E. (d.

)
2.) SONNY LO vs KJS ECO-FORMWORK SYSTEM PHIL, INC.
FACTS:
Lo, doing business under the name Sans Enterprises, ordered scaffolding
equipments from KJS worth P540,425.80. Lo paid a downpayment of P150,000 and
the balance was to be paid in 10 monthly installments.
KJS delivered the scaffoldings to Lo, who paid the first two installments. However,
his business encountered financial difficulties and he was unable to settle his
obligation despite oral and written demands.
Lo and KJS executed a Deed of Assignment, whereby Lo assigned to KJS his
receivables in the amount of P335,462.14 from Jomero Realty Corporation. The
agreement also stipulated: The ASSIGNOR further agrees and stipulates as
aforesaid that the said ASSIGNOR, his heirs, executors, administrators, or assigns,
shall and will at times hereafter, at the request of said ASSIGNEE, its successors or
assigns, at his cost and expense, execute and do all such further acts and deeds as
shall be reasonably necessary to effectually enable said ASSIGNEE to recover
whatever collectibles said ASSIGNOR has in accordance with the true intent and
meaning of these presents.
ISSUE/s: W/N the Deed of Assignment extinguished Los obligation. NO, he failed to
comply with his warranty.
HELD:
1. In dacion en pago, as a special mode of payment, the debtor offers another thing
to the creditor who accepts it as equivalent of payment of an outstanding debt. The
undertaking really partakes in one sense of the nature of sale the creditor is really
buying the thing or property of the debtor, payment for which is to be charged
against the debtors debt.
The assignment of credit, which is in the nature of a sale of personal property,
produced the effects of a dation in payment, which may extinguish the obligation.
However, as in any other contract of sale, the vendor or assignor is bound by certain
warranties. Paragraph 1 of Article 1628 of the Civil Code provides: The vendor in
good faith shall be responsible for the existence and legality of the credit at the
time of the sale, unless it
should have been sold as doubtful; but not for the solvency of the debtor, unless it
has been so expressly stipulated or unless the insolvency was prior to the sale and
of common knowledge.
Lo, as assignor, is bound to warrant the existence and legality of the credit at the
time of the sale or assignment. When Jomero claimed that it was no longer indebted
to Lo since the latter also had an unpaid obligation to it, it essentially meant that its
obligation to Lohas been extinguished by compensation. As a result, KJS alleged the
non-existence of the credit and asserted its claim to Los warranty under the
assignment. Lo was therefore required to make good its warranty and pay the
obligation.
Furthermore, Lo breached his obligation under the Deed of Assignment as he did
not execute and do all such further acts and deeds as shall be reasonably
necessary to effectually enable said ASSIGNEE to recover whatever collectibles said
ASSIGNOR has in accordance with the true intent and meaning of these presents.
By warranting the existence of the credit, Lo should have ensured its performance in
case it is found to be inexistent. He should be held liable to pay to KJS the amount of
his indebtedness. Judgment Affirmed.
3.) MAMERTA VDA. DE JAYME VS CA
FACTS:
The spouses Graciano and Mamerta Jayme are the registered owners of Lot 2700,
situated in the Municipality of Mandaue On January 8, 1973, they entered into a
Contract of Lease with George Neri, president of Airland Motors Corporation (now

