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[ G.R. No. 179743, August 02, 2010 ]

HADJA FATIMA GAGUIL MAGOYAG, JOINED BY HER HUSBAND, HADJI HASAN MADLAWI MAGOYAG, PETITIONERS, VS. HADJI ABUBACAR MARUHOM, RESPONDENT.

Facts:

Respondent Hadji Abubakar Marahum sold to Petitioner Hadji Fatima Magoyag a certain two-storey market stall located in the public market of Marawi City. The sale was evidenced by a Deed of Assignment which also stated that although there was a sale, possession will remain with the seller Hadji Maruhom and that he will pay a monthly rental. However, after several years Hadji Maruhom suddenly stopped paying rentals. Petitioner demanded payment but respondent failed to fulfill his promise and refused to vacate the premises. On August 22, 1994 petitioner filed a complaint for recovery of possession and damages with the RTC of Marawi City.

Issue:   Did the Deed of Assignment prove the existence of  a sale?

            Is the sale valid?

Decision: The Deed of Assignment is a clear indication that the transaction was really of a sale and not of a loan with an equitable mortgage. The language in the document is crystal clear, unambiguous and  needs no further interpretation.

However, the validity of the sale lies not with the interpretation of the contract. The sale was ultimately declared as invalid because the respondent, Hadji Maruhom is not the owner of the property. Records show that it is the city of Marawi who owned the property and as a mere grantee, he was expressly prohibited from  selling, donating or otherwise alienating the said property without the consent of the city government. Violation of the condition shall automatically render the sale, null and void.

One cannot give what one does not have. “Nemo dat qoud non habet”.

[ G.R. No. 131679, February 01, 2000 ]

CAVITE DEVELOPMENT BANK AND FAR EAST BANK AND TRUST COMPANY, PETITIONERS, VS. SPOUSES CYRUS LIM AND LOLITA CHAN LIM AND COURT OF APPEALS, RESPONDENTS.

Facts:

Rodolfo Guansing obtained a loan from Cavite Development Bank(CDB)  and offered as security his real estate property. For failing to pay his loan the property was foreclosed and title was issued in the name of CDB.

Now here comes Lolita Chan Lim, the respondent on this case who offered to buy the property from CDB. Mrs. Lim paid P30,000.00 as option money and was issued receipt by CDB. However , Mrs. Lim later discovered that the title of the property is being disputed by Perfecto Guansing, the father of the mortgagee Rodolfo Guansing. In fact, in a separate case it was declared that Rodolfo fraudulently secured title to the said mortgaged property and title to it was restored to Perfecto . The decision has since become final and executory.

Aggrieved by what she considered a serious misrepresentation by CDB and its mother company FEBTC, on their ability to sell the subject property, filed an action for specific performance and damage against petitioners.

Issues: Was the sale between CDB and Mrs. Lim perfected?

Is CDB liable for damges?

Is the sale valid?

Decision: Contracts are not defined by the parties thereto but by the principles of law. In determining the nature of a contract, the courts are not bound by the name or title given to it by the contracting parties. In the case at bar, the sum of P30,000.00, although denominated in the offer to purchase as “option money’ is actually in the nature of  “earnest money’ or down payment when considered with the other terms of the offer.

It is because when Mrs. Lim offered to buy the property the 10% so called “option money” forms part of the purchase price as contemplated under Art. 1482 of the Civil Code. It is clear then that the parties in this case actually entered into a contract of sale, partially consummated as to the payment of the price.

CDB cannot invoke the defense that it is a mortgagee in good faith. It only applies to private individuals and not to banking institutions. They cannot be excused from the duty of exercising the due diligence required of banking institutions. It is standard practice for banks, before approving a loan, to investigate who are the real owners thereof. Banking is affected with public interest that is why they are expected to exercise more care and prudence than private individuals.

Considering CDB’s negligence it is therefore liable for damages.

As to its validity, the doctrine of “Nemo dat quod non habet” applies. One cannot give what one does not have. The seller not being the owner the sale is void.