Case Summary (G.R. No. L-36902)
Petitioner
Alleges valid sale of coconut fruits for P4,200.00, seeks annulment of lower court’s declaration of nullity and refund of consideration, challenges recharacterization of the contract as a lease and the finding of a prohibited encumbrance.
Respondent
Originally awarded the land under RA 477, award cancelled in 1965 but not reverted by the State, rights reinstated in 1972. Executed the “Deed of Sale” in 1968 conveying fruits.
Key Dates
• Award to Alonzo under RA 477 – date unspecified
• Cancellation of award – January 27, 1965
• Deed of Sale executed – August 14, 1968
• Reinstatement of award – 1972
• Lower court decision – January 5, 1973
• Supreme Court decision – January 30, 1982
Applicable Law
• Republic Act No. 477, Section 8 (prohibits encumbrance or alienation of government-awarded land or permanent improvements for ten years)
• Civil Code:
– Art. 1370 (literal meaning to control if terms are clear)
– Art. 1458 (contract of sale)
– Art. 1461 (sale of things of potential existence)
– Art. 1543 (definition of lease)
– Art. 2208 (grounds for awarding attorney’s fees)
Facts
• Alonzo, as vendor, agreed to sell all coconut fruits on his awarded land to Pichel for P4,200.00.
• Part of the consideration (P3,650.00) was to be paid to a lessee, Ramon Sua, to free the land from his lease.
• Pichel first harvested in July 1972.
• At pre-trial, Alonzo admitted full payment by Pichel.
Issues
- Whether the “Deed of Sale” is a clear contract of sale or in truth a contract of lease of the land.
- Whether the contract constitutes a prohibited encumbrance under Section 8 of RA 477.
- Whether attorney’s fees properly awarded.
Lower Court Decision
Held that, despite its label, the contract granted Pichel use and enjoyment of land improvements for a definite period for a fixed price, thus constituting a lease. Declared the deed null and void as a prohibited encumbrance, ordered Alonzo to refund P4,200.00 with interest, awarded Pichel attorney’s fees of P500.00.
Supreme Court Ruling
• Cited Ras v. Sua: cancellation of an award under RA 477 does not divest rights absent formal reversion proceedings. Alonzo retained grantee rights from 1965 to 1972.
• Contract terms are clear: sale of coconut fruits, not lease. Under Art. 1370 literal stipulations control.
• Constituent elements of sale present: determinate thing (existing and future fruits), price certain, transfer of ownership upon sale. Cited precedent on sale of things of potential existence.
• A l
Case Syllabus (G.R. No. L-36902)
Procedural History
- Civil Case No. 820 filed in the Court of First Instance of Basilan City by Prudencio Alonzo against Luis Pichel for annulment of a “Deed of Sale” dated August 14, 1968.
- Lower Court issued decision on January 5, 1973 declaring the deed null and void and ordering remedies including refund and attorney’s fees.
- Luis Pichel filed a petition for review on certiorari under G.R. No. L-36902 before the Supreme Court.
- Supreme Court rendered its decision on January 30, 1982 through Justice Guerrero.
Factual Background
- Prudencio Alonzo was originally awarded Lot No. 21, PSD-32465 (Balactasan Plantation, Lamitan, Basilan City) under Republic Act No. 477; award cancelled by Board of Liquidators on January 27, 1965 and reinstated in 1972.
- On August 14, 1968, Alonzo (vendor) executed a Deed of Sale conveying “all the coconut fruits” on Lot No. 21 to Pichel (vendee) for ₱4,200.
- At sale time, land was leased to Ramon Sua; agreement that ₱3,650 of consideration be paid directly to Sua to free the land.
- Delivery and harvesting of fruits to commence September 15, 1968 and end January 1, 1976; harvesting to be done at vendee’s expense.
- Pichel first harvested the fruits in July 1972.
Issues Presented
- Whether Pichel paid the full consideration of ₱4,200 upon execution of the deed.
- Whether the deed of sale constituted an encumbrance prohibited by Section 8 of Republic Act No. 477.
Pre-Trial Admissions
- Parties admitted: Alonzo’s RA 477 award, its cancellation in 1965, and reinstatement in 1972.
- Alonzo stipulated full payment of ₱4,200 by Pichel.
- Only disputed issue: the propriety of the deed as a prohibited encumbrance under Section 8, RA 477.
Lower Court Decision
- Characterized the document as a le