Cebu Asiancars Inc.), covering one-half of Lot 2700. The lease was for twenty (20)
years. The terms and conditions of the lease contract stipulated that Cebu Asiancars
Inc. (hereafter, Asiancars) may use the leased premises as a collateral to secure
payment of a loan which Asiancars may obtain from any bank, provided that the
proceeds of the loan shall be used solely for the construction of a building which,
upon the termination of the lease or the voluntary surrender of the leased premises
before the expiration of the contract, shall automatically become the property of the
Jayme spouses (the lessors). A Special Power of Attorney dated January 26, 1974,
was executed in favor of respondent George Neri, who used the lot to secure a loan
of P300,000 from the General Bank and Trust Company. The loan was fully paid on
August 14, 1977 In October 1977, Asiancars obtained a loan of P6,000,000 from the
Metropolitan Bank and Trust Company (MBTC). The entire Lot 2700 was offered as
one of several properties given as collateral for the loan. As mortgagors, the spouses
signed a Deed of Real Estate Mortgage dated November 21, 1977 in favor of MBTC.
It stated that the deed was to secure the payment of a loanobtained by Asiancars
from the bank. To assure the Jayme spouses, Neri and the other officers of Asiancars,
executed an undertaking .In it they promised, in their personal capacities and/or in
representation of Cebu Asiancars, Inc., "to compensate Mr. & Mrs. Graciano Jayme
for any and all or whatever damage they may sustain or suffer by virtue and arising
out of the mortgage to MBTC. In addition, Neri wrote a letter dated September 1,
1981 addressed to Mamerta Jayme acknowledging her "confidence and help"
extended to him, his family and Asiancars. He promised to pay their indebtedness to
MBTC before the loan was due. Meeting financial difficulties and incurring an
outstanding balance on the loan, Asiancars conveyed ownership of the building on
the leased premises to MBTC, by way of "dacion en pago." Asiancars failed to pay.
Eventually, MBTC extrajudicially foreclosed the mortgage. A public auction was held
on February 4, 1981. MBTC was the highest bidder for P1,067,344.35. A certificate of
sale was issued and was registered with the Register of Deeds. Petitioners claim that
Neri and Asiancars did not tell them that the indebtedness secured by the mortgage
was for P6,000,000 and that the security was the whole of Lot 2700. Petitioners
allege that the deed presented to the Jayme spouses was in blank, without
explanation on the stipulations contained therein, except that its conditions were
identical to those of the stipulations when they mortgaged half the lots area
previously with General Bank. Petitioners also alleged that the Jayme spouses were
illiterate and only knew how to sign their names. That because they did not know
how to read nor write, and had given their full trust and confidence to George Neri,
the spouses were deceived into signing the Deed of Real Estate Mortgage. Their
intention as well as consent was only to be bound as guarantors.
ISSUE:
WON the dacion en pago by Asiancars in favor of MBTC is valid and binding despite
the stipulation in the lease contract that ownership of the building will vest on the
Jaymes at the termination of the lease.
HELD:
In the case at bar, when Asiancars failed to pay its obligations with MBTC, the
properties given as security (one of them being the land owned by the Jaymes)
became subject to foreclosure. When several things are given to secure the same
debt in its entirety, all of them are liable for the debt, and the creditor does not have
to divide his action by distributing the debt among the
various things pledged or mortgaged. Even when only a part of the debt remains
unpaid, all the things are liable for such balance.The debtor cannot ask for the
release of one or some of the several properties pledged or mortgaged (or any
portion thereof) or proportionate extinguishment of the pledge or mortgage unless
and until the debt secured has been fully paid. The alienation of the building by
Asiancars in favor of MBTC for the partial satisfaction of its indebtedness is, in our
view, also valid. The ownership of the building had been effectively in the name of

the lessee-mortgagor (Asiancars), though with the provision that said ownership be
transferred to the Jaymes upon termination of the lease or the voluntary surrender of
the premises. The lease was constituted on January 8, 1973 and was to expire 20
years thereafter, or on January 8, 1993. The alienation via dacion en pago was made
by Asiancars to MBTC on December 18, 1980, during the subsistence of the lease. At
this point, the mortgagor, Asiancars, could validly exercise rights of ownership,
including the right to alienate it, as it did to MBTC.

enforcing the contract and not rescinding it.

