SUPREME COURT REPORTS ANNOTATED VOLUME 111 file:///D:/My Documents/Law School Ebooks/Obligation and Contract/...

VOL. 111, JANUARY 30, 1982 341

Pichel vs. Alonzo
*
No. L-36902. January 30, 1982.

LUIS PICHEL, petitioner, vs. PRUDENCIO ALONZO,

respondent.

Public Lands; Cancellation of award of public land does not

automatically divest the awardee of his rights to the land.—Before
going into the issues raised by the instant Petition, the matter of
whether, under the admitted facts of this case, the respondent
had the right or authority to execute the “Deed of Sale” in 1968,
his award over Lot No. 21 having been cancelled previously by the
Board of Liquidators on January 27, 1965, must be clarified. The
case in point is Ras vs. Sua wherein it was categorically stated by
this Court that a cancellation of an award granted pursuant to the
provisions of Republic Act No. 477 does not automatically divest
the awardee of his rights to the land. Such cancellation does not
result in the immediate reversion of the property subject of the
award, to the State. Speaking through Mr. Justice J.B.L. Reyes,
this Court ruled that “until and unless an appropriate proceeding
for reversion is instituted by the State, and its reacquisition of the
ownership and possession of the land decreed by a competent
court, the grantee cannot be said to have been divested of
whatever right that he may have over the same property.”
Contracts; Interpretation of a document is not called for where
its terms are clear.—The first five assigned errors are interrelated,
hence, We shall consider them together. To begin with, We agree
with petitioner that construction or interpretation of the
document in question is not called for. A perusal of the deed fails
to disclose any ambiguity or obscurity in its provisions, nor is
there doubt as to the real intention of the contracting parties. The
terms of the agreement are clear and unequivocal, hence the
literal and plain meaning thereof should be observed.
Same; Sale; Potential fruits of apiece of land may be the
subject of sale.—The subject matter of the contract of sale in
question are the fruits of the coconut trees on the land during the
years from September 15, 1968 up to January 1, 1976, which
subject matter is a determinate thing. Under Article 1461 of the
New Civil Code, things having a potential existence may be the
object of the contract of sale.

1 of 16 8/11/2019, 8:28 PM
SUPREME COURT REPORTS ANNOTATED VOLUME 111 file:///D:/My Documents/Law School Ebooks/Obligation and Contract/...

_______________

* FIRST DIVISION.

342

342 SUPREME COURT REPORTS ANNOTATED

Pichel vs. Alonzo

And in Sibal vs. Valdez, 50 Phil 512, pending crops which have
potential existence may be the subject matter of sale.
Same; Same; A transfer of possession or ownership of the
fruits of apiece of land cannot be equated with the transfer of
possession or ownership of the land.—The contract was clearly a
“sale of the coconut fruits.” The vendor sold, transferred and
conveyed “by way of absolute sale, all the coconut fruits of his
land,” thereby divesting himself of all ownership or dominion over
the fruits during the seven-year period. The possession and
enjoyment of the coconut trees cannot be said to be the possession
and enjoyment of the land itself because these rights are distinct
and separate from each other, the first pertaining to the accessory
or improvements (coconut trees) while the second, to the principal
(the land). A transfer of the accessory or improvement is not a
transfer of the principal. It is the other way around, the accessory
follows the principal. Hence, the sale of the nuts cannot be
interpreted nor construed to be a lease of the trees, much less
extended further to include the lease of the land itself.
Public Lands; Sale; The grantee of public land is not
prohibited from selling the fruits thereof, like coconut fruits, which
are meant to be gathered and severed from the trees.—Resolving
now this principal issue, We find after a close and careful
examination of the terms of the first paragraph of Section 8
hereinabove quoted, that the grantee of a parcel of land under R.
A. No. 477 is not prohibited from alienating or disposing of the
natural and/or industrial fruits of the land awarded to him. What
the law expressly disallows is the encumbrance or alienation of
the land itself or any of the permanent improvements thereon.
Permanent improvements on a parcel of land are things
incorporated or attached to the property in a fixed manner,
naturally or artificially. They include whatever is built, planted or
sown on the land which is characterized by fixity, immutability or
immovability. Houses, buildings, machinery, animal houses, trees
and plants would fall under the category of permanent
improvements, the alienation or encumbrance of which is
prohibited by R.A. No. 477. While coconut trees are permanent
improvements of a land, their nuts are natural or industrial fruits

