SERAFIN MODINA, petitioner,vs.

COURT OF APPEALS AND ERNESTO HONTARCIEGO, PAUL FIGUEROA, TEODORO HIPALLA

At bar is a Petition for Review on Certiorari assailing the decision of the Court of Appeals in CA G.R. CV No. 26051 affirming the
decision of the trial court in the case, entitled "Serafin Modina vs. Ernesto Hontarciego, Paulino Figueroa and Ramon Chiang vs.
Merlinda Plana Chiang, intervenors", which declared as void and inexistent the deed of definite sale dated December 17, 1975 as well
as the Certificates of Title Nos. T-86912, T-86913, T-86914 in the name of Ramon Chiang.1wphi1.nt
The facts that matter are as follows:
The parcels of land in question are those under the name of Ramon Chiang (hereinafter referred to as CHIANG) covered by TCT Nos.
T-86912, T-86913, and T-86914. He theorized that subject properties were sold to him by his wife, Merlinda Plana Chiang (hereinafter
referred to as MERLINDA), as evidenced by a Deed of Absolute Sale dated December 17, 1975, 1 and were subsequently sold by
CHIANG to the petitioner Serafin Modina (MODINA), as shown by the Deeds of Sale, dated August 3, 1979 and August 24, 1979,
respectively.
MODINA brought a Complaint for Recovery of Possession with Damages against the private respondents, Ernesto Hontarciego, Paul
Figueroa and Teodoro Hipalla, docketed as Civil Case No. 13935 before the Regional Trial Court of Iloilo City.
Upon learning the institution of the said case, MERLINDA presented a Complaint-in-intervention, seeking the declaration of nullity of the
Deed of Sale between her husband and MODINA on the ground that the titles of the parcels of land in dispute were never legally
transferred to her husband. Fraudulent acts were allegedly employed by him to obtain a Torrens Title in his favor. However, she
confirmed the validity of the lease contracts with the other private respondents.
MERLINDA also admitted that the said parcels of land were those ordered sold by Branch 2 of the then Court of First Instance of Iloilo
in Special Proceeding No. 2469 in "Intestate Estate of Nelson Plana" where she was appointed as the administratix, being the widow of
the deceased, her first husband. An Authority to Sell was issued by the said Probate Court for the sale of the same properties. 2
After due hearing, the Trial Court decided in favor of MERLINDA, disposing thus:
WHEREFORE, judgment is hereby rendered (1) declaring as void and inexistent the sale of Lots 10063, 10088,
10085 and 10089 of the Cadastral Survey of Sta. Barbara by Merlinda Plana in favor of Ramon Chiang as evidenced
by the deed of definite sale dated December 17, 1975 (Exhibits "H"; "3"-Chiang; "9" Intervenor) as well as the
Certificates of Title Nos. T-86912, T-86913, T-86914 and T-86915 in the name of Ramon Chiang; (2) declaring as void
and inexistent the sale of the same properties by Ramon Chiang in favor of Serafin Modina as evidenced by the
deeds of sale (Exhibits "A", "B", "6" Chiang and "7" Chiang) dated August 3, and 24, 1979, as well as
Certificates of Title Nos. T-102631, 102630, 102632 and 102890 in the name of Serafin Modina; (3) ordering the
Register of Deeds of Iloilo to cancel said certificates of title in the names of Ramon Chiang and Serafin Modina and to
reinstate the Certificates of Title Nos. T-57960, T-57962, T-57963 and T-57864 in the name of Nelson Plana; (4)
ordering Serafin Modina to vacate and restore possession of the lots in question to Merlinda Plana Chiang; (5)
ordering Ramon Chiang to restitute and pay to Serafin Modina the sum of P145,800.00 and; (6) ordering Serafin
Modina to pay Ernesto Hontarciego the sum of P44,500.00 as actual and compensatory damages plus the sum of
P5,000.00, for and as attorney's fees, with costs in favor of said defendants against the plaintiff.
On appeal; the Court of Appeals affirmed the aforesaid decision in toto.
Dissatisfied therewith, petitioner found his way to this Court via the present Petition for Review under the Rule 45 seeking to set aside
the assailed decision of the Court of Appeals.
Raised for resolution here are: (1) whether the sale of subject lots should be nullified, (2) whether petitioner was not a purchaser in
good faith, (3) whether the decision of the trial court was tainted with excess of jurisdiction; and (4) whether or not only three-fourths of
subject lots should be returned to the private respondent.
Anent the first issue, petitioner theorizes that the sale in question is null and void for being violative of Article 14903 of the New Civil
Code prohibiting sales between spouses. Consequently, what is applicable is Article 1412 4 supra on the principle of in pari delicto,
which leaves both guilty parties where they are, and keeps undisturbed the rights of third persons to whom the lots involved were sold;
petitioner stressed.1wphi1.nt
Petitioner anchors his submission on the following statements of the Trial Court which the Court of Appeals upheld, to wit:

Furthermore, under Art. 1490, husband and wife are prohibited to sell properties to each other. And where, as in this
case, the sale is inexistent for lack of consideration, the principle of in pari delicto non oritur actio does not apply.
(Vasquez vs. Porta, 98 Phil 490), (Emphasis ours) Thus, Art. 1490 provides:
Art. 1490. The husband and the wife cannot sell property to each other, except:
(1) when a separation of propety was agreed upon in the marriage settlements; or
(2) when there has been a judicial separation of property under Art. 191.
The exception to the rule laid down in Art. 1490 of the New Civil Code not having existed with respect to the property
relations of Ramon Chiang and Merlinda Plana Chiang, the sale by the latter in favor of the former of the properties in
question is invalid for being prohibited by law. Not being the owner of subject properties, Ramon Chiang could not
have validly sold the same to plaintiff Serafin Modina. The sale by Ramon Chiang in favor of Serafin Modina is,
likewise, void and inexistent.
xxx xxx xxx
The Court of Appeals, on the other hand, adopted the following findings a quo: that there is no sufficient evidence establishing fault on
the part of MERLINDA, and therefore, the principle of in pari delicto is inapplicable and the sale was void for want of consideration. In
effect, MERLINDA can recover the lots sold by her husband to petitioner MODINA. However, the Court of Appeals ruled that the sale
was void for violating Article 1490 of the Civil Code, which prohibits sales between spouses.
The principle of in pari delicto non oritur actio 6 denies all recovery to the guilty parties inter se. It applies to cases where the nullity
arises from the illegality of the consideration or the purpose of the contract. 7 When two persons are equally at fault, the law does not
relieve them. The exception to this general rule is when the principle is invoked with respect to inexistent contracts. 8
In the petition under consideration, the Trial Court found that subject Deed of Sale was a nullity for lack of any consideration. 9 This
finding duly supported by evidence was affirmed by the Court of Appeals. Well-settled is the rule that this Court will not disturb such
finding absent any evidence to the contrary. 10
Under Article 1409 11 of the New Civil Code, enumerating void contracts, a contract without consideration is one such void contract. One
of the characteristics of a void or inexistent contract is that it produces no effect. So also, inexistent contracts can be invoked by any
person whenever juridical effects founded thereon are asserted against him. A transferor can recover the object of such contract
by accion reivindicatoria and any possessor may refuse to deliver it to the transferee, who cannot enforce the transfer. 12
Thus, petitioner's insistence that MERLINDA cannot attack subject contract of sale as she was a guilty party thereto is equally
unavailing.
But the pivot of inquiry here is whether MERLINDA is barred by the principle of in pari delicto from questioning subject Deed of Sale.
It bears emphasizing that as the contracts under controversy are inexistent contracts within legal contemplation. Articles 1411 and 1412
of the New Civil Code are inapplicable. In pari delicto doctrine applies only to contracts with illegal consideration or subject matter,
whether the attendant facts constitute an offense or misdemeanor or whether the consideration involved is merely rendered illegal. 13
The statement below that it is likewise null and void for being violative of Article 1490 should just be treated as a surplusage or an obiter
dictum on the part of the Trial Court as the issue of whether the parcels of land in dispute are conjugal in nature or they fall under the
exceptions provided for by law, was neither raised nor litigated upon before the lower Court. Whether the said lots were ganancial
properties was never brought to the fore by the parties and it is too late to do so now.
Furthermore, if this line of argument be followed, the Trial Court could not have declared subject contract as null and void because only
the heirs and the creditors can question its nullity and not the spouses themselves who executed the contract with full knowledge of the
prohibition. 14
Records show that in the complaint-in-intervention of MERLINDA, she did not aver the same as a ground to nullify subject Deed of
Sale. In fact, she denied the existence of the Deed of Sale in favor of her husband. In the said Complaint, her allegations referred to the

want of consideration of such Deed of Sale. She did not put up the defense under Article 1490, to nullify her sale to her husband
CHIANG because such a defense would be inconsistent with her claim that the same sale was inexistent.1wphi1.nt
The Trial Court debunked petitioner's theory that MERLINDA intentionally gave away the bulk of her and her late husband's estate to
defendant CHIANG as his exclusive property, for want of evidentiary anchor. They insist on the Deed of Sale wherein MERLINIDA
made the misrepresentation that she was a widow and CHIANG was single, when at the time of execution thereof, they were in fact
already married. Petitioner insists that this document conclusively established bad faith on the part of MERLINDA and therefore, the
principle of in pari delicto should have been applied.
These issues are factual in nature and it is not for this Court to appreciate and evaluate the pieces of evidence introduced below. An
appellate court defers to the factual findings of the Trial Court, unless petitioner can show a glaring mistake in the appreciation of
relevant evidence.
Since one of the characteristics of a void or inexistent contract is that it does not produce any effect, MERLINDA can recover the
property from petitioner who never acquired title thereover.
As to the second issue, petitioner stresses that his title should have been respected since he is a purchaser in good faith and for value.
The Court of Appeals, however, opined that he (petitioner) is not a purchaser in good faith. It found that there were circumstances
known to MODINA which rendered their transaction fraudulent under the attendant circumstances.
As a general rule, in a sale under the Torrens system, a void title cannot give rise to a valid title. The exception is when the sale of a
person with a void title is to a third person who purchased it for value and in good faith.
A purchaser in good faith is one who buys the property of another without notice that some other person has a right to or interest in
such property and pays a full and fair price at the time of the purchase or before he has notice of the claim or interest of some other
person in the property.
In the case under scrutiny, petitioner cannot claim that he was a purchaser in good faith. There are circumstances which are indicia of
bad faith on his part, to wit: (1) He asked his nephew, Placido Matta, to investigate the origin of the property and the latter learned that
the same formed part of the properties of MERLINDA's first husband; (2) that the said sale was between the spouses; (3) that when the
property was inspected, MODINA met all the lessees who informed that subject lands belong to MERLINDA and they had no knowledge
that the same lots were sold to the husband.
It is a well-settled rule that a purchaser cannot close his eyes to facts which would put a reasonable man upon his guard to make the
necessary inquiries, and then claim that he acted in good faith. His mere refusal to believe that such defect exists, or his wilful closing of
his eyes to the possibility of the existence of a defect in his vendor's title, will not make him an innocent purchaser for value, if it
afterwards develops that the title was in fact defective, and it appears that he had such notice of the defect as would have led to its
discovery had he acted with that measure of precaution which may reasonably be required of a prudent man in a like situation. 15
Thus, petitioner cannot claim that the sale between him and MODINA falls under the exception provided for by law.
With regard to the third issue posed by petitioner whether the Trial Court's decision allowing recovery on the part of Merlinda Chiang
of subject properties was void petitioner's contention is untennable. It is theorized that as the sale by MERLINDA was by virtue of an
Order to Sell issued in the Intestate Estate Proceedings of her late husband, Nelson Plana to allow recovery will defeat the said
order of the Probate Court. Petitioner equated the aforesaid Order to Sell as a judgment, which another court in a regular proceeding
has no jurisdiction to reverse.
Petitioner is under the mistaken impression that as the Order to Sell had become a judgment in itself as to the validity of the sale of the
properties involved, any question as to its nullity should have been brought before the Court of Appeals on appeal when the said Order
was issued.
It is a well-settled rule that a Court of First Instance (now Regional Trial Court) has jurisdiction over a case brought to rescind a sale
made upon prior authority of a Probate Court. This does not constitute an interference or review of the order of a co-equal Court since
the Probate Court has no jurisdiction over the question of title to subject properties. Consequently, a separate action may be brought to
determine the question of ownership. 16
Lastly, on the issue of whether only three-fourths of the property in question should have been returned to MERLINDA, petitioner's
stance is equally unsustainable. It is a settled doctrine that an issue which was neither averred in the Complaint nor raised during the

trial before the lower court cannot be raised for the first time on appeal, as such a recourse would be offensive to the basic rules of fair
play, justice, and due process. 17
The issue of whether only three-fourths of subject property will be returned was never an issue before the lower court and therefore, the
petitioner cannot do it now. A final word. In a Petition for Review, only questions of law may be raised. It is perceived by the Court that
what petitioner is trying to, albeit subtly, is for the Court to examine the probative value or evidentiary weight of the evidence presented
below 18. The Court cannot do that unless the appreciation of the pieces of evidence on hand is glaringly erroneous. But this is where
petitioner utterly failed.1wphi1.nt
WHEREFORE, the Petition is DENIED and the decision of the Court of Appeals, dated September 30, 1992, in CA-G.R. CV No. 26051
AFFIRMED. No pronouncement as to costs.
EUGENIO DOMINGO, CRISPIN MANGABAT and SAMUEL CAPALUNGAN, petitioners, vs.HON. COURT OF APPEALS, FELIPE C.
RIGONAN and CONCEPCION R. RIGONAN, respondents.
This petition1 seeks to annul the decision of the Court of Appeals dated August 29, 1996, which set aside the decision of the Regional
Trial Court of Batac, Ilocos Norte, Branch 17, in Civil Case No. 582-17 for reinvindicacionconsolidated with Cadastral Case No. 1.2 The
petition likewise seeks to annul the resolution dated December 11, 1996, denying petitioners' motion for reconsideration.
The facts of this case, culled from the records, are as follows:
Paulina Rigonan owned three (3) parcels of land, located at Batac and Espiritu, Ilocos Norte, including the house and warehouse on
one parcel. She allegedly sold them to private respondents, the spouses Felipe and Concepcion Rigonan, who claim to be her
relatives. In 1966, herein petitioners Eugenio Domingo, Crispin Mangabat and Samuel Capalungan, who claim to be her closest
surviving relatives, allegedly took possession of the properties by means of stealth, force and intimidation, and refused to vacate the
same. Consequently, on February 2, 1976, herein respondent Felipe Rigonan filed a complaint for reinvindicacion against petitioners in
the Regional Trial Court of Batac, Ilocos Norte. On July 3, 1977, he amended the complaint and included his wife as co-plaintiff. They
alleged that they were the owners of the three parcels of land through the deed of sale executed by Paulina Rigonan on January 28,
1965; that since then, they had been in continuous possession of the subject properties and had introduced permanent improvements
thereon; and that defendants (now petitioners) entered the properties illegally, and they refused to leave them when asked to do so.
Herein petitioners, as defendants below, contested plaintiffs' claims. According to defendants, the alleged deed of absolute sale was
void for being spurious as well as lacking consideration. They said that Paulina Rigonan did not sell her properties to anyone. As her
nearest surviving kin within the fifth degree of consanguinity, they inherited the three lots and the permanent improvements thereon
when Paulina died in 1966. They said they had been in possession of the contested properties for more than 10 years. Defendants
asked for damages against plaintiffs.
During trial, Juan Franco, Notary Public Evaristo P. Tagatag3 and plaintiff Felipe Rigonan testified for plaintiffs (private respondents
now).
Franco testified that he was a witness to the execution of the questioned deed of absolute sale. However, when cross-examined and
shown the deed he stated that the deed was not the document he signed as a witness, but rather it was the will and testament made by
Paulina Rigonan.
Atty. Tagatag testified that he personally prepared the deed, he saw Paulina Rigonan affix her thumbprint on it and he signed it both as
witness and notary public. He further testified that he also notarized Paulina's last will and testament dated February 19, 1965. The will
mentioned the same lots sold to private respondents. When asked why the subject lots were still included in the last will and testament,
he could not explain. Atty. Tagatag also mentioned that he registered the original deed of absolute sale with the Register of Deeds.
Plaintiff Felipe Rigonan claimed that he was Paulina's close relative. Their fathers were first cousins. However, he could not recall the
name of Paulina's grandfather. His claim was disputed by defendants, who lived with Paulina as their close kin. He admitted the
discrepancies between the Register of Deeds' copy of the deed and the copy in his possession. But he attributed them to the
representative from the Office of the Register of Deeds who went to plaintiffs house after that Office received a subpoena duces tecum.
According to him, the representative showed him blanks in the deed and then the representative filled in the blanks by copying from his
(plaintiffs) copy.
Counsel for defendants (petitioners herein) presented as witnesses Jose Flores, the owner of the adjacent lot; Ruben Blanco, then
acting Registrar of Deeds in Ilocos Norte; and Zosima Domingo, wife of defendant Eugenio Domingo.