II. A. (b.)
1.) ACE FOODS, INC., Petitioner,
vs.
MICRO PACIFIC TECHNOLOGIES CO., LTD., Respondent.
G.R. No. 200602

(e.)
2.)SANTOS vs. COURT OF APPEALS
Facts:
Spouses Santos owned the house and lot in Better Living Subdivision, Paranaque,
Metro Manila. The land together with the house, was mortgaged with the Rural Bank
of Salinas, Inc., to secure a loan of P150K. The bank sent Rosalinda Santos a letter
demanding payment of P16K in unpaid interest and other charges. Since the Santos
couple had no funds, Rosalinda offered to sell the house and lot to Carmen Caseda.
After inspecting the real property, Carmen and her husband agreed.
Carmen and Rosalinda signed a document, involving the sale of the house P350K
as full amount, P54K as downpayment. Among other condition set is that Caseda will
pay the balance of the mortgage in the bank, real estate taxes and the electric and
water bills.
The Casedas complied with the bank mortgage and the bills. The Santoses, seeing
that the Casedas lacked the means to pay the remaining installments and/or
amortization of the loan, repossessed the property. The Santoses then collected the
rentals from the tenants. Carmen approached petitioners and offered to pay the
balance of the purchase price for the house and lot. The parties, however, could not
agree, and the deal could not push through because the Santoses wanted a higher
price.
Carmen is now praying that the Santoses execute the final deed of conveyance over
the property.
Issue: WON there was a perfected contract of sale? NO
Held:
A contract is what the law defines it to be, taking into consideration its essential
elements, and not what the contracting parties call it. Article 1458 expressly obliges
the vendor to transfer ownership of the thing sold as an essential element of a
contract of sale. This is because the transfer of ownership in exchange for a price
paid or promised is the very essence of a contract of sale.
There was no transfer of ownership simultaneously with the delivery of the property
purportedly sold. The records clearly show that, notwithstanding the fact that the
Casedas first took then lost possession of the disputed house and lot, the title to the
property has remained always in the name of Rosalinda Santos. Although the parties
had agreed that the Casedas would assume the mortgage, all amortization
payments made by Carmen Caseda to the bank were in the name of Rosalinda
Santos. The foregoing circumstances categorically and clearly show that no valid
transfer of ownership was made by the Santoses to the Casedas. Absent this
essential element, their agreement cannot be deemed a contract of sale.
It was a contract to sell. Ownership is reserved by the vendor and is not to pass until
full payment of the purchase price. This we find fully applicable and understandable
in this case, given that the property involved is a titled realty under mortgage to a
bank and would require notarial and other formalities of law before transfer thereof
could be validly effected.
The CA cannot order rescission. If the vendor should eject the vendee for failure to
meet the condition precedent, he is enforcing the contract and not rescinding it.
When the petitioners in the instant case repossessed the disputed house and lot for
failure of private respondents to pay the purchase price in full, they were merely

December 11, 2013

DOCTRINE: Novation is never presumed, and the animus novandi, whether totally or
partially, must appear by express agreement of the parties, or by their acts that are
too clear and unequivocal to be mistaken.
FACTS:
1. ACE Foods is a domestic corporation engaged in the trading and distribution
of consumer goods in wholesale and retail bases, while MTCL is one
engaged in the supply of computer hardware and equipment.
2. MTCL sent a letter-proposal for the delivery and sale of the subject products
to be installed at various offices of ACE Foods. Aside from the itemization of
the products offered for sale.
3. ACE Foods accepted MTCLs proposal and accordingly issued Purchase
Order No. 100023 (Purchase Order) for the subject products amounting to
P646,464.00 (purchase price). MTCL delivered the said products to ACE
Foods. The fine print of the invoice states, inter alia, that "[t]itle to sold
property is reserved in MICROPACIFIC TECHNOLOGIES CO., LTD. until full
compliance of the terms and conditions of above and payment of the price"
(title reservation stipulation).
4. After delivery, the subject products were then installed and configured in
ACE Foodss premises. MTCLs demands against ACE Foods to pay the
purchase price, however, remained unheeded. Instead of paying the
purchase price, ACE Foods sent MTCL a Letter stating that it "ha[s] been
returning the [subject products] to [MTCL] thru [its] sales representative Mr.
Mark Anteola who has agreed to pull out the said [products] but had failed
to do so up to now."
5. ACE Foods lodged a Complaint against MTCL before the RTC, praying that
the latter pull out from its premises the subject products since MTCL
breached its "after delivery services" obligations to it, particularly, to: (a)
install and configure the subject products; (b) submit a cost benefit study to
justify the purchase of the subject products; and (c) train ACE Foodss
technicians on how to use and maintain the subject products. ACE Foods
likewise claimed that the subject products MTCL delivered are defective and
not working.
6. RTC rendered Decision in favor of ACE Foods. CA reversed and set aside the
RTCs ruling.
ISSUE: Whether ACE Foods should pay MTCL the purchase price for the subject
products. YES.
RATIO:
Parties agreed to a contract of sale. A contract of sale had been perfected at the
precise moment ACE Foods accepted the latters proposal to sell the subject
products in consideration of the purchase price of P646,464.00. From that point in
time, the reciprocal obligations of the parties (to deliver and to pay PP respectively)
already arose and consequently may be demanded.
At this juncture, the Court must dispel the notion that the stipulation anent MTCLs

reservation of ownership of the subject products as reflected in the Invoice Receipt,

