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Republic of the Philippines

SUPREME COURT
Manila
FIRST DIVISION

G.R. No. 118114 December 7, 1995
TEODORO ACAP, petitioner,
vs.
COURT OF APPEALS and EDY DE LOS REYES, respondents.

PADILLA, J .:
This is a petition for review on certiorari of the decision
1
of the Court of Appeals, 2nd
Division, in CA-G.R. No. 36177, which affirmed the decision
2
of the Regional Trial Court of Himamaylan,
Negros Occidental holding that private respondent Edy de los Reyes had acquired ownership of Lot No.
1130 of the Cadastral Survey of Hinigaran, Negros Occidental based on a document entitled "Declaration
of Heirship and Waiver of Rights", and ordering the dispossession of petitioner as leasehold tenant of the
land for failure to pay rentals.
The facts of the case are as follows:
The title to Lot No. 1130 of the Cadastral Survey of Hinigaran, Negros Occidental was evidenced by OCT
No. R-12179. The lot has an area of 13,720 sq. meters. The title was issued and is registered in the name
of spouses Santiago Vasquez and Lorenza Oruma. After both spouses died, their only son Felixberto
inherited the lot. In 1975, Felixberto executed a duly notarized document entitled "Declaration of Heirship
and Deed of Absolute Sale" in favor of Cosme Pido.
The evidence before the court a quo established that since 1960, petitioner Teodoro Acap had been the
tenant of a portion of the said land, covering an area of nine thousand five hundred (9,500) meters. When
ownership was transferred in 1975 by Felixberto to Cosme Pido, Acap continued to be the registered
tenant thereof and religiously paid his leasehold rentals to Pido and thereafter, upon Pido's death, to his
widow Laurenciana.
The controversy began when Pido died intestate and on 27 November 1981, his surviving heirs executed
a notarized document denominated as "Declaration of Heirship and Waiver of Rights of Lot No. 1130
Hinigaran Cadastre," wherein they declared; to quote its pertinent portions, that:
. . . Cosme Pido died in the Municipality of Hinigaran, Negros Occidental, he died
intestate and without any known debts and obligations which the said parcel of land is
(sic) held liable.
That Cosme Pido was survived by his/her legitimate heirs, namely: LAURENCIANA
PIDO, wife, ELY, ERVIN, ELMER, and ELECHOR all surnamed PIDO; children;
That invoking the provision of Section 1, Rule 74 of the Rules of Court, the above-
mentioned heirs do hereby declare unto [sic] ourselves the only heirs of the late Cosme
Pido and that we hereby adjudicate unto ourselves the above-mentioned parcel of land in
equal shares.
Now, therefore, We LAURENCIANA
3
, ELY, ELMER, ERVIN and ELECHOR all
surnamed PIDO, do hereby waive, quitclaim all our rights, interests and participation over
the said parcel of land in favor of EDY DE LOS REYES, of legal age, (f)ilipino, married to
VIRGINIA DE LOS REYES, and resident of Hinigaran, Negros Occidental, Philippines. . .
.
4
(Emphasis supplied)
The document was signed by all of Pido's heirs. Private respondent Edy de los Reyes did not sign said
document.
It will be noted that at the time of Cosme Pido's death, title to the property continued to be registered in
the name of the Vasquez spouses. Upon obtaining the Declaration of Heirship with Waiver of Rights in his
favor, private respondent Edy de los Reyes filed the same with the Registry of Deeds as part of a notice
of an adverse claim against the original certificate of title.
Thereafter, private respondent sought for petitioner (Acap) to personally inform him that he (Edy) had
become the new owner of the land and that the lease rentals thereon should be paid to him. Private
respondent further alleged that he and petitioner entered into an oral lease agreement wherein petitioner
agreed to pay ten (10) cavans of palay per annum as lease rental. In 1982, petitioner allegedly complied
with said obligation. In 1983, however, petitioner refused to pay any further lease rentals on the land,
prompting private respondent to seek the assistance of the then Ministry of Agrarian Reform (MAR) in
Hinigaran, Negros Occidental. The MAR invited petitioner to a conference scheduled on 13 October
1983. Petitioner did not attend the conference but sent his wife instead to the conference. During the
meeting, an officer of the Ministry informed Acap's wife about private respondent's ownership of the said
land but she stated that she and her husband (Teodoro) did not recognize private respondent's claim of
ownership over the land.
On 28 April 1988, after the lapse of four (4) years, private respondent filed a complaint for recovery of
possession and damages against petitioner, alleging in the main that as his leasehold tenant, petitioner
refused and failed to pay the agreed annual rental of ten (10) cavans of palay despite repeated demands.
During the trial before the court a quo, petitioner reiterated his refusal to recognize private respondent's
ownership over the subject land. He averred that he continues to recognize Cosme Pido as the owner of
the said land, and having been a registered tenant therein since 1960, he never reneged on his rental
obligations. When Pido died, he continued to pay rentals to Pido's widow. When the latter left for abroad,
she instructed him to stay in the landholding and to pay the accumulated rentals upon her demand or
return from abroad.
Petitioner further claimed before the trial court that he had no knowledge about any transfer or sale of the
lot to private respondent in 1981 and even the following year after Laurenciana's departure for abroad. He
denied having entered into a verbal lease tenancy contract with private respondent and that assuming
that the said lot was indeed sold to private respondent without his knowledge, R.A. 3844, as amended,
grants him the right to redeem the same at a reasonable price. Petitioner also bewailed private
respondent's ejectment action as a violation of his right to security of tenure under P.D. 27.
On 20 August 1991, the lower court rendered a decision in favor of private respondent, the dispositive
part of which reads:
WHEREFORE, premises considered, the Court renders judgment in favor of the plaintiff,
Edy de los Reyes, and against the defendant, Teodoro Acap, ordering the following, to
wit:
1. Declaring forfeiture of defendant's preferred right to issuance of a Certificate of Land
Transfer under Presidential Decree No. 27 and his farmholdings;
2. Ordering the defendant Teodoro Acap to deliver possession of said farm to plaintiff,
and;
3. Ordering the defendant to pay P5,000.00 as attorney's fees, the sum of P1,000.00 as
expenses of litigation and the amount of P10,000.00 as actual damages.
5

In arriving at the above-mentioned judgment, the trial court stated that the evidence had established that
the subject land was "sold" by the heirs of Cosme Pido to private respondent. This is clear from the
following disquisitions contained in the trial court's six (6) page decision:
There is no doubt that defendant is a registered tenant of Cosme Pido. However, when
the latter died their tenancy relations changed since ownership of said land was passed
on to his heirs who, by executing a Deed of Sale, which defendant admitted in his
affidavit, likewise passed on their ownership of Lot 1130 to herein plaintiff (private
respondent). As owner hereof, plaintiff has the right to demand payment of rental and the
tenant is obligated to pay rentals due from the time demand is made. . . .
6

xxx xxx xxx
Certainly, the sale of the Pido family of Lot 1130 to herein plaintiff does not of itself
extinguish the relationship. There was only a change of the personality of the lessor in
the person of herein plaintiff Edy de los Reyes who being the purchaser or transferee,
assumes the rights and obligations of the former landowner to the tenant Teodoro Acap,
herein defendant.
7

Aggrieved, petitioner appealed to the Court of Appeals, imputing error to the lower court when it ruled that
private respondent acquired ownership of Lot No. 1130 and that he, as tenant, should pay rentals to
private respondent and that failing to pay the same from 1983 to 1987, his right to a certificate of land
transfer under P.D. 27 was deemed forfeited.
The Court of Appeals brushed aside petitioner's argument that the Declaration of Heirship and Waiver of
Rights (Exhibit "D"), the document relied upon by private respondent to prove his ownership to the lot,
was excluded by the lower court in its order dated 27 August 1990. The order indeed noted that the
document was not identified by Cosme Pido's heirs and was not registered with the Registry of Deeds of
Negros Occidental. According to respondent court, however, since the Declaration of Heirship and Waiver
of Rights appears to have been duly notarized, no further proof of its due execution was necessary. Like
the trial court, respondent court was also convinced that the said document stands as prima facie proof of
appellee's (private respondent's) ownership of the land in dispute.
With respect to its non-registration, respondent court noted that petitioner had actual knowledge of the
subject sale of the land in dispute to private respondent because as early as 1983, he (petitioner) already
knew of private respondent's claim over the said land but which he thereafter denied, and that in 1982, he
(petitioner) actually paid rent to private respondent. Otherwise stated, respondent court considered this
fact of rental payment in 1982 as estoppel on petitioner's part to thereafter refute private respondent's
claim of ownership over the said land. Under these circumstances, respondent court ruled that indeed
there was deliberate refusal by petitioner to pay rent for a continued period of five years that merited
forfeiture of his otherwise preferred right to the issuance of a certificate of land transfer.
In the present petition, petitioner impugns the decision of the Court of Appeals as not in accord with the
law and evidence when it rules that private respondent acquired ownership of Lot No. 1130 through the
aforementioned Declaration of Heirship and Waiver of Rights.
Hence, the issues to be resolved presently are the following:
1. WHETHER OR NOT THE SUBJECT DECLARATION OF HEIRSHIP AND WAIVER
OF RIGHTS IS A RECOGNIZED MODE OF ACQUIRING OWNERSHIP BY PRIVATE
RESPONDENT OVER THE LOT IN QUESTION.
2. WHETHER OR NOT THE SAID DOCUMENT CAN BE CONSIDERED A DEED OF
SALE IN FAVOR OF PRIVATE RESPONDENT OF THE LOT IN QUESTION.
Petitioner argues that the Regional Trial Court, in its order dated 7 August 1990, explicitly excluded the
document marked as Exhibit "D" (Declaration of Heirship, etc.) as private respondent's evidence because
it was not registered with the Registry of Deeds and was not identified by anyone of the heirs of Cosme
Pido. The Court of Appeals, however, held the same to be admissible, it being a notarized document,
hence, a prima facie proof of private respondents' ownership of the lot to which it refers.
Petitioner points out that the Declaration of Heirship and Waiver of Rights is not one of the recognized
modes of acquiring ownership under Article 712 of the Civil Code. Neither can the same be considered a
deed of sale so as to transfer ownership of the land to private respondent because no consideration is
stated in the contract (assuming it is a contract or deed of sale).
Private respondent defends the decision of respondent Court of Appeals as in accord with the evidence
and the law. He posits that while it may indeed be true that the trial court excluded his Exhibit "D" which is
the Declaration of Heirship and Waiver of Rights as part of his evidence, the trial court declared him
nonetheless owner of the subject lot based on other evidence adduced during the trial, namely, the notice
of adverse claim (Exhibit "E") duly registered by him with the Registry of Deeds, which contains the
questioned Declaration of Heirship and Waiver of Rights as an integral part thereof.
We find the petition impressed with merit.
In the first place, an asserted right or claim to ownership or a real right over a thing arising from a juridical
act, however justified, is not per se sufficient to give rise to ownership over the res. That right or title must
be completed by fulfilling certain conditions imposed by law. Hence, ownership and real rights are
acquired only pursuant to a legal mode or process. While title is the juridical justification, mode is the
actual process of acquisition or transfer of ownership over a thing in question.
8

Under Article 712 of the Civil Code, the modes of acquiring ownership are generally classified into two (2)
classes, namely, the original mode (i.e., through occupation, acquisitive prescription, law or intellectual
creation) and the derivative mode (i.e., through succession mortis causa or tradition as a result of certain
contracts, such as sale, barter, donation, assignment or mutuum).
In the case at bench, the trial court was obviously confused as to the nature and effect of the Declaration
of Heirship and Waiver of Rights, equating the same with a contract (deed) of sale. They are not the
same.
In a Contract of Sale, one of the contracting parties obligates himself to transfer the ownership of and to
deliver a determinate thing, and the other party to pay a price certain in money or its equivalent.
9

Upon the other hand, a declaration of heirship and waiver of rights operates as a public instrument when
filed with the Registry of Deeds whereby the intestate heirs adjudicate and divide the estate left by the
decedent among themselves as they see fit. It is in effect an extrajudicial settlement between the heirs
under Rule 74 of the Rules of Court.
10

Hence, there is a marked difference between a sale of hereditary rights and a waiver of hereditary rights.
The first presumes the existence of a contract or deed of sale between the parties.
11
The second is,
technically speaking, a mode of extinction of ownership where there is an abdication or intentional
relinquishment of a known right with knowledge of its existence and intention to relinquish it, in favor of
other persons who are co-heirs in the succession.
12
Private respondent, being then a stranger to the
succession of Cosme Pido, cannot conclusively claim ownership over the subject lot on the sole basis of
the waiver document which neither recites the elements of either a sale,
13
or a donation,
14
or any other
derivative mode of acquiring ownership.
Quite surprisingly, both the trial court and public respondent Court of Appeals concluded that a "sale"
transpired between Cosme Pido's heirs and private respondent and that petitioner acquired actual
knowledge of said sale when he was summoned by the Ministry of Agrarian Reform to discuss private
respondent's claim over the lot in question. This conclusion has no basis both in fact and in law.
On record, Exhibit "D", which is the "Declaration of Heirship and Waiver of Rights" was excluded by the
trial court in its order dated 27 August 1990 because the document was neither registered with the
Registry of Deeds nor identified by the heirs of Cosme Pido. There is no showing that private respondent
had the same document attached to or made part of the record. What the trial court admitted was Annex
"E", a notice of adverse claim filed with the Registry of Deeds which contained the Declaration of Heirship
with Waiver of rights and was annotated at the back of the Original Certificate of Title to the land in
question.
A notice of adverse claim, by its nature, does not however prove private respondent's ownership over the
tenanted lot. "A notice of adverse claim is nothing but a notice of a claim adverse to the registered owner,
the validity of which is yet to be established in court at some future date, and is no better than a notice of
lis pendens which is a notice of a case already pending in court."
15