Jose Flores testified that he knew defendants, herein petitioners, who had lived on the land with Paulina Rigonan since he could
remember and continued to live there even after Paulina's death. He said he did not receive any notice nor any offer to sell the lots from
Paulina, contrary to what was indicated in the deed of sale that the vendor had notified all the adjacent owners of the sale. He averred
he had no knowledge of any sale between Paulina and private respondents.
Ruben Blanco, the acting Registrar of Deeds, testified that only the carbon copy, also called a duplicate original, of the deed of sale was
filed in his office, but he could not explain why this was so.
Zosima Domingo testified that her husband, Eugenio Domingo, was Paulina's nephew. Paulina was a first cousin of Eugenio's father.
She also said that they lived with Paulina and her husband, Jose Guerson, since 1956. They took care of her, spent for her daily needs
and medical expenses, especially when she was hospitalized prior to her death. She stated that Paulina was never badly in need of
money during her lifetime.
On March 23, 1994, the trial court rendered judgment in favor of defendants (now the petitioners). It disposed:
WHEREFORE, premises considered, judgment is hereby rendered in favor of defendants and against the plaintiffs, and as
prayed for, the Amended Complaint is hereby DISMISSED.
Defendants are hereby declared, by virtue of intestate succession, the lawful owners and possessors of the house including
the bodega and the three (3) parcels of land in suit and a Decree of Registration adjudicating the ownership of the said
properties to defendants is hereby issued.
The alleged deed of sale ( Exhs. "A", "A-1", "1" and "1-a") is hereby declared null and void and fake and the prayer for the
issuance of a writ of preliminary injunction is hereby denied.
Plaintiffs are hereby ordered to pay defendants:
a) P20,000.00 as moral damages;
b) P10,000.00 as exemplary damages;
c) P10,000.00 attorney's fees and other litigation expenses.
No pronouncement as to costs.4
Private respondents herein appealed to the Court of Appeals.
On August 29, 1996, the CA reversed the trial court's decision, thus:
WHEREFORE, the decision dated March 23, 1994 is hereby SET ASIDE. The plaintiffs-appellants Felipe Rigonan and
Concepcion Rigonan are declared the owners of the properties under litigation and the defendants-appellees are hereby
ordered to VACATE the subject properties and SURRENDER the possession thereof to the heirs of the plaintiffs-appellants.
Costs against the defendants-appellees.5
Hence, this petition assigning the following as errors:
I
THE RESPONDENT COURT OF APPEALS HAS DECIDED QUESTIONS OF LEGAL SUBSTANCE AND SIGNIFICANCE NOT IN
ACCORDANCE WITH THE EVIDENCE, LAW AND WITH THE APPLICABLE DECISIONS OF THIS HONORABLE COURT.
II
THAT THE FINDINGS OF RESPONDENT COURT OF APPEALS ARE CONTRARY TO THOSE OF THE TRIAL COURT AND
CLEARLY VIOLATES THE RULE THAT THE FACTUAL FINDINGS OF TRIAL COURTS ARE ENTITLED TO GREAT WEIGHT AND

RESPECT ON APPEAL, ESPECIALLY WHEN SAID FINDINGS ARE ESTABLISHED BY UNREBUTTED TESTIMONIAL AND
DOCUMENTARY EVIDENCE.
III
THAT THE FINDINGS AND CONCLUSIONS OF RESPONDENT COURT OF APPEALS ARE GROUNDED ENTIRELY ON
SPECULATIONS, SURMISES, CONJECTURES, OR ON INFERENCES MANIFESTLY MISTAKEN.
IV
THAT THE RESPONDENT COURT OF APPEALS MANIFESTLY OVERLOOKED CERTAIN RELEVANT FACTS NOT DISPUTED BY
THE PARTIES AND WHICH, IF PROPERLY CONSIDERED, WOULD JUSTIFY A DIFFERENT CONCLUSION.
V
THAT THE FINDINGS OF FACT OF RESPONDENT COURT OF APPEALS ARE PREMISED ON SUPPOSED ABSENCE OF
EVIDENCE BUT IS CONTRADICTED BY THE EVIDENCE ON RECORD THUS CONSTITUTES GRAVE ABUSE OF DISCRETION. 6
The basic issue for our consideration is, did private respondents sufficiently establish the existence and due execution of the Deed of
Absolute and Irrevocable Sale of Real Property? Marked as Exhibits "A," "A-1," "1" and "1-a," this deed purportedly involved nine (9)
parcels of land, inclusive of the three (3) parcels in dispute, sold at the price of P850 by Paulina Rigonan to private respondents on
January 28, 1965, at Batac, Ilocos Norte.7 The trial court found the deed "fake," being a carbon copy with no typewritten original
presented; and the court concluded that the document's execution "was tainted with alterations, defects, tamperings, and irregularities
which render it null and void ab initio".8
Petitioners argue that the Court of Appeals erred in not applying the doctrine that factual findings of trial courts are entitled to great
weight and respect on appeal, especially when said findings are established by unrebutted testimonial and documentary evidence.
They add that the Court of Appeals, in reaching a different conclusion, had decided the case contrary to the evidence presented and the
law applicable to the case. Petitioners maintain that the due execution of the deed of sale was not sufficiently established by private
respondents, who as plaintiffs had the burden of proving it. First, the testimonies of the two alleged instrumental witnesses of the sale,
namely, Juan Franco and Efren Sibucao, were dispensed with and discarded when Franco retracted his oral and written testimony that
he was a witness to the execution of the subject deed. As a consequence, the appellate court merely relied on Atty. Tagatag's (the
notary public) testimony, which was incredible because aside from taking the double role of a witness and notary public, he was a paid
witness. Further his testimony, that the subject deed was executed in the house of Paulina Rigonan, was rebutted by Zosima Domingo,
Paulina's housekeeper, who said that she did not see Atty. Tagatag, Juan Franco and Efren Sibucao in Paulina's house on the alleged
date of the deed's execution.
Secondly, petitioners said that private respondents failed to account for the typewritten original of the deed of sale and that the carbon
copy filed with the Register of Deeds was only a duplicate which contained insertions and erasures. Further, the carbon copy was
without an affidavit of explanation, in violation of the Administrative Code as amended, which requires that if the original deed of sale is
not presented or available upon registration of the deed, the carbon copy or so-called "duplicate original" must be accompanied by an
affidavit of explanation, otherwise, registration must be denied.9
Thirdly, petitioners aver that the consideration of only P850 for the parcels of land sold, together with a house and a warehouse, was
another indication that the sale was fictitious because no person who was financially stable would sell said property at such a grossly
inadequate consideration.
Lastly, petitioners assert that there was abundant evidence that at the time of the execution of the deed of sale, Paulina Rigonan was
already senile. She could not have consented to the sale by merely imprinting her thumbmark on the deed.
In their comment, private respondents counter that at the outset the petition must be dismissed for it lacks a certification against forum
shopping. Nonetheless, even disregarding this requirement, the petition must still be denied in due course for it does not present any
substantial legal issue, but factual or evidentiary ones which were already firmly resolved by the Court of Appeals based on records and
the evidence presented by the parties. Private respondents' claim that the factual determination by the trial court lacks credibility for it
was made by the trial judge who presided only in one hearing of the case. The trial judge could not validly say that the deed of absolute
sale was "fake" because no signature was forged, according to private respondents; and indeed a thumbmark, said to be the seller's
own, appears thereon.

In their reply, petitioners said that the copy of the petition filed with this Court was accompanied with a certification against forum
shopping. If private respondents' copy did not contain same certification, this was only due to inadvertence. Petitioners ask for the
Court's indulgence for anyway there was substantial compliance with Revised Circular No. 28-91.
On the contention that here only factual issues had been raised, hence not the proper subject for review by this Court, petitioners reply
that this general rule admits of exceptions, as when the factual findings of the Court of Appeals and the trial court are contradictory;
when the findings are grounded entirely on speculations, surmises or conjectures; and when the Court of Appeals overlooked certain
relevant facts not disputed by the parties which if properly considered would justify a different conclusion. All these, according to
petitioners, are present in this case.
Before proceeding to the main issue, we shall first settle procedural issues raised by private respondents.
While the trial judge deciding the case presided over the hearings of the case only once, this circumstance could not have an adverse
effect on his decision. The continuity of a court and the efficacy of its proceedings are not affected by the death, resignation or
cessation from the service of the presiding judge. A Judge may validly render a decision although he has only partly heard the
testimony of the witnesses.10 After all, he could utilize and rely on the records of the case, including the transcripts of testimonies heard
by the former presiding judge.
On the matter of the certification against forum-shopping, petitioners aver that they attached one in the copy intended for this Court.
This is substantial compliance. A deviation from a rigid enforcement of the rules may be allowed to attain their prime objective for, after
all, the dispensation of justice is the core reason for the court's existence.11
While the issues raised in this petition might appear to be mainly factual, this petition is properly given due course because of the
contradictory findings of the trial court and the Court of Appeals. Further, the later court apparently overlooked certain relevant facts
which justify a different conclusion.12 Moreover, a compelling sense to make sure that justice is done, and done rightly in the light of the
issues raised herein, constrains us from relying on technicalities alone to resolve this petition.
Now, on the main issue. Did private respondents establish the existence and due execution of the deed of sale? Our finding is in the
negative. First, note that private respondents as plaintiffs below presented only a carbon copy of this deed. When the Register of Deeds
was subpoenaed to produce the deed, no original typewritten deed but only a carbon copy was presented to the trial court. Although the
Court of Appeals calls it a "duplicate original," the deed contained filled in blanks and alterations. None of the witnesses directly testified
to prove positively and convincingly Paulina's execution of the original deed of sale. The carbon copy did not bear her signature, but
only her alleged thumbprint. Juan Franco testified during the direct examination that he was an instrumental witness to the deed.
However, when cross-examined and shown a copy of the subject deed, he retracted and said that said deed of sale was not the
document he signed as witness.13 He declared categorically he knew nothing about it.14
We note that another witness, Efren Sibucao, whose testimony should have corroborated Atty. Tagatag's, was not presented and his
affidavit was withdrawn from the court,15 leaving only Atty. Tagatag's testimony, which aside from being uncorroborated, was selfserving.
Secondly, we agree with the trial court that irregularities abound regarding the execution and registration of the alleged deed of sale.
On record, Atty. Tagatag testified that he himself registered the original deed with the Register of Deeds.16 Yet, the original was nowhere
to be found and none could be presented at the trial. Also, the carbon copy on file, which is allegedly a duplicate original, shows
intercalations and discrepancies when compared to purported copies in existence. The intercalations were allegedly due to blanks left
unfilled by Atty. Tagatag at the time of the deed's registration. The blanks were allegedly filled in much later by a representative of the
Register of Deeds. In addition, the alleged other copies of the document bore different dates of entry: May 16, 1966, 10:20 A.M. 17 and
June 10, 1966, 3:16 P.M.,18 and different entry numbers: 66246, 74389 19 and 64369. 20 The deed was apparently registered long after
its alleged date of execution and after Paulina's death on March 20, 1966.21 Admittedly, the alleged vendor Paulina Rigonan was not
given a copy.22
Furthermore, it appears that the alleged vendor was never asked to vacate the premises she had purportedly sold. Felipe testified that
he had agreed to let Paulina stay in the house until her death.23 In Alcos v. IAC, 162 SCRA 823 (1988), the buyer's immediate
possession and occupation of the property was deemed corroborative of the truthfulness and authenticity of the deed of sale. The
alleged vendor's continued possession of the property in this case throws an inverse implication, a serious doubt on the due execution
of the deed of sale. Noteworthy, the same parcels of land involved in the alleged sale were still included in the will subsequently
executed by Paulina and notarized by the same notary public, Atty. Tagatag.24 These circumstances, taken together, militate against
unguarded acceptance of the due execution and genuineness of the alleged deed of sale.

Thirdly, we have to take into account the element of consideration for the sale. The price allegedly paid by private respondents for nine
(9) parcels, including the three parcels in dispute, a house and a warehouse, raises further questions. Consideration is the why of a
contract, the essential reason which moves the contracting parties to enter into the contract.25 On record, there is unrebutted testimony
that Paulina as landowner was financially well off. She loaned money to several people.26 We see no apparent and compelling reason
for her to sell the subject parcels of land with a house and warehouse at a meager price of P850 only.
In Rongavilla vs. CA, 294 SCRA 289 (1998), private respondents were in their advanced years, and were not in dire need of money,
except for a small amount of P2,000 which they said were loaned by petitioners for the repair of their house's roof. We ruled against
petitioners, and declared that there was no valid sale because of lack of consideration.
In the present case, at the time of the execution of the alleged contract, Paulina Rigonan was already of advanced age and senile. She
died an octogenarian on March 20, 1966, barely over a year when the deed was allegedly executed on January 28, 1965, but before
copies of the deed were entered in the registry allegedly on May 16 and June 10, 1966. The general rule is that a person is not
incompetent to contract merely because of advanced years or by reason of physical infirmities.27 However, when such age or infirmities
have impaired the mental faculties so as to prevent the person from properly, intelligently, and firmly protecting her property rights then
she is undeniably incapacitated. The unrebutted testimony of Zosima Domingo shows that at the time of the alleged execution of the
deed, Paulina was already incapacitated physically and mentally. She narrated that Paulina played with her waste and urinated in bed.
Given these circumstances, there is in our view sufficient reason to seriously doubt that she consented to the sale of and the price for
her parcels of land. Moreover, there is no receipt to show that said price was paid to and received by her. Thus, we are in agreement
with the trial court's finding and conclusion on the matter:
The whole evidence on record does not show clearly that the fictitious P850.00 consideration was ever delivered to the vendor.
Undisputably, the P850.00 consideration for the nine (9) parcels of land including the house and bodega is grossly and
shockingly inadequate, and the sale is null and void ab initio.28
WHEREFORE, the petition is GRANTED. The decision and resolution of the Court of Appeals dated August 29, 1996 and December
11, 1996, respectively, are REVERSED and SET ASIDE. The decision of the Regional Trial Court of Batac, Ilocos Norte, Branch 17,
dated March 23, 1994, is REINSTATED.
SPOUSES CLARO and NIDA BAUTISTA, petitioners, vs.BERLINDA F. SILVA, Represented by HERMES J. DORADO, in his
capacity as Attorney-In-Fact,respondent.
To establish his status as a buyer for value in good faith, a person dealing with land registered in the name of and occupied by the
seller need only show that he relied on the face of the seller's certificate of title.1 But for a person dealing with land registered in the
name of and occupied by the seller whose capacity to sell is restricted, such as by Articles 1662 and 1733 of the Civil Code or Article
1244 of the Family Code, he must show that he inquired into the latter's capacity to sell in order to establish himself as a buyer for value
in good faith.5 The extent of his inquiry depends on the proof of capacity of the seller. If the proof of capacity consists of a special power
of attorney duly notarized, mere inspection of the face of such public document already constitutes sufficient inquiry. If no such special
power of attorney is provided or there is one but there appear flaws in its notarial acknowledgmentmere inspection of the document
will not do; the buyer must show that his investigation went beyond the document and into the circumstances of its execution.
Appealed by Petition for Review on Certiorari under Rule 45 of the Rules of Court are the November 21, 2001 Decision6 of the Court of
Appeals (CA) in CA-G.R. CV No. 487677 which affirmed in toto the January 10, 1995 Decision of the Regional Trial Court (RTC) in Civil
Case No. 3091-V-89, and the February 27, 2003 CA Resolution which denied the motion for reconsideration.
Civil Case No. 3091-V-89 is a Complaint for Annulment of Deed of Absolute Sale and Transfer Certificate of Title (TCT) No. V-2765,
Reconveyance and Damages filed with the RTC, Branch 171, Valenzuela, Metro Manila by Berlina F. Silva (Berlina), through Hermes
Dorado (Dorado) as Attorney-in-Fact, against Spouses Claro and Nida Bautista (Spouses Bautista). Spouses Bautista filed their
Answer8 and a Third-Party Complaint against Berlina's husband, Pedro M. Silva (Pedro).9 In an Order dated August 6, 1991, the RTC
declared third-party defendant Pedro in default for failure to file an answer to the Third-Party Complaint.10
The undisputed facts of the case, as found by the RTC, are as follows:
1. That Transfer Certificate of Title No. B-37189 of the Registry of Deeds for xxx Metro Manila District III over a parcel of land
(Lot 42, Block 10, of the subdivision plan (LRC) Psd-210217, Sheet 2, being a portion of Lot 903, Malinta Estate, LRC Record
No. 5941) situated in xxx Barrio of Parada, Valenzuela, Metro Manila, containing an area of 216 square meters, more or less,
was registered in the names of Spouses Berlina F. Silva and Pedro M. Silva on August 14, 1980;

2. That on March 3, 1988, Pedro M. Silva, for himself and as attorney-in-fact of his wife Berlina F. Silva, thru a Special Power
of Attorney purportedly executed on November 18, 1987 by Berlina F. Silva in his favor, signed and executed a Deed of
Absolute Sale over the said parcel of land covered by Transfer Certificate of Title No. B-37189 in favor of defendants-spouses
Claro Bautista and Nida Bautista; and
3. That as a consequence, Transfer Certificate of Title No. 37189 was cancelled and in lieu thereof, Transfer Certificate of Title
No. V-2765 of the Registry of Deeds for the Valenzuela Branch was issued in the names of Spouses Claro Bautista and Nida
Bautista on March 4, 1988.11
Based on the evidence presented, the RTC also found that the signature appearing on the Special Power of Attorney (SPA) as that of
Berlina Silva is a forgery, and that consequently the Deed of Absolute Sale executed by Pedro in favor of Spouses Bautista is not
authorized by Berlina.12
The RTC rendered judgment on January 10, 1995, the decretal portion of which reads:
WHEREFORE, Judgment is hereby rendered:
1. Declaring the Deed of Absolute Sale dated March 3, 1988 executed by Pedro M. Silva, for himself and as attorney-in-fact of
Berlina F. Silva, in favor of defendants-spouses Claro Bautista and Nida Bautista over the parcel of land, described and
covered by Transfer Certificate of Title No. B-37189 Metro Manila District III, null and void and the resulting Transfer Certificate
of Title No. V-2765 of Valenzuela Registry in the name of Spouses Claro Bautista and Nida Bautista cancelled and that
Transfer Certificate of Title No. B-37189 reinstated.
2. Ordering defendants to reconvey the property covered by the said Transfer Certificate of Title No. V-2765 together with the
improvements thereon to the plaintiff.
3. Condemning the defendants to pay the plaintiff the sum of P5,000.00 in the concept of reasonable attorney's fees and the
costs of suit.
Defendants' counterclaim is dismissed.
Judgment on default is hereby entered in favor of the third-party plaintiffs Spouses Claro Bautista and Nida Bautista against
third-party defendants Pedro M. Silva, condemning the third-party defendant Pedro Silva to indemnify/pay third-party plaintiffs
Spouses Claro Bautista and Nida Bautista the amount of Seventy Thousand Pesos (P70,000.00) the contract price of the sale
of the property, with interest at the legal rate from the date of the execution of the said document on March 3, 1988 until the
amount is fully paid and for whatever amount that the thirdparty plaintiffs were adjudged and paid to the plaintiff by reason of
this decision and the costs of suit.
SO ORDERED.13
Spouses Bautista filed an appeal with the CA which, in its November 21, 2001 Decision, affirmed in toto the RTC decision;14 and, in a
Resolution
dated February 27, 2003, denied the Motion for Reconsideration.15
Hence, the herein petition filed by Spouses Bautista praying that the CA Decision and Resolution be annulled and set aside on the
following grounds:
I. Respondent as represented by Hermes Dorado in his capacity as attorney-in-fact has no legal authority to file action against
spouses petitioners.
II. The petitioners are considered as purchasers in good faith and for value having relied upon a Special Power of Attorney
which appears legal, valid and genuine on its face.
III. Gratia argumenti that the special power of attorney is a forgery and the deed of sale executed by the husband is null and
void, the nullity [thereof] does not include the one half share of the husband.16

The petition fails for lack of merit.