i.e., the title reservation stipulation, changed the complexion of the transaction from
a contract of sale into a contract to sell. Records are bereft of any showing that the
said stipulation novated the contract of sale between the parties which, to repeat,
already existed at the precise moment ACE Foods accepted MTCLs proposal. To be
sure, novation, in its broad concept, may either be extinctive or modificatory. It is
extinctive when an old obligation is terminated by the creation of a new obligation
that takes the place of the former; it is merely modificatory when the old obligation
subsists to the extent it remains compatible with the amendatory agreement. In
either case, however, novation is never presumed, and the animus novandi, whether
totally or partially, must appear by express agreement of the parties, or by their acts
that are too clear and unequivocal to be mistaken.
In the present case, it has not been shown that the title reservation stipulation
appearing in the Invoice Receipt had been included or had subsequently modified or
superseded the original agreement of the parties. The fact that the Invoice Receipt
was signed by a representative of ACE Foods does not, by and of itself, prove animus
novandi since: (a) it was not shown that the signatory was authorized by ACE Foods
(the actual party to the transaction) to novate the original agreement; (b) the
signature only proves that the Invoice Receipt was received by a representative of
ACE Foods to show the fact of delivery; and (c) as matter of judicial notice, invoices
are generally issued at the consummation stage of the contract and not its
perfection, and have been even treated as documents which are not actionable per
se, although they may prove sufficient delivery. Thus, absent any clear indication
that the title reservation stipulation was actually agreed upon, the Court must deem
the same to be a mere unilateral imposition on the part of MTCL which has no effect
on the nature of the parties original agreement as a contract of sale. Perforce, the
obligations arising thereto, among others, ACE Foodss obligation to pay the
purchase price as well as to accept the delivery of the goods, remain enforceable
and subsisting.
Petition is denied. CA decision is affirmed.
3.) Calimlim-Canullas v. Fortun
Facts:
Petitioner Mercedes Calimlim-Canullas and Fernando Canullas were married in 1962,
with 5 children, and were living on a house situated on a land inherited by the latter.
In 1978, Fernando abandoned his family and lived with Corazon Daguines. In 1980,
Fernando sold the house and lot to Daguines, who initiated a complaint for quieting
of title. Mercedes resisted, claiming that the house and lot were conjugal properties,
and the sale was null nad void for she had not consented thereto.
Issues:
(1) Whether or not the construction of a conjugal house on the exclusive property of
the husband ipso facto gave the land the character of conjugal property
(2) Whether or not the sale of the lot together with the house and improvements
thereon was valid under the circumstances surrounding the transaction
Held:
(1) Both the land and the building belong to the conjugal partnership but the
conjugal partnership is indebted to the husband for the value of the land. The
spouse owning the lot becomes a creditor of the conjugal partnership for the value of
the lot, which value would be reimbursed at the liquidation of the conjugal
partnership. FERNANDO could not have alienated the house and lot to DAGUINES
since MERCEDES had not given her consent to said sale.
(2) The contract of sale was null and void for being contrary to morals and public
policy. The sale was made by a husband in favor of a concubine after he had
abandoned his family and left the conjugal home where his wife and children lived

and from whence they derived their support. That sale was subversive of the
stability of the family, a basic social institution which public policy cherishes and
protects. The law emphatically prohibits the spouses from selling property to each
other subject to certain exceptions. Similarly, donations between spouses during
marriage are prohibited. And this is so because if transfers or con conveyances
between spouses were allowed during marriage, that would destroy the system of
conjugal partnership, a basic policy in civil law. It was also designed to prevent the
exercise of undue influence by one spouse over the other, as well as to protect the
institution of marriage, which is the cornerstone of family law. The prohibitions apply
to a couple living as husband and wife without benefit of marriage, otherwise, "the
condition of those who incurred guilt would turn out to be better than those in legal
union." Those provisions are dictated by public interest and their criterion must be
imposed upon the wig of the parties.
4.) GUIANG v. COURT OF APPEALS
June 26, 1998 (291 SCRA 372)
FACTS:
The sale of a conjugal property requires the consent of both the husband and the
wife. The absence of the consent of one renders the sale null and void, while the
vitiation thereof makes it merely voidable. Only in the latter case can ratification
cure the defect.
Over the objection of private respondent Gilda Corpuz and while she was in Manila
seeking employment (with the consent of her husband), her husband sold to the
petitioners-spouses Antonio and Luzviminda Guiang one half of their conjugal
peoperty, consisting of their residence and the lot on which it stood. Upon her return
to Cotabato, respondent gathered her children and went back to the subject
property. Petitioners filed a complaint for trespassing. Later, there was an amicable
settlement between the parties. Feeling that she had the shorter end of the bargain,
respondent filed an Amended Complaint against her husband and petitioners. The
said Complaint sought the declaration of a certain deed of sale, which involved the
conjugal property of private respondent and her husband, null and void.
ISSUE: WON contract without the consent of wife is void
HELD:
Yes. Art 124 of the FC rules that In the event that one spouse is incapacitated or
otherwise unable to participate in the administration of the conjugal properties, the
other spouse may assume sole powers of administration. These powers do not
include the powers of disposition or encumbrance which must have the authority of
the court or the written consent of the other spouse. In the absence of such
authority or consent, the disposition or encumbrance shall be void.
Respondents consent to the contract of sale of their conjugal property was totally
inexistent or absent. The nullity of the contract of sale is premised on the absence of
private respondents consent. To constitute a valid contract, the Civil Code requires
the concurrence of the following elements: (1) cause, (2) object, and (3) consent, the
last element being indubitably absent in the case at bar.
A void contract cannot be ratified.
Neither can the amicable settlement be considered a continuing offer that was
accepted and perfected by the parties, following the last sentence of Article 124.
The order of the pertinent events is clear: after the sale, petitioners filed a complaint
for trespassing against private respondent, after which the barangay authorities
secured an amicable settlement and petitioners filed before the MTC a motion for
its execution. The settlement, however, does not mention a continuing offer to sell
the property or an acceptance of such a continuing offer. Its tenor was to the effect
that private respondent would vacate the property. By no stretch of the imagination,
can the Court interpret this document as the acceptance mentioned in Article 124.
5.) OLAGUER VS PURUGGANAN JR