2 of 16 8/11/2019, 8:28 PM
SUPREME COURT REPORTS ANNOTATED VOLUME 111 file:///D:/My Documents/Law School Ebooks/Obligation and Contract/...

which are meant to be gathered or severed from the trees, to be

used, enjoyed, sold or otherwise disposed of by the owner of the
land. Herein respondents, as the grantee of Lot No. 21 from the
Government, had the right and prerogative to sell the coconut
fruits of the trees growing on the property.

343

VOL. 111, JANUARY 30, 1982 343

Pichel vs. Alonzo

Same; Same; Sale of produce or fruits of land acquired from

the government under RA. 477 does not violate the purpose of said
law.—The purpose of the law is not violated when a grantee sells
the produce or fruits of his land. On the contrary, the aim of the
law is thereby achieved, for the grantee is encouraged and
induced to be more industrious and productive, thus making it
possible for him and his family to be economically self-sufficient
and to lead a respectable life. At the same time, the Government
is assured of payment on the annual installments on the land. We
agree with herein petitioner that it could not have been the
intention of the legislature to prohibit the grantee from selling the
natural and industrial fruits of his land, for otherwise, it would
lead to an absurd situation wherein the grantee would not be able
to receive and enjoy the fruits of the property in the real and
complete sense.
Same; Same; Contracts; A contracting party cannot be allowed
to impugn the contract he has entered into by saying he can change
his mind.—Respondent through counsel, in his Answer to the
Petition contends that even granting arguendo that he executed a
deed of sale of the coconut fruits, he has the “privilege to change
his mind and claim it as (an) implied lease,” and he has the
“legitimate right” to file an action for annulment “which no law
can stop.” He claims it is his “sole construction of the meaning of
the transaction that should prevail and not petitioner, (sic).”
Respondent’s counsel either mis-applies the law or is trying too
hard and going too far to defend his client’s hopeless cause.
Suffice it to say that respondent-grantee, after having received
the consideration for the sale of his coconut fruits, cannot be
allowed to impugn the validity of the contracts he entered into, to
the prejudice of petitioner who contracted in good faith and for a
consideration.

PETITION to review on certiorari the decision of the Court

of First Instance of Basilan City.

The facts are stated in the opinion of the Court.

GUERRERO, J.:

3 of 16 8/11/2019, 8:28 PM
SUPREME COURT REPORTS ANNOTATED VOLUME 111 file:///D:/My Documents/Law School Ebooks/Obligation and Contract/...

This is a petition to review on certiorari the decision of the

Court of First Instance of Basilan City dated January 5,
1973 in Civil Case No. 820 entitled “Prudencio Alonzo,
plaintiff, vs. Luis Pichel, defendant.”
344

344 SUPREME COURT REPORTS ANNOTATED

Pichel vs. Alonzo

This case originated in the lower Court as an action for the

annulment of a “Deed of Sale” dated August 14, 1968 and
executed by Prudencio Alonzo, as vendor, in favor of Luis
Pichel, as vendee, involving property awarded to the former
by the Philippine Government under Republic Act No. 477.
Pertinent portions of the document sued upon read as
follows:

“That the VENDOR for and in consideration of the sum of FOUR

THOUSAND TWO HUNDRED PESOS (P4,200.00), Philippine
Currency, in hand paid by the VENDEE to the entire satisfaction
of the VENDOR, the VENDOR hereby sells, transfers, and
conveys, by way of absolute sale, all the coconut fruits of his
coconut land, designated as Lot No. 21—Subdivision Plan No.
Psd-32465, situated at Balactasan Plantation, Lamitan, Basilan
City, Philippines;
“That for the herein sale of the coconut fruits are for all the
fruits on the aforementioned parcel of land presently found
therein as well as for future fruits to be produced on the said
parcel of land during the years period; which shall commence to
run as of SEPTEMBER 15, 1968; up to JANUARY 1, 1976 (sic);
“That the delivery of the subject matter of the Deed of Sale
shall be from time to time and at the expense of the VENDEE
who shall do the harvesting and gathering of the fruits;
“That the Vendor’s right, title, interest and participation herein
conveyed is of his own exclusive and absolute property, free from
any liens and encumbrances and he warrants to the Vendee good
title thereto and to defend the same against any and all claims of
1
all persons whomsoever.”