As to the first ground, petitioners argue that for lack of authority of Dorado to represent respondent, the latter's Complaint failed to state
a cause of action and should have been dismissed.17
The argument holds no water.
True, there was no written authority for Dorado to represent respondent in the filing of her Complaint. However, no written authorization
of Dorado was needed because the Complaint was actually filed by respondent, and not merely through Dorado as her attorney-in-fact.
As correctly observed by the CA, respondent herself signed the verification attached to the Complaint.18 She stated therein that she is
the plaintiff in Civil Case No. 3091-V-89 and that she caused the preparation of the Complaint.19 Respondent also personally testified on
the facts alleged in her Complaint.20 In reality, respondent acted for and by herself, and not through any representative, when she filed
the Complaint. Therefore, respondent being the real party in interest, by virtue of the then prevailing Articles 16621 and 17322 of the Civil
Code, the Complaint she filed sufficiently stated a cause of action. The sufficiency of the Complaint was not affected by the inclusion of
Dorado as party representative for this was an obvious error which, under Section 11 of Rule 3,23 is not a ground for dismissal, as it may
be corrected by the court, on its own initiative and at any stage of the action, by dropping such party from the complaint.24
Anent the second ground, there is no merit to petitioners' claim that they are purchasers in good faith.
That the SPA is a forgery is a finding of the RTC and the CA on a question of fact.25 The same is conclusive upon the
Court, 26 especially as it is based on the expert opinion of the NBI which constitutes more than clear, positive and convincing evidence
that respondent did not sign the SPA, and on the uncontroverted Certification of Dorado that respondent was in Germany working as a
nurse when the SPA was purportedly executed in 1987.
The SPA being a forgery, it did not vest in Pedro any authority to alienate the subject property without the consent of respondent.
Absent such marital consent, the deed of sale was a nullity.27
But then petitioners disclaim any participation in the forgery of the SPA or in the unauthorized sale of the subject property. They are
adamant that even with their knowledge that respondent was in Germany at the time of the sale, they acted in good faith when they
bought the subject property from Pedro alone because the latter was equipped with a SPA which contains a notarial acknowledgment
that the same is valid and authentic.28 They invoke the status of buyers in good faith whose registered title in the property is already
indefeasible and against which the remedy of reconveyance is no longer available.29 In the alternative, petitioners offer that should
respondent be declared entitled to reconveyance, let it affect her portion only but not that of Pedro.30
Whether or not petitioners are buyers for value in good faith is a question of fact not cognizable by us in a petition for review.31 We
resolve only questions of law; we do not try facts nor examine testimonial or documentary evidence on record. We leave these to the
trial and appellate courts to whose findings and conclusions we accord great weight and respect, especially when their findings
concur.32 We may have at times reversed their findings and conclusions but we resort to this only under exceptional circumstances as
when it is shown that said courts failed to take into account certain relevant facts which, if properly considered, would justify a different
conclusion.33 No such exceptional circumstance obtains in the present case for we find the conclusions of the RTC and CA supported
by the established facts and applicable law. However, we do not fully subscribe to some of their views on why petitioners cannot be
considered in good faith, as we will discuss below.
A holder of registered title may invoke the status of a buyer for value in good faith as a defense against any action questioning his
title.34 Such status, however, is never presumed but must be proven by the person invoking it.35
A buyer for value in good faith is one who buys property of another, without notice that some other person has a right to, or interest in,
such property and pays full and fair price for the same, at the time of such purchase, or before he has notice of the claim or interest of
some other persons in the property. He buys the property with the well-founded belief that the person from whom he receives
the thing had title to the property and capacity to convey it. 36
To prove good faith, a buyer of registered and titled land need only show that he relied on the face of the title to the property. He need
not prove that he made further inquiry for he is not obliged to explore beyond the four corners of the title.37 Such degree of proof of good
faith, however, is sufficient only when the following conditions concur: first, the seller is the registered owner of the land; 38 second, the
latter is in possession thereof;39 and third, at the time of the sale, the buyer was not aware of any claim or interest of some other person
in the property,40 or of any defect or restriction in the title of the seller or in his capacity to convey title to the property.41

Absent one or two of the foregoing conditions, then the law itself puts the buyer on notice and obliges the latter to exercise a higher
degree of diligence by scrutinizing the certificate of title and examining all factual circumstances in order to determine the seller's title
and capacity to transfer any interest in the property.42 Under such circumstance, it is no longer sufficient for said buyer to merely show
that he relied on the face of the title; he must now also show that he exercised reasonable precaution by inquiring beyond the
title.43 Failure to exercise such degree of precaution makes him a buyer in bad faith.44
In the present case, petitioners were dealing with a seller (Pedro) who had title to and possession of the land but, as indicated on the
face of his title, whose capacity to sell was restricted, in that the marital consent of respondent is required before he could convey the
property. To prove good faith then, petitioners must show that they inquired not only into the title of Pedro but also into his capacity to
sell.
According to petitioners, to determine Pedro's capacity to sell, they conducted the following forms of inquiry: first, they inspected the
photocopy of the SPA presented to them by Pedro;45 second, they brought said copy to Atty. Lorenzo Lucero (the notary public who
prepared the deed of sale) and asked whether it was genuine;46 and third, they inspected the original copy of the SPA after they
advanced payment of Php55,000.00 to Pedro.47 Essentially, petitioners relied on the SPA, specifically on its notarial acknowledgment
which states that respondent appeared before the notary public and acknowledged having executed the SPA in favor of Pedro.
The RTC and CA, however, found such inquiry superficial. They expected of petitioners an investigation not only into the whereabouts
of respondent at the time of the execution of the SPA48 but also into the genuineness of the signature appearing on it.49
We find such requirements of the RTC and CA too stringent that to adopt them would be to throw commerce into madness where
buyers run around to probe the circumstances surrounding each piece of sales document while sellers scramble to produce evidence of
its good order. Remember that it is not just any scrap of paper that is under scrutiny but a SPA, the execution and attestation of which a
notary public has intervened.
To what extent, therefore, should an inquiry into a notarized special power of attorney go in order for one to qualify as a buyer for value
in good faith?
We agree with one author who said:
x x x To speak of "notice", as applied to the grantee, is to follow the language of the Statue of Elizabeth. Its proviso protects
the man who purchases "upon good consideration and bona fide * * * not having at the time * * * any manner of notice
or knowledge." The term "notice", however, is really but an approach to the test of good faith, and all modern legislation tends
toward that point.
Thus, some present day statutes (outside of the Uniform Law) may speak of notice, actual and constructive, and define both
terms, but they should be "liberally construed, so as to protect bona fide purchaser for value." They may require the grantee to
have "knowledge" of the debtor's intent, but save for technical purposes of pleading, the term is read in the light of the rules we
are studying. It comes always to a question of the grantee's good faith as distinct from mere negligence. 50
There must, indeed, be more than negligence. There must be a conscious turning away from the subject x x x. As put by the
Supreme Court, the grantee must take the consequences if he "chooses to remain ignorant of what the necessities of
the case require him to know." The search, therefore, is described by the question, did the grantee make a choice
between not knowing and finding out the truth; or were the circumstances such that he was not faced with that
choice? (Emphasis ours)
This means that no automatic correlation exists between the state of forgery of a document and the bad faith of the buyer who relies on
it. A test has to be done whether the buyer had a choice between knowing the forgery and finding it out, or he had no such choice at all.
When the document under scrutiny is a special power of attorney that is duly notarized, we know it to be a public document where the
notarial acknowledgment is prima facie evidence of the fact of its due execution.51 A buyer presented with such a document would have
no choice between knowing and finding out whether a forger lurks beneath the signature on it. The notarial acknowledgment has
removed that choice from him and replaced it with a presumption sanctioned by law that the affiant appeared before the notary public
and acknowledged that he executed the document, understood its import and signed it. In reality, he is deprived of such choice not
because he is incapable of knowing and finding out but because, under our notarial system, he has been given the luxury of merely
relying on the presumption of regularity of a duly notarized SPA. And he cannot be faulted for that because it is precisely that fiction of
regularity which holds together commercial transactions across borders and time.

In sum, all things being equal, a person dealing with a seller who has possession and title to the property but whose capacity to sell is
restricted, qualifies as a buyer in good faith if he proves that he inquired into the title of the seller as well as into the latter's capacity to
sell; and that in his inquiry, he relied on the notarial acknowledgment found in the seller's duly notarized special power of attorney. He
need not prove anything more for it is already the function of the notarial acknowledgment to establish the appearance of the parties to
the document, its due execution and authenticity.52
Note that we expressly made the foregoing rule applicable only under the operative words "duly notarized" and "all things being equal."
Thus, said rule should not apply when there is an apparent flaw afflicting the notarial acknowledgment of the special power of attorney
as would cast doubt on the due execution and authenticity of the document; or when the buyer has actual notice of circumstances
outside the document that would render suspect its genuineness.
In Domingo v. Reed,53 we found that the special power of attorney relied upon by the buyers contained a defective notarial
acknowledgment in that it stated there that only the agent-wife signed the document before the notary public while the principalhusband did not. Such flaw rendered the notarial acknowledgment of no effect and reduced the special power of attorney into a private
document. We declared the buyer who relied on the private special power of attorney a buyer in bad faith.
In Lao v. Villones-Lao,54 and Estacio v. Jaranilla,55 we found that the buyers knew of circumstances extrinsic to the special power of
attorney which put in question the actual execution of said document. In Domingo Lao, the buyer knew that the agent-wife was
estranged from the principal-husband but was living within the same city. In the Estacio case, we found admissions by the buyers that
they knew that at the time of the purported execution of the special power of attorney, the alleged principal was not in the Philippines. In
both cases we held that the buyers were not in good faith, not because we found any outward defect in the notarial acknowledgment of
the special powers of attorney, but because the latter had actual notice of facts that should have put them on deeper inquiry into the
capacity to sell of the seller.
In the present case, petitioners knew that Berlina was in Germany at the time they were buying the property and the SPA relied upon by
petitioners has a defective notarial acknowledgment. The SPA was a mere photocopy56and we are not convinced that there ever was an
original copy of said SPA as it was only this photocopy that was testified to by petitioner Nida Bautista and offered into evidence by her
counsel.57 We emphasize this fact because it was actually this photocopy that was relied upon by petitioners before they entered into
the deed of sale with Pedro. As admitted to by petitioner Nida Bautista, upon inspection of the photocopy of the SPA, they gave Pedro
an advanced payment of Php55,000.00; this signifies that, without further investigation on the SPA, petitioners had agreed to buy the
subject property from Pedro.
But then said photocopy of the SPA contains no notarial seal. A notarial seal is a mark, image or impression on a document which
would indicate that the notary public has officially signed it.58 There being no notarial seal, the signature of the notary public on the
notarial certificate was therefore incomplete. The notarial certificate being deficient, it was as if the notarial acknowledgment was
unsigned. The photocopy of the SPA has no notarial acknowledgment to speak of. It was a mere private document which petitioners
cannot foist as a banner of good faith.
All told, it was not sufficient evidence of good faith that petitioners merely relied on the photocopy of the SPA as this turned out to be a
mere private document. They should have adduced more evidence that they looked beyond it. They did not. Instead, they took no
precautions at all. They verified with Atty. Lucero whether the SPA was authentic but then the latter was not the notary public who
prepared the document. Worse, they purposely failed to inquire who was the notary public who prepared the SPA. Finally, petitioners
conducted the transaction in haste. It took them all but three days or from March 2 to 4, 1988 to enter into the deed of sale,
notwithstanding the restriction on the capacity to sell of Pedro.59 In no way then may petitioners qualify as buyers for value in good faith.
That said, we come to the third issue on whether petitioners may retain the portion of Pedro Silva in the subject property. Certainly not.
It is well-settled that the nullity of the sale of conjugal property contracted by the husband without the marital consent of the wife affects
the entire property, not just the share of the wife.60 We see no reason to deviate from this rule.
WHEREFORE, the petition is hereby DENIED. The Decision dated November 21, 2001 and Resolution dated February 27, 2003 of the
Court of Appeal are AFFIRMED.

RAMIREZ VS RAMIREZ
Petitioner Potenciano Ramirez filed this petition for review on certiorari under Rule 45 of the Rules of Court
against the decision of the Court of Appeals (CA) in CA-G.R. No. 69401.

On October 8, 1996, petitioner filed a complaint against respondent Ma. Cecilia Ramirez before the Regional Trial
Court of Olongapo City (RTC) for annulment of: 1) a Deed of Donation; 2) Waiver of Possessory Rights; and 3) Transfer
Certificates of Title (TCT) Nos. T-5618 and T-5617.[1] Petitioner claimed that respondent caused the execution of the
Deed of Donation and Waiver of Possessory Rights to acquire ownership over the land and improvements then covered
by TCT Nos. T-4575 and T-4576. Using the Deed of Donation, respondent allegedly succeeded in having TCT Nos. T4575 and T-4576 cancelled and TCT Nos. T-5618 and T-5617 issued in her name. Furthermore, petitioner alleged that
with the Waiver of Possessory Rights, respondent was able to cause the Office of the City Assessor to transfer to her
name the tax declarations on the improvements in the land. [2]

The Deed of Donation and Waiver of Possessory Rights were allegedly executed by petitioner and his wife,
Dolores Ramirez, on January 29, 1993 andOctober 24, 1995, respectively. However, the death certificate presented
showed that Dolores died on April 5, 1991 and, consequently, could not have executed the assailed documents.
Petitioner repudiated the other signatures appearing on the two documents that were purportedly his and insisted that
he did not intend to transfer the properties to respondent.

In her Answer, respondent alleged that her father, petitioner, would not have filed the case were it not for the
fact that he remarried despite his age of 84 years. She further claimed that it was her fathers idea to cause the
preparation of the Deed of Donation and Waiver of Possessory Rights to save on expenses for publication and
inheritance taxes.

After trial, the RTC ruled that the signature of Dolores on the Deed of Donation was a forgery while her signature
on the Waiver of Possessory Rights was genuine. It also found petitioners signatures on both documents to be
genuine. It then held petitioner and respondent in pari delicto, as participants to the forgery, and ruled that they must
bear the consequences of their acts without cause of action against each other in accordance with Article 1412 of the
Civil Code. The RTC dismissed the complaint. [3]

Petitioner went to the CA, which held that Doloress signature on the Deed of Donation as well as her alleged
signature appearing in the Waiver of Possessory Rights were forgeries. The petition was denied and the CA likewise
held both parties in pari delicto.[4]

The issue is simple: whether petitioner and respondent are in pari delicto.

As one of the modes of acquiring ownership, donations are governed by Title 3, Book III, of the Civil
Code. Donations inter vivos are additionally governed by the general provisions on obligations and contracts in all that
is not determined by the title governing donations. [5] Hence, the rule on pari delicto under the general provisions of
contracts is applicable to the present case.

The Court agrees with the rulings of the CA and the RTC that petitioner and respondent are
in pari delicto. Nevertheless, both courts erred on the applicable law. Article 1412 of the Civil Code, which they

applied, refers to a situation where the cause of the contract is unlawful or forbidden but does not constitute a
violation of the criminal laws, thus:
ARTICLE 1412. If the act in which the unlawful or forbidden cause consists does not constitute
a criminal offense, the following rules shall be observed:
(1)
When the fault is on the part of both contracting parties, neither may recover what he
has given by virtue of the contract, or demand the performance of the other's undertaking;
(2)
When only one of the contracting parties is at fault, he cannot recover what he has
given by reason of the contract, or ask for the fulfillment of what has been promised him. The other,
who is not at fault, may demand the return of what he has given without any obligation to comply with
his promise.

On the other hand, where the act involved constitutes a criminal offense, the applicable provision is Article
1411:
ARTICLE 1411. When the nullity proceeds from the illegality of the cause or object of the
contract, and the act constitutes a criminal offense, both parties being in pari delicto, they shall have
no action against each other, and both shall be prosecuted. Moreover, the provisions of the Penal
Code relative to the disposal of effects or instruments of a crime shall be applicable to the things or the
price of the contract.
This rule shall be applicable when only one of the parties is guilty; but the innocent one may
claim what he has given, and shall not be bound to comply with his promise.

Petitioner alleged that the signatures of Dolores on the Deed of Donation and on the Waiver
of Possessory Rights are a forgery. Respondent does not deny this allegation. Forging a persons signature corresponds
to the felony of falsification under Section 4, Title IV of the Revised Penal Code. Hence, the act of forging Doloress
signature constitutes a criminal offense under the terms of Article 1411 of the Civil Code.

The Court now proceeds to determine if there is ground to hold the parties in pari delicto under Article 1411 of
the Civil Code. Under this article, it must be shown that the nullity of the contract proceeds from an illegal cause or
object, and the act of executing said contract constitutes a criminal offense. The second requirement has already been
discussed and is found to be present.

On the first element, petitioner claims that the object or cause of the Deed of Donation and of the Waiver
of Possessory Rights is the transferred real properties and that there is nothing illegal about them. He maintains that
the illegality instead stems from the act of forgery which pertains to consent, which is not material to the application of
Article 1411. The argument is untenable. Object and cause are two separate elements of a donation and the illegality
of either element gives rise to the application of the doctrine of pari delicto. Object is the subject matter of the
donation, while cause is the essential reason which moves the parties to enter into the transaction. Petitioner wrongly
asserts that the donated real properties are both the object and cause of the donation. In fact, the donated properties
pertain only to the object. Therefore, while he is correct in stating that the object of the donation is legal, his
argument misses the point insofar as the cause is concerned. The cause which moved the parties to execute the Deed
of Donation and the Waiver of Possessory Rights, the motive behind the forgery, is the desire to evade the payment of

publication expenses and inheritance taxes, which became due upon the death of Dolores. [6] Undeniably, the Deed of
Donation and the Waiver of Possessory Rights were executed for an illegal cause, thus completing all the requisites for
the application of Article 1411.

Both petitioner and respondent are, therefore, in pari delicto. Neither one may expect positive relief from the
courts from their illegal acts and transactions. Consequently, they will be left as they were at the time the case was
filed.WHEREFORE, the petition is DENIED. No pronouncement as to costs.
TEOFILO BAUTISTA, represented by FRANCISCO MUOZ, Attorney-in-Fact, Petitioner, vs.ALEGRIA BAUTISTA, ANGELICA
BAUTISTA, PRISCILLA BAUTISTA, GILBERT BAUTISTA, JIM BAUTISTA, GLENDA BAUTISTA, GUEN BAUTISTA, GELACIO
BAUTISTA, GRACIA BAUTISTA, PEDRO S. TANDOC and CESAR TAMONDONG, Respondents.
During her lifetime, Teodora Rosario was the owner of a 211.80-square meter parcel of land (the property) in Poblacion, San Carlos
City, Pangasinan, covered by Transfer Certificate of Title (TCT) No. 12951. She died intestate on January 19, 1970, leaving behind her
spouse Isidro Bautista (Isidro) and five children, namely: Teofilo Bautista (Teofilo), Alegria Bautista (Alegria), Angelica Bautista
(Angelica), Pacita Bautista (Pacita) and Gil Bautista (Gil).
On April 21, 1981, Isidro and four of his five children Pacita, Gil, Alegria, and Angelica executed a Deed of Extra-Judicial Partition1 of
the property in which Isidro waived his share in favor of his said four children. Teofilo was excluded from the partition.
Alegria and Angelica, who, under the Deed of Extra-Judicial Partition, acquired of the property, sold the same, by Deed of Absolute
Sale dated May 14, 1981, to their sibling Pacita and her common-law husband Pedro Tandoc (Pedro).2
Pacita and Pedro soon obtained tax declarations3 and TCT No. 187774 in their names over 209.85 square meters of the property
including the shares they purchased from Angelica and Alegria.
Pacita, with Pedros conformity, later conveyed via Deed of Absolute Sale5 dated April 13, 1993 of the property in favor of Cesar
Tamondong, Pedros nephew.
On January 24, 1994, herein petitioner Teofilo, represented by his attorney-in-fact Francisco Muoz, filed a Complaint6 against his
siblings Alegria and Angelica, along with Pedro (the common-law husband of his already deceased sister Pacita), Priscilla Bautista (wife
of his already deceased brother Gil), Pricillas children Gilbert, Jim, Glenda, Guen, and Gelacio and Cesar Tamondong before the
Regional Trial Court (RTC) of San Carlos City, for annulment of documents, partition, recovery of ownership, possession and damages.
In his complaint, petitioner claimed that his co-heirs defrauded him of his rightful share of the property and that the deed of sale
executed by Pacita in favor of Cesar Tamondong was fictitious as it was impossible for her to have executed the same in Manila, she
being already seriously ill at the time.7
In their Answer,8 the defendants-herein respondents sisters Alegria and Angelica, who were joined therein by their co-defendantsrespondents Priscilla, Gilbert, Jim, Glenda, Guen, Gelacio, and Gracia, claimed that it was Pacita who caused the execution of the
Deed of Extra-Judicial Partition and because they trusted Pacita, they signed the document without scrutinizing it; and that they learned
about the contents of the partition only upon Teofilos filing of the Complaint.
By way of cross-claim9 against Pedro and Cesar Tamondong, the answering defendants-respondents claimed that a few weeks after
the partition, Pacita approached Angelica and Alegria to borrow their share in the property on her representation that it would be used
as security for a business loan; and that agreeing to accommodate Pacita, Angelica and Alegria signed a document which Pacita
prepared which turned out to be the deed of absolute sale in Pacitas favor.
In their Answer with Counterclaim,10 Pedro and Cesar Tamondong claimed that they were buyers in good faith.11In any event, they
contended that prescription had set in, and that the complaint was a mere rehash of a previous complaint for falsification of public
document which had been dismissed by the prosecutors office.12
By Decision13 of June 24, 1999, Branch 57 of the RTC of San Carlos City rendered judgment in favor of Teofilo, disposing as follows:

WHEREFORE, in view of the foregoing, judgment is hereby rendered:

1) Declaring as null and void and of no force and effect the following documents:
a) Deed of Extra-Judicial Partition dated April 21, 1981;
b) Deed of Absolute Sale [d]ated May 14, 1981;
c) Transfer Certificate of Title No. 18777;
d) Tax Declaration Nos. 59941, 45999, and 46006;
e) Deed of Absolute Sale dated April 13, 1993;
2) Ordering the partition of the land in question among the compulsory heirs of the late Spouses Isidro Bautista and Teodora
Rosario
3) Ordering defendants Cesar Tamondong and Pedro Tandoc to vacate the premises.
No pronouncement[s] as to cost.14 (Underscoring supplied)
On appeal by Pedro and Cesar Tamondong, the Court of Appeals, by Decision15 of February 21, 2003, reversed and set aside the trial
courts decision and dismissed Teofilos complaint on the ground of prescription.16 His Motion for Reconsideration17 having been
denied,18 Teofilo filed the present Petition for Review on Certiorari.19
The petition is impressed with merit.
The Court of Appeals, in holding that prescription had set in, reasoned:
Unquestionably, the Deed of Extra-judicial Partition is invalid insofar as it affects the legitimate share pertaining to the defendantappellee in the property in question.1avvphi1 There can be no question that the Deed of Extra-judicial Partition was fraudulently
obtained. Hence, an action to set it aside on the ground of fraud could be instituted. Such action for the annulment of the said partition,
however, must be brought within four years from the discovery of the fraud. Significantly, it cannot be denied, either, that by its
registration in the manner provided by law, a transaction may be known actually or constructively.
In the present case, defendant-appellee is deemed to have been constructively notified of the extra-judicial settlement by reason of its
registration and annotation in the certificate of title over the subject lot on December 21, 1981. From the time of its registration,
defendant-appellee had four (4) years or until 21 December 1985, within which to file his objections or to demand the appropriate
settlement of the estate. Unfortunately, defendant-appellee failed to institute the present civil action within said period, having filed the
same only on 17 January 1994 or more than twelve (12) years from the registration of the deed of extra-judicial partition. Hence,
defendant-appellees right to question the deed of extra-judicial partition has prescribed.
Even on the extreme assumption that defendant-appellees complaint in Civil Case No. SC-1797 is an action for reconveyance of a
portion of the property which rightfully belongs to him based upon an implied trust resulting from fraud, said remedy is already barred by
prescription. An action of reconveyance of land based upon an implied or constructive trust prescribes after ten years from the
registration of the deed or from the issuance of the title.
xxxx
The complaint of defendant-appellee was filed only on 17 January 1994, while the deed of extra-judicial partition was registered and
inscribed on Transfer Certificate of Title 12951, on 21 December 1981. Clearly, the complaint was filed twelve (12) years and twentyseven (27) days after the inscription of the deed of extra-judicial partition on TCT 12951. Hence, even if We consider defendantappellees complaint as an action for reconveyance against plaintiff-appellants on the basis of implied trust, we find and so hold that his
remedy for reconveyance has also prescribed.20 (Underscoring supplied)
As gathered from the above-quoted portion of its decision, the Court of Appeals applied the prescriptive periods for annulment on the
ground of fraud and for reconveyance of property under a constructive trust.