It is to be noted that while the existence of said adverse claim was duly proven, there is no evidence
whatsoever that a deed of sale was executed between Cosme Pido's heirs and private respondent
transferring the rights of Pido's heirs to the land in favor of private respondent. Private respondent's right
or interest therefore in the tenanted lot remains an adverse claim which cannot by itself be sufficient to
cancel the OCT to the land and title the same in private respondent's name.
Consequently, while the transaction between Pido's heirs and private respondent may be binding
on both parties, the right of petitioner as a registered tenant to the land cannot be perfunctorily
forfeited on a mere allegation of private respondent's ownership without the corresponding proof
thereof.
Petitioner had been a registered tenant in the subject land since 1960 and religiously paid lease rentals
thereon. In his mind, he continued to be the registered tenant of Cosme Pido and his family (after Pido's
death), even if in 1982, private respondent allegedly informed petitioner that he had become the new
owner of the land.
Under the circumstances, petitioner may have, in good faith, assumed such statement of private
respondent to be true and may have in fact delivered 10 cavans of palay as annual rental for 1982 to
private respondent. But in 1983, it is clear that petitioner had misgivings over private respondent's claim
of ownership over the said land because in the October 1983 MAR conference, his wife Laurenciana
categorically denied all of private respondent's allegations. In fact, petitioner even secured a certificate
from the MAR dated 9 May 1988 to the effect that he continued to be the registered tenant of Cosme Pido
and not of private respondent. The reason is that private respondent never registered the Declaration of
Heirship with Waiver of Rights with the Registry of Deeds or with the MAR. Instead, he (private
respondent) sought to do indirectly what could not be done directly, i.e., file a notice of adverse claim on
the said lot to establish ownership thereover.
It stands to reason, therefore, to hold that there was no unjustified or deliberate refusal by petitioner to
pay the lease rentals or amortizations to the landowner/agricultural lessor which, in this case, private
respondent failed to establish in his favor by clear and convincing evidence.
16

Consequently, the sanction of forfeiture of his preferred right to be issued a Certificate of Land Transfer
under P.D. 27 and to the possession of his farmholdings should not be applied against petitioners, since
private respondent has not established a cause of action for recovery of possession against petitioner.
WHEREFORE, premises considered, the Court hereby GRANTS the petition and the decision of the
Court of Appeals dated 1 May 1994 which affirmed the decision of the RTC of Himamaylan, Negros
Occidental dated 20 August 1991 is hereby SET ASIDE. The private respondent's complaint for recovery
of possession and damages against petitioner Acap is hereby DISMISSED for failure to properly state a
cause of action, without prejudice to private respondent taking the proper legal steps to establish the legal
mode by which he claims to have acquired ownership of the land in question.
SO ORDERED.
Davide, Jr., Bellosillo, Kapunan and Hermosisima, Jr., JJ., concur.


