the fact that he is indeed in bad faith in entering into such agreement.
ANG YU ASUNCION v CA G.R. No. 109125 December 2, 1994
FACTS:
A complaint for Specific Performance was filed by Ang Yu Asuncion et al., against Bobby Cu Unjieng and Jose Tan. The plaintiffs were tenants or lessees of residential and commercial spaces owned by defendants in Binondo. On several conditions defendants informed the plaintiffs that they are offering to sell the premises and are giving them priority to acquire the same.
During negotiations, Cu Unjieng offered a price of P6- million while plaintiffs made a counter of offer of P5-million.Plaintiff thereafter asked the defendants to put their offer in writing to which the defendants acceded. In reply to defendants’ letter, plaintiffs wrote, asking that they specify the terms and conditions of the offer to sell. When the plaintiffs did not receive any reply, they sent another letter with the same request. Since defendants failed to specify the terms and conditions of the offer to sell and because of information received that the defendants were about to sell the property, plaintiffs were compelled to file the complaint to compel defendants to sell the property to them. Defendants filed their answer denying the material allegations of the complaint and interposing a special defense of lack of cause of action.
The court dismissed the complaint on the ground that the parties did not agree upon the terms and conditions of the proposed sale, hence, there was no contact of sale at all. The lower court ruled that should the defendants subsequently offer their property for sale at a price of P11-million or below, plaintiffs will have the right of first refusal. Aggrieved by the decision, plaintiffs appealed to Court of Appeals which ruled that there was no meeting of the minds between the parties concerning the sale of the property. Absent such requirement, the claim for specific performance will not lie. The decision of this Court was brought to the Supreme Court by petition for review on certiorari. The Supreme Court denied the appeal for insufficiency in form and substances.
The Cu Unjieng spouses executed a Deed of Sale transferring the property in question to Buen Realty and Development Corporation. Buen Realty, as the new owner of the subject property, wrote to the lessees demanding the latter to vacate the premises. In its reply, it stated that Buen Realty and Development Corporation brought the property subject to the notice of lis pendens. Buen Realty, as the new owner of the subject property, wrote to the lessees demanding the latter to vacate the premises. The lessees filed a Motion for Execution. The court ruled in favor of the petitioners and ordered the defendants are hereby ordered to execute the necessary Deed of Sale of the property in litigation in favor of plaintiffs Ang Yu Asuncion, Keh Tiong and Arthur Go for the consideration of P15 Million pesos in recognition of plaintiffs' right of first refusal and that a new Transfer Certificate of Title be issued in favor of the buyer and ruled that the issuance of another title to Buen Realty Corporation, has been executed in bad faith.
In its reply, it stated that Buen Realty and Development Corporation brought the property subject to the notice of lis pendens.
ISSUE:
1. WON Buen Realty can be bound by the writ of execution by virtue of the notice of lis pendens, carried over on TCT No. 195816 issued in the name of Buen Realty, at the time of the latter’s purchase of the property on 15 November 1991 from the Cu Unjiengs.
RULING:
Right of first refusal is not a perfected contract of sale under Article 1458 of the Civil Code In the law on sales, the so-called “right of first refusal” is an innovative juridical relation. Needless to point out, it cannot be deemed a perfected contract of sale under Article 1458 of the Civil Code.
In a right of first refusal, while the object might be made determinate, the exercise of the right, however, would be dependent not only on the grantor’s eventual intention to enter into a binding juridical relation with another but also on terms, including the price, that obviously are yet to be later firmed up. Prior thereto, it can at best be so described as merely belonging to a class of preparatory juridical relations governed not by contracts (since the essential elements to establish the vinculum juris would still be indefinite and inconclusive) but by, among other laws of general application, the pertinent scattered provisions of the Civil Code on human conduct.
The proper action for violation of the right of first refysal is to file an action for damages and NOT writ of execution The final judgment in Civil Case No. 87-41058, it must be stressed, has merely accorded a “right of first refusal” in favor of petitioners (Ang Yu et. al). The consequence of such a declaration entails no more than what has heretofore been said. In fine, if, as it is here so conveyed to us, petitioners are aggrieved by the failure of private respondents to honor the right of first refusal, the remedy is not a writ of execution on the judgment, since there is none to execute, but an action for damages in a proper forum for the purpose.