Facts:
A petition for review on the decision of CA affirming the decision of RTC dismissing
the Olaguers suit.
Petitioner was the owner of shares of stocks of businessday Corp. He was active in
the political opposition against Marcos dictatorship. Antiicpating the possibility of his
arrest and detention by tem arcos military, he executed a SPS appointing his
attorneys-in-fact Locsin, Joaquin and hofilena for the purpose of selling or
transferring his shares of stocks with Busonessday. During his trial under the SPA, in
order to cancel his shares of stocks even before they are sold for the purpose of
concealing that he was a stockholder. The parties acknowledge the SPA before Emilio
Purugganan, the corporate Sec and the notary public.
He was arrested for arson and locsin ordered purugganan to cancel the shares in thr
books of the corp and to transfer them to Locsins name.
When he was released from detention, he discovered that he was no longer
registered as stickholder. He demanded that respondents restore to him full
ownership , but they refused to do so. He filed a complaint before RTC against
purugganana and locsin to declare as illegal the sale of the shares of stock.
He alleged that respondent exceeded his authority under the SPA. SPA only applied
in absence and incapacity.
RTC dismissed and found the sale of shares b/w him and respondent locsin was valid.
Issue: WON the CA erred in ruling that there was perfected sale.
Ruling:
Petitioner sought to impose a strict construction of the SPA by limiting th deifiniton of
the word ABSENCE to a condition wherein a person disappears from his domicile, his
whereabouts being unknown without leaving an agent to administer his proeprty.
Incapacity for olaguer would be limited to mean minority, insanity, imbecility, the
state of being deaf-mute, prodigality and civil interdiction.
He claims that his arrest and subsequent detention are not among the instances
covered by the terms absence and incapacity as provided in the SPA in favor of
locsin.

Facts:
Mariano Bernardo, a minor, inherited 17 parcels of land from his deceased father.
Respondent, Marianos step-mother, was appointed his guardian. As guardian, she
sold the 17 parcels to Dr. Ramos, her brother-in-law, for P14,700. After a week, Dr.
Ramos sold the lands to her for P15,000. Subsequently, she sold 4 out of 17 parcels
to Emilio Cruz. Petitioner replaced Roldan as guardian, and two months thereafter,
this litigation sought to declare as null and void the sale to Dr. Ramos, and the sale
to Emilio Cruz.
Issue:
Whether the sale of the land by the guardian is null and void for being violative of
the prohibition for a guardian to purchase either in person or through the mediation
of another the property of her ward
Held:
Remembering the general doctrine that guardianship is a trust of the highest order,
and the trustee cannot be allowed to have any inducement to neglect his wards
interest, and in line with the courts suspicion whenever the guardian acquires
wards property we have no hesitation to declare that in this case, in the eyes of the
law, Socorro Roldan took by purchase her wards parcels thru Dr. Ramos, and that
Article 1459 of the Civil Code applies.
7.) Macariola v. Asuncion, 114 SCRA 77, May 31, 1982
(En Banc), J. Makasiar
Facts: When the decision in Civil Case No. 3010 rendered by respondent Hon. Judge
Elias B. Asuncion of Court of First Instance of Leyte became final on June 8, 1863 for
lack of an appeal, a project of partition was submitted to him which he later
approved in an Order dated October 23, 1963. Among the parties thereto was
complainant Bernardita R. Macariola.
One of the properties mentioned in the project of partition was Lot 1184. This lot
according to the decision rendered by Judge Asuncion was adjudicated to the
plaintiffs Reyes in equal shares subdividing Lot 1184 into five lots denominated as
Lot 1184-A to 1184-E.
On July 31, 1964 Lot 1184-E was sold to Dr. Arcadio Galapon who later sold a portion
of Lot 1184-E to Judge Asuncion and his wife Victoria Asuncion. Thereafter spouses
Asuncion and spouses Galapon conveyed their respective shares and interests in Lot
1184-E to the Traders Manufacturing and Fishing Industries Inc. wherein Judge
Asuncion was the president.