[Syllabus]
THIRD DIVISION
[G.R. No. 103577. October 7, 1996]
ROMULO A. CORONEL, ALARICO A. CORONEL, ANNETTE A. CORONEL,
ANNABELLE C. GONZALES (for herself and on behalf of Floraida C. Tupper, as attorney-in-
fact), CIELITO A. CORONEL, FLORAIDA A. ALMONTE, and CATALINA BALAIS
MABANAG, petitioners, vs. THE COURT OF APPEALS, CONCEPCION D. ALCARAZ and
RAMONA PATRICIA ALCARAZ, assisted by GLORIA F. NOEL as attorney-in-fact,
respondents.
D E C I S I O N
MELO, J.:
The petition before us has its roots in a complaint for specific performance to compel herein
petitioners (except the last named, Catalina Balais Mabanag) to consummate the sale of a parcel
of land with its improvements located along Roosevelt Avenue in Quezon City entered into by
the parties sometime in January 1985 for the price of P1,240,000.00.
The undisputed facts of the case were summarized by respondent court in this wise:
On January 19, 1985, defendants-appellants Romulo Coronel, et. al. (hereinafter referred to as
Coronels) executed a document entitled Receipt of Down Payment (Exh. A) in favor of
plaintiff Ramona Patricia Alcaraz (hereinafter referred to as Ramona) which is reproduced
hereunder:
RECEIPT OF DOWN PAYMENT
P1,240,000.00 - Total amount
50,000.00 - Down payment
------------------------------------------
P1,190,000.00 - Balance
Received from Miss Ramona Patricia Alcaraz of 146 Timog, Quezon City, the sum of Fifty
Thousand Pesos purchase price of our inherited house and lot, covered by TCT No. 119627 of
the Registry of Deeds of Quezon City, in the total amount of P1,240,000.00.
We bind ourselves to effect the transfer in our names from our deceased father, Constancio P.
Coronel, the transfer certificate of title immediately upon receipt of the down payment above-
stated.
On our presentation of the TCT already in or name, We will immediately execute the deed of
absolute sale of said property and Miss Ramona Patricia Alcaraz shall immediately pay the
balance of the P1,190,000.00.
Clearly, the conditions appurtenant to the sale are the following:
1. Ramona will make a down payment of Fifty Thousand (P50,000.00) pesos upon
execution of the document aforestated;
2. The Coronels will cause the transfer in their names of the title of the property registered
in the name of their deceased father upon receipt of the Fifty Thousand (P50,000.00) Pesos down
payment;
3. Upon the transfer in their names of the subject property, the Coronels will execute the
deed of absolute sale in favor of Ramona and the latter will pay the former the whole balance of
One Million One Hundred Ninety Thousand (P1,190,000.00) Pesos.
On the same date (January 15, 1985), plaintiff-appellee Concepcion D. Alcaraz (hereinafter
referred to as Concepcion), mother of Ramona, paid the down payment of Fifty Thousand
(P50,000.00) Pesos (Exh. B, Exh. 2).
On February 6, 1985, the property originally registered in the name of the Coronels father was
transferred in their names under TCT No. 327043 (Exh. D; Exh 4)
On February 18, 1985, the Coronels sold the property covered by TCT No. 327043 to intervenor-
appellant Catalina B. Mabanag (hereinafter referred to as Catalina) for One Million Five
Hundred Eighty Thousand (P1,580,000.00) Pesos after the latter has paid Three Hundred
Thousand (P300,000.00) Pesos (Exhs. F-3; Exh. 6-C)
For this reason, Coronels canceled and rescinded the contract (Exh. A) with Ramona by
depositing the down payment paid by Concepcion in the bank in trust for Ramona Patricia
Alcaraz.
On February 22, 1985, Concepcion, et. al., filed a complaint for a specific performance against
the Coronels and caused the annotation of a notice of lis pendens at the back of TCT No. 327403
(Exh. E; Exh. 5).
On April 2, 1985, Catalina caused the annotation of a notice of adverse claim covering the same
property with the Registry of Deeds of Quezon City (Exh. F; Exh. 6).
On April 25, 1985, the Coronels executed a Deed of Absolute Sale over the subject property in
favor of Catalina (Exh. G; Exh. 7).
On June 5, 1985, a new title over the subject property was issued in the name of Catalina under
TCT No. 351582 (Exh. H; Exh. 8).
(Rollo, pp. 134-136)
In the course of the proceedings before the trial court (Branch 83, RTC, Quezon City) the parties
agreed to submit the case for decision solely on the basis of documentary exhibits. Thus,
plaintiffs therein (now private respondents) proffered their documentary evidence accordingly
marked as Exhibits A through J, inclusive of their corresponding submarkings. Adopting
these same exhibits as their own, then defendants (now petitioners) accordingly offered and
marked them as Exhibits 1 through 10, likewise inclusive of their corresponding
submarkings. Upon motion of the parties, the trial court gave them thirty (30) days within which
to simultaneously submit their respective memoranda, and an additional 15 days within which to
submit their corresponding comment or reply thereto, after which, the case would be deemed
submitted for resolution.
On April 14, 1988, the case was submitted for resolution before Judge Reynaldo Roura, who was
then temporarily detailed to preside over Branch 82 of the RTC of Quezon City. On March 1,
1989, judgment was handed down by Judge Roura from his regular bench at Macabebe,
Pampanga for the Quezon City branch, disposing as follows:
WHEREFORE, judgment for specific performance is hereby rendered ordering defendant to
execute in favor of plaintiffs a deed of absolute sale covering that parcel of land embraced in and
covered by Transfer Certificate of Title No. 327403 (now TCT No. 331582) of the Registry of
Deeds for Quezon City, together with all the improvements existing thereon free from all liens
and encumbrances, and once accomplished, to immediately deliver the said document of sale to
plaintiffs and upon receipt thereof, the plaintiffs are ordered to pay defendants the whole balance
of the purchase price amounting to P1,190,000.00 in cash. Transfer Certificate of Title No.
331582 of the Registry of Deeds for Quezon City in the name of intervenor is hereby canceled
and declared to be without force and effect. Defendants and intervenor and all other persons
claiming under them are hereby ordered to vacate the subject property and deliver possession
thereof to plaintiffs. Plaintiffs claim for damages and attorneys fees, as well as the
counterclaims of defendants and intervenors are hereby dismissed.
No pronouncement as to costs.
So Ordered.
Macabebe, Pampanga for Quezon City, March 1, 1989.
(Rollo, p. 106)
A motion for reconsideration was filed by petitioners before the new presiding judge of the
Quezon City RTC but the same was denied by Judge Estrella T. Estrada, thusly:
The prayer contained in the instant motion, i.e., to annul the decision and to render anew decision
by the undersigned Presiding Judge should be denied for the following reasons: (1) The instant
case became submitted for decision as of April 14, 1988 when the parties terminated the
presentation of their respective documentary evidence and when the Presiding Judge at that time
was Judge Reynaldo Roura. The fact that they were allowed to file memoranda at some future
date did not change the fact that the hearing of the case was terminated before Judge Roura and
therefore the same should be submitted to him for decision; (2) When the defendants and
intervenor did not object to the authority of Judge Reynaldo Roura to decide the case prior to the
rendition of the decision, when they met for the first time before the undersigned Presiding Judge
at the hearing of a pending incident in Civil Case No. Q-46145 on November 11, 1988, they
were deemed to have acquiesced thereto and they are now estopped from questioning said
authority of Judge Roura after they received the decision in question which happens to be
adverse to them; (3) While it is true that Judge Reynaldo Roura was merely a Judge-on-detail at
this Branch of the Court, he was in all respects the Presiding Judge with full authority to act on
any pending incident submitted before this Court during his incumbency. When he returned to
his Official Station at Macabebe, Pampanga, he did not lose his authority to decide or resolve
cases submitted to him for decision or resolution because he continued as Judge of the Regional
Trial Court and is of co-equal rank with the undersigned Presiding Judge. The standing rule and
supported by jurisprudence is that a Judge to whom a case is submitted for decision has the
authority to decide the case notwithstanding his transfer to another branch or region of the same
court (Sec. 9, Rule 135, Rule of Court).
Coming now to the twin prayer for reconsideration of the Decision dated March 1, 1989 rendered
in the instant case, resolution of which now pertains to the undersigned Presiding Judge, after a
meticulous examination of the documentary evidence presented by the parties, she is convinced
that the Decision of March 1, 1989 is supported by evidence and, therefore, should not be
disturbed.
IN VIEW OF THE FOREGOING, the Motion for Reconsideration and/or to Annul Decision
and Render Anew Decision by the Incumbent Presiding Judge dated March 20, 1989 is hereby
DENIED.
SO ORDERED.
Quezon City, Philippines, July 12, 1989.
(Rollo, pp. 108-109)
Petitioners thereupon interposed an appeal, but on December 16, 1991, the Court of Appeals
(Buena, Gonzaga-Reyes, Abad-Santos (P), JJ.) rendered its decision fully agreeing with the trial
court.
Hence, the instant petition which was filed on March 5, 1992. The last pleading, private
respondents Reply Memorandum, was filed on September 15, 1993. The case was, however, re-
raffled to undersigned ponente only on August 28, 1996, due to the voluntary inhibition of the
Justice to whom the case was last assigned.
While we deem it necessary to introduce certain refinements in the disquisition of respondent
court in the affirmance of the trial courts decision, we definitely find the instant petition bereft
of merit.
The heart of the controversy which is the ultimate key in the resolution of the other issues in the
case at bar is the precise determination of the legal significance of the document entitled
Receipt of Down Payment which was offered in evidence by both parties. There is no dispute
as to the fact that the said document embodied the binding contract between Ramona Patricia
Alcaraz on the one hand, and the heirs of Constancio P. Coronel on the other, pertaining to a
particular house and lot covered by TCT No. 119627, as defined in Article 1305 of the Civil
Code of the Philippines which reads as follows:
Art. 1305. A contract is a meeting of minds between two persons whereby one binds himself,
with respect to the other, to give something or to render some service.
While, it is the position of private respondents that the Receipt of Down Payment embodied a
perfected contract of sale, which perforce, they seek to enforce by means of an action for specific
performance, petitioners on their part insist that what the document signified was a mere
executory contract to sell, subject to certain suspensive conditions, and because of the absence of
Ramona P. Alcaraz, who left for the United States of America, said contract could not possibly
ripen into a contract of absolute sale.
Plainly, such variance in the contending parties contention is brought about by the way each
interprets the terms and/or conditions set forth in said private instrument. Withal, based on
whatever relevant and admissible evidence may be available on record, this Court, as were the
courts below, is now called upon to adjudge what the real intent of the parties was at the time the
said document was executed.
The Civil Code defines a contract of sale, 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.
Sale, by its very nature, is a consensual contract because it is perfected by mere consent. The
essential elements of a contract of sale are the following:
a) Consent or meeting of the minds, that is, consent to transfer ownership in exchange for
the price;
b) Determinate subject matter; and
c) Price certain in money or its equivalent.
Under this definition, a Contract to Sell may not be considered as a Contract of Sale because the
first essential element is lacking. In a contract to sell, the prospective seller explicitly reserves
the transfer of title to the prospective buyer, meaning, the prospective seller does not as yet agree
or consent to transfer ownership of the property subject of the contract to sell until the happening
of an event, which for present purposes we shall take as the full payment of the purchase price.
What the seller agrees or obliges himself to do is to fulfill his promise to sell the subject property
when the entire amount of the purchase price is delivered to him. In other words the full
payment of the purchase price partakes of a suspensive condition, the non-fulfillment of which
prevents the obligation to sell from arising and thus, ownership is retained by the prospective
seller without further remedies by the prospective buyer. In Roque vs. Lapuz (96 SCRA 741
[1980]), this Court had occasion to rule:
Hence, We hold that the contract between the petitioner and the respondent was a contract to sell
where the ownership or title is retained by the seller and is not to pass until the full payment of
the price, such payment being a positive suspensive condition and failure of which is not a
breach, casual or serious, but simply an event that prevented the obligation of the vendor to
convey title from acquiring binding force.
Stated positively, upon the fulfillment of the suspensive condition which is the full payment of
the purchase price, the prospective sellers obligation to sell the subject property by entering into
a contract of sale with the prospective buyer becomes demandable as provided in Article 1479 of
the Civil Code which states:
Art. 1479. A promise to buy and sell a determinate thing for a price certain is reciprocally
demandable.
An accepted unilateral promise to buy or to sell a determinate thing for a price certain is binding
upon the promissor of the promise is supported by a consideration distinct from the price.
A contract to sell may thus be defined as a bilateral contract whereby the prospective seller,
while expressly reserving the ownership of the subject property despite delivery thereof to the
prospective buyer, binds himself to sell the said property exclusively to the prospective buyer
upon fulfillment of the condition agreed upon, that is, full payment of the purchase price.
A contract to sell as defined hereinabove, may not even be considered as a conditional contract
of sale where the seller may likewise reserve title to the property subject of the sale until the
fulfillment of a suspensive condition, because in a conditional contract of sale, the first element
of consent is present, although it is conditioned upon the happening of a contingent event which
may or may not occur. If the suspensive condition is not fulfilled, the perfection of the contract
of sale is completely abated (cf. Homesite and Housing Corp. vs. Court of Appeals, 133 SCRA
777 [1984]). However, if the suspensive condition is fulfilled, the contract of sale is thereby
perfected, such that if there had already been previous delivery of the property subject of the sale
to the buyer, ownership thereto automatically transfers to the buyer by operation of law without
any further act having to be performed by the seller.
In a contract to sell, upon the fulfillment of the suspensive condition which is the full payment of
the purchase price, ownership will not automatically transfer to the buyer although the property
may have been previously delivered to him. The prospective seller still has to convey title to the
prospective buyer by entering into a contract of absolute sale.
It is essential to distinguish between a contract to sell and a conditional contract of sale specially
in cases where the subject property is sold by the owner not to the party the seller contracted
with, but to a third person, as in the case at bench. In a contract to sell, there being no previous
sale of the property, a third person buying such property despite the fulfillment of the suspensive
condition such as the full payment of the purchase price, for instance, cannot be deemed a buyer
in bad faith and the prospective buyer cannot seek the relief of reconveyance of the property.
There is no double sale in such case. Title to the property will transfer to the buyer after
registration because there is no defect in the owner-sellers title per se, but the latter, of course,
may be sued for damages by the intending buyer.
In a conditional contract of sale, however, upon the fulfillment of the suspensive condition, the
sale becomes absolute and this will definitely affect the sellers title thereto. In fact, if there had
been previous delivery of the subject property, the sellers ownership or title to the property is
automatically transferred to the buyer such that, the seller will no longer have any title to transfer
to any third person. Applying Article 1544 of the Civil Code, such second buyer of the property
who may have had actual or constructive knowledge of such defect in the sellers title, or at least
was charged with the obligation to discover such defect, cannot be a registrant in good faith.
Such second buyer cannot defeat the first buyers title. In case a title is issued to the second
buyer, the first buyer may seek reconveyance of the property subject of the sale.
With the above postulates as guidelines, we now proceed to the task of deciphering the real
nature of the contract entered into by petitioners and private respondents.
It is a canon in the interpretation of contracts that the words used therein should be given their
natural and ordinary meaning unless a technical meaning was intended (Tan vs. Court of
Appeals, 212 SCRA 586 [1992]). Thus, when petitioners declared in the said Receipt of Down
Payment that they --
Received from Miss Ramona Patricia Alcaraz of 146 Timog, Quezon City, the sum of Fifty
Thousand Pesos purchase price of our inherited house and lot, covered by TCT No. 1199627
of the Registry of Deeds of Quezon City, in the total amount of P1,240,000.00.
without any reservation of title until full payment of the entire purchase price, the natural and
ordinary idea conveyed is that they sold their property.
When the Receipt of Down payment is considered in its entirety, it becomes more manifest
that there was a clear intent on the part of petitioners to transfer title to the buyer, but since the
transfer certificate of title was still in the name of petitioners father, they could not fully effect
such transfer although the buyer was then willing and able to immediately pay the purchase
price. Therefore, petitioners-sellers undertook upon receipt of the down payment from private
respondent Ramona P. Alcaraz, to cause the issuance of a new certificate of title in their names
from that of their father, after which, they promised to present said title, now in their names, to
the latter and to execute the deed of absolute sale whereupon, the latter shall, in turn, pay the
entire balance of the purchase price.
The agreement could not have been a contract to sell because the sellers herein made no express
reservation of ownership or title to the subject parcel of land. Furthermore, the circumstance
which prevented the parties from entering into an absolute contract of sale pertained to the sellers
themselves (the certificate of title was not in their names) and not the full payment of the
purchase price. Under the established facts and circumstances of the case, the Court may safely
presume that, had the certificate of title been in the names of petitioners-sellers at that time, there
would have been no reason why an absolute contract of sale could not have been executed and
consummated right there and then.
Moreover, unlike in a contract to sell, petitioners in the case at bar did not merely promise to sell
the property to private respondent upon the fulfillment of the suspensive condition. On the
contrary, having already agreed to sell the subject property, they undertook to have the certificate
of title change to their names and immediately thereafter, to execute the written deed of absolute
sale.
Thus, the parties did not merely enter into a contract to sell where the sellers, after compliance
by the buyer with certain terms and conditions, promised to sell the property to the latter. What
may be perceived from the respective undertakings of the parties to the contract is that
petitioners had already agreed to sell the house and lot they inherited from their father,
completely willing to transfer ownership of the subject house and lot to the buyer if the
documents were then in order. It just so happened, however, that the transfer certificate of title
was then still in the name of their father. It was more expedient to first effect the change in the
certificate of title so as to bear their names. That is why they undertook to cause the issuance of
a new transfer of the certificate of title in their names upon receipt of the down payment in the
amount of P50,000.00. As soon as the new certificate of title is issued in their names, petitioners
were committed to immediately execute the deed of absolute sale. Only then will the obligation
of the buyer to pay the remainder of the purchase price arise.
There is no doubt that unlike in a contract to sell which is most commonly entered into so as to
protect the seller against a buyer who intends to buy the property in installment by withholding
ownership over the property until the buyer effects full payment therefor, in the contract entered
into in the case at bar, the sellers were the ones who were unable to enter into a contract of
absolute sale by reason of the fact that the certificate of title to the property was still in the name
of their father. It was the sellers in this case who, as it were, had the impediment which
prevented, so to speak, the execution of an contract of absolute sale.
What is clearly established by the plain language of the subject document is that when the said
Receipt of Down Payment was prepared and signed by petitioners Romulo A. Coronel, et. al.,
the parties had agreed to a conditional contract of sale, consummation of which is subject only to
the successful transfer of the certificate of title from the name of petitioners father, Constancio
P. Coronel, to their names.
The Court significantly notes that this suspensive condition was, in fact, fulfilled on February 6,
1985 (Exh. D; Exh. 4). Thus, on said date, the conditional contract of sale between
petitioners and private respondent Ramona P. Alcaraz became obligatory, the only act required
for the consummation thereof being the delivery of the property by means of the execution of the
deed of absolute sale in a public instrument, which petitioners unequivocally committed
themselves to do as evidenced by the Receipt of Down Payment.
Article 1475, in correlation with Article 1181, both of the Civil Code, plainly applies to the case
at bench. Thus,
Art. 1475. The contract of sale is perfected at the moment there is a meeting of minds upon the
thing which is the object of the contract and upon the price.
From that moment, the parties may reciprocally demand performance, subject to the provisions
of the law governing the form of contracts.
Art. 1181. In conditional obligations, the acquisition of rights, as well as the extinguishment or
loss of those already acquired, shall depend upon the happening of the event which constitutes
the condition.
Since the condition contemplated by the parties which is the issuance of a certificate of title in
petitioners names was fulfilled on February 6, 1985, the respective obligations of the parties
under the contract of sale became mutually demandable, that is, petitioners, as sellers, were
obliged to present the transfer certificate of title already in their names to private respondent
Ramona P. Alcaraz, the buyer, and to immediately execute the deed of absolute sale, while the
buyer on her part, was obliged to forthwith pay the balance of the purchase price amounting to
P1,190,000.00.
It is also significant to note that in the first paragraph in page 9 of their petition, petitioners
conclusively admitted that:
3. The petitioners-sellers Coronel bound themselves to effect the transfer in our names
from our deceased father Constancio P. Coronel, the transfer certificate of title immediately upon
receipt of the downpayment above-stated". The sale was still subject to this suspensive
condition. (Emphasis supplied.)
(Rollo, p. 16)
Petitioners themselves recognized that they entered into a contract of sale subject to a suspensive
condition. Only, they contend, continuing in the same paragraph, that:
. . . Had petitioners-sellers not complied with this condition of first transferring the title to the
property under their names, there could be no perfected contract of sale. (Emphasis supplied.)
(Ibid.)
not aware that they have set their own trap for themselves, for Article 1186 of the Civil Code