After the pre-trial conference, the Court a quo issued an

Order dated November 9, 1972 which in part read thus:

“The following facts are admitted by the parties:

“Plaintiff Prudencio Alonzo was awarded by the Government
that parcel of land designated as Lot No. 21 of Subdivision Plan
Psd-32465 of Balactasan, Lamitan, Basilan City in accordance
with Republic Act No. 477. The award was cancelled by the Board
of Liquidators on January 27, 1965 on the ground that, previous
thereto,

4 of 16 8/11/2019, 8:28 PM
SUPREME COURT REPORTS ANNOTATED VOLUME 111 file:///D:/My Documents/Law School Ebooks/Obligation and Contract/...

_______________

1 Exhibit “A”, Folder of Exhibits.

345

VOL. 111, JANUARY 30, 1982 345

Pichel vs. Alonzo

plaintiff was proved to have alienated the land to another, in

violation of law. In 1972, plaintiff’s rights to the land were
reinstated.
“On August 14, 1968, plaintiff and his wife sold to defendant all
the fruits of the coconut trees which may be harvested in the land
in question for the period, September 15, 1968 to January 1, 1976,
in consideration of P4,200.00. Even as of the date of sale, however,
the land was still under lease to one, Ramon Sua, and it was the
agreement that part of the consideration of the sale, in the sum of
P3,650.00, was to be paid by defendant directly to Ramon Sua so
as to release the land from the clutches of the latter. Pending said
payment plaintiff refused to allow the defendant to make any
harvest.
“In July 1972, defendant for the first time since the execution
of the deed of sale in his favor, caused the harvest of the fruit of
the coconut trees in the land.
x x x      x x x      x x x
“Considering the foregoing, two issues appear posed by the
complaint and the answer which must needs be tested in the
crucible of a trial on the merits, and they are:
“First.—Whether or nor defendant actually paid to plaintiff the
full sum of P4,200.00 upon execution of the deed of sale.
“Second.—Is the deed of sale. Exhibit ‘A’, the prohibited
2
encumbrance contemplated in Section 8 of Republic Act No. 477?”

Anent the first issue, counsel for plaintiff Alonzo

subsequently “stipulated and agreed that 3his client x x x
admits full payment thereof by defendant.” The remaining
issue being one of law, the Court below considered the case
submitted for summary judgment on the basis of the
pleadings of the parties, and the admission of facts and
documentary evidence presented at the pre-trial
conference.
The lower court rendered its decision now under review,
holding that although the agreement in question is

_______________

2 Order of the lower Court dated November 9, 1972, Original Record on

Appeal, pp. 9-10. The first issue was originally phrased thus: “Was the
partial consideration of sale in the sum of P3,650.00 paid by defendant to
Ramon Sua as agreed upon by the parties?,” but was later changed to

5 of 16 8/11/2019, 8:28 PM
SUPREME COURT REPORTS ANNOTATED VOLUME 111 file:///D:/My Documents/Law School Ebooks/Obligation and Contract/...

what appears above, in an Order dated November 21, 1972, Original

Record on Appeal, p. 12.
3 Decision of the lower Court dated January 5, 1973, Original Record on
Appeal, p. 16.

346

346 SUPREME COURT REPORTS ANNOTATED

Pichel vs. Alonzo

denominated by the parties as a deed of sale of fruits of the

coconut trees found in the vendor’s land, it actually is, for
all legal intents and purposes, a contract of lease of the
land itself. According to the Court:

“x x x the sale aforestated has given defendant complete control

and enjoyment of the improvements of the land. That the contract
is consensual; that its purpose is to allow the enjoyment or use of
a thing; that it is onerous because rent or price certain is
stipulated; and that the enjoyment or use of the thing certain is
stipulated to be for a certain and definite period of time, are
characteristics which admit of no other conclusion, x x x The
provisions of the contract itself and its characteristics govern its
4
nature.”