It is a general rule the SPA must be strictly construed, however, the rule is not
absolute and should not be applied to the extent of destroying the very purpose of
the power.

Macariola then filed an instant complaint on August 9, 1968 docketed as Civil Case
No. 4234 in the CFI of Leyte against Judge Asuncion with "acts unbecoming a judge"
alleging that Judge Asuncion in acquiring by purchase a portion of Lot 1184-E
violated Article 1491 par. 5 of the New Civil Code, Art. 14, pars. 1 and 5 of the Code
of Commerce, Sec. 3 par. H of R.A. 3019, Sec. 12 Rule XVIII of the Civil Service Rules
and Canon 25 of the Canons of Judicial Ethics.

He already authorized agents to do specific acts of admniistraiton and no longer

necessitated the appointment of one by the court.

On November 2, 1970, Judge Jose Nepomuceno of the CFI of Leyte rendered a

decision dismissing the complaints against Judge Asuncion.

Absence and incapacity by their everyday usage means the state of not being
present and the inability to act given to context that the SPA authorizes the
agents to attend stockholders meeitgns and vote in behalf of petitioner, to sell the
shares of stocks and other related acts. This construction covers the situation
wherein petritoner was arrested and detained. Which he admitted in his testimony.

After the investigation, report and recommendation conducted by Justice Cecilia

Munoz Palma of the Court of Appeals, she recommended on her decision dated
March 27, 1971 that Judge Asuncion be exonerated.

6.) Philippine Trust Co. v. Roldan

Issue: Does Judge Asuncion, now Associate Justice of Court of Appeals violated any
law in acquiring by purchase a parcel of Lot 1184-E which he previously decided in a
Civil Case No. 3010 and his engagement in business by joining a private corporation

during his incumbency as a judge of the CFI of Leyte constitute an "act unbecoming
of a judge"?
Ruling: No. The respondent Judge Asuncion's actuation does not constitute of an
"act unbecoming of a judge." But he is reminded to be more discreet in his private
and business activities.
SC ruled that the prohibition in Article 1491 par. 5 of the New Civil Code applies only
to operate, the sale or assignment of the property during the pendency of the
litigation involving the property. Respondent judge purchased a portion of Lot 1184-E
on March 6, 1965, the in Civil Case No. 3010 which he rendered on June 8, 1963 was
already final because none of the parties therein filed an appeal within the
reglementary period. Hence, the lot in question was no longer subject to litigation.
Furthermore, Judge Asuncion did not buy the lot in question directly from the
plaintiffs in Civil Case No. 3010 but from Dr. Arcadio Galapon who earlier purchased
Lot1184-E from the plaintiffs Reyes after the finality of the decision in Civil Case No.
3010.
SC stated that upon the transfer of sovereignty from Spain to the US and later on
from the US to the Republic of the Philippines, Article 14 of Code of Commerce must
be deemed to have been abrogated because where there is change of sovereignty,
the political laws of the former sovereign, whether compatible or not with those of
the new sovereign, are automatically abrogated, unless they are expressly reenacted by affirmative act of the new sovereign. There appears no enabling or
affirmative act that continued the effectivity of the aforestated provision of the Code
of Commerce, consequently, Art. 14 of the Code of Commerce has no legal and
binding effect and cannot apply to the respondent Judge Asuncion.
Respondent Judge cannot also be held liable to par. H, Section 3 of R.A. 3019
because the business of the corporation in which respondent participated had
obviously no relation or connection with his judicial office.
SC stated that respondent judge and his wife deserve the commendation for their
immediate withdrawal from the firm 22 days after its incorporation realizing that
their interest contravenes the Canon 25 of the Canons of Judicial Ethics.