expressly provides that:
Art. 1186. The condition shall be deemed fulfilled when the obligor voluntarily prevents its
fulfillment.
Besides, it should be stressed and emphasized that what is more controlling than these mere
hypothetical arguments is the fact that the condition herein referred to was actually and
indisputably fulfilled on February 6, 1985, when a new title was issued in the names of
petitioners as evidenced by TCT No. 327403 (Exh. D; Exh. 4).
The inevitable conclusion is that on January 19, 1985, as evidenced by the document
denominated as Receipt of Down Payment (Exh. A; Exh. 1), the parties entered into a
contract of sale subject to the suspensive condition that the sellers shall effect the issuance of
new certificate title from that of their fathers name to their names and that, on February 6, 1985,
this condition was fulfilled (Exh. D; Exh. 4).
We, therefore, hold that, in accordance with Article 1187 which pertinently provides -
Art. 1187. The effects of conditional obligation to give, once the condition has been fulfilled,
shall retroact to the day of the constitution of the obligation . . .
In obligations to do or not to do, the courts shall determine, in each case, the retroactive effect of
the condition that has been complied with.
the rights and obligations of the parties with respect to the perfected contract of sale became
mutually due and demandable as of the time of fulfillment or occurrence of the suspensive
condition on February 6, 1985. As of that point in time, reciprocal obligations of both seller and
buyer arose.
Petitioners also argue there could been no perfected contract on January 19, 1985 because they
were then not yet the absolute owners of the inherited property.
We cannot sustain this argument.
Article 774 of the Civil Code defines Succession as a mode of transferring ownership as follows:
Art. 774. Succession is a mode of acquisition by virtue of which the property, rights and
obligations to the extent and value of the inheritance of a person are transmitted through his
death to another or others by his will or by operation of law.
Petitioners-sellers in the case at bar being the sons and daughters of the decedent Constancio P.
Coronel are compulsory heirs who were called to succession by operation of law. Thus, at the
point their father drew his last breath, petitioners stepped into his shoes insofar as the subject
property is concerned, such that any rights or obligations pertaining thereto became binding and
enforceable upon them. It is expressly provided that rights to the succession are transmitted from
the moment of death of the decedent (Article 777, Civil Code; Cuison vs. Villanueva, 90 Phil.
850 [1952]).
Be it also noted that petitioners claim that succession may not be declared unless the creditors
have been paid is rendered moot by the fact that they were able to effect the transfer of the title to
the property from the decedents name to their names on February 6, 1985.
Aside from this, petitioners are precluded from raising their supposed lack of capacity to enter
into an agreement at that time and they cannot be allowed to now take a posture contrary to that
which they took when they entered into the agreement with private respondent Ramona P.
Alcaraz. The Civil Code expressly states that:
Art. 1431. Through estoppel an admission or representation is rendered conclusive upon the
person making it, and cannot be denied or disproved as against the person relying thereon.
Having represented themselves as the true owners of the subject property at the time of sale,
petitioners cannot claim now that they were not yet the absolute owners thereof at that time.
Petitioners also contend that although there was in fact a perfected contract of sale between them
and Ramona P. Alcaraz, the latter breach her reciprocal obligation when she rendered impossible
the consummation thereof by going to the United States of America, without leaving her address,
telephone number, and Special Power of Attorney (Paragraphs 14 and 15, Answer with
Compulsory Counterclaim to the Amended Complaint, p. 2; Rollo, p. 43), for which reason, so
petitioners conclude, they were correct in unilaterally rescinding the contract of sale.
We do not agree with petitioners that there was a valid rescission of the contract of sale in the
instant case. We note that these supposed grounds for petitioners rescission, are mere
allegations found only in their responsive pleadings, which by express provision of the rules, are
deemed controverted even if no reply is filed by the plaintiffs (Sec. 11, Rule 6, Revised Rules of
Court). The records are absolutely bereft of any supporting evidence to substantiate petitioners
allegations. We have stressed time and again that allegations must be proven by sufficient
evidence (Ng Cho Cio vs. Ng Diong, 110 Phil. 882 [1961]; Recaro vs. Embisan, 2 SCRA 598
[1961]). Mere allegation is not an evidence (Lagasca vs. De Vera, 79 Phil. 376 [1947]).
Even assuming arguendo that Ramona P. Alcaraz was in the United States of America on
February 6, 1985, we cannot justify petitioners-sellers act of unilaterally and extrajudicially
rescinding the contract of sale, there being no express stipulation authorizing the sellers to
extrajudicially rescind the contract of sale. (cf. Dignos vs. CA, 158 SCRA 375 [1988]; Taguba
vs. Vda. De Leon, 132 SCRA 722 [1984])
Moreover, petitioners are estopped from raising the alleged absence of Ramona P. Alcaraz
because although the evidence on record shows that the sale was in the name of Ramona P.
Alcaraz as the buyer, the sellers had been dealing with Concepcion D. Alcaraz, Ramonas
mother, who had acted for and in behalf of her daughter, if not also in her own behalf. Indeed,
the down payment was made by Concepcion D. Alcaraz with her own personal Check (Exh. B;
Exh. 2) for and in behalf of Ramona P. Alcaraz. There is no evidence showing that petitioners
ever questioned Concepcions authority to represent Ramona P. Alcaraz when they accepted her
personal check. Neither did they raise any objection as regards payment being effected by a
third person. Accordingly, as far as petitioners are concerned, the physical absence of Ramona
P. Alcaraz is not a ground to rescind the contract of sale.
Corollarily, Ramona P. Alcaraz cannot even be deemed to be in default, insofar as her obligation
to pay the full purchase price is concerned. Petitioners who are precluded from setting up the
defense of the physical absence of Ramona P. Alcaraz as above-explained offered no proof
whatsoever to show that they actually presented the new transfer certificate of title in their names
and signified their willingness and readiness to execute the deed of absolute sale in accordance
with their agreement. Ramonas corresponding obligation to pay the balance of the purchase
price in the amount of P1,190,000.00 (as buyer) never became due and demandable and,
therefore, she cannot be deemed to have been in default.
Article 1169 of the Civil Code defines when a party in a contract involving reciprocal obligations
may be considered in default, to wit:
Art. 1169. Those obliged to deliver or to do something, incur in delay from the time the obligee
judicially or extrajudicially demands from them the fulfillment of their obligation.
x x x
In reciprocal obligations, neither party incurs in delay if the other does not comply or is not
ready to comply in a proper manner with what is incumbent upon him. From the moment
one of the parties fulfill his obligation, delay by the other begins. (Emphasis supplied.)
There is thus neither factual nor legal basis to rescind the contract of sale between petitioners and
respondents.
With the foregoing conclusions, the sale to the other petitioner, Catalina B. Mabanag, gave rise
to a case of double sale where Article 1544 of the Civil Code will apply, to wit:
Art. 1544. If the same thing should have been sold to different vendees, the ownership shall be
transferred to the person who may have first taken possession thereof in good faith, if it should
be movable property.
Should it be immovable property, the ownership shall belong to the person acquiring it who in
good faith first recorded it in the Registry of Property.
Should there be no inscription, the ownership shall pertain to the person who in good faith was
first in the possession; and, in the absence thereof to the person who presents the oldest title,
provided there is good faith.
The record of the case shows that the Deed of Absolute Sale dated April 25, 1985 as proof of the
second contract of sale was registered with the Registry of Deeds of Quezon City giving rise to
the issuance of a new certificate of title in the name of Catalina B. Mabanag on June 5, 1985.
Thus, the second paragraph of Article 1544 shall apply.
The above-cited provision on double sale presumes title or ownership to pass to the buyer, the
exceptions being: (a) when the second buyer, in good faith, registers the sale ahead of the first
buyer, and (b) should there be no inscription by either of the two buyers, when the second buyer,
in good faith, acquires possession of the property ahead of the first buyer. Unless, the second
buyer satisfies these requirements, title or ownership will not transfer to him to the prejudice of
the first buyer.
In his commentaries on the Civil Code, an accepted authority on the subject, now a distinguished
member of the Court, Justice Jose C. Vitug, explains:
The governing principle is prius tempore, potior jure (first in time, stronger in right).
Knowledge by the first buyer of the second sale cannot defeat the first buyers rights except
when the second buyer first registers in good faith the second sale (Olivares vs. Gonzales, 159
SCRA 33). Conversely, knowledge gained by the second buyer of the first sale defeats his rights
even if he is first to register, since knowledge taints his registration with bad faith (see also
Astorga vs. Court of Appeals, G.R. No. 58530, 26 December 1984). In Cruz vs. Cabana (G.R.
No. 56232, 22 June 1984, 129 SCRA 656), it was held that it is essential, to merit the protection
of Art. 1544, second paragraph, that the second realty buyer must act in good faith in registering
his deed of sale (citing Carbonell vs. Court of Appeals, 69 SCRA 99, Crisostomo vs. CA, G.R.
No. 95843, 02 September 1992).
(J. Vitug, Compendium of Civil Law and Jurisprudence, 1993 Edition, p. 604).
Petitioners point out that the notice of lis pendens in the case at bar was annotated on the title of
the subject property only on February 22, 1985, whereas, the second sale between petitioners
Coronels and petitioner Mabanag was supposedly perfected prior thereto or on February 18,
1985. The idea conveyed is that at the time petitioner Mabanag, the second buyer, bought the
property under a clean title, she was unaware of any adverse claim or previous sale, for which
reason she is a buyer in good faith.
We are not persuaded by such argument.
In a case of double sale, what finds relevance and materiality is not whether or not the second
buyer in good faith but whether or not said second buyer registers such second sale in good faith,
that is, without knowledge of any defect in the title of the property sold.
As clearly borne out by the evidence in this case, petitioner Mabanag could not have in good
faith, registered the sale entered into on February 18, 1985 because as early as February 22,
1985, a notice of lis pendens had been annotated on the transfer certificate of title in the names of
petitioners, whereas petitioner Mabanag registered the said sale sometime in April, 1985. At the
time of registration, therefore, petitioner Mabanag knew that the same property had already been
previously sold to private respondents, or, at least, she was charged with knowledge that a
previous buyer is claiming title to the same property. Petitioner Mabanag cannot close her eyes
to the defect in petitioners title to the property at the time of the registration of the property.
This Court had occasions to rule that:
If a vendee in a double sale registers the sale after he has acquired knowledge that there was a
previous sale of the same property to a third party or that another person claims said property in a
previous sale, the registration will constitute a registration in bad faith and will not confer upon
him any right. (Salvoro vs. Tanega, 87 SCRA 349 [1978]; citing Palarca vs. Director of Land,
43 Phil. 146; Cagaoan vs. Cagaoan, 43 Phil. 554; Fernandez vs. Mercader, 43 Phil. 581.)
Thus, the sale of the subject parcel of land between petitioners and Ramona P. Alcaraz, perfected
on February 6, 1985, prior to that between petitioners and Catalina B. Mabanag on February 18,
1985, was correctly upheld by both the courts below.
Although there may be ample indications that there was in fact an agency between Ramona as
principal and Concepcion, her mother, as agent insofar as the subject contract of sale is
concerned, the issue of whether or not Concepcion was also acting in her own behalf as a co-
buyer is not squarely raised in the instant petition, nor in such assumption disputed between
mother and daughter. Thus, We will not touch this issue and no longer disturb the lower courts
ruling on this point.
WHEREFORE, premises considered, the instant petition is hereby DISMISSED and the
appealed judgment AFFIRMED.
SO ORDERED.
Narvasa, C.J. (Chairman), Davide, Jr., and Francisco, JJ., concur.
Panganiban, J., no part.
THIRD DIVISION
[G.R. No. 112330. August 17, 1999]
SPS. HENRY CO AND ELIZABETH CO AND MELODY CO, petitioners, vs. COURT OF
APPEALS AND MRS. ADORACION CUSTODIO, represented by her Attorney-in-fact,
TRINIDAD KALAGAYAN, respondents.
D E C I S I O N
GONZAGA-REYES, J.:
Before us is a Petition for Review on Certiorari of the decision of the Court of Appealsi[1] in
CA-G.R. CV No. 32972 entitled MRS. ADORACION CUSTODIO, represented by her
Attorney-in-fact, TRINIDAD KALAGAYAN vs. SPS. HENRY CO AND ELIZABETH CO
AND MELODY CO.
The following facts as found by the lower court and adopted by the Court of Appeals are
undisputed:
xxx sometime on October 9, 1984, plaintiff entered into a verbal contract with defendant for her
purchase of the latters house and lot located at 316 Beata St., New Alabang Village,
Muntinlupa, Metro Manila, for and in consideration of the sum of $100,000.00. One week
thereafter, and shortly before she left for the United States, plaintiff paid to the defendants the
amounts of $1,000.00 and P40,000.00 as earnest money, in order that the same may be reserved
for her purchase, said earnest money to be deducted from the total purchase price. The purchase
price of $100,000.00 is payable in two payments $40,000.00 on December 4, 1984 and the
balance of $60,000.00 on January 5, 1985. On January 25, 1985, although the period of payment
had already expired, plaintiff paid to the defendant Melody Co in the United States, the sum of
$30,000.00, as partial payment of the purchase price. Defendants counsel, Atty. Leopoldo
Cotaco, wrote a letter to the plaintiff dated March 15, 1985, demanding that she pay the balance
of $70,000.00 and not receiving any response thereto, said lawyer wrote another letter to plaintiff
dated August 8, 1986, informing her that she has lost her option to purchase the property
subject of this case and offered to sell her another property.
Under date of September 5 (1986), Atty. Estrella O. Laysa, counsel for plaintiff, wrote a letter to
Atty. Leopoldo Cotaco informing him that plaintiff is now ready to pay the remaining balance to
complete the sum of $100,000.00, the agreed amount as selling price and on October 24, 1986,
plaintiff filed the instant complaint.ii[2]
The Regional Trial Court (RTC) ruled in favor of private respondent Adoracion Custodio
(CUSTODIO) and ordered the petitioner spouses Henry and Elizabeth Co (COS) to refund the
amount of $30,000.00 in CUSTODIOs favor. The dispositive portion of the RTCs decision
reads:
WHEREFORE, the Court hereby orders:
1. that the earnest money of $1,000.00 and P40,000.00 is hereby forfeited in favor of the
defendants, and
2. the defendants are ordered to remit to plaintiff the peso equivalent of THIRTY
THOUSAND ($30,000.00) U.S. DOLLARS, at the prevailing rate of exchange at the time of
payment.
Costs against plaintiff.
SO ORDERED.iii[3]
Not satisfied with the decision, the COS appealed to the Court of Appeals which affirmed the
decision of the RTC. Hence, this appeal where the COS assign as sole error the following:
PETITIONER RESPECTFULLY SUBMITS THAT RESPONDENT COURT OF
APPEALS HAS DECIDED A QUESTION OF SUBSTANCE NOT IN ACCORD WITH
LAW AND THE APPLICABLE DECISIONS OF THE SUPREME COURT.iv[4]
The COS argue that the Court of Appeals erred in ruling that CUSTODIO could still exercise her
option to pay the balance of the purchase price of the property. The COS claim that CUSTODIO
was in default since she failed to pay after a demand was made by the petitioners in their March
15, 1985 letterv[5]. The COS claim that they never granted CUSTODIO an extension of time to
exercise the option contrary to the finding of the Court of Appeals that a thirty (30) day period
of time was granted to her in their August 8, 1986 lettervi[6]. Said period refers to another option
which the COS gave CUSTODIO to buy another piece of property and not the Beata property as
they could no longer hold the Beata property for CUSTODIO. In fact, said letter specifically
states that CUSTODIO lost her option to purchase the subject property; that the COS were
willing to apply the payments already made to the payment of the second property; and that if
CUSTODIO failed to purchase the second property within thirty (30) days, she would forfeit her
previous payments. Since CUSTODIO manifested her readiness to exercise her option to pay
the balance of the purchase price of the Beata property and not the second property, her
manifestation was no longer of any legal effect as this option was no longer available to her.
This being the case, the Court of Appeals should have ruled that the COS properly rescinded
their contract with CUSTODIO over the Beata property pursuant to Article 1191vii[7] of the
Civil Code and should have further ordered her to pay them damages consequent to the
rescission. Moreover, even assuming that they waived the deadline by accepting the payment of
$30,000.00 on January 26, 1986, CUSTODIO still failed to pay the remaining balance of
$70,000.00. Her offer to pay the remaining balance came too late as the option given to her had
already been lost. In addition, the Court of Appeals also erred in ordering the COS to return the
$30,000.00 dollars since the August 8, 1986 letter warned CUSTODIO that if the she did not
exercise her option within thirty days, she would lose her option and other rights and any
payments made shall be forfeited. Finally, the COS claim that the Court of Appeals erred in not
granting them attorneys fees when the law allows recovery therefor considering that by the
defendants act or omission, the plaintiff is compelled to litigate with third persons or to incur
expenses to protect his rights.viii[8]
The core issue is whether or not the Court of Appeals erred in ordering the COS to return the
$30,000.00 paid by CUSTODIO pursuant to the option granted to her over the Beata property?
We rule in the negative.
The COS main argument is that CUSTODIO lost her option over the Beata property and her
failure to exercise said option resulted in the forfeiture of any amounts paid by her pursuant to
the August letter.
An option is a contract granting a privilege to buy or sell within an agreed time and at a
determined price. It is a separate and distinct contract from that which the parties may enter into
upon the consummation of the option. It must be supported by consideration.ix[9] An option
contract conforms with the second paragraph of Article 1479 of the Civil Codex[10] which
reads:
Article 1479. xxx
An accepted unilateral promise to buy or to sell a determinate thing for a price certain is binding
upon the promissor if the promise is supported by a consideration distinct from the price.
However, the March 15, 1985 letterxi[11] sent by the COS through their lawyer to the
CUSTODIO reveals that the parties entered into a perfected contract of sale and not an option
contract.
A contract of sale is a consensual contract and is perfected at the moment there is a meeting of
the minds upon the thing which is the object of the contract and upon the price. From that
moment the parties may reciprocally demand performance subject to the provisions of the law
governing the form of contracts.xii[12] The elements of a valid contract of sale under Article
1458 of the Civil Code are (1) consent or meeting of the minds; (2) determinate subject matter;
and (3) price certain in money or its equivalent.xiii[13] As evidenced by the March 15, 1985
letter, all three elements of a contract of sale are present in the transaction between the
petitioners and respondent. CUSTODIOs offer to purchase the Beata property, subject of the
sale at a price of $100,000.00 was accepted by the COS. Even the manner of payment of the
price was set forth in the letter. Earnest money in the amounts of US$1,000.00 and P40,000.00
was already received by the COS. Under Article 1482xiv[14] of the Civil Code, earnest money
given in a sale transaction is considered part of the purchase price and proof of the perfection of
the sale.xv[15]
Despite the fact that CUSTODIOs failure to pay the amounts of US$ 40,000.00 and US$
60,000.00 on or before December 4, 1984 and January 5, 1985 respectively was a breach of her
obligation under Article 1191xvi[16] of the Civil Code, the COS did not sue for either specific
performance or rescission of the contract. The COS were of the mistaken belief that
CUSTODIO had lost her option over the Beata property when she failed to pay the remaining
balance of $70,000.00 pursuant to their August 8, 1986 letter. In the absence of an express
stipulation authorizing the sellers to extrajudicially rescind the contract of sale, the COS cannot
unilaterally and extrajudicially rescind the contract of sale.xvii[17] Accordingly, CUSTODIO
acted well within her rights when she attempted to pay the remaining balance of $70,000.00 to
complete the sum owed of $100,000.00 as the contract was still subsisting at that time. When the
COS refused to accept said payment and to deliver the Beata property, CUSTODIO immediately
sued for the rescission of the contract of sale and prayed for the return of the $30,000.00 she had
initially paid.
Under Article 1385xviii[18] of the Civil Code, rescission creates the obligation to return the
things which were the object of the contract but such rescission can only be carried out when the
one who demands rescission can return whatever he may be obliged to restore. This principle
has been applied to rescission of reciprocal obligations under Article 1191 of the Civil
Code.xix[19] The Court of Appeals therefore did not err in ordering the COS to return the
amount of $30,000.00 to CUSTODIO after ordering the rescission of the contract of sale over the
Beata property. We quote with approval the Court of Appeals decision to wit:
Since it has been shown that the appellee who was not in default, was willing to perform part of
the contract while the appellants were not, rescission of the contract is in order. The power to
rescind obligations is implied in reciprocal ones, in case one of the obligors should not comply
with what is incumbent upon him, (Article 1191, same Code). Rescission creates the obligation
to return the things which were the object of the contract, together with their fruits, and the price
with its interest x x x x (Article 1385, same Code).
In the case at bar, the property involved has not been delivered to the appellee. She has therefore
nothing to return to the appellants. The price received by the appellants has to be returned to the
appellee as aptly ruled by the lower court, for such is a consequence of rescission, which is to
restore the parties in their former situations.
No error was committed by the lower court when it did not award attorneys fees to the
appellants for as has been shown, the appellees complaint is not unfounded.xx[20]
We cannot uphold the forfeiture clause contained in the petitioners August 8, 1986 letter. It
appears that such condition was unilaterally imposed by the COS and was not agreed to by
CUSTODIO. It cannot therefore be considered as part of the contract of sale as it lacks the
consent of CUSTODIO.xxi[21]
Finally, the Court of Appeals did not err in not awarding the COS attorneys fees. Although
attorneys fees may be awarded if the claimant is compelled to litigate with third persons or to
incur expenses to protect his interest by reason of an unjustified act or omission of the party from
whom it is soughtxxii[22], we find that CUSTODIOs act clearly was not unjustified.
WHEREFORE, the instant petition is hereby DENIED, and the appealed decision of the Court
of Appeals is AFFIRMED.
SO ORDERED.
Melo, (Chairman), Vitug, Panganiban, and Purisima, JJ., concur.

