CASE #13 Buencamino V Hernandez

NARCISA BUENCAMINO, AMADA DE LEON-ERAÑA, ENCARNACION DE The respondent Treasurer contends that the certificates in question
LEON and BIENVENIDO B. ERAÑA vs C. HERNANDEZ 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
FACTS
or multiples of one thousand pesos and shall be payable to bearer on
demand . . ., " the ones issue to the petitioners were payable to bearer
The Land Tenure Administration, LTA for short, purchased from the not on demand but, only upon the expiration of the five-year period
petitioners Narcisa Buencamino, Amada de Leon-Eraña, and Encarnacion there in specified.
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. For the
On the other hand, the petitioners contend that although the certificates
purpose, a Memorandum Agreement was executed on the said date which
issued could not really be encashed within the period therein mentioned,
expressly declared that the LTA was purchasing the hacienda upon
they could, however, still be used for the settlement of tax liabilities at any
petition of the tenants thereof in accordance with Republic Act No. 1400,
time after their issue in accordance with Section 10 of the same Act. The
otherwise known as the Land Reform Act of 1955.
petitioners maintain that the 5-year restriction against encashment
referred merely and exclusively to the time when the certificates may be
The parties to the sale agreed that of the full price of P2,746,000.00, 50% converted to cash and not anymore to the utility of the said instruments
or P1,373,000.00 was to be paid in cash and the balance in negotiable as substitutes for tax obligations.
land certificates.
ISSUE
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
Whether or not the refusal of respondent Treasurer to accept the land
Hacienda de Leon was adopted or taken from the Memorandum
certificates to be legally justified.
Agreement
HELD
Under the deed of sale, dated July 31, 1957, the above condition was —
YES. We hold the refusal of the respondent Treasurer to accept the land
That the VENDORS shall not, however, within five (5) years,
certificates to be legally justified. They failed to comply with the
present for encashment the negotiable land certificates
requirements of Republic Act No. 1400.
amounting to ONE MILLION THREE HUNDRED SEVENTY THREE
THOUSAND PESOS (P1,373,000.00) but nevertheless, shall be
authorized to use the same for payment of land taxes or Under the above-mentioned law, the land certificates "shall be payable
obligations due and payable in favor of the Government and to bearer on demand." (Section 9) The one issued, however, were
such other uses or purposes provided for by Section 10 of payable to bearer only after the lapse of five years from a given period.
Republic Act No. 1400 within the said period of five (5) years Obviously then, the requirement that they should be payable on
from this date. (page 4, Absolute Deed of Sale) 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
Availing themselves of what they considered was their contractual and
Instruments Law) The 5-year period within which the certificates could
statutory rights under the certificate, the petitioners presented two of
not be encashed was an expression of the time for payment contrary to
them to the respondent City Treasurer in payment of certain 1957 realty
paragraph (b) of the last law cited.
tax obligations to Quezon City. The respondent Treasurer refused to
accept the same 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. And, invoking his
discretion in the premises, the respondent Treasurer explained that he
could not accept the certificates offered as Quezon City was then in great
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 Court of First
Instance of Quezon City.
To the above petition, the LTA filed a timely answer 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.
In effect, however, they resolve themselves into the single question of

whether or not the said certificates where drawn payable on demand as
required by Section 9 of Republic Act 1400.

CASE #13 Buencamino V Hernandez

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CASE #13 Buencamino V Hernandez

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NARCISA BUENCAMINO, AMADA DE LEON-ERAÑA, ENCARNACION DE The respondent Treasurer contends that the certificates in question

In effect, however, they resolve themselves into the single question of

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