The Court, therefore, concluded that the deed of sale in

question is an encumbrance prohibited by Republic Act No.
477 which provides thus:

“Sec. 8. Except in favor of the Government or any of its branches,

units, or institutions, land acquired under the provisions of this
Act or any permanent improvements thereon shall not be subject
to encumbrance or alienation from the date of the award of the
land or the improvements thereon and for a term of ten years
from and after the date of issuance of the certificate of title, nor
shall they become liable to the satisfaction of any debt contracted
prior to the expiration of such period.
“Any occupant or applicant of lands under this Act who
transfers whatever rights he has acquired on said lands and/or on
the improvements thereon before the date of the award or
signature of the contract of sale, shall not be entitled to apply for
another piece of agricultural land or urban, homesite or
residential lot, as the case may be, from the National Abaca and
Other Fibers Corporation; and such transfer shall be considered
5
null and void.”

_______________

4 Ibid., pp. 17-18.

5 This provision has been amended by Section 2 of Presidential Decree
No. 967, promulgated on June 24, 1976, to read as follows: “Sec. 8. Any

6 of 16 8/11/2019, 8:28 PM
SUPREME COURT REPORTS ANNOTATED VOLUME 111 file:///D:/My Documents/Law School Ebooks/Obligation and Contract/...

provision of law, executive order, rules or regulations to the contrary

notwithstanding, an applicant who has acquired land pursuant to the
provisions of this Act and to whom a certificate of title has been issued
covering such land

347

VOL. 111, JANUARY 30, 1982 347

Pichel vs. Alonzo

The dispositive portion of the lower Court’s decision states:

“WHEREFORE, it is the judgment of this Court that the deed of

sale, Exhibit ‘A’, should be, as it is, hereby declared null and void;
that plaintiff be, as he is, ordered to pay back to defendant the
consideration of the sale in the sum of P4,200.00 the same to bear
legal interest from the date of the filing of the complaint until
paid; that defendant shall pay to the plaintiff the sum of P500.00
as attorney’s fees.
6
Costs against the defendant.”

Before going into the issues raised by the instant Petition,

the matter of whether, under the admitted facts of this
case, the respondent had the right or authority to execute
the “Deed of Sale” in 1968, his award over Lot No. 21
having been cancelled previously by the Board of
Liquidators on January 27, 71965, must be clarified. The
case in point is Ras vs. Sua wherein it was categorically
stated by this Court that a cancellation of an award
granted pursuant to the provisions of Republic Act No. 477
does not automatically divest the awardee of his rights to
the land. Such cancellation does not result in the
immediate reversion of the property subject of the award,
to the State. Speaking through Mr. Justice J.B.L. Reyes,
this Court ruled that “until and unless an appropriate
proceeding for reversion is instituted by the State, and its
reacquisition of the ownership and possession of the land
decreed by a competent court, the grantee cannot be said to
have been divested of whatever
8
right that he may have
over the same property.”
There is nothing in the record to show that at any time
after the supposed cancellation of herein respondent’s
award on

_______________

may sell, cede, transfer, or convey his rights and interests therein,
including the permanent improvements on the land, to any interested
party.”
6 Decision of the lower Court dated January 5, 1973, Original Record on
Appeal, p. 19.

7 of 16 8/11/2019, 8:28 PM
SUPREME COURT REPORTS ANNOTATED VOLUME 111 file:///D:/My Documents/Law School Ebooks/Obligation and Contract/...

7 L-23302, September 25, 1968, 25 SCRA 153.

8 Ibid., p. 160.

348

348 SUPREME COURT REPORTS ANNOTATED

Pichel vs. Alonzo

January 27, 1965, reversion proceedings against Lot No. 21

were instituted by the State. Instead, the admitted fact is
that the award was reinstated in 1972. Applying the
doctrine announced in the above-cited Ras case, therefore,
herein respondent is not deemed to have lost any of his
rights as grantee of Lot No. 21 under Republic Act No. 477
during the period material to the case at bar, i.e., from the
cancellation of the award in 1965 to its reinstatement in
1972. Within said period, respondent could exercise all the
rights pertaining to a grantee with respect to Lot No. 21.
This brings Us to the issues raised by the instant
Petition. In his Brief, petitioner contends that the lower
Court erred:

1. In resorting to construction and interpretation of

the deed of sale in question where the terms thereof
are clear and unambiguous and leave no doubt as to
the intention of the parties;
2. In declaring—granting without admitting that an
interpretation is necessary—the deed of sale in
question to be a contract of lease over the land itself
where the respondent himself waived and
abandoned his claim that said deed did not express
the true agreement of the parties, and on the
contrary, respondent admitted at the pre-trial that
his agreement with petitioner was one of sale of the
fruits of the coconut trees on the land;
3. In deciding a question which was not in issue when
it declared the deed of sale in question to be a
contract of lease over Lot 21;
4. In declaring furthermore the deed of sale in
question to be a contract of lease over the land itself
on the basis of facts which were not proved in
evidence;
5. In not holding that the deed of sale, Exhibit “A” and
“2”, expresses a valid contract of sale;
6. In not deciding squarely and to the point the issue
as to whether or not the deed of sale in question is
an encumbrance on the land and its improvements
prohibited by Section 8 of Republic Act 477; and
7. In awarding respondent attorneys fees even

8 of 16 8/11/2019, 8:28 PM
SUPREME COURT REPORTS ANNOTATED VOLUME 111 file:///D:/My Documents/Law School Ebooks/Obligation and Contract/...

granting, without admitting, that the deed of sale in

question is violative of Section 8 of Republic Act
477.

The first five assigned errors are interrelated, hence, We

shall consider them together. To begin with, We agree with
349

VOL. 111, JANUARY 30, 1982 349

Pichel vs. Alonzo

petitioner that construction or interpretation of the

document in question is not called for. A perusal of the deed
fails to disclose any ambiguity or obscurity in its provisions,
nor is there doubt as to the real intention of the contracting
parties. The terms of the agreement are clear and
unequivocal, hence the literal and plain meaning thereof
should be observed. Such is the mandate of the Civil Code
of the Philippines which provides that:

“Art. 1370. If the terms of a contract are clear and leave no doubt
upon the intention of the contracting parties, the literal meaning
of its stipulation shall control, x x x.”

Pursuant to the afore-quoted legal provision, the first and

fundamental duty of the courts is the application of the
contract according to its express terms, interpretation
being resorted
9
to only when such literal application is
impossible.
Simply and directly stated, the “Deed of Sale dated
August 14, 1968 is precisely what it purports to be. It is a
document evidencing the agreement of herein parties for
the sale of coconut fruits of Lot No. 21. and not for the lease
of the land itself as found by the lower Court. In clear and
express terms, the document defines the object of the
contract thus: “the herein sale of the coconut fruits are for
all the fruits on the aforementioned parcel of land during
the years x x x (from) SEPTEMBER 15, 1968; up to
JANUARY 1, 1976.” Moreover, as petitioner correctly
asserts, the document in question expresses a valid
contract of sale. It has the essential elements of a contract
of sale as defined under Article 1485 of the New Civil Code
which provides thus:

“Art. 1458. By the contract of sale one of the contracting parties

obligates himself to transfer the ownership of and to deliver a
determinate thing, and the other to pay therefor a price certain in
money or its equivalent.
A contract of sale may be absolute or conditional.”

9 of 16 8/11/2019, 8:28 PM
SUPREME COURT REPORTS ANNOTATED VOLUME 111 file:///D:/My Documents/Law School Ebooks/Obligation and Contract/...

_______________

9 See Pacific Oxygen and Acetylene Co. vs. Central Bank, L-21881,
March 1, 1968, 22 SCRA 917, 921.

350

350 SUPREME COURT REPORTS ANNOTATED

Pichel vs. Alonzo

The subject matter of the contract of sale in question are

the fruits of the coconut trees on the land during the years
from September 15, 1968 up to January 1, 1976, which
subject matter is a determinate thing. Under Article 1461
of the New Civil Code, things having a potential existence
may be the object of the contract of sale. And in Sibal vs.
Valdez, 50 Phil. 512, pending crops which have potential
existence may be the subject matter of sale. Here, the
Supreme Court, citing Mechem on Sales and American
cases said:

“Mr. Mechem says that a valid sale may be made of a thing, which
though not yet actually in existence, is reasonably certain to come
into existence as the natural increment or usual incident of
something already in existence, and then belonging to the vendor,
and the title will vest in the buyer the moment the thing comes
into existence. (Emerson vs. European Railway Co., 67 Me., 387;
Cutting vs. Packers Exchange, 21 Am. St. Rep. 63) Things of this
nature are said to have a potential existence. A man may sell
property of which he is potentially and not actually possessed. He
may make a valid sale of the wine that a vineyard is expected to
produce; or the grain a field may grow in a given time; or the milk
a cow may yield during the coming year; or the wool that shall
thereafter grow upon sheep; or what may be taken at the next
case of a fisherman’s net; or fruits to grow; or young animals not
yet in existence; or the good will of a trade and the like. The thing
sold, however, must be specific and identified. They must be also
owned at the time by the vendor. (Hull vs. Hull, 48 Conn., 250 (40
Am. Rep., 165)” (pp. 522-523).

We do not agree with the trial court that the contract

executed by and between the parties is “actually a contract
of lease of the land and the coconut trees there.” (CFI
Decision, p. 62, Records). The Court’s holding that the
contract in question fits the definition of a lease of things
wherein one of the parties binds himself to give to another
the enjoyment or use of a thing for a price certain and for a
period which may be definite or indefinite (Art. 1643, Civil
Code of the Philippines) is erroneous. The essential
difference between a contract of sale and a lease of things is
that the delivery of the thing sold transfers ownership,

10 of 16 8/11/2019, 8:28 PM
SUPREME COURT REPORTS ANNOTATED VOLUME 111 file:///D:/My Documents/Law School Ebooks/Obligation and Contract/...

while in lease no such transfer of ownership results as the

rights of the lessee are limited to the use and enjoyment of
the thing leased.
351

VOL. 111, JANUARY 30, 1982 351

Pichel vs. Alonzo

In Rodriguez vs. Borromeo, 43 Phil. 479, 490, the Supreme

Court held:

“Since according to article 1543 of the same Code the contract of

lease is defined as the giving or the concession of the enjoyment or
use of a thing for a specified time and fixed price, and since such
contract is a form of enjoyment of the property, it is evident that it
must be regarded as one of the means of enjoyment referred to in
said article 398, inasmuch as the terms enjoyment, use, and
benefit involve the same and analogous meaning relative to the
general utility of which a given thing is capable.” (104
Jurisprudencia Civil, 443)

In concluding that the possession and enjoyment of the

coconut trees can therefore be said to be the possession and
enjoyment of the land itself because the defendant-lessee in
order to enjoy his right under the contract, he actually
takes possession of the land, at least during harvest time,
gather all of the fruits of the coconut trees in the land, and
gain exclusive use thereof without the interference or
intervention of the plaintiff-lessor such that said plaintiff-
lessor is excluded in fact from the land during the period
aforesaid, the trial court erred. The contract was clearly a
“sale of the coconut fruits.” The vendor sold, transferred
and conveyed “by way of absolute sale, all the coconut fruits
of his land,” thereby divesting himself of all ownership or
dominion over the fruits during the seven-year period. The
possession and enjoyment of the coconut trees cannot be
said to be the possession and enjoyment of the land itself
because these rights are distinct and separate from each
other, the first pertaining to the accessory or improvements
(coconut trees) while the second, to the principal (the land).
A transfer of the accessory or improvement is not a transfer
of the principal. It is the other way around, the accessory
follows the principal. Hence, the sale of the nuts cannot be
interpreted nor construed to be a lease of the trees, much
less extended further to include the lease of the land itself.
The real and pivotal issue of this case which is taken up
in petitioner’s sixth assignment of error and as already
stated above, refers to the validity of the “Deed of Sale”, as
such contract of sale, vis-a-vis the provisions of Sec. 8, R.A.
No. 477. The lower Court did not rule on this question,

11 of 16 8/11/2019, 8:28 PM
SUPREME COURT REPORTS ANNOTATED VOLUME 111 file:///D:/My Documents/Law School Ebooks/Obligation and Contract/...