G.R. No. , Aguinaldo v. Esteban and Sarmiento, 135 SCRA
645
Republic of the Philippines
SUPREME COURT
Manila
FIRST DIVISION
DECISION
April 15, 1985
G.R. No. L-27289
JUAN AGUINALDO, Substituted by MARINA and PRIMITIVO AGUINALDO, plaintiffs-
appellants,
vs.
JOSE ESTEBAN and FRANCISCA SARMIENTO, defendants-appellees.
Crisostomo M. Diokno for plaintiff-appellants. Andres Franco for defendants-appellees.
RELOVA, J .:
In Civil Case No. 6977, the Court of First Instance of Rizal declared the contract, entitled:
"Sanglaan ng Isang Lupa na Patuluyan Ipaaari," valid and binding contract of sale and dismissed
the complaint as well as the counterclaim with costs against the plaintiff. From said judgment of
the lower court, appeal was taken to this Court, "the same involving, as it does, a question of
law." (p. 25, Rollo)
Plaintiff Juan Aguinaldo in his complaint alleged, among others, that on June 23, 1958,
defendants, through fraud, deceit and misrepresentations and exercising undue pressure,
influence and advantage, procured the thumbmark of Jose Aguinaldo, father of plaintiff, to be
affixed on subject contract; that defendants caused the cancellation of Tax Declaration No. 4004,
Rizal (1948) in the name of Jose Aguinaldo and the issuance in lieu thereof of Tax Declaration
No. 10725-Rizal in the names of defendant spouses; that the document in question on which Jose
Aguinaldo affixed his thumbmark is not true and genuine, as the thumbmark appearing thereon is
a forgery; that it contains terms and conditions which partake the nature of "pacto comisario"
which render same null and void; that it does not fix a period for the payment of the loan nor
does it state the duration of the mortgage; that plaintiff is the sole successor-in-interest and legal
heir of Jose Aguinaldo who died intestate in October 1960; that defendants having no right to
win and possess the property in question are withholding the possession thereof from plaintiff
and consequently deprived plaintiff of the fruits of said property; and that by reason of the
willfull and malevolent acts of defendants, plaintiff suffered moral and actual damages in the
amount of P4,000.00.
In their answer, defendants claim absolute ownership of subject property upon the death of Jose
Aguinaldo in October 1960 on the theory that the document in controversy is one of sale and not
one of mortgage.
The parties, through their respective counsels, agreed to submit the case for decision solely on
whether the contract in question, Annex "A" of the complaint, is one of mortgage or of sale.
When plaintiff Juan Aguinaldo died intestate on August 6, 1965, his heirs, namely: Marina and
Primitivo, both surnamed Aguinaldo, petitioned the trial court that they be substituted as party
plaintiffs in lieu of their deceased father.
It is the position of plaintiffs-appellants that the document in question, Annex "A" of the
complaint, is null and void because it contains stipulations which partake of the nature of "pacto
comisario." On the other hand, the defendants contend that the contract is a valid sale and, as
such, it passed the title to them.
Hereunder is the contract in question:
SANGLAAN NG ISANG LUPA-CANAVERAL NA PATULOYAN IPAAARI
HAYAG SA SINO MAN MAKAKABASA:
Na, ako JOSE AGUINALDO, Pilipino, balo, may karampatan gulang, tubo at naninirahan sa Bo.
Bambang, Tagig, Rizal, Kapuluan Pilipinas, sa pamamagitan nito ay
ISINASAYSAY KO AT PINAGTITIBAY:
1. Na, sarili at tunay kong pagaari dahil sa ipinagkaloob sa akin ng aking amain Martin
Concepcion (patay) ang isang parcelang lupa-canaveral, at ang lupang ito ay napagkikilala at
nauligiran ng mga pagaaring lupa ng mga kahangganan kagaya ng mga sumusunod:
Isang parcelang lupa-canaveral na nasa pook ng Bo. Bambang, Tagig, Rizal, at siyang lupang
nakatala sa Tax Declaration No. 4004-Rizal (1948), sa Tanggapan ng Tasador ng lupa sa
lalawigan ng RizaL Pasig, RizaL at valor ameliarado ng P70.00 at napaloob sa mga pagaaring
lupa ng mga kahangganan kagaya ng mga sumusunod: Sa Norte, Antonio Silvestre at Pedro
Sarmiento; sa Este, Don-lingo Luga; sa Sur, Dionisio Dionisio at Pedro Sarmiento, at sa Weste,
Tomas Cruz
2. Na, alang-alang sa halagang LIMANG DAAN AT APATNAPUNG PISO (P540.00), salaping
Pilipino na sa kasalukuyan ay ating ginagamit, ay natanggap ko na, sa hindi biglaan kung hindi
LIMANGPUNG SENTIMOS (P0.50) lamang araw-araw magbuhat pa nuong Marzo 26, 1955, at
ang kabuuang halaga ng halagang nabanggit sa itaas nito, sa oras na ito, ay kusang loob kong
tinanggap sa magasawang JOSE ESTEBAN at FRANCISCA SARMIENTO, mga Pilipino, may
karampatan gulang, naninirahan at may padalahan sulat sa Bo. Bambang, Tagig, Rizal, ay
ISINASANGLA AT PATULOYAN IPAARI KO sa nasabing magasawa ang lupang nobanggit
ko sa itaas, sa aming mga kasunduan kagaya ng mga sumusunod:
NA AKO, JOSE AGUINALDO AY PAKAKANIN HABANG NABUBUHAY NG
MAGASAWANG JOSE ESTEBAN AT FRANCISCA SARMIENTO, 0 NG KANILANG
KAHALILI AT TAGAPAGMANA, AT BILANG KABAYARAN NAMAN SA HALAGANG
LIMANG DAAN AT APATNAPUNG PISO (P540.00) AT PAGPAPAKAIN SA AKIN NG
MAGASAWANG JOSE ESTEBAN AT FRANCISCA SARMIENTO, ORAS NA AKO AY
MAMATAY SILA (JOSE ESTEBAN AT FRANCISCA SARMIENTO) NA ANG LUBOSAN
MAGMAMAYARI NG AKING LUPANG ISINANGLANG ITO SA KANILA, SAPAGKAT
ANG LAHAT NG AKING KARAPATAN SA LUPA, NGAYON PA AY
IPINAGKAKALOOB KO SA KANILA SA ILALIM NG KASUNDUAN.
3. Na, ang lupa-canaveral na isinasangla ko sa pamamagitan ng kasulatan ito na ipaaring
patuluyan ay pinamomosiyonan ng mag-asawang Jose Esteban at Francisco Sarmiento, nuong
pang Marzo 26, 1955.
4. Na, ang lupang akin binabanggit sa kasulatan ito, ay hindi ko ipinagkakautang sa kanino man
tao, na maliban sa magasawang Jose Esteban at Francisca Samiento.
5. Na, ang lupa kong ito na siyang nakatala sa Tax Declaration No. 4004-Rizal (1948), ay hindi
nakatala sa bisa ng Batas Blg. 496 o maging sa Hipotecaria Espanola, at napagkasunduan ang
kasulatan ito, ay nais ipatala sa bisa ng Batas Blg. 3344, at sinusugan.
SA KATUNAYAN NG LAHAT KONG IPINAHAYAG SA DOKUMENTONG ITO, ay
inilagda ko ang aking pangalan at apelyedo dito sa Lunsod ng Maynila, Pilipinas, ngayong ika
______ ng Hunyo 1958, sa harap ng dalawang saksi.
(Thumbmark)
JOSE AGUINALDO
Nagsangla
SUMASANGAYON SA MGA ALITUNTUNIN:
(Sgd.) JOSE ESTEBAN
Pinagsanglaan
(Sgd.) FRANCISCA SARMIENTO
Pinagsanglaan
MGA SAKSI:
(Sgd.) Illegible
(Sgd.) Eugenia S. Relon
ACKNOWLEDGMENT
(pp. 7-1 0, Record on Appeal)
There is merit in the appeal.
On the issue as to whether or not the subject contract is one of sale or of mortgage, an inquiry
into the surrounding facts would disclose the intention of the parties and thereby determine the
truth of plaintiff-appellant's allegation that his father, Jose Aguinaldo, was misled into affixing
his thumbmark on the said contract.
Plaintiff-appellant, Juan Aguinaldo, is the son of Jose and it is indeed intriguing why defendants-
appellees, who are not related at all to the old man, would give him fifty centavos (P0.50)
everyday beginning May 26, 1955. The contract in question was executed in June 1958, or after
three (3) years from the time the daffy amount of half-a-peso was given the old man. Thereafter,
the defendants-appellees' saw to it that the recipient of the money would execute the contract,
entitled: "Sanglaan ng isang lupang-canaveral na Patuluyang Ipaaari."
It is significant to note that herein plaintiff-appellant was not even a witness in the document
when his father who is of low intelligence, illiterate and could not even sign his name, affixed his
thumbmark in the document in question. It would appear that the execution of the contract was
made behind his back and/or without giving notice to him. Stated differently, if the transaction
was on the level, why was not plaintiff-appellant asked to sign as a witness to the document. It
may be true that the contract was read to the old man but it is doubtful if he understood the
meaning of its contents. The contract was so written that anyone could believe he was only
giving his property by way of mortgage, not as a sale. For instance, in paragraph 2 thereof, it
reads "... ay isinasangla at patuloyan ipaaari ko sa nasabing magasawa ang lupang nabanggit ko
sa itaas, ... ." In some Tagalog provinces the word "Sangla" means "Bilihan Mabibiling Muli" or
"Pacto de Retro." By this contract, the vendee-a-retro takes possession of the property as owner
until the same is repurchased or redeemed. On the other hand, mortgage is understood as
"Prenda."
In the case at bar, defendants-appellees took possession of the property on March 26, 1955 when
they started giving Jose Aguinaldo the fifty centavos (P0.50) a day. It would appear then that the
money which he has been receiving from the Estebans come from his own property. In effect,
there was no consideration for the transfer of the property-be it sale, mortgage or Pacto
Comisario.
WHEREFORE, the decision of the trial court, dated August 16, 1966, is REVERSED and the
contract "Sanglaan ng Isang Lupa-Canaveral na Patuluyan Ipaaari" is declared null and void, and
the deceased plaintiff Juan Aguinaldo is declared as the true and lawful owner of subject
property.
Further, defendants-appellees are hereby ordered to transfer and deliver the possession of subject
property to the said deceased plaintiff Juan Aguinaldo's heirs, Marina Aguinaldo and Primitive
Aguinaldo, who substituted him as plaintiffs in this case and/or their respective heirs and
successors; and the Provincial Assessor of Rizal is directed to cancel Tax Declaration No. 10725
(Rizal) in the name of defendants-appellees, Jose Esteban and Francisco Sarmiento, and in lieu
thereof issue another in the name of the deceased plaintiff Juan Aguinaldo's heirs, Marina
Aguinaldo and Primitivo Aguinaldo.
SO ORDERED.
Teehankee (Chairman), Plana, Gutierrez, Jr., De la Fuente and Alampay, JJ., concur.
FIRST DIVISION
[G.R. No. 83974. August 17, 1998]
SPOUSES NARCISO RONGAVILLA and DOLORES RONGAVILLA, petitioners, vs.
COURT OF APPEALS AND MERCEDES DELA CRUZ AND FLORENCIA DELA CRUZ,
respondents.
D E C I S I O N
QUISUMBING, J.:
For review on appeal by certiorari are the Decisionxxiii[1] of the Court of Appeals in CA-
G.R. CV No. 06543, promulgated on March 11, 1988, and the Resolutionxxiv[2] dated
June 28, 1988, denying petitioner's motion for reconsideration.
The appealed decision affirmed in toto the judgment of the Regional Trial Court of
Pasay City in Civil Case No. LP-8790-P, which disposed of the controversy as follows:
"WHEREFORE, judgment is hereby rendered declaring void and inexistent the Deed of
Absolute Sale (Exh. "I") dated June 3, 1976 allegedly executed by plaintiffs in favor of
defendant spouses, which document is now particulary identified as Doc, No. 164; Page
no. 34; Book No. I; Series of 1976 in the Notarial Register of Arcadio Espiritu, a Notary
Public for and in Province of Cavite. Further, defendant spouses are hereby ordered -
a. To reconvey to the plaintiffs, free from all liens and encumbrances, the property
covered by Transfer Certificate of Title No. S-28903 of the Registry of Deeds for the
Province of Rizal;
b. . To pay to plaintiffs the sum of P5,000.00 as attorney's fees; and
c. To pay the cost of the suit."xxv[3]
As gleaned from the record, the private parties are closely related. Plaintiffs below, now
the private respondents, are the aunts of herein petitioner Dolores Rongavilla. Both
spinsters, they earn their livelihood as embroiderers ("magbuburda") and dressmakers;
although unschooled in English, they are however able to read and write in Tagalog.
Since they are of advanced age (Mercedes de la Cruz, 60 and Florencia de la Cruz,
71), their day to day activities were confined mostly close to home.
The property subject of this controversy between kith and kin is a parcel of land,
located in Manuyo, Las Pias, Rizal (now Metro Manila) owned by private respondents,
in the proportion of one-half (1/2) pro-indiviso, with another niece named Juanita
Jimenez as co-owner of the other one-half. The whole parcel consisted of 131 square
meters and was covered by Original Certificate of Title (OCT) No. 5415 of the Register
of Deeds of the Province of Rizal. This OCT, as well as the Transfer Certificate of Title
(TCT) No. S-28903 after the parcel was subdivided, was kept in the possession of
Juanita Jimenez, who is the elder sister of Dolores Rongavilla.
Although the basic fact situation here might appear all too familiar, the legal controversy
itself is notable for having passed through the entire channel of the justice
system.xxvi[4] The present petition before us was given due course per
Resolutionxxvii[5] dated June 26, 1989; but it was denied on September 20, 1989, for
non-compliance with certain requirements;xxviii[6] although, upon motion for
reconsideration by the petitioners showing compliance, it was reinstatedxxix[7] on
September 2, 1991.
Considering the circumstances in this case, including the relationship of the parties, it
behooves this Court now to examine closely and carefully the questioned judgment and
the record below. For the Court could not but be mindful of the codal admonition that:
"In all contractual, property or other relations, when one of the parties is at a
disadvantage on account of his moral dependence, ignorance, indigence, mental
weakness, tender age, or other handicap, the courts must vigilant for his protection."
(Art. 24, Civil Code)
From the facts found below, it appears that in the month of May, 1976, the private
respondents borrowed the amount of two thousand (P2,000) from the petitioners for the
purpose of having their (respondents') dilapidated rooftop repaired.
A month later, petitioner Dolores Rongavilla and her sister Juanita Jimenez visited their
aunt's home, bringing with them a document for the signature of their aunts. The
document is admittedly typewritten in English. When asked in Tagalog by one of the
aunts, respondent Mercedes de la Cruz, what the paper was all about, Dolores
Rongavilla answered also in Tagalog, that it was just a document to show that the
private respondents had a debt amounting to P2,000. On account of that representation,
private respondent signed the document.
In September 1980, or after a lapse of over four years, petitioner Dolores Rongavilla
went to private respondents' place and asked them to vacate the parcel in question,
claiming that she and her husband were already the new owners of the land.
Surprised by petitioners' moves, private respondents with the help of friends went to the
Office of the Register of Deeds of the Province of Rizal to verify the matter. They
discovered that their Certificate of Title had been cancelled and a new one, Transfer
Certificate of Title No. S-28903, had been issued in favor of petitioners. They further
discovered that said parcel of land had been mortgaged with the Cavite Development
Bank by the petitioners. It was only then that the private respondents realized that the
document they had previously been asked by their nieces to sign was a deed of sale.
On February 3, 1981, private respondents filed with the Court of First Instance, now
Regional Trial Court, of Pasay City the sworn complaintxxx[8] to have the purported
deed of sale declared void and inexistent, for being fictitious and simulated, and
secured by means of fraud and misrepresentation. They alleged that they did not sell
their property in question to the defendants; that they did not receive any consideration
on the supposed sale; that their Original Certificate of Title was cancelled and TCT No.
S-28903 was issued in favor of defendants (herein petitioners), who thereafter
mortgaged said title for a total of P40,000.00 to the damage and prejudice of the
plaintiffs. They also claimed moral and exemplary damages, as the court might
determine.
Petitioners duly filed their answerxxxi[9] after the denial of their motion to dismiss,
alleging that plaintiffs (now the private respondents) sold their parcel of land voluntarily,
that there was consent to the deed of sale, that there was sufficient consideration
therefor and that the document on the sale was complete in itself and in due form,
enabling the Register of deeds to cancel their old TCT and issue a new one. Petitioners
further stated that private respondent were fully appraised by the Notary Public, Atty.
Arcadio G. Espiritu, on what the document was all about, and having understood the
explanation made by said Notary Public, they voluntarily affixed their signatures on said
document. Petitioners also asserted as affirmative and/or special defenses that
prescription had set in and that private respondents no longer had a cause of action,
and that the deed of sale contained all the pre-requisites of a contract, namely consent
of the parties, consideration or a price certain, and determinate thing or object; and
could no longer be annulled. They also claimed moral and exemplary damages.
The trial court's judgment, quoted at the outset, being adverse to the petitioners, they
seasonably appealed. And after their rebuff at the appellate level, they come now to
this Court on certiorari under Rule 45 of the Rules of Court, citing the following grounds
for their petition:
"(1) It is clear and patent error of the Court of Appeals to declare as 'void and inexistent
the Deed of Absolute Sale (Exhibit 1) dated June 3, 1976.
(2) The Court of Appeals committed grave error of law in holding that the action to
declare nullity of the Deed of Absolute Sale (Exhibit 1) does not prescribe.
(3) The Court of Appeals committed grave abuse of discretion in relying on a purported
Certificate of Bureau of Internal Revenue which was not offered in evidence.
(4) The Court of Appeals committed grave error of law and abuse of discretion and
grave abuse of discretion amounting to lack or excess of jurisdiction in ordering the
petitioners to reconvey the subject parcel of land to the private respondents."xxxii[10]
With a slight variation but consistent with the grounds they have relied on petitioners
raise in their Memorandumxxxiii[11] the following:
"ISSUES
1. Did the Court of Appeals commit a clear and patent error in declaring as 'void
and inexistent' the Deed of Absolute Sale (Exhibit 1) dated June 3, 1976?
2. Did the Court of Appeals commit grave error in holding that the action to annul
the Deed of Sale (Exhibit 1) does not prescribe?
3. Did the Court of Appeals commit grave abuse of discretion in relying on a
purported Certificate of the Bureau of Internal Revenue which was not offered in
evidence?
4. Did the Court of Appeals commit grave error of law and grave abuse of discretion
amounting to lack of jurisdiction or in excess of jurisdiction in ordering petitioners
to reconvey the subject parcel of land to the private respondents?"
These issues may be synthesized into one: Did the respondent Court of Appeals
commit reversible error when it upheld the trial court's judgment that the disputed Deed
of Sale (Exhibit "1") is void and inexistent?
To resolve this pivotal issue, it must be noted that private respondents, as plaintiffs
below, based their complaint to declare the disputed deed void and inexistent on two
fundamental grounds: (1) lack of consent and (2) want of consideration. Under oath,
they strongly denied selling or even just agreeing to sell, their parcel of land to their
niece and nephew-in-law. During the hearing, they also denied going to and appearing
before the Notary Public who prepared the deed of sale. They also vehemently denied
receiving any consideration for the alleged sale. They added that their signatures on the