The extra-judicial partition executed by Teofilos co-heirs was invalid, however. So Segura v. Segura21 instructs:
x x x The partition in the present case was invalid because it excluded six of the nine heirs who were entitled to equal shares in the
partitioned property. Under the rule, "no extra-judicial settlement shall be binding upon any person who has not participated therein or
had no notice thereof." As the partition was a total nullity and did not affect the excluded heirs, it was not correct for the trial court to
hold that their right to challenge the partition had prescribed after two years x x x22 (Underscoring supplied)
The deed of extra-judicial partition in the case at bar being invalid, the action to have it annulled does not prescribe.23
Since the deed of extra-judicial partition is invalid, it transmitted no rights to Teofilos co-heirs.24 Consequently, the subsequent transfer
by Angelica and Alegria of of the property to Pacita and her husband Pedro, as well as the transfer of of the property to Cesar
Tamondong is invalid, hence, conferring no rights upon the transferees under the principle of nemo dat quod non habet.25
WHEREFORE, the petition is GRANTED. The decision of the court a quo is SET ASIDE and the Decision of the Regional Trial Court of
San Carlos City, Pangasinan, Branch 57 is REINSTATED.
JACOBUS BERNHARD HULST, petitioner, vs.PR BUILDERS, INC., respondent.
Before the Court is a Petition for Review on Certiorari under Rule 45 of the Revised Rules of Court assailing the Decision1 dated
October 30, 2002 of the Court of Appeals (CA) in CA-G.R. SP No. 60981.
The facts:
Jacobus Bernhard Hulst (petitioner) and his spouse Ida Johanna Hulst-Van Ijzeren (Ida), Dutch nationals, entered into a Contract to Sell
with PR Builders, Inc. (respondent), for the purchase of a 210-sq m residential unit in respondent's townhouse project
in Barangay Niyugan, Laurel, Batangas.
When respondent failed to comply with its verbal promise to complete the project by June 1995, the spouses Hulst filed before the
Housing and Land Use Regulatory Board (HLURB) a complaint for rescission of contract with interest, damages and attorney's fees,
docketed as HLRB Case No. IV6-071196-0618.
On April 22, 1997, HLURB Arbiter Ma. Perpetua Y. Aquino (HLURB Arbiter) rendered a Decision2 in favor of spouses Hulst, the
dispositive portion of which reads:
WHEREFORE, premises considered, judgment is hereby rendered in favor of the complainant, rescinding the Contract to Sell
and ordering respondent to:
1) Reimburse complainant the sum of P3,187,500.00, representing the purchase price paid by the complainants to P.R.
Builders, plus interest thereon at the rate of twelve percent (12%) per annum from the time complaint was filed;
2) Pay complainant the sum of P297,000.00 as actual damages;
3) Pay complainant the sum of P100,000.00 by way of moral damages;
4) Pay complainant the sum of P150,000.00 as exemplary damages;
5) P50,000.00 as attorney's fees and for other litigation expenses; and
6) Cost of suit.
SO ORDERED.3
Meanwhile, spouses Hulst divorced. Ida assigned her rights over the purchased property to petitioner.4 From then on, petitioner alone
pursued the case.
On August 21, 1997, the HLURB Arbiter issued a Writ of Execution addressed to the Ex-Officio Sheriff of the Regional Trial Court of
Tanauan, Batangas directing the latter to execute its judgment.5

On April 13, 1998, the Ex-Officio Sheriff proceeded to implement the Writ of Execution. However, upon complaint of respondent with the
CA on a Petition for Certiorari and Prohibition, the levy made by the Sheriff was set aside, requiring the Sheriff to levy first on
respondent's personal properties.6 Sheriff Jaime B. Ozaeta (Sheriff) tried to implement the writ as directed but the writ was returned
unsatisfied.7
On January 26, 1999, upon petitioner's motion, the HLURB Arbiter issued an Alias Writ of Execution.8
On March 23, 1999, the Sheriff levied on respondent's 15 parcels of land covered by 13 Transfer Certificates of Title
(TCT)9 in Barangay Niyugan, Laurel, Batangas.10
In a Notice of Sale dated March 27, 2000, the Sheriff set the public auction of the levied properties on April 28, 2000 at 10:00 a.m..11
Two days before the scheduled public auction or on April 26, 2000, respondent filed an Urgent Motion to Quash Writ of Levy with the
HLURB on the ground that the Sheriff made an overlevy since the aggregate appraised value of the levied properties at P6,500.00 per
sq m is P83,616,000.00, based on the Appraisal Report12 of Henry Hunter Bayne Co., Inc. dated December 11, 1996, which is over and
above the judgment award.13
At 10:15 a.m. of the scheduled auction date of April 28, 2000, respondent's counsel objected to the conduct of the public auction on the
ground that respondent's Urgent Motion to Quash Writ of Levy was pending resolution. Absent any restraining order from the HLURB,
the Sheriff proceeded to sell the 15 parcels of land. Holly Properties Realty Corporation was the winning bidder for all 15 parcels of land
for the total amount ofP5,450,653.33. The sum of P5,313,040.00 was turned over to the petitioner in satisfaction of the judgment award
after deducting the legal fees.14
At 4:15 p.m. of the same day, while the Sheriff was at the HLURB office to remit the legal fees relative to the auction sale and to submit
the Certificates of Sale15 for the signature of HLURB Director Belen G. Ceniza (HLURB Director), he received the Order dated April 28,
2000 issued by the HLURB Arbiter to suspend the proceedings on the matter.16
Four months later, or on August 28, 2000, the HLURB Arbiter and HLURB Director issued an Order setting aside the sheriff's levy on
respondent's real properties,17 reasoning as follows:
While we are not making a ruling that the fair market value of the levied properties is PhP6,500.00 per square meter (or an
aggregate value of PhP83,616,000.00) as indicated in the Hunter Baynes Appraisal Report, we definitely cannot agree with the
position of the Complainants and the Sheriff that the aggregate value of the 12,864.00-square meter levied properties is only
around PhP6,000,000.00. The disparity between the two valuations are [sic] so egregious that the Sheriff should have looked
into the matter first before proceeding with the execution sale of the said properties, especially when the auction sale
proceedings was seasonably objected by Respondent's counsel, Atty. Noel Mingoa. However, instead of resolving first the
objection timely posed by Atty. Mingoa, Sheriff Ozaete totally disregarded the objection raised and, posthaste, issued the
corresponding Certificate of Sale even prior to the payment of the legal fees (pars. 7 & 8, Sheriff's Return).
While we agree with the Complainants that what is material in an execution sale proceeding is the amount for which the
properties were bidded and sold during the public auction and that, mere inadequacy of the price is not a sufficient ground to
annul the sale, the court is justified to intervene where the inadequacy of the price shocks the conscience (Barrozo vs.
Macaraeg, 83 Phil. 378). The difference between PhP83,616,000.00 and Php6,000,000.00 is PhP77,616,000.00 and it
definitely invites our attention to look into the proceedings had especially so when there was only one bidder, the HOLLY
PROPERTIES REALTY CORPORATION represented by Ma, Chandra Cacho (par. 7, Sheriff's Return) and the auction sale
proceedings was timely objected by Respondent's counsel (par. 6, Sheriff's Return) due to the pendency of the Urgent Motion
to Quash the Writ of Levy which was filed prior to the execution sale.
Besides, what is at issue is not the value of the subject properties as determined during the auction sale, but the
determination of the value of the properties levied upon by the Sheriff taking into consideration Section 9(b) of the
1997 Rules of Civil Procedure x x x.
xxxx
It is very clear from the foregoing that, even during levy, the Sheriff has to consider the fair market value of the properties
levied upon to determine whether they are sufficient to satisfy the judgment, and any levy in excess of the judgment award is
void (Buan v. Court of Appeals, 235 SCRA 424).

x x x x18 (Emphasis supplied).

The dispositive portion of the Order reads:
WHEREFORE, the levy on the subject properties made by the Ex-Officio Sheriff of the RTC of Tanauan, Batangas, is hereby
SET ASIDE and the said Sheriff is hereby directed to levy instead Respondent's real properties that are reasonably sufficient
to enforce its final and executory judgment, this time, taking into consideration not only the value of the properties as indicated
in their respective tax declarations, but also all the other determinants at arriving at a fair market value, namely: the cost of
acquisition, the current value of like properties, its actual or potential uses, and in the particular case of lands, their size, shape
or location, and the tax declarations thereon.
SO ORDERED.19
A motion for reconsideration being a prohibited pleading under Section 1(h), Rule IV of the 1996 HLURB Rules and Procedure,
petitioner filed a Petition for Certiorari and Prohibition with the CA on September 27, 2000.
On October 30, 2002, the CA rendered herein assailed Decision20 dismissing the petition. The CA held that petitioner's insistence
that Barrozo v. Macaraeg21 does not apply since said case stated that "when there is a right to redeem inadequacy of price should not
be material" holds no water as what is obtaining in this case is not "mere inadequacy," but an inadequacy that shocks the senses;
that Buan v. Court of Appeals22 properly applies since the questioned levy covered 15 parcels of land posited to have an aggregate
value of P83,616,000.00 which shockingly exceeded the judgment debt of only around P6,000,000.00.
Without filing a motion for reconsideration,23 petitioner took the present recourse on the sole ground that:
THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN AFFIRMING THE ARBITER'S ORDER SETTING ASIDE
THE LEVY MADE BY THE SHERIFF ON THE SUBJECT PROPERTIES.24
Before resolving the question whether the CA erred in affirming the Order of the HLURB setting aside the levy made by the sheriff, it
behooves this Court to address a matter of public and national importance which completely escaped the attention of the HLURB
Arbiter and the CA: petitioner and his wife are foreign nationals who are disqualified under the Constitution from owning real property in
their names.
Section 7 of Article XII of the 1987 Constitution provides:
Sec. 7. Save in cases of hereditary succession, no private lands shall be transferred or conveyed except to individuals,
corporations, or associations qualified to acquire or hold lands of the public domain. (Emphasis supplied).
The capacity to acquire private land is made dependent upon the capacity to acquire or hold lands of the public domain. Private land
may be transferred or conveyed only to individuals or entities "qualified to acquire lands of the public domain." The 1987 Constitution
reserved the right to participate in the disposition, exploitation, development and utilization of lands of the public domain for Filipino
citizens25 or corporations at least 60 percent of the capital of which is owned by Filipinos.26 Aliens, whether individuals or corporations,
have been disqualified from acquiring public lands; hence, they have also been disqualified from acquiring private lands.27
Since petitioner and his wife, being Dutch nationals, are proscribed under the Constitution from acquiring and owning real property, it is
unequivocal that the Contract to Sell entered into by petitioner together with his wife and respondent is void. Under Article 1409 (1) and
(7) of the Civil Code, all contracts whose cause, object or purpose is contrary to law or public policy and those expressly prohibited or
declared void by law are inexistent and void from the beginning. Article 1410 of the same Code provides that the action or defense for
the declaration of the inexistence of a contract does not prescribe. A void contract is equivalent to nothing; it produces no civil effect.28It
does not create, modify or extinguish a juridical relation.29
Generally, parties to a void agreement cannot expect the aid of the law; the courts leave them as they are, because they are deemed in
pari delicto or "in equal fault."30 In pari delicto is "a universal doctrine which holds that no action arises, in equity or at law, from an illegal
contract; no suit can be maintained for its specific performance, or to recover the property agreed to be sold or delivered, or the money
agreed to be paid, or damages for its violation; and where the parties are in pari delicto, no affirmative relief of any kind will be given to
one against the other."31
This rule, however, is subject to exceptions32 that permit the return of that which may have been given under a void contract to: (a) the
innocent party (Arts. 1411-1412, Civil Code);33 (b) the debtor who pays usurious interest (Art. 1413, Civil Code);34 (c) the party

repudiating the void contract before the illegal purpose is accomplished or before damage is caused to a third person and if
public interest is subserved by allowing recovery (Art. 1414, Civil Code);35 (d) the incapacitated party if the interest of justice so
demands (Art. 1415, Civil Code);36 (e) the party for whose protection the prohibition by law is intended if the agreement is not illegal per
se but merely prohibited and if public policy would be enhanced by permitting recovery (Art. 1416, Civil Code);37 and (f) the party for
whose benefit the law has been intended such as in price ceiling laws (Art. 1417, Civil Code)38 and labor laws (Arts. 1418-1419, Civil
Code).39
It is significant to note that the agreement executed by the parties in this case is a Contract to Sell and not a contract of sale. A
distinction between the two is material in the determination of when ownership is deemed to have been transferred to the buyer or
vendee and, ultimately, the resolution of the question on whether the constitutional proscription has been breached.
In a contract of sale, the title passes to the buyer upon the delivery of the thing sold. The vendor has lost and cannot recover the
ownership of the property until and unless the contract of sale is itself resolved and set aside.40 On the other hand, a contract to sell is
akin to a conditional sale where the efficacy or obligatory force of the vendor's obligation to transfer title is subordinated to the
happening of a future and uncertain event, so that if the suspensive condition does not take place, the parties would stand as if the
conditional obligation had never existed.41 In other words, in a contract to sell, the prospective seller agrees to transfer ownership of the
property to the buyer upon the happening of an event, which normally is the full payment of the purchase price. But even upon the
fulfillment of the suspensive condition, ownership does not automatically transfer to the buyer. The prospective seller still has to convey
title to the prospective buyer by executing a contract of absolute sale.42
Since the contract involved here is a Contract to Sell, ownership has not yet transferred to the petitioner when he filed the suit for
rescission. While the intent to circumvent the constitutional proscription on aliens owning real property was evident by virtue of the
execution of the Contract to Sell, such violation of the law did not materialize because petitioner caused the rescission of the contract
before the execution of the final deed transferring ownership.
Thus, exception (c) finds application in this case. Under Article 1414, one who repudiates the agreement and demands his money
before the illegal act has taken place is entitled to recover. Petitioner is therefore entitled to recover what he has paid, although the
basis of his claim for rescission, which was granted by the HLURB, was not the fact that he is not allowed to acquire private land under
the Philippine Constitution. But petitioner is entitled to the recovery only of the amount of P3,187,500.00, representing the purchase
price paid to respondent. No damages may be recovered on the basis of a void contract; being nonexistent, the agreement produces
no juridical tie between the parties involved.43 Further, petitioner is not entitled to actual as well as interests thereon,44 moral and
exemplary damages and attorney's fees.
The Court takes into consideration the fact that the HLURB Decision dated April 22, 1997 has long been final and executory. Nothing is
more settled in the law than that a decision that has acquired finality becomes immutable and unalterable and may no longer be
modified in any respect even if the modification is meant to correct erroneous conclusions of fact or law and whether it was made by the
court that rendered it or by the highest court of the land.45 The only recognized exceptions to the general rule are the correction of
clerical errors, the so-called nunc pro tunc entries which cause no prejudice to any party, void judgments, and whenever circumstances
transpire after the finality of the decision rendering its execution unjust and inequitable.46 None of the exceptions is present in this case.
The HLURB decision cannot be considered a void judgment, as it was rendered by a tribunal with jurisdiction over the subject matter of
the complaint.47
Ineluctably, the HLURB Decision resulted in the unjust enrichment of petitioner at the expense of respondent. Petitioner received more
than what he is entitled to recover under the circumstances.
Article 22 of the Civil Code which embodies the maxim, nemo ex alterius incommode debet lecupletari (no man ought to be made rich
out of another's injury), states:
Art. 22. Every person who through an act of performance by another, or any other means, acquires or comes into possession
of something at the expense of the latter without just or legal ground, shall return the same to him.
The above-quoted article is part of the chapter of the Civil Code on Human Relations, the provisions of which were formulated as basic
principles to be observed for the rightful relationship between human beings and for the stability of the social order; designed to indicate
certain norms that spring from the fountain of good conscience; guides for human conduct that should run as golden threads through
society to the end that law may approach its supreme ideal which is the sway and dominance of justice.48 There is unjust enrichment
when a person unjustly retains a benefit at the loss of another, or when a person retains money or property of another against the
fundamental principles of justice, equity and good conscience.49