Unconditional mutual promise to buy vs. Accepted unilateral promise An unconditional mutual promise to buy and sell, as long as the object is made determinate and the price is fixed, can be obligatory on the parties, and compliance therewith may accordingly be exacted.
An accepted unilateral promise which specifies the thing to be sold and the price to be paid, when coupled with a valuable consideration distinct and separate from the price, is what may properly be termed a perfected contract of option. This contract is legally binding, and in sales, it conforms with the second paragraph of Article 1479 of the Civil Code, viz:
Art. 1479. . . . An accepted unilateral promise to buy or to sell a determinate thing for a price certain is binding upon the promissor if the promise is supported by a consideration distinct from the price. (1451a)
Observe, however, that the option is not the contract of sale itself. The optionee has the right, but not the obligation, to buy. Once the option is exercised timely, i.e., the offer is accepted before a breach of the option, a bilateral promise to sell and to buy ensues and both parties are then reciprocally bound to comply with their respective undertakings.
Buen Realty cannot be ousted from the ownership and possession of the property Furthermore, whether private respondent Buen Realty Development Corporation, the alleged purchaser of the property, has acted in good faith or bad faith and whether or not it should, in any case, be considered bound to respect the registration of the lis pendens in Civil Case No. 87-41058 are matters that must be independently addressed in appropriate proceedings. Buen Realty, not having been impleaded in Civil Case No. 87-41058, cannot be held subject to the writ of execution issued by respondent Judge, let alone ousted from the ownership and possession of the property, without first being duly afforded its day in court.
A complaint for Specific Performance was filed by Ang Yu Asuncion et al., against Bobby Cu Unjieng and Jose Tan. The plaintiffs were tenants or lessees of residential and commercial spaces owned by defendants in Binondo. On several conditions defendants informed the plaintiffs that they are offering to sell the premises and are giving them priority to acquire the same.
During negotiations, Cu Unjieng offered a price of P6- million while plaintiffs made a counter of offer of P5-million.Plaintiff thereafter asked the defendants to put their offer in writing to which the defendants acceded. In reply to defendants’ letter, plaintiffs wrote, asking that they specify the terms and conditions of the offer to sell. When the plaintiffs did not receive any reply, they sent another letter with the same request. Since defendants failed to specify the terms and conditions of the offer to sell and because of information received that the defendants were about to sell the property, plaintiffs were compelled to file the complaint to compel defendants to sell the property to them. Defendants filed their answer denying the material allegations of the complaint and interposing a special defense of lack of cause of action.
The court dismissed the complaint on the ground that the parties did not agree upon the terms and conditions of the proposed sale, hence, there was no contact of sale at all. The lower court ruled that should the defendants subsequently offer their property for sale at a price of P11-million or below, plaintiffs will have the right of first refusal. Aggrieved by the decision, plaintiffs appealed to Court of Appeals which ruled that there was no meeting of the minds between the parties concerning the sale of the property. Absent such requirement, the claim for specific performance will not lie. The decision of this Court was brought to the Supreme Court by petition for review on certiorari. The Supreme Court denied the appeal for insufficiency in form and substances.
The Cu Unjieng spouses executed a Deed of Sale transferring the property in question to Buen Realty and Development Corporation. Buen Realty, as the new owner of the subject property, wrote to the lessees demanding the latter to vacate the premises. In its reply, it stated that Buen Realty and Development Corporation brought the property subject to the notice of lis pendens. Buen Realty, as the new owner of the subject property, wrote to the lessees demanding the latter to vacate the premises. The lessees filed a Motion for Execution. The court ruled in favor of the petitioners and ordered the defendants are hereby ordered to execute the necessary Deed of Sale of the property in litigation in favor of plaintiffs Ang Yu Asuncion, Keh Tiong and Arthur Go for the consideration of P15 Million pesos in recognition of plaintiffs' right of first refusal and that a new Transfer Certificate of Title be issued in favor of the buyer and ruled that the issuance of another title to Buen Realty Corporation, has been executed in bad faith.