purported deed of sale were obtained by fraud and misrepresentation as petitioners had
misled them to believe the document was just a paper to evidence a debt of P2,000
they obtained to buy G.I sheets for the repair of their leaking roof.xxxiv[12] Private
respondents were shocked and got sick when they were told by petitioners that they
(respondents) were no longer the owners of the land.xxxv[13]
On these two points of consent and consideration, the trial court found that:
"x x x. A careful analysis and meticulous evaluation of the evidence on record has
convinced the Court that the sale of their property to the defendants was farthest from
the plaintiffs' minds. The Court believes that when plaintiffs voluntarily signed the
document which turned out to be a deed of sale, they were misled by defendant
Dolores Rongavilla and her sister Juanita Jimenez into believing that what they signed
was a document acknowledging the loan of P2,000.00 extended them by said
defendant.
"The Deed of Absolute Sale (Exh. "l") mentions a consideration of P2,000.00. Three
years after the alleged sale, the same property was mortgaged by defendant spouses
with the Cavite Development Bank for P40,000.00. Clearly enough, the gross
inadequacy and unconsciounableness [sic] of the consideration deters the Court from
subscribing to defendants' theory that plaintiffs sold the property to them. It is more
reasonable to assume that the amount of P2,000.00 mentioned in the deed refers to the
loan defendants extended to plaintiffs for the same amount.
"Plaintiffs are now of advanced age. Their only property is the lot in question and the
house erected thereon. x x x.
"As there is no indication that plaintiffs were in dire need of money, except for few [sic]
amount, except for few [sic] amount necessary for the repair of the roof of their house
for which they obtained a loan of P2,000.00 from defendants, there was no reason for
plaintiffs to dispose of their property. To do so would be inconsistent with the regular
norm of human conduct and the natural course of events. It is not in accord with the
natural promptings and instincts of human nature."xxxvi[14]
To these findings by thetrial court, the Court of Appelas in its own decision asserted. In
addition, it laid stress on the point of lack of consideration by quoting agreeably the trial
judge's holding thereon:
"By more than mere preponderance of evidence of evidence plaintiffs [herein private
respondents] have established the merit of their cause of action. The Court is of the
opinion and so holds that there was fraud exercised by defendant Dolores Rongavilla
and her sister Juanita Jimenez in securing the signature of the Deed of Absolute Sale
(Exh. 'l') and there was no consideration whatsoever dor the alleged sale. Undoubtedly,
the said deed of sale is simulated, fictitious and void."xxxvii[15]
And before concluding, the appellate court reiterated the proper characterization of the
deed of sale in question, not as an annullable contract, but as a void and inexistent
contract as found by the trial court:
"x x x. In the case at bar, however, We are dealing not merely with a voidable contract
which is tainted with fraud, mistake, undue influence, violence or intimidation which may
justify the annulment of a contract, but with a contract that is null and void ab initio.
"In the present case, plaintiffs-appellees declared under oath in their complaint that they
signed the alleged document without knowing that said document was a deed of
absolute sale. This means that plaintiffs-appelles consent was not only vitiated, but that
plaintiffs-appealles have not give their consent at all. And since there was no consent,
the deed of absolute sale is, therefore, null and void ab initio. xxx'"xxxviii[16]
Dissatisfied, petitioners now seek from this Court the reversal of the judgment below.
They insist in their petition before us that the deed is valid; and that because of the
statute of limitations, after the lapse of four years from its execution and registration, it
could no longer be annulled.
They assert that "the presumption that contracts are presumed to be valid and to be
supported by lawful and good consideration of one dollar is just as effectual and
valuable as a larger sum stipulated or paid''.xxxix[17]
They further assert that since private respondents signed the Deed of Sale, as a public
instrument, the truth of the recitals therein embodied could only be impugned and
disproved, not by mere preponderance of evidence, but by evidence of the "the clearest
and most satisfactory character, convincing and overwhelming.'"xl[18] Petitioners further
state that since they have been the ones paying real estate taxes on the property, rather
than their aunts, the latter by their acts had confirmed the deed executed by them.xli[19]
Despite the petitioners' insistence that the deed of sale is presumed valid and, being
registered, could not be disturbed anymore, we however find their arguments and
ratiocination less than persuasive. While petitioners would not want the deed of sale to
be impugned, they themselves contradict the recitals therein. On the vital point of
consideration, they and their witnesses, namely Juanita Jimenez and Atty. Arcadio
Espiritu repeatedly declared that the true consideration paid for the sale of the land was
not P2,000 as stated in their own Exhibit "l", the Deed of Sale, but in fact
P7,800.00.xlii[20]
Petitioner Dolores Rongavilla herself on cross-examination testified as follows:
"Atty. Rodriguez:
Q. You stated that you were present when this was explained by the notary public, how did
the notary public explain this deed of sale in English or Tagalog?
A. It was explained by the notary public that the property is being sold by them to us and
that the consideration was only P2,000.00 as appearing in the document in order that
we may be able to save for the payment of taxes and documentary stamps.
Q. Did the plaintiffs not say anything when the notary public according to you explained
that instead of P7,800.00, P2,000.00 will be stated in the document?
A. They did not say anything because we gave to them the amount of the consideration
agreed between us the sum of P7,800.00. (t.s.n., Sept. 2, 1982, pp. 9-10)"xliii[21]
By their own testimony, the petitioners are pictured as not exactly averse to bending the
truth, particularly the purported consideration. Sadly, the irony of it is that while they
claimed they were regulary paying taxes on the land in question they had no second
thoughts stating at the trial and later on appeal that they had resorted to doctoring the
price stated in the disputed Deed of Sale, allegedly "to save on taxes". That admission
surely opens the door to questions on the integrity, genuineness and veracity of said
public instrument.
Thus, the trial court could not be said to err in asserting that "while it is true that public
documents are presumed genuine and regular under the provisions of the Rules of
Court, this presumption is a rebuttable presumption which may be overcome by clear,
strong and convincing evidence."xliv[22]
Moreover, Exhibit "l", the deed itself, shows that contrary to the testimony of the notary
public, who appeared as a witness for petitioners, what was originally typed therein was
the amount of "Three Thousand Pesos (P3,000)", which later on was substituted by the
handwritten amount now of Two Thousand Pesos (P2,000)."xlv[23] There is no need to
speculate on the motivation for this alteration. The notary public might have just wanted
to further save on taxes, rather than short-change the coffers of the government. But,
again, the whole fabric of petitioners' claim to the sanctity of the deed as public
instrument had thereby been shredded.
If as petitioners claimed on trial, the price paid was P7,800 while their deed showed only
P2,000, after the amount of P3,000 in the deed was altered, one may well inquire: which
figure could this Court believe? Could one say that the trial and the appellate courts
both erred in holding that no consideration passed from the buyer to the seller?
But petitioners herein would further take to task the appellate court for grave abuse of
discretion, as well as for a reversible error, in having relied on the "purported
Certification of the Bureau of Internal Revenue which was not offered in evidence".
Since this is a petition under Rule 45, however, we will not dwell on the alleged grave
abuse of discretion but limit our observation to the alleged error of law. The BIR
certificate was the subject of the testimony of witnesses at the hearing where both
parties took full advantage of the opportunity for direct and cross-examination as well as
rebuttal and sur-rebuttal.xlvi[24] On the witness stand, private respondents as plaintiffs
below denied that they had any tax account number nor even residence certificates.
They were supported by their witnesses, testifying also under oath. They contradicted
the claim of the petitioners' lawyer-notary public, that the disputed deed of sale was
complete and in due form and was signed in his presence by the private respondents.
They further denied even having gone to the office of the lawyer-notary public in
Bacoor, Cavite, on June 3, 1976, the date of execution shown in the deed, or on any
other date. While indeed the BIR certificate was not formally offered in evidence, hence
no longer available on review, the record would show that said BIR certificate was
presented during the testimony on rebuttal of respondent Mercedes de la Cruz:xlvii[25]
"ATTY. RODRIGUEZ:
According to the defendants, there was the alleged deed of sale executed by you and
your sister in favor of the defendants before Notary Public Arcadio G. Espiritu. It
appears you have presented Tax Account No. (TAN) 2345-463-6 and your sister
Florencia de la Cruz also presented Tax Account No. (TAN) 2345-468-4. Now, do you
have any tax account number?
WITNESS:
None, sir.xlviii[26]
x x x
ATTY. RODRIGUEZ:
I am showing to you this certification from the "Kawanihan ng Rentas, Quezon City ,
dated June 16, 1982, addressed to Miss Florencia de la Cruz and Miss Mercedes de la
Cruz, Las Pias, Metro-Manila, issued by the accounting chief, stating that in reply to
you[r] request dated June 14, 1982, requesting certification of your TAN, the records of
their office do not show that you were issued any tax account number, what relation has
this document which for purposes of identification, we respectfully request that the same
be marked Exhibit "C" to the certification issued by the BIR?
WITNESS:
"Yes, this is the one."xlix[27]
Now even if the matter of the official certification by the BIR is set aside, the whole
question of the TAN being fake or belonging to somebody else, would boil down to one
of credibility between the two camps. Unfortunately for the petitioners herein, the trial
court found them and their witnesses far from credible. As remarked by the trial Judge,
"the declarations of defendants [herein petitioners] do not inspire rational belief."l[28] It
would thus appear that the trial court and the appellate court committed no grave error
of law, that would impel us on this point to override their judgment.
Neither can we give assent to the assertion of petitioners that the appealed Court of
Appeals (CA) decision here as well as the judgment below is "contrary to settled
jurisprudence". This Court in Rivero v. Court of Appeals, 80 SCRA 411 (1977) had
occasion already to affirm a trial court's judgment declaring null and void the questioned
deed of sale where it found:
"The undisputed facts of record support the finding of the trial court that the consent of
Ana Concepcion to the deed of sale was obtained through fraudulent misrepresentation
of [her nephew] Jaime Rivero that the contract she was signing was one of mortgage."
"The land in question is located in the municipality of Polo, Bulacan, very near Manila. It
has an area of 2 hectares, 32 ares and 45 centares. The consideration for the sale of
said land is only P5,000.00 which is not only grossly inadequate but shocking to the
conscience x x x"li[29]
In Ocejo, Perez & Co. vs. Flores, 40 Phil. 921 (1920), regarding the sale of land in
Tayabas, Quezon, the Court confronted a similar question:
"The first question presented is whether the contract of sale executed by Isabel Flores
in favor of Joaquin Bas is valid or not.
"By relying upon the documents executed in his favor by Isabel Flores evidencing the
contract of sale, Joaquin Bas insists that there has been a perfect and valid contract of
sale of real estate between them and that he paid to her the consideration of P20,000
mentioned in said documents. x x x.
"Isabel Flores, on the other hand, maintained that there was neither a real sale nor did
she receive a centavo from the defendant, as the price of said sale, x x x."lii[30]
Concluded the Court, after reviewing the series of transactions on record:
"It is then evident that the contract of sale mentioned in the notarial document of May 7,
1915, lacks cause or consideration and is therefore null and void and without any effect
whatsoever according to Article 1275 of the Civil Code, for it has been satisfactorily and
conclusively proven that the purchaser Joaquin Bas has not paid Isabel Flores for the
price of the lands that the latter has sold to him, and after being contented with having
for a long time given several promises showing that he had no intention to comply with
his contract, he concluded by executing four promissory notes payable to the vendor,
which recite the aforementioned purchase price and which were not also paid, there
appearing in the record facts from which it can be inferred that fraud has been
committed."liii[31]
This Court in Mapalo v. Mapalo, 17 SCRA 114 (1966) stated:
"The rule under the Civil Code, again be it the old or the new, is that contracts without a
cause or consideration produce no effect whatsoever."liv[32]
The "problem" before the Court "is whether a deed which states a consideration that in
fact did not exist, is a contract, without consideration, and therefore void ab initio, or a
contract with a false consideration, and therefore, at least under the Old Civil Code,
voidable." This problem arose, as observed by the Court, because the questioned "deed
of sale" between the brothers Magpalo, in 1936, stated that it had for its consideration
Five Hundred (P500.00) Pesos. In fact, however, said "consideration was totally
absent."lv[33]
Thus, the Court concluded:
"In our view, therefore, the ruling of this Court in Ocejo, Perez & Co. vs. Flores, 40 Phil.
921 is squarely applicable herein. In that case we ruled that a contract of purchase and
sale is null and null and void and produces no effect whatsoever where the same is
without cause or consideration in that the purchase price which appears thereon as paid
has in fact never been paid by the puchaser to vendor."lvi[34]
Turning now to the issue of prescription, it follows that once the disputed deed is found
to be inexistent and void, the statute of limitations cannot apply. As the courts below
ruled, the cause of action for its declaration as such is imprescriptible.lvii[35] Petitioners-
spouses contend, however, that this is contrary to settled jurisprudence because the
applicable precedent should be Pangadil v. CFI of Cotabato, 116 SCRA 347 (1982). But
the fact situation of that case differs radically from the present controversy. There the
Court upheld the dismissal of the action to declare a document known as "Ratificacion
de Una Venta" as inexistent and void after finding that it was "not a contract wherein the
parties do not intend to be bound at all;" that no circumstance was alleged to sustain the
contention "that the execution of the aforesaid document is contrary to public
policy;"lviii[36] and that for 27 years the petitioners did not even care to verify the status
of the land in question. "Their inaction for such a considerable period of time reflects on
the credibility of their pretense that they merely intended to confirm an oral mortgage,
instead of sale of the land in question."lix[37]
Here in the present case, there is no doubt about the credibility of plaintiffs below
(herein private respondents) in pursuing their cause promptly and forcefully. They never
intended to sell, nor acceded to be bound by the sale of their land. Public policy is also
well served in defending the rights of the aged to legal protection, including their right to
property that is their home, as against fraud, misrepresentation, chicanery and abuse of
trust and confidence by those who owed them candor and respect.
More to the point, in our view, is Baranda v. Baranda, 150 SCRA 59 (1987), where this
Court found that:
"This Civil Code provides in Article 1391 that an action to annul a contract on the ground
of vitiated consent must be filed within four years from the discovery of the vice of
consent. In the instant case, however, we are dealing not with a voidable contract
tainted with fraud, mistake, undue influence, violence or intimidation that can justify its
nullification, but with a contract that is null and void ab initio
"Paulina Baranda declared under oath in her complaint that she signed the deeds of
sale without knowing what they were, which means that her consent was not merely
marred by the above-stated vices, so as to make the contracts voidable, but that she
had not given her consent at all. We are also satisfied that there was no valid
consideration either for the alleged transfers, for reasons already discussed. Lack of
consent and consideration made the deeds of sale void altogetherlx[38]and rendered
them subject to attack at any time, conformably to the rule in Article 1410 that an action
to declare the inexistence of void contracts 'does not prescribe'."lxi[39]
And if the passage of time could not cure the fatal flaw in the inexistent and void
contract, neither could an alleged ratification or confirmation thereof. Further, as in the
case before us, reconveyance is proper. "The defect of inexistence of a contract is
permanent and incurable, hence it cannot be cured either by ratification or by
prescription. x x x There is no need of an action to set aside a void or inexistent
contract; in fact such action cannot logically exist. However, an action to declare the
non-existence of the contract can be maintained; and in the same action, the plaintiff
may recover what he has given by virtue of the contract."lxii[40]
Given the circumstances of the case and there being no reversible error in the
challenged decision, we are in accord with the judgment below and find the petitioners'
appeal without merit. For as well said in the Court of Appeals' Decision and Resolution
under review, "We cannot contemplate of the rather absurd situation, which defendants-
appellants would ineluctably lead [u]s to, where plaintiffs-appellees would sell their only
house, in which they have lived for so many years, in order to secure the measly sum of
P2,000.00 to repair the roof of their only house, which would all be lost to them anyway
upon the consummation of the sale. They would then become homeless, and the
repaired roof would be of no use to them."lxiii[41] Experience which is the life of the law
-- as well as logic and common sense -- militates against the petitioners' cause.
WHEREFORE, the instant petition is hereby DENIED. The Decision and the Resolution
of the Court of Appeals in CA-G.R. CV No. 06543 are hereby AFFIRMED.
Cost against petitioners.
SO ORDERED.
Davide , Jr. (Chairman), Bellosillo, Vitug and Panganiban, JJ., concur.