A sense of justice and fairness demands that petitioner should not be allowed to benefit from his act of entering into a contract to sell
that violates the constitutional proscription.
This is not a case of equity overruling or supplanting a positive provision of law or judicial rule. Rather, equity is exercised in this case
"as the complement of legal jurisdiction [that] seeks to reach and to complete justice where courts of law, through the inflexibility of their
rules and want of power to adapt their judgments to the special circumstances of cases, are incompetent to do so."50
The purpose of the exercise of equity jurisdiction in this case is to prevent unjust enrichment and to ensure restitution. Equity jurisdiction
aims to do complete justice in cases where a court of law is unable to adapt its judgments to the special circumstances of a case
because of the inflexibility of its statutory or legal jurisdiction.51
The sheriff delivered to petitioner the amount of P5,313,040.00 representing the net proceeds (bidded amount isP5,450,653.33) of the
auction sale after deducting the legal fees in the amount of P137,613.33.52 Petitioner is only entitled to P3,187,500.00, the amount of
the purchase price of the real property paid by petitioner to respondent under the Contract to Sell. Thus, the Court in the exercise of its
equity jurisdiction may validly order petitioner to return the excess amount of P2,125,540.00.
The Court shall now proceed to resolve the single issue raised in the present petition: whether the CA seriously erred in affirming the
HLURB Order setting aside the levy made by the Sheriff on the subject properties.
Petitioner avers that the HLURB Arbiter and Director had no factual basis for pegging the fair market value of the levied properties
at P6,500.00 per sq m or P83,616,000.00; that reliance on the appraisal report was misplaced since the appraisal was based on the
value of land in neighboring developed subdivisions and on the assumption that the residential unit appraised had already been built;
that the Sheriff need not determine the fair market value of the subject properties before levying on the same since what is material is
the amount for which the properties were bidded and sold during the public auction; that the pendency of any motion is not a valid
ground for the Sheriff to suspend the execution proceedings and, by itself, does not have the effect of restraining the Sheriff from
proceeding with the execution.
Respondent, on the other hand, contends that while it is true that the HLURB Arbiter and Director did not categorically state the exact
value of the levied properties, said properties cannot just amount to P6,000,000.00; that the HLURB Arbiter and Director correctly held
that the value indicated in the tax declaration is not the sole determinant of the value of the property.
The petition is impressed with merit.
If the judgment is for money, the sheriff or other authorized officer must execute the same pursuant to the provisions of Section 9, Rule
39 of the Revised Rules of Court, viz:
Sec. 9. Execution of judgments for money, how enforced.
(a) Immediate payment on demand. - The officer shall enforce an execution of a judgment for money by demanding from the
judgment obligor the immediate payment of the full amount stated in the writ of execution and all lawful fees. x x x
(b) Satisfaction by levy. - If the judgment obligor cannot pay all or part of the obligation in cash, certified bank check or other
mode of payment acceptable to the judgment obligee, the officer shall levy upon the properties of the judgment obligor
of every kind and nature whatsoever which may be disposed of for value and not otherwise exempt from execution,
giving the latter the option to immediately choose which property or part thereof may be levied upon, sufficient to satisfy the
judgment. If the judgment obligor does not exercise the option, the officer shall first levy on the personal properties, if any, and
then on the real properties if the personal properties are insufficient to answer for the judgment.
The sheriff shall sell only a sufficient portion of the personal or real property of the judgment obligor which has been
levied upon.
When there is more property of the judgment obligor than is sufficient to satisfy the judgment and lawful fees, he
must sell only so much of the personal or real property as is sufficient to satisfy the judgment and lawful fees.
Real property, stocks, shares, debts, credits, and other personal property, or any interest in either real or personal
property, may be levied upon in like manner and with like effect as under a writ of attachment (Emphasis supplied).53

Thus, under Rule 39, in executing a money judgment against the property of the judgment debtor, the sheriff shall levy on all property
belonging to the judgment debtor as is amply sufficient to satisfy the judgment and costs, and sell the same paying to the judgment
creditor so much of the proceeds as will satisfy the amount of the judgment debt and costs. Any excess in the proceeds shall be
delivered to the judgment debtor unless otherwise directed by the judgment or order of the court.54
Clearly, there are two stages in the execution of money judgments. First, the levy and then the execution sale.
Levy has been defined as the act or acts by which an officer sets apart or appropriates a part or the whole of a judgment debtor's
property for the purpose of satisfying the command of the writ of execution.55 The object of a levy is to take property into the custody of
the law, and thereby render it liable to the lien of the execution, and put it out of the power of the judgment debtor to divert it to any
other use or purpose.56
On the other hand, an execution sale is a sale by a sheriff or other ministerial officer under the authority of a writ of execution of the
levied property of the debtor.57
In the present case, the HLURB Arbiter and Director gravely abused their discretion in setting aside the levy conducted by the Sheriff
for the reason that the auction sale conducted by the sheriff rendered moot and academic the motion to quash the levy. The HLURB
Arbiter lost jurisdiction to act on the motion to quash the levy by virtue of the consummation of the auction sale. Absent any order from
the HLURB suspending the auction sale, the sheriff rightfully proceeded with the auction sale. The winning bidder had already paid the
winning bid. The legal fees had already been remitted to the HLURB. The judgment award had already been turned over to the
judgment creditor. What was left to be done was only the issuance of the corresponding certificates of sale to the winning bidder. In fact,
only the signature of the HLURB Director for that purpose was needed58 a purely ministerial act.
A purely ministerial act or duty is one which an officer or tribunal performs in a given state of facts, in a prescribed manner, in obedience
to the mandate of a legal authority, without regard for or the exercise of his own judgment upon the propriety or impropriety of the act
done. If the law imposes a duty upon a public officer and gives him the right to decide how or when the duty shall be performed, such
duty is discretionary and not ministerial. The duty is ministerial only when the discharge of the same requires neither the exercise of
official discretion nor judgment.59In the present case, all the requirements of auction sale under the Rules have been fully complied with
to warrant the issuance of the corresponding certificates of sale.
And even if the Court should go into the merits of the assailed Order, the petition is meritorious on the following grounds:
Firstly, the reliance of the HLURB Arbiter and Director, as well as the CA, on Barrozo v. Macaraeg60 and Buan v. Court of Appeals61 is
misplaced.
The HLURB and the CA misconstrued the Court's pronouncements in Barrozo. Barrozo involved a judgment debtor who wanted to
repurchase properties sold at execution beyond the one-year redemption period. The statement of the Court in Barrozo, that "only
where such inadequacy shocks the conscience the courts will intervene," is at best a mere obiter dictum. This declaration should be
taken in the context of the other declarations of the Court in Barrozo, to wit:
Another point raised by appellant is that the price paid at the auction sale was so inadequate as to shock the conscience of the
court. Supposing that this issue is open even after the one-year period has expired and after the properties have passed into
the hands of third persons who may have paid a price higher than the auction sale money, the first thing to consider is that the
stipulation contains no statement of the reasonable value of the properties; and although defendant' answer avers that the
assessed value wasP3,960 it also avers that their real market value was P2,000 only. Anyway, mere inadequacy of price
which was the complaint' allegation is not sufficient ground to annul the sale. It is only where such inadequacy
shocks the conscience that the courts will intervene. x x x Another consideration is that the assessed value being P3,960
and the purchase price being in effect P1,864 (P464 sale price plusP1,400 mortgage lien which had to be discharged) the
conscience is not shocked upon examining the prices paid in the sales in National Bank v. Gonzales, 45 Phil., 693
and Guerrero v. Guerrero, 57 Phil., 445, sales which were left undisturbed by this Court.
Furthermore, where there is the right to redeem as in this case inadequacy of price should not be material because
the judgment debtor may re-acquire the property or else sell his right to redeem and thus recover any loss he claims
to have suffered by reason of the price obtained at the execution sale.
x x x x (Emphasis supplied).62

In other words, gross inadequacy of price does not nullify an execution sale. In an ordinary sale, for reason of equity, a transaction may
be invalidated on the ground of inadequacy of price, or when such inadequacy shocks one's conscience as to justify the courts to
interfere; such does not follow when the law gives the owner the right to redeem as when a sale is made at public auction, 63 upon the
theory that the lesser the price, the easier it is for the owner to effect redemption.64 When there is a right to redeem, inadequacy of price
should not be material because the judgment debtor may re-acquire the property or else sell his right to redeem and thus recover any
loss he claims to have suffered by reason of the price obtained at the execution sale.65 Thus, respondent stood to gain rather than be
harmed by the low sale value of the auctioned properties because it possesses the right of redemption. More importantly, the subject
matter in Barrozo is the auction sale, not the levy made by the Sheriff.
The Court does not sanction the piecemeal interpretation of a decision. To get the true intent and meaning of a decision, no specific
portion thereof should be isolated and resorted to, but the decision must be considered in its entirety.66
As regards Buan, it is cast under an entirely different factual milieu. It involved the levy on two parcels of land owned by the judgment
debtor; and the sale at public auction of one was sufficient to fully satisfy the judgment, such that the levy and attempted execution of
the second parcel of land was declared void for being in excess of and beyond the original judgment award granted in favor of the
judgment creditor.
In the present case, the Sheriff complied with the mandate of Section 9, Rule 39 of the Revised Rules of Court, to "sell only a sufficient
portion" of the levied properties "as is sufficient to satisfy the judgment and the lawful fees." Each of the 15 levied properties was
successively bidded upon and sold, one after the other until the judgment debt and the lawful fees were fully satisfied. Holly Properties
Realty Corporation successively bidded upon and bought each of the levied properties for the total amount of P5,450,653.33 in full
satisfaction of the judgment award and legal fees.67
Secondly, the Rules of Court do not require that the value of the property levied be exactly the same as the judgment debt; it can be
less or more than the amount of debt. This is the contingency addressed by Section 9, Rule 39 of the Rules of Court. In the levy of
property, the Sheriff does not determine the exact valuation of the levied property. Under Section 9, Rule 39, in conjunction with Section
7, Rule 57 of the Rules of Court, the sheriff is required to do only two specific things to effect a levy upon a realty: (a) file with the
register of deeds a copy of the order of execution, together with the description of the levied property and notice of execution; and (b)
leave with the occupant of the property copy of the same order, description and notice.68 Records do not show that respondent alleged
non-compliance by the Sheriff of said requisites.
Thirdly, in determining what amount of property is sufficient out of which to secure satisfaction of the execution, the Sheriff is left to his
own judgment. He may exercise a reasonable discretion, and must exercise the care which a reasonably prudent person would
exercise under like conditions and circumstances, endeavoring on the one hand to obtain sufficient property to satisfy the purposes of
the writ, and on the other hand not to make an unreasonable and unnecessary levy.69 Because it is impossible to know the precise
quantity of land or other property necessary to satisfy an execution, the Sheriff should be allowed a reasonable margin between the
value of the property levied upon and the amount of the execution; the fact that the Sheriff levies upon a little more than is necessary to
satisfy the execution does not render his actions improper.70 Section 9, Rule 39, provides adequate safeguards against excessive
levying. The Sheriff is mandated to sell so much only of such real property as is sufficient to satisfy the judgment and lawful fees.
In the absence of a restraining order, no error, much less abuse of discretion, can be imputed to the Sheriff in proceeding with the
auction sale despite the pending motion to quash the levy filed by the respondents with the HLURB. It is elementary that sheriffs, as
officers charged with the delicate task of the enforcement and/or implementation of judgments, must, in the absence of a restraining
order, act with considerable dispatch so as not to unduly delay the administration of justice; otherwise, the decisions, orders, or other
processes of the courts of justice and the like would be futile.71 It is not within the jurisdiction of the Sheriff to consider, much less
resolve, respondent's objection to the continuation of the conduct of the auction sale. The Sheriff has no authority, on his own, to
suspend the auction sale. His duty being ministerial, he has no discretion to postpone the conduct of the auction sale.
Finally, one who attacks a levy on the ground of excessiveness carries the burden of sustaining that contention.72In the determination of
whether a levy of execution is excessive, it is proper to take into consideration encumbrances upon the property, as well as the fact that
a forced sale usually results in a sacrifice; that is, the price demanded for the property upon a private sale is not the standard for
determining the excessiveness of the levy.73
Here, the HLURB Arbiter and Director had no sufficient factual basis to determine the value of the levied property. Respondent only
submitted an Appraisal Report, based merely on surmises. The Report was based on the projected value of the townhouse project after
it shall have been fully developed, that is, on the assumption that the residential units appraised had already been built. The Appraiser
in fact made this qualification in its Appraisal Report: "[t]he property subject of this appraisal has not been constructed. The basis of the
appraiser is on the existing model units."74 Since it is undisputed that the townhouse project did not push through, the projected value

did not become a reality. Thus, the appraisal value cannot be equated with the fair market value. The Appraisal Report is not the best
proof to accurately show the value of the levied properties as it is clearly self-serving.
Therefore, the Order dated August 28, 2000 of HLURB Arbiter Aquino and Director Ceniza in HLRB Case No. IV6-071196-0618 which
set aside the sheriff's levy on respondent's real properties, was clearly issued with grave abuse of discretion. The CA erred in affirming
said Order.
WHEREFORE, the instant petition is GRANTED. The Decision dated October 30, 2002 of the Court of Appeals in CA-G.R. SP No.
60981 is REVERSED and SET ASIDE. The Order dated August 28, 2000 of HLURB Arbiter Ma. Perpetua Y. Aquino and Director Belen
G. Ceniza in HLRB Case No. IV6-071196-0618 is declared NULL andVOID. HLURB Arbiter Aquino and Director Ceniza are directed to
issue the corresponding certificates of sale in favor of the winning bidder, Holly Properties Realty Corporation. Petitioner is ordered to
return to respondent the amount of P2,125,540.00, without interest, in excess of the proceeds of the auction sale delivered to petitioner.
After the finality of herein judgment, the amount of P2,125,540.00 shall earn 6% interest until fully paid.
JOAQUIN QUIMPO, SR., substituted by Heirs of Joaquin Quimpo, Sr., petitioners, vs.CONSUELO ABAD VDA. DE BELTRAN,
IRENEO ABAD, DANILO ABAD, MARITES ABAD, ANITA AND HELEN ABAD, respondents.
This Petition for Review on Certiorari assails the July 22, 2003 Decision1 of the Court of Appeals in CA-G.R. CV No. 56187, and the
October 16, 2003 Resolution denying the motion for its reconsideration.
Eustaquia Perfecto-Abad (Eustaquia) was the owner of several parcels of land in Goa, Camarines Sur, described as follows:
Parcel I - Residential land situated at Abucayan, Goa, Camarines Sur covering an area of 684 square-meters;
Parcel II Coconut land situated at Abucayan, Goa, Camarines Sur covering an area of 4.3731 hectares;
Parcel III Residential land situated at San Jose Street, Goa, Camarines Sur covering an area of 1,395 square meters; and
Parcel IV Abaca and coconut land situated at Abucayan, Goa, Camarines Sur covering an area 42.6127 hectares.2
Eustaquia died intestate in 1948 leaving these parcels of land to her grandchild and great grandchildren, namely, Joaquin Quimpo and
respondents Consuelo, Ireneo, Danilo, Marites, Anita and Helen, all surnamed Abad.
In 1966, Joaquin and respondents undertook an oral partition of parcel III (San Jose property) and parcel IV. Half of the properties was
given to Joaquin and the other half to the respondents. However, no document of partition was executed, because Joaquin refused to
execute a deed. Consuelo and Ireneo occupied their respective shares in the San Jose property, and installed several tenants over
their share in parcel IV. Joaquin, on the other hand, became the administrator of the remaining undivided properties and of the shares
of respondents Danilo, Marites, Anita and Helen, who were still minors at that time.
In 1989, Danilo, Marites, Anita and Helen wanted to take possession of the portions allotted to them, but Joaquin prevented them from
occupying the same. Joaquin also refused to heed respondents demand for partition of parcels I and II, prompting respondents to file a
complaint for judicial partition and/or recovery of possession with accounting and damages with the Regional Trial Court (RTC) of
Camarines Sur.3
Joaquin denied the material allegations in the complaint, and averred, as his special and affirmative defenses, lack of cause of action
and prescription. He asserted absolute ownership over parcels III and IV, claiming that he purchased these lands from Eustaquia in
1946, evidenced by deeds of sale executed on August 23, 1946 and December 2, 1946. He, likewise, claimed continuous, peaceful and
adverse possession of these lots since 1946, and alleged that Consuelos occupation of the portion of the San Jose property was by
mere tolerance.4
During the pendency of the case, Joaquin died. Accordingly, he was substituted by his wife, Estela Tena-Quimpo and his children,
namely, Jose, Adelia, Joaquin, Anita, Angelita, Amelia, Arlene, Joy and Aleli, all surnamed Quimpo (the Quimpos).
On December 12, 1996, the RTC rendered a Decision5 in favor of respondents, declaring them as co-owners of all the properties left by
Eustaquia. It rejected Joaquins claim of absolute ownership over parcels III and IV, and declared void the purported deeds of sale
executed by Eustaquia for lack of consideration and consent. The court found that at the time of the execution of these deeds, Joaquin
was not gainfully employed and had no known source of income, which shows that the deeds of sale state a false and fictitious

consideration. Likewise, Eustaquia could not have possibly given her consent to the sale because she was already 91 years old at that
time. The RTC also sustained the oral partition among the heirs in 1966. According to the trial court, the possession and occupation of
land by respondents Consuelo and Ireneo, and Joaquins acquiescence for 23 years, furnish sufficient evidence that there was actual
partition of the properties. It held that Joaquin and his heirs are now estopped from claiming ownership over the entire San Jose
property as well as over parcel IV.
The RTC disposed, thus:
WHEREFORE, decision is hereby rendered in favor of the plaintiffs Consuelo Vda. de Beltran, Ireneo Abad, Marites Abad,
Danilo Abad, Anita Abad and Helen Abad and against defendant Joaquin Quimpo, substituted by the latters wife Estela Tena
and their children, Amparo, Jose, Amelia, Joaquin Jr., Adelia, Arlene, Anita, Joy, Angelita and Aleli, all surnamed Quimpo, as
follows:
1. Ordering the above-named substituted defendants, and the plaintiffs to execute their written agreement of partition
with respect to parcel Nos. III and IV more particularly described in paragraph 7 of the complaint, and for them to
execute an agreement of partition with respect to parcel Nos. I and II, both parcels are more particularly described in
paragraph 7 of the complaint;
2. Declaring the plaintiffs Danilo Abad, Marites Abad, Anita Abad and Helen Abad the owner of six (6) hectares a
portion included in parcel No. IV also described in paragraph 7 of the complaint, and therefore, entitled to its
possession and ordering the said substituted defendants to deliver that portion to them as their share thereto;
3. Ordering the above-named substituted defendants to pay plaintiffs the sum of Six Thousand Pesos (P6,000.00),
Philippine Currency, as reasonable attorneys fees and the sum of One Thousand Pesos (P1,000.00) also of
Philippine Currency, as litigation expenses and for the said defendants to pay the costs.
The counterclaim, not being proved, the same is hereby ordered dismissed.
SO ORDERED.6
On appeal, the CA affirmed the RTC ruling. Sustaining the RTC, the CA declared that it was plausible that Eustaquias consent was
vitiated because she was then 91 years old and sickly. It was bolstered by the fact that the deeds of sale only surfaced 43 years after its
alleged execution and 23 years from the time of the oral partition. The CA also rejected petitioners argument that the action was barred
by prescription and laches, explaining that prescription does not run against the heirs so long as the heirs, for whose benefit
prescription is invoked, have not expressly or impliedly repudiated the co-ownership. The CA found no repudiation on Joaquins part. It,
therefore, concluded that respondents action could not be barred by prescription or laches.
The Quimpos, thus, filed the instant petition for review on certiorari imputing the following errors to the CA:
1) THE HONORABLE COURT OF APPEALS ERRED IN RULING THAT PETITIONERS DID NOT ACQUIRE OWNERSHIP
OVER [THE] SUBJECT PARCELS OF LAND BY WAY OF DEEDS OF ABSOLUTE SALE EXECUTED IN THEIR FAVOR;
2) THE HONORABLE COURT OF APPEALS ERRED IN RULING THAT CO-OWNERSHIP EXISTS AMONG PETITIONERS
AND RESPONDENTS OVER THE SUBJECT PARCELS OF LAND;
3) THE HONORABLE COURT OF APPEALS ERRED IN RULING THAT RESPONDENTS HAVE PROVEN THEIR FILIATION
TO THE ORIGINAL OWNER OF THE SUBJECT PARCELS OF LAND BY MERE SCANT EVIDENCE;
4) THE HONORABLE COURT OF APPEALS ERRED IN NOT RULING THAT LACHES HAS TIMEBARRED THE
RESPONDENTS FROM ASSAILING THE ABSOLUTE OWNERSHIP OF PETITIONERS OVER THE SUBJECT PARCELS OF
LAND; AND
5) THE HONORABLE COURT OF APPEALS ERRED IN RULING THAT RESPONDENTS ARE ENTITLED TO ATTORNEYS
FEES.7
The Quimpos insist on the validity of the deeds of sale between Joaquin and Eustaquia. They assail the probative value and weight
given by the RTC and the CA in favor of the respondents pieces of evidence while refusing to give credence or value to the documents