In its reply, it stated that Buen Realty and Development Corporation brought the property subject to the notice of lis pendens.
ISSUE:
1. WON Buen Realty can be bound by the writ of execution by virtue of the notice of lis pendens, carried over on TCT No. 195816 issued in the name of Buen Realty, at the time of the latter’s purchase of the property on 15 November 1991 from the Cu Unjiengs.
RULING:
Right of first refusal is not a perfected contract of sale under Article 1458 of the Civil Code In the law on sales, the so-called “right of first refusal” is an innovative juridical relation. Needless to point out, it cannot be deemed a perfected contract of sale under Article 1458 of the Civil Code.
In a right of first refusal, while the object might be made determinate, the exercise of the right, however, would be dependent not only on the grantor’s eventual intention to enter into a binding juridical relation with another but also on terms, including the price, that obviously are yet to be later firmed up. Prior thereto, it can at best be so described as merely belonging to a class of preparatory juridical relations governed not by contracts (since the essential elements to establish the vinculum juris would still be indefinite and inconclusive) but by, among other laws of general application, the pertinent scattered provisions of the Civil Code on human conduct.
The proper action for violation of the right of first refysal is to file an action for damages and NOT writ of execution The final judgment in Civil Case No. 87-41058, it must be stressed, has merely accorded a “right of first refusal” in favor of petitioners (Ang Yu et. al). The consequence of such a declaration entails no more than what has heretofore been said. In fine, if, as it is here so conveyed to us, petitioners are aggrieved by the failure of private respondents to honor the right of first refusal, the remedy is not a writ of execution on the judgment, since there is none to execute, but an action for damages in a proper forum for the purpose.
Unconditional mutual promise to buy vs. Accepted unilateral promise An unconditional mutual promise to buy and sell, as long as the object is made determinate and the price is fixed, can be obligatory on the parties, and compliance therewith may accordingly be exacted.
An accepted unilateral promise which specifies the thing to be sold and the price to be paid, when coupled with a valuable consideration distinct and separate from the price, is what may properly be termed a perfected contract of option. This contract is legally binding, and in sales, it conforms with the second paragraph of Article 1479 of the Civil Code, viz:
Art. 1479. . . . An accepted unilateral promise to buy or to sell a determinate thing for a price certain is binding upon the promissor if the promise is supported by a consideration distinct from the price. (1451a)
Observe, however, that the option is not the contract of sale itself. The optionee has the right, but not the obligation, to buy. Once the option is exercised timely, i.e., the offer is accepted before a breach of the option, a bilateral promise to sell and to buy ensues and both parties are then reciprocally bound to comply with their respective undertakings.
Buen Realty cannot be ousted from the ownership and possession of the property Furthermore, whether private respondent Buen Realty Development Corporation, the alleged purchaser of the property, has acted in good faith or bad faith and whether or not it should, in any case, be considered bound to respect the registration of the lis pendens in Civil Case No. 87-41058 are matters that must be independently addressed in appropriate proceedings. Buen Realty, not having been impleaded in Civil Case No. 87-41058, cannot be held subject to the writ of execution issued by respondent Judge, let alone ousted from the ownership and possession of the property, without first being duly afforded its day in court.
SAN MIGUEL PROPERTIES PHILIPPINES, INC v HUANG G.R. No. 137290. July 31, 2000
FACTS
Petitioner San Miguel Properties Philippines, Inc. is a domestic corporation engaged in the purchase and sale of real properties. Part of its inventory are two parcels of land totalling 1,738 square meters at the corner of Meralco Avenue and General Capinpin Street, Barrio Oranbo, Pasig City and was duly registered with Register of Deeds of Pasig City.