SPECIAL FIRST DIVISION
[G.R. No. 122544. January 28, 2003]
REGINA P. DIZON, AMPARO D. BARTOLOME, FIDELINA D. BALZA, ESTER ABAD
DIZON and JOSEPH ANTHONY DIZON, RAYMUND A. DIZON, GERARD A. DIZON and
JOSE A. DIZON, JR., petitioners, vs. COURT OF APPEALS and OVERLAND EXPRESS
LINES, INC., respondents.
[G.R. No. 124741. January 28, 2003]
REGINA P. DIZON, AMPARO D. BARTOLOME, FIDELINA D. BALZA, ESTER ABAD
DIZON and JOSEPH ANTHONY DIZON, RAYMUND A. DIZON, GERARD A. DIZON and
JOSE A. DIZON, JR., petitioners, vs. COURT OF APPEALS, HON. MAXIMIANO C.
ASUNCION and OVERLAND EXPRESS LINES, INC., respondents.
R E S O L U T I O N
YNARES-SANTIAGO, J.:
On January 28, 1999, this Court rendered judgment in these consolidated cases as follows:
WHEREFORE, in view of the foregoing, both petitions are GRANTED. The decision dated
March 29, 1994 and the resolution dated October 19, 1995 in CA-G.R. CV Nos. 25153-54, as
well as the decision dated December 11, 1995 and the resolution dated April 23, 1997 in CA-
G.R. SP No. 33113 of the Court of Appeals are hereby REVERSED and SET ASIDE.
Let the records of this case be remanded to the trial court for immediate execution of the
judgment dated November 22, 1982 in Civil Case No. VIII-29155 of the then City Court (now
Metropolitan Trial Court) of Quezon City, Branch III as affirmed in the decision dated
September 26, 1984 of the then Intermediate Appellate Court (now Court of Appeals) and in the
resolution dated June 19, 1985 of this Court.
However, petitioners are ordered to REFUND to private respondent the amount of P300,000.00
which they received through Alice A. Dizon on June 20, 1975.
SO ORDERED.
Private respondent filed a Motion for Reconsideration, Second Motion for Reconsideration, and
Motion to Suspend Procedural Rules in the Higher Interest of Substantial Justice, all of which
have been denied by this Court. This notwithstanding, the cases were set for oral argument on
March 21, 2001, on the following issues:
1. WHETHER THERE ARE CIRCUMSTANCES THAT WOULD JUSTIFY
SUSPENSION OF THE RULES OF COURT;
2. WHETHER THE SUM OF P300,000.00 RECEIVED BY ALICE DIZON FROM
PRIVATE RESPONDENT WAS INTENDED AS PARTIAL PAYMENT OF THE
PURCHASE PRICE OF THE PROPERTY, OR AS PAYMENT OF BACK RENTALS ON
THE PROPERTY;
3. WHETHER ALICE DIZON WAS AUTHORIZED TO RECEIVE THE SUM OF
P300,000.00 ON BEHALF OF PETITIONERS;
4. (A) IF SO, WHETHER PETITIONERS ARE ESTOPPED FROM QUESTIONING
THE BELATED EXERCISE BY PRIVATE RESPONDENT OF ITS OPTION TO BUY
WHEN THEY ACCEPTED THE SAID PARTIAL PAYMENT;
(B) IF SO, WHETHER ALICE DIZON CAN VALIDLY BIND PETITIONERS IN THE
ABSENCE OF A WRITTEN POWER OF ATTORNEY;
5. (A) WHETHER THERE WAS A PERFECTED CONTRACT OF SALE BETWEEN
THE PARTIES;
(B) WHETHER THERE WAS A CONTRACT OF SALE AT LEAST WITH RESPECT TO
THE SHARES OF FIDELA AND ALICE DIZON; AND
6. WHETHER PRIVATE RESPONDENTS ACTION FOR SPECIFIC PERFORMANCE
HAS PRESCRIBED.
In order to resolve the first issue, it is necessary to pass upon the other questions which relate to
the merits of the case. It is only where there exist strong compelling reasons, such as serving the
ends of justice and preventing a miscarriage thereof, that this Court can suspend the rules.1[1]
After reviewing the records, we find that, despite all of private respondents protestations, there
is absolutely no written proof of Alice Dizons authority to bind petitioners. First of all, she was
not even a co-owner of the property. Neither was she empowered by the co-owners to act on
their behalf.
The acceptance of the amount of P300,000.00, purportedly as partial payment of the purchase
price of the land, was an act integral to the sale of the land. As a matter of fact, private
respondent invokes such receipt of payment as giving rise to a perfected contract of sale. In this
connection, Article 1874 of the Civil Code is explicit that: When a sale of a piece of land or
any interest therein is through an agent, the authority of the latter shall be in writing; otherwise,
the sale shall be void.
When the sale of a piece of land or any interest thereon is through an agent, the authority of the
latter shall be in writing; otherwise, the sale shall be void. Thus the authority of an agent to
execute a contract for the sale of real estate must be conferred in writing and must give him
specific authority, either to conduct the general business of the principal or to execute a binding
contract containing terms and conditions which are in the contract he did execute. A special
power of attorney is necessary to enter into any contract by which the ownership of an
immovable is transmitted or acquired either gratuitously or for a valuable consideration. The
express mandate required by law to enable an appointee of an agency (couched) in general terms
to sell must be one that expressly mentions a sale or that includes a sale as a necessary ingredient
of the act mentioned. For the principal to confer the right upon an agent to sell real estate, a
power of attorney must so express the powers of the agent in clear and unmistakable language.
When there is any reasonable doubt that the language so used conveys such power, no such
construction shall be given the document.2[2]
It necessarily follows, therefore, that petitioners cannot be deemed to have received partial
payment of the supposed purchase price for the land through Alice Dizon. It cannot even be said