they presented. Specifically, they contend that the notarized deeds of sale and the tax declarations should have adequately established
Joaquins ownership of parcels III and IV.
The contention has no merit. Well-entrenched is the rule that the Supreme Courts role in a petition under Rule 45 is limited to reviewing
or reversing errors of law allegedly committed by the appellate court. Factual findings of the trial court, especially when affirmed by the
Court of Appeals, are conclusive on the parties. Since such findings are generally not reviewable, this Court is not duty-bound to
analyze and weigh all over again the evidence already considered in the proceedings below, unless the factual findings complained of
are devoid of support from the evidence on record or the assailed judgment is based on a misapprehension of facts.8
Petitioners fail to convince us that the CA committed reversible error in affirming the trial court and in giving no weight to the pieces of
evidence they presented.
The stated consideration for the sale are P5,000.00 and P6,000.00, respectively, an amount which was so difficult to raise in the year
1946. Respondents established that at the time of the purported sale Joaquin Quimpo was not gainfully employed. He was studying in
Manila and Eustaquia was the one supporting him; that when Eustaquia died two (2) years later, Joaquin was not able to continue his
studies. The Quimpos failed to override this. Except for the incredible and unpersuasive testimony of Joaquins daughter, Adelia
Magsino, no other testimonial or documentary evidence was offered to prove that Joaquin was duly employed and had the financial
capacity to buy the subject properties in 1946.
In Rongavilla v. Court of Appeals,9 reiterated in Cruz v. Bancom Finance Corp,10 we held that a deed of sale, in which the stated
consideration has not been, in fact, paid is a false contract; that it is void ab initio. Furthermore,Ocejo v. Flores,11 ruled that a contract of
purchase and sale is null and void and produces no effect whatsoever where it appears that the same is without cause or consideration
which should have been the motive thereof, or the purchase price which appears thereon as paid but which in fact has never been paid
by the purchaser to the vendor.
Likewise, both the trial court and the CA found that Eustaquia was 91 years old, weak and senile, at the time the deeds of sale were
executed. In other words, she was already mentally incapacitated by then, and could no longer be expected to give her consent to the
sale. The RTC and CA cannot, therefore, be faulted for not giving credence to the deeds of sale in favor of Joaquin.
Petitioners also presented Tax Declaration Nos. 3650,12 3708,13 and 365914 to substantiate Joaquins claim of absolute dominion over
parcels III and IV. But we note that these tax declarations are all in the name of Eustaquia Perfecto-Abad. These documents, therefore,
do not support their claim of absolute dominion since 1946, but enervate it instead. Besides, the fact that the disputed property may
have been declared for taxation purposes in the name of Joaquin Quimpo does not necessarily prove ownership for it is well settled
that a tax declaration or tax receipts are not conclusive evidence of ownership.15 The CA, therefore, correctly found this proof
inadequate to establish Joaquins claim of absolute dominion.
For forty-three (43) years, Consuelo and Ireneo occupied their portions of the San Jose property and significantly, Joaquin never
disturbed their possession. They also installed tenants in parcel IV, and Joaquin did not prevent them from doing so, nor did he assert
his ownership over the same. These unerringly point to the fact that there was indeed an oral partition of parcels III and IV.
In Maglucot-aw v. Maglucot,16 we held, viz.:
[P]artition may be inferred from circumstances sufficiently strong to support the presumption. Thus, after a long possession in
severalty, a deed of partition may be presumed. It has been held that recitals in deeds, possession and occupation of land,
improvements made thereon for a long series of years, and acquiescence for 60 years, furnish sufficient evidence that there
was an actual partition of land either by deed or by proceedings in the probate court, which had been lost and were not
recorded.
Furthermore, in Hernandez v. Andal,17 we explained that:
On general principle, independent and in spite of the statute of frauds, courts of equity have enforced oral partition when it has
been completely or partly performed.
Regardless of whether a parol partition or agreement to partition is valid and enforceable at law, equity will in proper
cases, where the parol partition has actually been consummated by the taking of possession in severalty and the
exercise of ownership by the parties of the respective portions set off to each, recognize and enforce such parol
partition and the rights of the parties thereunder. Thus, it has been held or stated in a number of cases involving an
oral partition under which the parties went into possession, exercised acts of ownership, or otherwise partly

performed the partition agreement, that equity will confirm such partition and in a proper case decree title in
accordance with the possession in severalty.
In numerous cases it has been held or stated that parol partitions may be sustained on the ground ofestoppel of the
parties to assert the rights of a tenant in common as to parts of land divided by parol partition as to which possession
in severalty was taken and acts of individual ownership were exercised. And a court of equity will recognize the
agreement and decree it to be valid and effectual for the purpose of concluding the right of the parties as between
each other to hold their respective parts in severalty.
A parol partition may also be sustained on the ground that the parties thereto have acquiesced in and ratified the
partition by taking possession in severalty, exercising acts of ownership with respect thereto, or otherwise recognizing
the existence of the partition.
A number of cases have specifically applied the doctrine of part performance, or have stated that a part performance
is necessary, to take a parol partition out of the operation of the statute of frauds. It has been held that where there
was a partition in fact between tenants in common, and a part performance, a court of equity would have regard to
and enforce such partition agreed to by the parties.
The CA, therefore, committed no reversible error in sustaining the oral partition over parcels III and IV and in invalidating the deeds of
sale between Eustaquia and Joaquin.
Similarly, we affirm the CA ruling that respondents are co-owners of the subject four (4) parcels of land, having inherited the same from
a common ancestor Eustaquia Perfecto-Abad. Petitioners assertion that respondents failed to prove their relationship to the late
Eustaquia deserves scant consideration.
During the pre-trial, Joaquin Quimpo admitted that:
Eustaquia Perfecto Abad and Diego Abad had two (2) children by the names of Leon Abad and Joaquin Abad; that Leon Abad
has three (3) children namely: Anastacia, Wilfredo and Consuelo, all surnamed Abad; that Joaquin Abad has only one (1) child,
a daughter by the name of Amparo; that Wilfredo has four (4) children, namely, Danilo, Helen, Marites and Anita; Amparo has
one child, son Joaquin Quimpo, x x x 18
Consuelo was the grandchild of Eustaquia, while respondents Danilo, Helen, Marites, Anita and also Joaquin Quimpo were Eustaquias
great grandchildren. As such, respondents can rightfully ask for the confirmation of the oral partition over parcels III and IV, and the
partition of parcels I and II. Jurisprudence is replete with rulings that any co-owner may demand at any time the partition of the common
property unless a co-owner has repudiated the co-ownership. This action for partition does not prescribe and is not subject to laches.19
Finally, petitioners challenge the attorneys fees in favor of respondents.
The grant of attorneys fees depends on the circumstances of each case and lies within the discretion of the court. It may be awarded
when a party is compelled to litigate or to incur expenses to protect its interest by reason of an unjustified act by the other,20 as in this
case.
In fine, we find no reversible error in the assailed rulings of the Court of Appeals.WHEREFORE, the petition is DENIED. The Decision
and Resolution of the Court of Appeals in CA-G.R. CV No. 56187, are AFFIRMED.
SPOUSES ONESIFORO and ROSARIO ALINAS, petitioner, vs.SPOUSES VICTOR and ELENA ALINAS, respondents.
This resolves the Petition for Review on Certiorari under Rule 45 of the Rules of Court, praying that the Decision1of the Court of
Appeals (CA) dated September 25, 2002, and the CA Resolution2 dated March 31, 2003, denying petitioners' motion for
reconsideration, be reversed and set aside.
The factual antecedents of the case are as follows.
Spouses Onesiforo and Rosario Alinas (petitioners) separated sometime in 1982, with Rosario moving to Pagadian City and Onesiforo
moving to Manila. They left behind two lots identified as Lot 896-B-9-A with a bodega standing on it and Lot 896-B-9-B with petitioners'
house. These two lots are the subject of the present petition.

Petitioner Onesiforo Alinas (Onesiforo) and respondent Victor Alinas (Victor) are brothers. Petitioners allege that they entrusted their
properties to Victor and Elena Alinas (respondent spouses) with the agreement that any income from rentals of the properties should be
remitted to the Social Security System (SSS) and to the Rural Bank of Oroquieta City (RBO), as such rentals were believed sufficient to
pay off petitioners' loans with said institutions. Lot 896-B-9-A with the bodega was mortgaged as security for the loan obtained from the
RBO, while Lot 896-B-9-B with the house was mortgaged to the SSS. Onesiforo alleges that he left blank papers with his signature on
them to facilitate the administration of said properties.
Sometime in 1993, petitioners discovered that their two lots were already titled in the name of respondent spouses.
Records show that after Lot 896-B-9-A was extra-judicially foreclosed, Transfer Certificate of Title (TCT) No. T-11853 3 covering said
property was issued in the name of mortgagee RBO on November 13, 1987. On May 2, 1988, the duly authorized representative of
RBO executed a Deed of Installment Sale of Bank's Acquired Assets4conveying Lot 896-B-9-A to respondent spouses. RBO's TCT over
Lot 896-B-9-A was then cancelled and on February 22, 1989, TCT No. T-126645 covering said lot was issued in the name of respondent
spouses.
Lot 896-B-9-B was also foreclosed by the SSS and on November 17, 1986, the Ex-Oficio City Sheriff of Ozamis City issued a Certificate
of Sale6 over said property in favor of the SSS. However, pursuant to a Special Power of Attorney7 signed by Onesiforo in favor of
Victor, dated March 10, 1989, the latter was able to redeem, on the same date, Lot 896-B-9-B from the SSS for the sum of P111,110.09.
On June 19, 1989, a Certificate of Redemption8 was issued by the SSS.
Onesiforo's signature also appears in an Absolute Deed of Sale9 likewise dated March 10, 1989, selling Lot 896-B-9-B to respondent
spouses. The records also show a notarized document dated March 10, 1989 and captioned Agreement10 whereby petitioner Onesiforo
acknowledged that his brother Victor used his own money to redeem Lot 896-B-9-B from the SSS and, thus, Victor became the owner
of said lot. In the same Agreeement, petitioner Onesiforo waived whatever rights, claims, and interests he or his heirs, successors and
assigns have or may have over the subject property. On March 15, 1993, by virtue of said documents, TCT No. 1739411 covering Lot
896-B-9-B was issued in the name of respondent spouses.
On June 25, 1993, petitioners filed with the Regional Trial Court (RTC) of Ozamis City a complaint for recovery of possession and
ownership of their conjugal properties with damages against respondent spouses.
After trial, the RTC rendered its Decision dated November 13, 1995, finding that:
1. Plaintiffs have not proven that they entrusted defendant spouses with the care and administration of their properties. It was
Valeria Alinas, their mother, whom plaintiff Onesiforo requested/directed to "take care of everything and sell everything" and
Teresita Nuez, his elder sister, to whom he left a "verbal" authority to administer his properties.
2. Plaintiffs have not proven their allegation that defendant spouses agreed to pay rent of P1,500.00 a month for the
occupancy of plaintiffs' house, which rent was to be remitted to the SSS and Rural Bank of Oroquieta to pay off plaintiffs' loan
and to keep for plaintiffs the rest of the rent after the loans would have been paid in full.
3. Plaintiff Onesiforo's allegation that defendants concocted deeds of conveyances (Exh. "M", "N" & "O") with the use of his
signatures in blank is not worthy of credence. Why his family would conspire to rob him at a time when life had struck him with
a cruel blow in the form of a failed marriage that sent him plummeting to the depths of despair is not explained and likewise
defies comprehension. That his signatures appear exactly on the spot where they ought to be in Exhs. "M", "N" & "O" belies
his pretension that he affixed them on blank paper only for the purpose of facilitating his sister Terry's acts of administration.
This Court, therefore, does not find that defendant spouses had schemed to obtain title to plaintiffs' properties or enriched
themselves at the expense of plaintiffs.12
with the following dispositive portion:
WHEREFORE, this Court renders judgment:
1. declaring [respondents] Victor Jr. and Elena Alinas owners of Lot 896-B-9-A with the building (bodega) standing
thereon and affirming the validity of their acquisition thereof from the Rural Bank of Oroquieta, Inc.;

2. declaring [petitioners] Onesiforo and Rosario Alinas owners of Lot 896-B-9-B with the house standing thereon,
plaintiff Onesiforo's sale thereof to defendants spouses without the consent of his wife being null and void and
defendant spouses' redemption thereof from the SSS not having conferred its ownership to them;
3. ordering [petitioners] to reimburse [respondents] Victor Jr. and Elena Alinas the redemption sum ofP111,100.09,
paid by them to the SSS (without interest as it shall be compensated with the rental value of the house they occupy)
within sixty days from the finality of this judgment;
4. ordering [respondents] to vacate the subject house within thirty days from receiving the reimbursement mentioned
in No. 3 above; and
5. reinstating TCT No. T-7248 in the name of [petitioners] and cancelling TCT No. T-17394 in the name of
[respondents].
No costs.
SO ORDERED.13
Only respondent spouses appealed to the CA assailing the RTC's ruling that they acquired Lot 896-B-9-B from the SSS by mere
redemption and not by purchase. They likewise question the reimbursement by petitioners of the redemption price without interest.
On September 25, 2002, the CA promulgated herein assailed Decision, the dispositive portion of which reads:
WHEREFORE, in view of the foregoing disquisitions, the first paragraph of the dispositive portion of the assailed decision is
AFFIRMED and the rest MODIFIED as follows:
1. declaring [respondents] Victor Jr. and Elena Alinas owners of Lot 896-B-9-A with the building (bodega) standing
thereon and affirming the validity of their acquisition thereof from the Rural Bank of Oroquieta, Inc.;
2. declaring Onesiforo's sale of Lot 896-B-9-B together with the house standing thereon to [respondents] in so far as
Rosario Alinas, his wife's share of one half thereof is concerned, of no force and effect;
3. ordering [petitioners] Rosario Alinas to reimburse [respondents] the redemption amount ofP55,550.00 with interest
of 12% per annum from the time of redemption until fully paid.
4. ordering the [respondents] to convey and transfer one half portion of Lot 896-B-9-B unto Rosario Alinas, which
comprises her share on the property simultaneous to the tender of the above redemption price, both to be
accomplished within sixty (60) days from finality of this judgment.
5. in the event of failure of [respondents] to execute the acts as specified above, [petitioner] Rosario Alinas may
proceed against them under Section 10, Rule 39 of the 1997 Rules of Civil Procedure.
6. on the other hand, failure of [petitioner] Rosario Alinas to reimburse the redemption price within sixty (60) days
from the finality of this decision will render the conveyance and sale of her share by her husband to [respondents], of
full force and effect.
No costs.
SO ORDERED.14
Petitioners moved for reconsideration but the CA denied said motion per herein assailed Resolution dated March 31, 2003.
Hence, the present petition on the following grounds:
The Honorable Court of Appeals abuse [sic] its discretion in disregarding the testimony of the Register of Deeds, Atty. Nerio
Nuez, who swore that the signatures appearing on various TCTs were not his own;

The Honorable Court of Appeals manifestly abuse [sic] its discretion in declaring the respondents to be the owners of Lot 896B-9-A with the building (bodega) standing thereon when they merely redeemed the property and are therefore mere trustees of
the real owners of the property;
It was pure speculation and conjecture and surmise for the Honorable Court of Appeals to impose an obligation to reimburse
upon petitioners without ordering respondents to account for the rentals of the properties from the time they occupied the
same up to the present time and thereafter credit one against the other whichever is higher.15
The first issue raised by petitioners deserves scant consideration. By assailing the authenticity of the Registrar of Deeds' signature on
the certificates of title, they are, in effect, questioning the validity of the certificates.
Section 48 of Presidential Decree No. 1529 provides, thus:
Sec. 48. Certificate not subject to collateral attack. - A certificate of title shall not be subject to collateral attack. It cannot be
altered, modified, or cancelled except in a direct proceeding in accordance with law.
Pursuant to said provision, the Court ruled in De Pedro v. Romasan Development Corporation16 that:
It has been held that a certificate of title, once registered, should not thereafter be impugned, altered, changed, modified,
enlarged or diminished except in a direct proceeding permitted by law. x x x
The action of the petitioners against the respondents, based on the material allegations of the complaint,is one for
recovery of possession of the subject property and damages. However, such action is not a direct, but a collateral
attack of TCT No. 236044.17 (Emphasis supplied)
As in De Pedro, the complaint filed by herein petitioners with the RTC is also one for recovery of possession and ownership. Verily, the
present case is merely a collateral attack on TCT No. T-17394, which is not allowed by law and jurisprudence.
With regard to the second issue, petitioners claim that it was the CA which declared respondent spouses owners of Lot 896-B-9-A (with
bodega) is misleading. It was the RTC which ruled that respondent spouses are the owners of Lot 896-B-9-A and, therefore, since only
the respondent spouses appealed to the CA, the issue of ownership over Lot 896-B-9-A is not raised before the appellate court.
Necessarily, the CA merely reiterated in the dispositive portion of its decision the RTC's ruling on respondent spouses' ownership of Lot
896-B-9-A.
It is a basic principle that no modification of judgment or affirmative relief can be granted to a party who did not appeal.18 Hence, not
having appealed from the RTC Decision, petitioners can no longer seek the reversal or modification of the trial court's ruling that
respondent spouses had acquired ownership of Lot 896-B-9-A by virtue of the sale of the lot to them by RBO.
Furthermore, the CA did not commit any reversible error in affirming the trial court's factual findings as the records are indeed bereft of
proof to support the petitioners allegations that they left the care and administration of their properties to respondent spouses; and that
there is an agreement between petitioners and respondent spouses regarding remittance to the SSS and the RBO of rental income
from their properties. Thus, respondent spouses may not be held responsible for the non-payment of the loan with RBO and the
eventual foreclosure of petitioners' Lot 896-B-9-A.
Petitioners do not assail the validity of the foreclosure of said lot but argues that respondent spouses merely redeemed the property
from RBO. This is, however, belied by evidence on record which shows that ownership over the lot had duly passed on to the RBO, as
shown by TCT No. T-11853 registered in its name; and subsequently, RBO sold the lot with its improvements to respondent spouses.
Needless to stress, the sale was made after the redemption period had lapsed. The trial court, therefore, correctly held that respondent
spouses acquired their title over the lot from RBO and definitely not from petitioners.
However, with regard to Lot 896-B-9-B (with house), the Court finds it patently erroneous for the CA to have applied the principle of
equity in sustaining the validity of the sale of Onesiforos one-half share in the subject property to respondent spouses.
Although petitioners were married before the enactment of the Family Code on August 3, 1988, the sale in question occurred in 1989.
Thus, their property relations are governed by Chapter IV on Conjugal Partnership of Gains of the Family Code.
The CA ruling completely deviated from the clear dictate of Article 124 of the Family Code which provides:

Art. 124. The administration and enjoyment of the conjugal partnership property shall belong to both spouses jointly. x x x
In the event that one spouse is incapacitated or otherwise unable to participate in the administration of the conjugal properties,
the other spouse may assume sole powers of administration. These powers do not include the powers of disposition or
encumbrance which must have the authority of the court or the written consent of the other spouse. In the absence of such
authority or consent the disposition or encumbrance shall be void . x x x (Underscoring and emphasis supplied)
In Homeowners Savings & Loan Bank v. Dailo,19 the Court categorically stated thus:
In Guiang v. Court of Appeals, it was held that the sale of a conjugal property requires the consent of both the husband and
wife. In applying Article 124 of the Family Code, this Court declared that the absence of the consent of one renders the
entire sale null and void, including the portion of the conjugal property pertaining to the husband who contracted the
sale. x x x
xxxx
x x x By express provision of Article 124 of the Family Code, in the absence of (court) authority or written consent of the other
spouse, any disposition or encumbrance of the conjugal property shall be void. 20
Thus, pursuant to Article 124 of the Family Code and jurisprudence, the sale of petitioners' conjugal property made by petitioner
Onesiforo alone is void in its entirety.
It is true that in a number of cases, this Court abstained from applying the literal import of a particular provision of law if doing so would
lead to unjust, unfair and absurd results.21
In the present case, the Court does not see how applying Article 124 of the Family Code would lead to injustice or absurdity. It should
be noted that respondent spouses were well aware that Lot 896-B-9-B is a conjugal property of petitioners. They also knew that the
disposition being made by Onesiforo is without the consent of his wife, as they knew that petitioners had separated, and, the sale
documents do not bear the signature of petitioner Rosario. The fact that Onesiforo had to execute two documents, namely: the Absolute
Deed of Sale dated March 10, 1989 and a notarized Agreement likewise dated March 10, 1989, reveals that they had full knowledge of
the severe infirmities of the sale. As held in Heirs of Aguilar-Reyes v. Spouses Mijares,22 "a purchaser cannot close his eyes to facts
which should put a reasonable man on his guard and still claim he acted in good faith."23 Such being the case, no injustice is being
foisted on respondent spouses as they risked transacting with Onesiforo alone despite their knowledge that the subject property is a
conjugal property.
Verily, the sale of Lot 896-B-9-B to respondent spouses is entirely null and void.
However, in consonance with the salutary principle of non-enrichment at anothers expense, the Court agrees with the CA that
petitioners should reimburse respondent spouses the redemption price paid for Lot 896-B-9-B in the amount of P111,110.09 with legal
interest from the time of filing of the complaint.
In Heirs of Aguilar-Reyes, the husband's sale of conjugal property without the consent of the wife was annulled but the spouses were
ordered to refund the purchase price to the buyers, it was ruled that an interest of 12% per annum on the purchase price to be refunded
is not proper. The Court elucidated as follows:
The trial court, however, erred in imposing 12% interest per annum on the amount due the respondents. In Eastern Shipping
Lines, Inc. v. Court of Appeals, it was held that interest on obligations not constituting a loan or forbearance of money is six
percent (6%) annually. If the purchase price could be established with certainty at the time of the filing of the complaint, the six
percent (6%) interest should be computed from the date the complaint was filed until finality of the decision. In Lui vs.
Loy, involving a suit for reconveyance and annulment of title filed by the first buyer against the seller and the second buyer, the
Court, ruling in favor of the first buyer and annulling the second sale, ordered the seller to refund to the second buyer (who
was not a purchaser in good faith) the purchase price of the lots. It was held therein that the 6% interest should be computed
from the date of the filing of the complaint by the first buyer. After the judgment becomes final and executory until the
obligation is satisfied, the amount due shall earn interest at 12% per year, the interim period being deemed equivalent to a
forbearance of credit.
Accordingly, the amount of P110,000.00 due the respondent spouses which could be determined with certainty at the
time of the filing of the complaint shall earn 6% interest per annum from June 4, 1986 until the finality of this decision.

If the adjudged principal and the interest (or any part thereof) remain unpaid thereafter, the interest rate shall be
twelve percent (12%) per annum computed from the time the judgment becomes final and executory until it is fully
satisfied.24
Thus, herein petitioners should reimburse respondent spouses the redemption price plus interest at the rate of 6% per annum from the
date of filing of the complaint, and after the judgment becomes final and executory, the amount due shall earn 12% interest per
annum until the obligation is satisfied.
Petitioners pray that said redemption price and interest be offset or compensated against the rentals for the house and bodega.
The records show that the testimonial evidence for rentals was only with regard to the bodega.25 However, the Court has affirmed the
ruling of the RTC that Lot 896-B-9-A with the bodega had been validly purchased by respondent spouses from the RBO and a TCT over
said property was issued in the name of respondent spouses on February 22, 1989. Testimonial evidence shows that the bodega was
leased out by respondent spouses only beginning January of 1990 when ownership had been transferred to them.26 Hence, any rentals
earned from the lease of said bodega rightfully belongs to respondent spouses and cannot be offset against petitioners' obligation to
respondent spouses.
As to rentals for Lot 896-B-9-B and the house thereon, respondent Victor testified that they never agreed to rent the house and when
they finally took over the same, it was practically inhabitable and so they even incurred expenses to repair the house. 27 There is
absolutely no proof of the rental value for the house, considering the condition it was in; as well as for the lot respondent spouses are
occupying.
Respondent spouses, having knowledge of the flaw in their mode of acquisition, are deemed to be possessors in bad faith under Article
52628 of the Civil Code. However, they have a right to be refunded for necessary expenses on the property as provided under Article
54629 of the same Code. Unfortunately, there is no credible proof to support respondent spouses' allegation that they spent more
than P400,000.00 to repair and make the house habitable.
Set-off or compensation is governed by Article 1279 of the Civil Code which provides, thus:
Article 1279. In order that compensation may be proper, it is necessary:
1. That each one of the obligors be bound principally, and that he be at the time a principal creditor of the other;
2. That both debts consist in a sum of money, or if the things due are consumable, they be of the same kind, and also of the
same quality if the latter has been stated;
3. That the two debts be due;
4. That they be liquidated and demandable;
5. That over neither of them there be any retention or controversy, commenced by third persons and communicated in due
time to the debtor.
Therefore, under paragraph 4 of the foregoing provision, compensation or set-off is allowed only if the debts of both parties against
each other is already liquidated and demandable. To liquidate means "to make the amount of indebtedness or an obligation clear and
settled in the form of money."30 In the present case, no definite amounts for rentals nor for expenses for repairs on subject house has
been determined. Thus, in the absence of evidence upon which to base the amount of rentals, no compensation or set-off can take
place between petitioners and respondent spouses.
While the courts are empowered to set an amount as reasonable compensation to the owners for the use of their property, this Court
cannot set such amount based on mere surmises and conjecture
WHEREFORE, the petition is PARTLY GRANTED. The Decision of the Court of Appeals dated September 25, 2002 is MODIFIED to
read as follows:
1. declaring respondent spouses Victor Jr. and Elena Alinas owners of Lot 896-B-9-A with the building (bodega) standing thereon and
affirming the validity of their acquisition thereof from the Rural Bank of Oroquieta, Inc.;

2. declaring Onesiforo's sale of Lot 896-B-9-B together with the house standing thereon to respondent spouses null and
void ab initio;
3. ordering petitioners to jointly and severally reimburse respondent spouses the redemption amount ofP111,110.09 with interest at
6% per annum from the date of filing of the complaint, until finality of this decision. After this decision becomes final, interest
at the rate of 12% per annum on the principal and interest (or any part thereof) shall be imposed until full payment;
4. ordering the respondent spouses to convey and transfer Lot 896-B-9-B to petitioners and vacate said premises within fifteen (15)
days from finality of this Decision; and
5. in the event of failure of respondent spouses to execute the acts as specified above, petitioners may proceed against them under
Section 10, Rule 39 of the 1997 Rules of Civil Procedure.No costs.
JESUS CAMPOS and ROSEMARIE CAMPOS-BAUTISTA, Petitioners, vs.NENITA BUENVENIDA PASTRANA, ROGER
BUENVENIDA, SONIA BUENVENIDA,TEDDY BUENVENIDA, VICTOR BUENVENIDA, HARRY BUENVENIDA, MILDRED
BUENVENIDA, MANOLITO BUENVENIDA and DAISY BUENVENIDA, represented by their Attorney-in-Fact CARLITO
BUENVENIDA,*** Respondents.
It sometimes happens that a creditor, after securing a judgment against a debtor, finds that the debtor had transferred all his properties
to another leaving nothing to satisfy the obligation to the creditor. In this petition for review on certiorari,1 petitioners ask us to set aside
the November 23, 2005 Decision2 of the Court of Appeals (CA) in CA-G.R. CV No. 68731 declaring as null the sale of several parcels of
land made by their parents in their favor, for being absolutely simulated transactions. Also assailed is the November 21, 2006
Resolution.3
Factual antecedents
This is the third case between essentially the same parties and the second among those cases to reach this Court on appeal, spanning
a period of close to three decades.
The first case arose from the refusal of Carlito Campos (Carlito), the father of herein petitioners, to surrender the possession of a
fishpond he leased from respondents mother, Salvacion Buenvenida, despite the expiration of their contract of lease in 1980. Alleging
that he was an agricultural lessee, Carlito filed an agrarian case docketed as CAR Case No. 1196 (Agrarian Case) against his lessor.
After trial, the Regional Trial Court of Roxas City, Branch 14, found that Carlito was not an agricultural tenant. He then appealed to the
CA and subsequently to this Court, but was unsuccessful.
While the appeal in the Agrarian Case was pending before the CA, herein respondents filed the second case, Civil Case No. V-5417,
against Carlito for Recovery of Possession and Damages with Preliminary Mandatory Injunction (Possession Case) involving the same
fishpond subject of the earlier agrarian case. On November 27, 1990, the Regional Trial Court of Roxas City, Branch 16, rendered a
Decision4 finding Carlito to have retained possession of the fishpond notwithstanding the expiration of the contract of lease and ordering
him to pay rentals, the value of the produce and damages to the herein respondents. The Decision became final and executory and a
Writ of Execution5 was issued on February 7, 1995. Subsequently, on September 19, 1995, an Alias Writ of Execution6was also issued.
Both were returned unsatisfied as per Sheriffs Return of Service dated November 14, 1995.
During the pendency of the Agrarian Case, as well as prior to the filing of the Possession Case, Carlito was the registered owner of the
following properties:
1. Residential Lots 3715-A and 3715-B-2 covered by Transfer Certificates of Title Nos. 182057 and 18417,8respectively and
2. Agricultural Lots 850 and 852 covered by Original Certificates of Title
Nos. P-91999 and P-9200,10 respectively.
When the respondents were about to levy these properties to satisfy the judgment in the Possession Case, they discovered that
spouses Carlito and Margarita Campos transferred these lots to their children Rosemarie and Jesus Campos, herein petitioners, by
virtue of Deeds of Absolute Sale dated October 18, 198511 and November 2, 1988.12 Specifically, spouses Campos sold the residential
lots (Lots 3715-A and 3715-B-2), with a total area of 1,393 square meters, to their daughter Rosemarie for P7,000.00 and the
agricultural lots (Lots 850 and 852) with a combined area of 7,972 square meters, to their son Jesus for P5,600.00.
Proceedings before the Regional Trial Court
Civil Case No. V-7028
On February 18, 1997, respondents instituted the third case, Civil Case No.

V-7028 (Nullity of Sale Case),13 subject of this appeal, seeking to declare as null the aforesaid deeds of sale and the transfer certificates
of title issued pursuant thereto. They alleged that the contracts of sale between spouses Campos and petitioners were simulated for the
sole purpose of evading the levy of the abovementioned properties in satisfaction of a money judgment that might be rendered in the
Possession Case.
In their Answer with Counterclaim,14 spouses Campos and petitioners averred that Rosemarie and Jesus Campos acquired the lots in
question in good faith and for value because they were sold to them before they had any notice of the claims or interests of other
persons thereover.
On August 21, 2000, the Regional Trial Court of Roxas City, Branch 14, dismissed the complaint.15 It held that
In the Resolution of this case the issue is whether or not the spouses Carlito Campos and Margarita Arduo, sensing that an unfavorable
judgment might be rendered against them in Civil Case No. V-5417 filed in Branch 16 on July 17, 1987 by the same plaintiffs for
Recovery of Possession and Damages with Preliminary Mandatory Injunction, in evident bad faith and wanton disregard of the law,
maliciously and fraudulently, executed a purely fictitious and simulated sale of their properties thereby ceding and transferring their
ownership thereto to their children Rosemarie Campos-Bautista and Jesus Campos.
A close scrutiny of the defendants documentary exhibits and testimonies showed that as early as 1981 defendant Jesus Campos was
already leasing a fishpond in Brgy. Majanlud, Sapi-an, Capiz from Victorino Jumpay and defendant Rosemarie Campos was engaged in
the sari-sari store business starting 1985 so that they were able to purchase the properties of their parents out of their profits derived
therefrom.
The Deed of Absolute Sale (Exh. "6" & "10") executed by the spouses Carlito Campos and Margarita Arduo to Rosemarie Campos and
Jesus Campos were dated October 17, 1985 and November 2, 1988, respectively.
It can readily [be] gleaned from the records that Civil Case No. V-5417 was filed on July 7, 1987 and was decided on November 27,
1990. Furthermore, the alias writ of execution was issued only on July 5, 1995 for which the Sheriffs Return of Service was returned
unsatisfied on November 14, 1995.
WHEREFORE, the complaint of the plaintiffs against the defendants is DISMISSED. Their claim for damages is likewise DISMISSED.
The counter-claim of the defendants must also be DISMISSED as the case was not filed in evident bad faith and with malicious intent.
SO ORDERED.16
Proceedings before the Court of Appeals
Upon review of the evidence presented, the CA found that the conveyances were made in 1990, and not in 1985 or 1988, or just before
their actual registration with the Registry of Deeds, evidently to avoid the properties from being attached or levied upon by the
respondents. The CA likewise noted that the zonal value of the subject properties were much higher than the value for which they were
actually sold. The appellate court further observed that despite the sales, spouses Campos retained possession of the properties in
question. Finally, the CA took note of the fact that the writ of execution and alias writ issued in the Possession Case remained
unsatisfied as the lower court could not find any other property owned by the spouses Campos that could be levied upon to satisfy its
judgment, except the parcels of land subject of the assailed transactions.
On these bases, the CA ruled that the assailed contracts of sale were indeed absolutely simulated transactions and declared the same
to be void ab initio. The dispositive portion of the Decision of the CA reads:
WHEREFORE, the instant appeal is GRANTED. The decision of the Regional Trial Court of Roxas City, Branch 14, dated August 21,
2000 in Civil Case No. V-7028 is REVERSED and SET ASIDE. Let a copy of this Decision be furnished to the Register of Deeds of the
Province of Capiz who is hereby ordered to cancel Transfer Certificates of Title Nos. T-26092 and T-26093 in the name of Rosemarie
Campos, and Transfer Certificates of Title Nos. T-23248 and 23249 in the name of Jesus Campos and restore said titles in the name of
the previous owner, Carlito Campos.
SO ORDERED.
Only petitioners moved for reconsideration17 but the CA denied the same.18
Issues
Hence, this petition for review on certiorari raising the following errors:
I.

THE COURT OF APPEALS COMMITTED AN ERROR OF LAW IN APPLYING ARTICLE 1409, CIVIL CODE, INSTEAD OF ARTIcLE
1381 (3), CIVIL CODE, AND IN SPECULATING THAT A CAUSE OF ACTION OF SUPPOSED SALE IN FRAUD OF CREDITORS
EXISTS DESPITE NON-EXHAUSTION OF REMEDIES TO ENFORCE THE JUDGMENT IN CIVIL CASE NO. V-5417.
II.
THE COURT OF APPEALS COMMITTED AN ERROR OF LAW OVERLOOKING THAT THE CAUSE OF ACTION HAD PRESCRIBED,
THE COMPLAINT HAVING BEEN FILED AFTER SEVEN (7) YEARS OR ONLY ON 14 OCTOBER 1997, FROM THE TIME THE
TITLES WERE ISSUED IN 1990.
III.
THE COURT OF APPEALS ERRONEOUSLY ANCHORED ITS IMPUGNED JUDGMENT ON MISAPPREHENSION OF FACTS THAT
THE SALE WERE ANTEDATED, HENCE SIMULATED DESPITE GLARING ABSENCE OF EVIDENCE IN SUPPORT THEREOF.
IV.
THE COURT OF APPEALS COMMITTED GRAVE ABUSE OF DISCRETION IN CASTING ASIDE OVERWHELMING EVIDENCE
DULY APPRECIATED BY THE TRIAL COURT THAT PETITIONERS ARE BUYERS IN GOOD FAITH AND FOR VALUE, WHO
EXERCISED DOMINION OVER THE SUBJECT LOTS, WHICH IF PROPERLY CONSIDERED, SHALL WARRANT THE SINGULAR
CONCLUSION THAT THE SALE AND TRANSFER OF TITLES ARE VALID.19
Petitioners arguments
Petitioners assail the application of Article 140920 of the Civil Code on void
contracts as against Article 1381(3)21 of the Civil Code on rescissible contracts in fraud of creditors, considering that the questioned
conveyances executed by the spouses Campos to their children were allegedly done to evade the enforcement of the writ of execution
in the Possession Case.22 In addition, petitioners allege that the CA misappreciated the facts of this case when it found that the
questioned transactions were tainted with badges of fraud.23
Respondents arguments
Respondents argue that the application of Article 1409 on void contracts was a natural and logical consequence of the CAs finding that
subject deeds of sale were absolutely simulated and fictitious, consistent with the nature of the respondents cause of action which was
for declaration of nullity of said contracts and the transfer certificates of titles issued pursuant thereto. 24 Respondents also stressed that
the CAs finding is conclusive upon us and that only questions of law may be raised in a petition for review on certiorari under Rule 45 of
the Rules of Court.25
Our Ruling
The petition lacks merit.
Well-settled is the rule that this Court is not a trier of facts. When supported by substantial evidence, the findings of fact of the CA are
conclusive and binding, and are not reviewable by this Court, unless the case falls under any of the following recognized exceptions:
(1) When the conclusion is a finding grounded entirely on speculation, surmises and conjectures;
(2) When the inference made is manifestly mistaken, absurd or impossible;
(3) Where there is a grave abuse of discretion;
(4) When the judgment is based on a misappreciation of facts;
(5) When the findings of fact are conflicting;
(6) When the CA in making its findings, went beyond the issues of the case and the same is contrary to the admissions of both
appellant and appellee;
(7) When the findings are contrary to those of the trial court;

(8) When the findings of fact are conclusions without citation of specific evidence on which they are based;
(9) When the facts set forth in the petition as well as in the petitioners main and reply briefs are not disputed by the
respondents; and
(10) When the findings of fact of the CA are premised on the supposed absence of evidence and contradicted by the evidence
on record.
None of these exceptions is present in this case. We find that the Decision of the CA is supported by the required quantum of evidence.
The subject Deeds of Absolute Sale executed by the Spouses Campos to their children (herein petitioners) are absolutely simulated
and fictitious.
The CA correctly held that the assailed Deeds of Absolute Sale were executed when the Possession Case was already pending,
evidently to avoid the properties subject thereof from being attached or levied upon by the respondents. While the sales in question
transpired on October 18, 1985 and November 2, 1988, as reflected on the Deeds of Absolute Sale, the same were registered with the
Registry of Deeds only on October 25, 1990 and September 25, 1990.
We also agree with the findings of the CA that petitioners failed to explain the reasons for the delay in the registration of the sale,
leading the appellate court to conclude that the conveyances were made only in 1990 or sometime just before their actual registration
and that the corresponding Deeds of Absolute Sale were antedated. This conclusion is bolstered by the fact that the supposed notary
public before whom the deeds of sale were acknowledged had no valid notarial commission at the time of the notarization of said
documents.26
Indeed, the Deeds of Absolute Sale were executed for the purpose of putting the lots in question beyond the reach of creditors. First,
the Deeds of Absolute Sale were registered exactly one month apart from each other and about another one month from the time of the
promulgation of the judgment in the Possession Case. The Deeds of Absolute Sale were antedated and that the same were executed
when the Possession Case was already pending.
Second, there was a wide disparity in the alleged consideration specified in the Deeds of Absolute Sale and the actual zonal valuation
of the subject properties as per the BIR Certification, as follows:
Consideration
specified in Deed of
Absolute Sale

