Buencamino v. Hernandez - Case Digest

NARCISA BUENCAMINO, AMADA DE LEON-ERAÑA, ENCARNACION DE LEON and
BIENVENIDO B. ERAÑA, petitioners-appellants, vs. C. HERNANDEZ, as City Treasurer of

Quezon City, JAIME HERNANDEZ, as Secretary of Finance and LAND TENURE
ADMINISTRATION, respondents-appellees; G.R. No. L-14883 July 31, 1963
SYLLABUS: Land, tenure act; Negotiable land certificates; Failure to comply with legal requirements:
Realty tax obligations may not be paid with them. —Where the land certificates held by the
petitioners failed to comply with the requirements of Republic Act No. 1400 that they "shall be payable
to bearer on demand"(Section 9), and instead they were issued payable to bearer only after the lapse
of five years from a given period, despite the provision of Section 10 of the said Act authorizing the
use of said certificates for the payment of all tax obligations of the holder thereof," the respondent city
treasurer is legally justified in refusing to accept said land certificates of petitioners in payment of
their realty tax obligations to the city.
NATURE OF THE CASE: An appeal from the order of the Quezon City Court of First Instance, Judge
Nicasio Yatco dismissing the petition for mandamus filed by the herein petitioners to compel the
respondent City Treasurer of Quezon City to accept Government negotiable land certificates as
payment for land taxes.
FACTS:
On May 11, 1957, the Land Tenure Administration, LTA for short, purchased from the petitioners
Narcisa Buencamino, Amada de Leon-Eraña, and Encarnacion de Leon, and other members of the de
Leon family their hacienda in Talavera, Nueva Ecija for a total consideration of P2,746,000.00.
A Memorandum Agreement was executed on the said date which expressly declared that the LTA was
purchasing the hacienda upon petition of the tenants thereof in accordance with Republic Act No.
1400, otherwise known as the Land Reform Act of 1955.
The parties to the sale agreed that of the full price of P2,746,000.00, 50% or P1,373,000.00 was to be
paid in cash and the balance in negotiable land certificates. A negotiable land certificate was given.
The condition in the certificate regarding its encashment only after the lapse of five years from the
date of execution of the Deed of Sale of Hacienda de Leon was adopted or taken from the
Memorandum Agreement of May 11, 1957 and which was subsequently ratified by the Cabinet and the
President. As stipulated in the said document, the condition reads:
B. That the mode of payment shall be 50% in cash and 50% in negotiable land certificates except that
the encashment of the said negotiable land certificate may not be made until after five (5) years from
the date of the execution of the deed of sale with the payments of the corresponding interest, said
negotiable land certificate may be applied and used for all the purposes authorized by Republic Act No.
1400 and other pertinent laws on the matter within the said period of five (5) years; (page 3,
Memorandum Agreement).
This stipulation was incorporated and clarified in the Absolute Deed of Sale executed to formalize the
terms contained in the Memorandum Agreement. The aforecited provisions of the Memorandum
Agreement and the Absolute Deed of Sale in relation to the condition in the negotiable land certificate
were mere implementation of Section 10 of Republic Act No. 1400. Availing themselves of what they
considered was their contractual and statutory rights under the certificate, the petitioners presented
two of them to the respondent City Treasurer in payment of certain 1957 realty tax obligations to
Quezon City (Q.C.)but the latter refused to accept and claimed that as per the opinion rendered by the
Secretary of Finance, it was discretionary on his part, the respondent Treasurer, to accept or reject
the said certificates seeing that Q.C. was the in need of funds.
The petitioners were thus obliged to settle in cash the 1957 tax obligation aforementioned.
Subsequently, however, the petitioners tendered once more the same certificates in payment of their
1958 realty taxes and the respondent Treasurer similarly rejected the tender. As a result, the
petitioners filed the instant mandamus proceedings with the CFI of Quezon City.
The LTA filed a timely answer to the petition sustaining the petitioners' stand. The Secretary of
Finance, represented by the Solicitor General, also filed an answer, which argued that he was not a
necessary party to the case as he was not the officer with the duty of collecting taxes. The respondent
Treasurer did not file an answer but instead, he filed a Motion to Dismiss on the ground that the
petition failed to state a cause of action.
The respondent argued that he could not be compelled to accept the certificates and that that the
certificates in question were not issued strictly in accordance with the provisions of Republic Act No.
1400 because while Section 9 of that Act inquires that "negotiable land certificates shall be issued in
denominations of one thousand pesos or multiples of one thousand pesos and shall be payable to
bearer on demand . . ., " the ones issue to the petitioners were payable to bearer not on demand but,
only upon the expiration of the five-year period there in specified.
The petitioners contend that although the certificates issued could not really be encashed within the
period therein mentioned, they could, however, still be used for the settlement of tax liabilities at any
time after their issue in accordance with Section 10 of the same Act. The petitioners maintain that the
5-year restriction against encashment referred merely and exclusively to the time when the
certificates may be converted to cash and not anymore to the utility of the said instruments as
substitutes for tax obligations.
CFI dismissed the petition for mandamus, hence this appeal.
ISSUE: WON the City Treasurer of Q.C. could not be compelled to accept the certificates.
RULING: NO
The refusal of the respondent Treasurer to accept the land certificates is legally justified. Under the
above-mentioned law, the land certificates "shall be payable to bearer on demand." (Section 9) The
one issued, however, were payable to bearer only after the lapse of five years from a given period.
Obviously then, the requirement that they should be payable on demand was not met since an
instrument payable on demand is one which (a) is expressed to be payable on demand, or at sight, or
on presentation; or (b) expresses no time for payment (Sec. 7, Negotiable Instruments Law) The 5-
year period within which the certificates could not be encashed was an expression of the time for
payment contrary to paragraph (b) of the last law cited.
The petitioners maintain, as already indicated above, that although the questioned certificates may
not really be payable on demand, they may nevertheless be used for the payment of realty obligations
to the Government because of Section 10 of Republic Act No. 1400.
There is no merit in the above assertion. It is a conclusion unsupported by any provision of law. While
Section 10 of Republic Act No. 1400 expressly authorizes the use of the said certificates for the
"payment of all tax obligations of the holder thereof," the said section can only have meant such
certificates as were issued strictly in accordance with Section 9 of the same Act, i.e., that the
instrument is payable on demand. And, as discussed above, the certificates issued were not payable
on demand, then the benefits of Section 10 cannot be properly invoked.

Buencamino v. Hernandez - Case Digest

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NARCISA BUENCAMINO, AMADA DE LEON-ERAÑA, ENCARNACION DE LEON and

BIENVENIDO B. ERAÑA, petitioners-appellants, vs. C. HERNANDEZ, as City Treasurer of

CFI dismissed the petition for mandamus, hence this appeal.

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