The properties were offered for sale for P52,140,000.00 in cash. The offer was made to Atty. Helena M. Dauz who was acting for respondent spouses as undisclosed principals. Atty. Dauz signified her clients interest in purchasing the properties for the amount for which they were offered by petitioner, which Isidro A. Sobrecarey, petitioner’s Vice-President and Operations Manager for corporate real estate, indicated his conformity to the offer by affixing his signature to the letter and accepted the "earnest deposit" of P1 million. Upon request of respondent spouses, Sobrecarey ordered the removal of the "FOR SALE" sign from the properties.
Atty. Dauz and Sobrecarey then commenced negotiations. Sobrecarey informed Atty. Dauz that petitioner was willing to sell the subject properties on a 90-day term. Atty. Dauz countered with an offer of six months within which to pay. Atty. Dauz asked for an extension of 45 days adding that within that period, they hope to finalize the agreement on the matter."Her request was granted.
However, petitioner, through its president and chief executive officer, Federico Gonzales, wrote Atty. Dauz informing her that because the parties failed to agree on the terms and conditions of the sale despite the extension granted by petitioner, the latter was returning the amount of P1 million given as "earnest-deposit." Respondent spouses, through counsel, wrote petitioner demanding the execution within five days of a deed of sale covering the properties. Respondents attempted to return the "earnest-deposit" but petitioner refused on the ground that respondent’s option to purchase had already expired. Respondent spouses filed a complaint for specific performance against petitioner before the Regional Trial Court of Pasig City. Within the period for filing a responsive pleading, petitioner filed a motion to dismiss the complaint alleging that (1) the alleged "exclusive option" of respondent spouses lacked a consideration separate and distinct from the purchase price and was thus unenforceable and (2) the complaint did not allege a cause of action because there was no "meeting of the minds" between the parties and, therefore, no perfected contract of sale.
The trial court granted petitioners motion and dismissed the action. Respondents filed a motion for reconsideration, but it was denied by the trial court. They then appealed to the Court of Appeals which rendered a decision reversing the judgment of the trial court on the ground that that all the requisites of a perfected contract of sale had been complied. Petitioner moved for reconsideration of the trial court’s decision, but its motion was denied. Hence, this petition.
ISSUE
Whether or not there’s a perfected contract of sale between the petitioner and respondents.
RULING
No. With regard to the alleged payment and acceptance of earnest money, the Court holds that respondents did not give the P1 million as "earnest money" as provided by Art. 1482 of the Civil
Code because at the time when petitioner accepted the terms of respondents offer, their contract had not yet been perfected. They presented the amount merely as a deposit of what would eventually become the earnest money or downpayment should a contract of sale be made by them. The amount was thus given not as a part of the purchase price and as proof of the perfection of the contract of sale but only as a guarantee that respondents would not back out of the sale.
The first condition for an option period of 30 days sufficiently shows that a sale was never perfected. All that respondents had was just the option to buy the properties which privilege was not, however, exercised by them because there was a failure to agree on the terms of payment. No contract of sale may thus be enforced by respondents. Furthermore, even the option secured by respondents from petitioner was fatally defective. Under the second paragraph of Art. 1479, an accepted unilateral promise to buy or sell a determinate thing for a price certain is binding upon the promisor only if the promise is supported by a distinct consideration. Consideration in an option contract may be anything of value, unlike in sale where it must be the price certain in money or its equivalent. There is no showing here of any consideration for the option. Lacking any proof of such consideration, the option is unenforceable.
Equally compelling as proof of the absence of a perfected sale is the second condition that, during the option period, the parties would negotiate the terms and conditions of the purchase. The stages of a contract of sale are as follows: (1) negotiation, covering the period from the time the prospective contracting parties indicate interest in the contract to the time the contract is perfected; (2) perfection, which takes place upon the concurrence of the essential elements of the sale which are the meeting of the minds of the parties as to the object of the contract and upon the price; and (3) consummation, which begins when the parties perform their respective undertakings under the contract of sale, culminating in the extinguishment thereof. In the present case, the parties never got past the negotiation stage. While the parties already agreed on the real properties which were the objects of the sale and on the purchase price, the fact remains that they failed to arrive at mutually acceptable terms of payment, despite the 45-day extension given by petitioner. The manner of payment of the purchase price is an essential element before a valid and binding contract of sale can exist. Thus, it is not the giving of earnest money, but the proof of the concurrence of all the essential elements of the contract of sale which establishes the existence of a perfected sale. In the absence of a perfected contract of sale, it is immaterial whether Isidro A. Sobrecarey had the authority to enter into a contract of sale in behalf of petitioner.