having reached
352

352 SUPREME COURT REPORTS ANNOTATED

Pichel vs. Alonzo

the conclusion that the contract at bar was one of lease. It

was from the context of a lease contract that the Court
below determined the applicability of Sec. 8, R.A. No. 477,
to the instant case.
Resolving now this principal issue, We find after a close
and careful examination of the terms of the first paragraph
of Section 8 hereinabove quoted, that the grantee of a
parcel of land under R.A. No. 477 is not prohibited from
alienating or disposing of the natural and/or industrial
fruits of the land awarded to him. What the law expressly
disallows is the encumbrance or alienation of the land itself
or any of the permanent improvements thereon. Permanent
improvements on a parcel of land are things incorporated
or attached to the property in a fixed manner, naturally or
artificially. They include whatever is built, planted or sown
on the land which is characterized by fixity, immutability
or immovability. Houses, buildings, machinery, animal
houses, trees and plants would fall under the category of
permanent improvements, the alienation or encumbrance
of which is prohibited by R.A. No. 477. While coconut trees
are permanent improvements of a land, their nuts are
natural or industrial fruits which are meant to be gathered
or severed from the trees, to be used, enjoyed, sold or
otherwise disposed of by the owner of the land. Herein
respondents, as the grantee of Lot No. 21 from the
Government, had the right and prerogative to sell the
coconut fruits of the trees growing on the property.
By virtue of R.A. No. 477, bona fide occupants, veterans,
members of guerilla organizations and other qualified
persons were given the opportunity to acquire government
lands by purchase, taking into account their limited means.
It was intended for these persons to make good and
productive use of the lands awarded to them, not only to
enable them to improve their standard of living, but
likewise to help provide for the annual payments to the
Government of the purchase price of the lots awarded to
them. Section 8 was included, as stated by the Court a quo,
to protect the grantees “from themselves and the incursions
of opportunists who prey on their misery and poverty.” It is
there to insure that the grantees themselves benefit from
their respective lots, to the exclusion of other persons.
353

12 of 16 8/11/2019, 8:28 PM
SUPREME COURT REPORTS ANNOTATED VOLUME 111 file:///D:/My Documents/Law School Ebooks/Obligation and Contract/...

VOL. 111, JANUARY 30, 1982 353

Pichel vs. Alonzo

The purpose of the law is not violated when a grantee sells

the produce or fruits of his land. On the contrary, the aim
of the law is thereby achieved, for the grantee is
encouraged and induced to be more industrious and
productive, thus making it possible for him and his family
to be economically self-sufficient and to lead a respectable
life. At the same time, the Government is assured of
payment on the annual installments on the land. We agree
with herein petitioner that it could not have been the
intention of the legislature to prohibit the grantee from
selling the natural and industrial fruits of his land, for
otherwise, it would lead to an absurd situation wherein the
grantee would not be able to receive and enjoy the fruits of
the property in the real and complete sense.
Respondent through counsel, in his Answer to the
Petition contends that even granting arguendo that he
executed a deed of sale of the coconut fruits, he has the
“privilege to change his mind and claim it as (an) implied
lease,” and he has the “legitimate right” to file an action for
annulment “which no law can stop.” He claims it is his “sole
construction of the meaning of the10transaction that should
prevail and not petitioner. (sic).” Respondent’s counsel
either mis-applies the law or is trying too hard and going
too far to defend his client’s hopeless cause. Suffice it to say
that respondent-grantee, after having received the
consideration for the sale of his coconut fruits, cannot be
allowed to impugn the validity of the contracts he entered
into, to the prejudice of petitioner who contracted in good
faith and for a consideration.
The issue raised by the seventh assignment of error as
to the propriety of the award of attorney’s fees made by the
lower Court need not be passed upon, such award having
been apparently based on the erroneous finding and
conclusion that the contract at bar is one of lease. We shall
limit Ourselves to the question of whether or not in
accordance with Our ruling in this case, respondent is
entitled to an award of attorney’s fees. The Civil Code
provides that:

_______________

10 Respondent’s Answer to Petition for Review, p. 5; Rollo, p. 74.

354

354 SUPREME COURT REPORTS ANNOTATED

13 of 16 8/11/2019, 8:28 PM
SUPREME COURT REPORTS ANNOTATED VOLUME 111 file:///D:/My Documents/Law School Ebooks/Obligation and Contract/...