that Alice Dizons acceptance of the money bound at least the share of Fidela Dizon, in the
absence of a written power of attorney from the latter. It should be borne in mind that the
Receipt dated June 20, 1975, while made out in the name of Fidela Dizon, was signed by Alice
Dizon alone.
Moreover, there could not have been a perfected contract of sale. As we held in our Decision
dated January 28, 1999, the implied renewal of the contract of lease between the parties affected
only those terms and conditions which are germane to the lessees right of continued enjoyment
of the property. The option to purchase afforded private respondent expired after the one-year
period granted in the contract. Otherwise stated, the implied renewal of the lease did not include
the option to purchase. We see no reason to disturb our ruling on this point, viz:
In this case, there was a contract of lease for one (1) year with option to purchase. The contract
of lease expired without the private respondent, as lessee, purchasing the property but remained
in possession thereof. Hence, there was an implicit renewal of the contract of lease on a monthly
basis. The other terms of the original contract of lease which are revived in the implied new
lease under Article 1670 of the New Civil Code are only those terms which are germane to the
lessees right of continued enjoyment of the property leased. Therefore, an implied new lease
does not ipso facto carry with it any implied revival of private respondent's option to purchase
(as lessee thereof) the leased premises. The provision entitling the lessee the option to purchase
the leased premises is not deemed incorporated in the impliedly renewed contract because it is
alien to the possession of the lessee. Private respondents right to exercise the option to purchase
expired with the termination of the original contract of lease for one year. The rationale of this
Court is that:
This is a reasonable construction of the provision, which is based on the presumption that when
the lessor allows the lessee to continue enjoying possession of the property for fifteen days after
the expiration of the contract he is willing that such enjoyment shall be for the entire period
corresponding to the rent which is customarily paid in this case up to the end of the month
because the rent was paid monthly. Necessarily, if the presumed will of the parties refers to the
enjoyment of possession the presumption covers the other terms of the contract related to such
possession, such as the amount of rental, the date when it must be paid, the care of the property,
the responsibility for repairs, etc. But no such presumption may be indulged in with respect to
special agreements which by nature are foreign to the right of occupancy or enjoyment inherent
in a contract of lease.3[3]
There being no merit in the arguments advanced by private respondent, there is no need to
suspend the Rules of Court and to admit the motion for reconsideration. While it is within the
power of the Court to suspend its own rules, or to except a particular case from its operation,
whenever the interest of justice require it, however, the movant must show strong compelling



reasons such as serving the ends of justice and preventing a grave miscarriage thereof,4[4] none
of which obtains in this case.
Litigation must end sometime and somewhere. An effective and efficient administration of
justice requires that, once a judgment has become final, the winning party be not, through a mere
subterfuge, deprived of the fruits of the verdict. Courts must, therefore, guard against any
scheme calculated to bring about that result. Constituted as they are to put an end to
controversies, courts should frown upon any attempt to prolong them.5[5]
ACCORDINGLY, the Motion to Suspend Procedural Rules in the Higher Interest of Substantial
Justice filed by private respondent is DENIED WITH FINALITY. No further pleadings will be
entertained in these cases.
SO ORDERED.
Puno, J., concur.
Davide, Jr., C.J., (Chairman), see separate opinion, hereto attached.







































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