CIR V CA G.R. No. 115349. April 18, 1997
FACTS
The Institute of Philippine Culture (IPC), is auxiliary unit of private respondent ATENEO DE MANILA UNIVERSITY and accepts sponsorships for its research activities from international organizations, private foundations and government agencies. Private respondent received from petitioner Commissioner of Internal Revenue (CIR) demand letters for alleged deficiency contractors tax and alleged deficiency income tax, Denying said tax liabilities, private respondent sent petitioner a letter-protest and subsequently filed with the latter a memorandum contesting the validity of the assessments.
Petitioner rendered a letter-decision canceling the assessment for deficiency income tax but modifying the assessment for deficiency contractors tax by increasing the amount due. Unsatisfied, private respondent requested for a reconsideration or reinvestigation of the modified assessment. At the same time, it filed in the respondent court a petition for review of the said letter-decision of the petitioner. While the petition was pending before the respondent court, petitioner issued a final decision reducing the assessment for deficiency contractors tax from P193,475.55 to P46,516.41, exclusive of surcharge and interest.
The Court of Appeals disagreed with the Petitioner Commissioner of Internal Revenue and affirmed the assailed decision of the Court of Tax Appeals. Unfazed, petitioner now asks us to reverse the CA through this petition for review.
ISSUE
Is Ateneo de Manila University, through its auxiliary unit or branch -the Institute of Philippine Culture- performing the work of an independent contractor and, thus, subject to the three percent contractors tax levied by then Section 205 of the National Internal Revenue Code?
RULING
The petition is unmeritorious. Section 205 of the National Internal Revenue Code provides that business agents and other independent contractors, except persons, associations and corporations under contract for embroidery and apparel for export, as well as their agents and contractors, and except gross receipts of or from a pioneer industry registered with the Board of Investments under the provisions of Republic Act No. 5186. The term independent contractors include persons (juridical or natural) not enumerated above (but not including individuals subject to the occupation tax under Section 12 of the Local Tax Code) whose activity consists essentially of the sale of all kinds of services for a fee regardless of whether or not the performance of the service calls for the exercise or use of the physical or mental faculties of such contractors or their employees.
Petitioner Commissioner of Internal Revenue erred in applying the principles of tax exemption without first applying the well-settled doctrine of strict interpretation in the imposition of taxes. To fall under its coverage, Section 205 of the National Internal Revenue Code requires that the independent contractor be engaged in the business of selling its services. Hence, to impose the three percent contractors tax on Ateneos Institute of Philippine Culture, it should be sufficiently proven that the private respondent is indeed selling its services for a fee in pursuit of an independent business.
And it is only after private respondent has been found clearly to be subject to the provisions of Sec. 205 that the question of exemption therefrom would arise. Only after such coverage is shown does the rule of construction -- that tax exemptions are to be strictly construed against the taxpayer -- come into play, contrary to petitioner’s position.
After reviewing the records of this case, court found no evidence that Ateneos Institute of Philippine Culture ever sold its services for a fee to anyone or was ever engaged in a business apart from and independently of the academic purposes of the university. The records do not show that Ateneos IPC in fact contracted to sell its research services for a fee. Clearly then, as found by the Court of Appeals and the Court of Tax Appeals, petitioners theory is inapplicable to the established factual milieu obtaining in the instant case. In the first place, the petitioner has presented no evidence to prove its bare contention that, indeed, contracts for sale of services were ever entered into by the private respondent.