Pichel vs. Alonzo

“Art. 2208. In the absence of stipulation, attorney’s fees and

expenses of litigation, other than judicial costs, cannot be
recovered, except:

(1) When exemplary damages are awarded;

(2) When the defendant’s act or omission has compelled the
plaintiff to litigate with third persons or to incur expenses
to protect his interest;
(3) In criminal cases of malicious prosecution against the
plaintiff;
(4) In case of a clearly unfounded civil action or proceeding
against the plaintiff;
(5) Where the defendant acted in gross and evident bad faith
in refusing to satisfy the plaintiff’s plainly valid, just and
demandable claim;
(6) In actions for legal support;
(7) In actions for the recovery of wages of household helpers,
laborers and skilled workers;
(8) In actions for indemnity under workmen’s compensation
and employer’s liability laws;
(9) In a separate civil action to recover civil liability arising
from a crime;
(10) When at least double judicial costs are awarded;
(11) In any other case where the court deems it just and
equitable that attorney’s fees and expenses of litigation
should be recovered.

In all cases, the attorney’s fees and expenses of litigation must

be reasonable.”

We find that none of the legal grounds enumerated above

exists to justify or warrant the grant of attorney’s fees to
herein respondent.
IN VIEW OF THE FOREGOING, the judgment of the
lower Court is hereby set aside and another one is entered
dismissing the Complaint. Without costs.
SO ORDERED.

          Teehankee (Chairman), Makasiar, Fernandez,

Melencio-Herrera and Plana, JJ., concur.

355

VOL. 111, JANUARY 30, 1982 355

Pichel vs. Alonzo

Judgment set aside.

14 of 16 8/11/2019, 8:28 PM
SUPREME COURT REPORTS ANNOTATED VOLUME 111 file:///D:/My Documents/Law School Ebooks/Obligation and Contract/...

Notes.—The limitations provided for by Section 118 of

the Public Land Act applies whether disposition of rights is
made before or after the issuance of the free patent.
(Gonzaga vs. Court of Appeals, 51 SCRA 381.)
Right to acquire public lands presupposes compliance
with the requirements of the Public Land Act. (Piñero vs.
Dir. of Lands, 57 SCRA 386.)
The government may bring an action for the reversion of
public land fraudulently acquired. (Piñero, Jr. vs. Dir. of
Lands, 57 SCRA 386.)
The Court may review the decision of the Director of
Lands only in a direct proceeding therefor and not
collaterally. (Firmalo vs. Tutaan, 53 SCRA 505.)
Titles issued over non-alienable public lands are void ab
initio.
Mere inadequacy of price does not vitiate a contract of
sale. (Alsua-Betts vs. Court of Appeals, 92 SCRA 332.)
A contract of sale is void where the price which appears
as paid has in fact never been paid by the purchaser to the
vendor and not considered consummated. (Castillo vs.
Galvan, 85 SCRA 526.)
A contract of sale which stipulate payment of interest at
4% per annum in case vendor fails to issue a certificate of
title to vendee is not a penal clause because even without it
vendee would be entitled to interest at the legal rate of 6%
per annum. (Robes-Francisco Realty & Development
Corporation vs. Court of First Instance of Rizal, 86 SCRA
59.)
A contract of sale is perfected the moment there is
agreemerit upon the thing object of the contract and upon
the price. (Philippine Virginia Tobacco Administration vs.
De los Angeles, 87 SCRA 197.)
Vendee who neglected to register the sale of property to
him but in good faith first took possession of the land had
better right over the property under Article 1594 of the
Civil Code. (Salvoro vs. Tañega, 87 SCRA 359.)
356

356 SUPREME COURT REPORTS ANNOTATED

Vda. de Bogacki vs. Inserto

Purchaser should examine the certificate of title and all

factual circumstances necessary for him to determine
whether or not flows exist which might invalidate said title.
(Barrios vs. Court of Appeals, 78 SCRA 427.)

——o0o——

15 of 16 8/11/2019, 8:28 PM
SUPREME COURT REPORTS ANNOTATED VOLUME 111 file:///D:/My Documents/Law School Ebooks/Obligation and Contract/...

© Copyright 2019 Central Book Supply, Inc. All rights reserved.

16 of 16 8/11/2019, 8:28 PM