Moreover, the Court of Tax Appeals accurately and correctly declared that the funds received by the Ateneo de Manila University are technically not a fee. They may however fall as gifts or donations which are tax-exempt as shown by private respondents compliance with the requirement of Section 123 of the National Internal Revenue Code providing for the exemption of such gifts to an educational institution. Therefore, it is clear that the funds received by Ateneos Institute of Philippine Culture are not given in the concept of a fee or price in exchange for the performance of a service or delivery of an object. Rather, the amounts are in the nature of an endowment or donation given by IPCs benefactors solely for the purpose of sponsoring or funding the research with no strings attached. As found by the two courts below, such sponsorships are subject to IPCs terms and conditions. No proprietary or commercial research is done, and IPC retains the ownership of the results of the research, including the absolute right to publish the same.
In the case at bench, it is clear from the evidence on record that there was no sale either of objects or services because, as adverted to earlier, there was no transfer of ownership over the research data obtained or the results of research projects undertaken by the Institute of Philippine Culture. Furthermore, it is clear that the research activity of the Institute of Philippine Culture is done in pursuance of maintaining Ateneos university status and not in the course of an independent business of selling such research with profit in mind.
EDRADA V RAMOS G.R. No. 154413, August 31, 2005
FACTS:
Respondent spouses Eduardo and Carmencita Ramos (respondents) are the owners of two (2) fishing vessels, the Lady Lalaine and the Lady Theresa. On 1 April 1996, respondents and petitioners executed an untitled handwritten document pertaining to the sale of the said vessels. Upon the signing of the document, petitioners delivered to respondents four (4) postdated Far East Bank and Trust Company (FEBTC) checks payable to cash drawn by petitioner Rosella Edrada, in various amounts totaling One Hundred Forty Thousand Pesos (P140,000.00). On 3 June 1996, respondents filed an action against petitioners for specific performance with damages before the RTC, praying that petitioners be obliged to execute the necessary deed of sale of the two fishing vessels and to pay the balance of the purchase price.
In their Complaint, respondents alleged that petitioners contracted to buy the two fishing vessels for the agreed purchase price of Nine Hundred Thousand Pesos (P900,000.00), which according to them evinced a contract to buy. However, despite delivery of said vessels and repeated oral demands, petitioners failed to pay the balance, so respondents further averred. On the other hand, petitioners averred that the document sued upon merely embodies an agreement brought about by the loans they extended to respondents. According to petitioners, respondents allowed them to manage or administer the fishing vessels as a business on the understanding that should they find the business profitable, the vessels would be sold to them for Nine Hundred Thousand Pesos (P900,000.00). But petitioners decided to call it quits after spending a hefty sum for the repair and maintenance of the vessels which were already in dilapidated condition.
After trial, the RTC ruled in favor of the respondents. Both parties appealed the RTC Decision. However, finding no reversible error in the appealed decision, the Court of Appeals, in its Decision, affirmed the same and dismissed both appeals. Only petitioners elevated the controversy to this Court. Hence this petition for reversal.
ISSUE
Whether or not there’s perfected contract of sale between the petitioners and respondents.
RATIO
The SC disagreed with the RTC and the Court of Appeals that the document is a perfected contract of sale. A contract of sale is defined as an agreement whereby one of the contracting parties obligates himself to transfer the ownership of and to deliver a determinate thing, and the other to pay therefore a price certain in money or its equivalent. It must evince the consent on the part of the seller to transfer and deliver and on the part of the buyer to pay.
An examination of the document reveals that there is no perfected contract of sale. The agreement may confirm the receipt by respondents of the two vessels and their purchase price. However, there is no equivocal agreement to transfer ownership of the vessel, but a mere commitment that documents pertaining to the sale and agreement of payments to follow. Evidently, the document or documents which would formalize the transfer of ownership and contain the terms of payment of the purchase price, or the period when such would become due and demandable, have yet to be executed. But no such document was executed and no such terms were stipulated upon.
A contract is perfected when there is concurrence of the wills of the contracting parties with respect to the object and the cause of the contract. In this case, the agreement merely acknowledges that a purchase price had been agreed on by the parties. There was no mutual promise to buy on the part of petitioners and to sell on the part of respondents. The agreement in question does not create any obligatory force either for the transfer of title of the vessels, or the rendition of payments as part of the purchase price.
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