Market Value as
per Tax
Declaration

Computed Zonal
Valuation (BIR
Certification)

Residential Lots: From

Spouses Campos to
daughter, Rosemarie
Campos

P 7,000.00

P 83,580.0027

P 417,900.0028

Agricultural Lots: From

Spouses Campos to
son,
Jesus Campos

P 5,600.00

P 25,000.1929

P 39,860.0030

As correctly noted by the CA, the appraised value of the properties subject of this controversy may be lower at the time of the sale in
1990 but it could not go lower than P7,000.00 and P5,600.00. We likewise find the considerations involved in the assailed contracts of
sale to be inadequate considering the market values presented in the tax declaration and in the BIR zonal valuation.
Third, we cannot believe that the buyer of the 1,393-square meter31 residential land could not recall the exact area of the two lots she
purchased. In her cross-examination, petitioner Rosemarie Campos stated:
Q: Can you tell us the total area of those two (2) lots that they sold to you?
A: It consists of One Thousand (1,000) Square Meters.32
xxxx
Q: By the way, for how much did you buy this [piece] of land consisting of 1,000 square meters?
A: Seven Thousand Pesos (P7,000.00) Your Honor.33

Fourth, it appears on record that the money judgment in the Possession Case has not been discharged with. Per Sheriffs Service
Return dated November 14, 1995, the Alias Writ of Execution and Sheriffs Demand for Payment dated September 19, 1995 remain
unsatisfied.
Finally, spouses Campos continue to be in actual possession of the properties in question. Respondents have established through the
unrebutted testimony of Rolando Azoro that spouses Campos have their house within Lot 3715-A and Lot 3715-B-2 and that they reside
there together with their daughter Rosemarie.34 In addition, spouses Campos continued to cultivate the rice lands which they
purportedly sold to their son Jesus.35 Meantime, Jesus, the supposed new owner of said rice lands, has relocated to Bulacan36 where
he worked as a security guard.37 In other words, despite the transfer of the said properties to their children, the latter have not exercised
complete dominion over the same. Neither have the petitioners shown if their parents are paying rent for the use of the properties which
they already sold to their children.
In Suntay v. Court of Appeals,38 we held that:
The failure of the late Rafael to take exclusive possession of the property allegedly sold to him is a clear badge of fraud. The fact that,
notwithstanding the title transfer, Federico remained in actual possession, cultivation and occupation of the disputed lot from the time
the deed of sale was executed until the present, is a circumstance which is unmistakably added proof of the fictitiousness of the said
transfer, the same being contrary to the principle of ownership.
While in Spouses Santiago v. Court of Appeals,39 we held that "the failure of petitioners to take exclusive possession of the property
allegedly sold to them, or in the alternative, to collect rentals from the alleged vendor x x x is contrary to the principle of ownership and
a clear badge of simulation that renders the whole transaction void and without force and effect, pursuant to Article 1409 of the Civil
Code".
The issuance of transfer certificates of title to petitioners did not vest upon them ownership of the properties.
The fact that petitioners were able to secure titles in their names did not operate to vest upon them ownership over the subject
properties. That act has never been recognized as a mode of acquiring ownership.40 The Torrens system does not create or vest title. It
only confirms and records title already existing and vested. It does not protect a usurper from the true owner. It cannot be a shield for
the commission of fraud.41
In the instant case, petitioner Rosemarie Campos supposedly bought the residential properties in 1985 but did not have the assailed
Deed of Absolute Sale registered with the proper Registry of Deeds for more than five years, or until a month before the promulgation of
the judgment in the Possession Case. Hence, we affirm the finding of the CA that the purported deed was antedated. Moreover, her
failure to take exclusive possession of the property allegedly sold, or, alternatively, to collect rentals is contrary to the principle of
ownership and a clear badge of simulation. On these grounds, we cannot hold that Rosemarie Campos was an innocent buyer for
value.
Likewise, petitioner Jesus Campos supposedly bought the rice land from his parents in 1988 but did not have the assailed Deed of
Absolute Sale registered with the proper Registry of Deeds for more than two years, or until two months before the promulgation of the
judgment in the Possession Case. Thus, we likewise affirm the finding of the CA that the purported deed was antedated. In addition, on
cross, he confirmed that he had knowledge of the prior pending cases when he supposedly purchased his parents rice land stating
that:
Q: You never knew that your parents and the plaintiffs in this case have cases in the past prior to this case now, is that right?
A: Yes, sir. I knew about it.
Q: And in spite of your knowledge, that there was a pending case between your parents and the plaintiffs here, you still
purchased these two (2) lots 850 and 852 from your parents, is that what you are telling us?
A: All I knew was that, that case was a different case from the subject matter then [sic] the lot now in question. 42
On these findings of fact, petitioner Jesus Campos cannot be considered as an innocent buyer and for value.
Since both the transferees, Rosemarie and Jesus Campos, are not innocent purchasers for value, the subsequent registration procured
by the presentation of the void deeds of absolute sale is likewise null and void.
The action for the declaration of the inexistence of the assailed Deeds of Absolute Sale does not prescribe.
Petitioners argue that respondents cause of action had prescribed when they filed the Nullity of the Sale Case on October 14, 1997, or
seven years after the registration of the questioned sales in 1990.1avvphi1

We cannot agree. As discussed above, the sale of subject properties to herein petitioners are null and void. And under Article 1410 of
the Civil Code, an action or defense for the declaration of the inexistence of a contract is imprescriptible. Hence, petitioners contention
that respondents cause of action is already barred by prescription is without legal basis.
Since the assailed Deeds of Absolute Sale are null and void, the Civil Code provisions on rescission have no application in the instant
case.
Finally, petitioners argument that the applicable law in this case is Article 1381(3) of the Civil Code on rescissible contracts and not
Article 1409 on void contracts is not a question of first impression. This issue had already been settled several decades ago when we
held that "an action to rescind is founded upon and presupposes the existence of a contract".43 A contract which is null and void is no
contract at all and hence could not be the subject of rescission.44
In the instant case, we have declared the Deeds of Absolute Sale to be fictitious and inexistent for being absolutely simulated contracts.
It is true that the CA cited instances that may constitute badges of fraud under Article 1387 of the Civil Code on rescissible contracts.
But there is nothing else in the appealed decision to indicate that rescission was contemplated under the said provision of the Civil
Code. The aforementioned badges must have been considered merely as grounds for holding that the sale is fictitious. Consequently,
we find that the CA properly applied the governing law over the matter under consideration which is Article 1409 of the Civil Code on
void or inexistent contracts.
WHEREFORE, the petition is DENIED. Costs against petitioners.
AURORA L. TECSON, SPOUSES JOSE L. TECSON and LEONILA TECSON, Petitioners,
vs.MINERVA, MARIA, FRANCISCO, AGUSTINA, JOSE, ROMUALDO, ELIZABETH and VICTOR, all surnamed FAUSTO, and
ISABEL VDA. DE FAUSTO, Respondents.
For Review1 are the Decision2 dated 12 December 2006 and Resolution3 dated 2 October 2007 of the Court of Appeals in CA-G.R. CV
No. 70303. In the said decision and resolution, the Court of Appeals reversed the Regional Trial Court (RTC), Branch 19 of Pagadian
City4 thereby allowing the respondents to recover four hundred fifty-seven (457) square meters of land from Transfer Certificate of Title
(TCT) No. T-4,342 in the name of petitioner Jose Tecson. The decretal portion of the decision of the appellate court reads:5
WHEREFORE, in the light of the foregoing, the appeal is hereby GRANTED. The assailed decision is hereby REVERSED and SET
ASIDE.
Defendant-appellee Atty. Jose L. Tecson is entitled only to 507 square meters under Lot 2189-A; he is DIRECTED to reconvey, within
thirty (30) days from notice, the excess of 457 square meters thereof to herein plaintiff-appellants in order to restore the latters original
area of 508 square meters under Lot 2189-B pursuant to Exhibit "B" (Subdivision Plan Psd-09-06-000110 dated March 25, 1974) and
Exhibit "C" (the Agreement of Partition dated April 15, 1974). Failure on his part to reconvey the aforesaid 457 square meters within the
period prescribed thereto, the Clerk of Court of RTC, Branch 19, Pagadian City, is hereby directed to cause the transfer of the same in
favor of herein plaintiff-appellants pursuant to Section 10, Rule 39 of the Rules of Court.
Defendant-appellees Aurora L. Tecson and Atty. Jose L. Tecson are directed to pay, jointly and severally, plaintiff-appellants the
following:
a.) P200,000 as moral damages;
b.) P10,000 as exemplary damages; and
c.) P20,000 as attorneys fees.
The antecedents of this case are as follows:
Sometime in 1945, Atty. Agustin Fausto (Atty. Fausto) acquired in co-ownership with his sister, Waldetrudes Fausto-Nadela
(Waldetrudes), Lot 2189a one thousand fifteen (1,015) square meter parcel of land situated at Jose Zulueta Street corner National
Highway in Pagadian City, Zamboanga Del Sur.6 In 1953, Atty. Fausto constructed his house on a portion of the said lot.7
In 1970, following a cadastral proceeding, Atty. Fausto and Waldetrudes were recognized as co-owners of Lot 2189. Consequently,
Original Certificate of Title (OCT) No. 7348 covering Lot 2189 was issued in the names of:
[I]n undivided shares, Waldetrudes Fausto, married to Leon Nadela; and Agustin Fausto, married to Isabel Pareja, x x x.

Not long after, Atty. Fausto and Waldetrudes decided to partition Lot 2189. For this purpose, Waldetrudes hired one Engr. Ernesto D.
Aguilar (Engr. Aguilar) to prepare a subdivision plan for the lot. On 25 March 1974, Engr. Aguilar prepared subdivision plan Psd-09-06000110 (First Plan)9 that divided Lot 2189 into two (2) lots, i.e., Lot 2189-A with an area of 507 square meters, and Lot 2189-B with an
area of 508 square meters. An illustration of the First Plan shows this division:
On 6 April 1974, the Regional Director of the Bureau of Lands approved the First Plan.
On 15 April 1974, Atty. Fausto and Waldetrudes formalized their decision to subdivide Lot 2189 by executing an Agreement of
Partition.10 Under this agreement (First Partition Agreement), Waldetrudes was to be given absolute ownership over Lot 2189-A, while
Atty. Fausto was to be conferred separate dominion over Lot 2189-B.11 The First Partition Agreement, however, was never registered
with the Register of Deeds.
On 14 March 1975, Atty. Fausto died. He was survived by herein respondents, who are his wife12 and children.13
On 7 July 1977, however, Waldetrudes entered into a Contract to Sell14 with herein petitioner Aurora L. Tecson (Aurora). In it,
Waldetrudes undertook to sell, among others, her "ideal share" in Lot 2189 to Aurora upon full payment of the purchase price.15
On 28 July 1977, Engr. Aguilar prepared a second subdivision plan (Second Plan)16 for Lot 2189. The Second Plan, designated as Psd268803, drastically altered the division of Lot 2189 under the First Plan.17 It introduced the following changes:
1. Waldetrudes Lot 2189-A with an area of 507 square meters under the First Plan was now Lot 2189-B with an increased
area of 964 square meters.18
2. Atty. Faustos Lot 2189-B with an area of 508 square meters under the First Plan was now Lot 2189-A with a decreased
area of 51 square meters.19
An illustration of the Second Plan will further highlight these changes:
The Second Plan was approved by the Land Registration Commission on 12 August 1977.
On 28 September 1977, a second partition over Lot 2189 (Second Partition Agreement)20 was executed between the respondents in
their capacity as heirs of Atty. Fausto on one hand, and Waldetrudes on the other. Presumably with the Second Plan as a new basis,
the agreement named Waldetrudes as the owner of Lot 2189-B while the respondents were allocated Lot 2189-A.
On 8 May 1978, Waldetrudes sold Lot 2189-B, with an area of nine hundred sixty-four (964) square meters, to Aurora.21
Meanwhile, it would seem that the Register of Deeds had refused registration of the Second Partition Agreement in view of the fact that
several of the respondents, namely Jose, Romualdo, Elizabeth and Victor were still minors.22 Hence, a guardianship proceeding was
commenced by respondent Isabel Vda. De Fausto (Isabel)the wife of Atty. Faustoto secure her appointment as the legal guardian
of her minor children in connection with the Second Partition Agreement.23
On 28 July 1978, the guardianship court granted Isabels Petition24 and, on 17 January 1980, issued an Order approving the Second
Partition Agreement.25
On 19 February 1980, the following events transpired:
1. The Second Partition Agreement was finally registered with the Register of Deeds. As a consequence, OCT No. 734
covering Lot 2189 was cancelled and, in lieu thereof, were issued the following titles:
a. Transfer Certificate of Title (TCT) No. T-4,335 covering Lot 2189-A in the name of Atty. Fausto; and
b. TCT No. T-4,336 for Lot 2189-B in the name of Waldetrudes.26
2. The sale of Lot 2189-B in favor of Aurora was likewise registered with the Register of Deeds.27Accordingly, the newly issued
TCT No. T-4,336 was immediately cancelled and replaced by TCT No. T-4,33828 in the name of Aurora.

3. Aurora executed a Deed of Absolute Sale,29 conveying Lot 2189-B to her brother, herein petitioner Atty. Jose L. Tecson (Atty.
Tecson).
4. On the very same day, the above deed was registered with the Register of Deeds.30
On 20 February 1980, TCT No. T-4,338 was cancelled. In its place, TCT No. T-4,34231 was issued, this time, in the name of Atty.
Tecson.
Seven (7) years after, or on 28 May 1987, the respondents filed a Complaint32 for the Declaration of Nullity of Documents, Titles,
Reconveyance and Damages against Waldetrudes and the petitioners before the Regional Trial Court (RTC) of Pagadian City. In
essence, the respondents seek the recovery of four hundred fifty-seven (457) square meters of land from TCT No. T-4,342, which they
believe was unlawfully taken from the lawful share of their predecessor-in-interest, Atty. Fausto, in Lot 2189.33
The respondents allege that Atty. Fausto and Waldetrudes are, in actual fact, co-owners in equal share of Lot 2189.34 They insist on the
First Partition Agreement as the only true, correct and binding division of Lot 2189.35Hence, Atty. Fausto is entitled not merely to the
meager fifty-one (51) square meter lot actually given to him under the Second Plan and Second Partition Agreement, but to the five
hundred eight (508) square meters of land allotted for him under the original partition.36
Verily, Waldetrudes could not have sold more than her rightful share of only five hundred seven (507) square meters.37 The
respondents, thus, ask for the nullification of the sale of Lot 2189-B to the petitioners, at least with respect to the excess amounting to
four hundred fifty-seven (457) square meters.38
In the same vein, the respondents impugn the validity and binding effect of the Second Plan and the ensuing Second Partition
Agreement.39 They denounce the said plan and agreement as mere handiworks of respondent Atty. Tecson himself in a fraudulent
scheme to get a lions share of Lot 2189.40 More particularly, the respondents claim that:
1. Atty. Tecson was the one who deceived them into signing the Second Partition Agreement.41 The respondents say that they
were not involved in the preparation of the Second Partition Agreement.42 It was only respondent Atty. Tecson who presented
them with the said agreement and who misleadingly told them that it was required to facilitate the sale of Waldetrudes
share.43 The respondents explain that they believed Atty. Tecson because he was their long-time neighbor, a close family friend
and, not the least, a respected member of the community being a former governor of the province.44
2. The respondents also point out that the Second Partition Agreement did not specify the exact areas allotted for each
component lot, and that they were never furnished with copies of the Second Plan.45
3. The Second Plan, which supposedly supplants the First Plan and divides Lot 2189 into two (2) vastly unequal portions, was
prepared without the respondents knowledge or consent.46 For which reason, the Second Plan could not be binding upon
them.
4. The guardianship proceeding purportedly initiated in the name of respondent Isabel was actually orchestrated and financed
by Atty. Tecson.47 Atty. Tecson was the one who hired Atty. Fausto M. Lingating, his former legal adviser during his term as
governor, to handle the guardianship case for and on behalf of Isabel.48
On 20 October 1988, Waldetrudes, who was originally sued by the respondents as a defendant in the RTC, executed an
affidavit49 expressing her intent to join the respondents in their cause. In the mentioned affidavit, Waldetrudes confirmed the
allegations of the respondents as follows:
xxxx
4. That the truth of the matter is that, my brother the late Agustin Fausto and I are co-owners of a parcel of land covered by
Original Certificate of Title No. 734 of Lot 2189, situated at Gatas District, Pagadian City, containing an area of 1,015 square
meters, more or less, in equal share pro indiviso;
5. That sometimes (sic) in 1974 the late Agustin Fausto and myself agreed to terminate our co-ownership and have the area
surveyed and the same was approved and designated as PSD-09-06-000110, of which we have executed an agreement of
partition on April 15, 1974 apportioning Lot No. 2189-A with an area of 508 square meters in favor of my late brother Agustin
Fausto and Lot No. 2189-B with an area of 507 square meters in my favor;

6. That the aforestated documents were not registered in the Office of the Register of Deeds until the death of my brother
Agustin Fausto on March 14, 1975, however, the papers or documents involving Lot No. 2189 was kept by me;
7. That due to financial problem especially I am already very old and sickly, I thought of selling my portion which is Lot 2189-B
in favor of Jose L. Tecson, however, in the document the vendee appears to be the sister of Jose L. Tecson in the person of
Aurora L. Tecson;
8. That I do not know later on how Jose L. Tecson maneuvered to have the parcel of land again surveyed reducing the area of
my brother to only 51 square meters, when in truth and in fact the portion of my late brother has an area of 508 square meters;
9. That while it is true that I sold Jose L. Tecson my portion of Lot 2189-B but the area sold is only 507 square meters and
there is no intention on my part to sell to Jose L. Tecson more than that area;
10. That several occasion in the past I was made to sign documents by Jose L. Tecson in relation to the portion sold in his
favor, trusting him to be closed (sic) to the family, not knowing later on that he maneuvered to change the area of my portion
from 507 square meters to 964 square meters encroaching the share of my late brother Atty. Agustin Fausto thereby reducing
his area to 51 square meters;
11. That because of the illegal maneuvering which does not reflect to be my true intention in selling my share to Jose L.
Tecson, I am informing the Honorable Court that I am joining as party plaintiff in Civil Case No. 2692 in order that the truth will
come out and justice will prevail.
On 18 August 1992, the trial court ordered Waldetrudes to be dropped as a party-defendant from the case and, instead, be impleaded
therein as a party-plaintiff.50
During the trial, Waldetrudes51 and respondents Romualdo,52 Minerva53 and Isabel54 were able to testify.
In its decision dated 8 December 2000, the RTC dismissed the complaint of the respondents.55 The trial court found no merit in the
position of the respondents and considered the petitioners to be innocent purchasers for value of Lot 2189-B.56 The dispositive portion
of the ruling of the trial court reads:57
WHEREFORE, judgment is hereby rendered dismissing the case, and placing defendants spouses Jose Tecson and Leonila F. Tecson
in physical possession of Lot No. 2189-B, with an area of 964 square meters in accordance with the approved subdivision plan on
August 12, 1977 of the then Land Registration Commission; and ordering the plaintiffs to pay defendants:
a. Moral damages in the amount of P30,000.00;
b. Attorneys fee in the amount of P15,000.00;
c. And the cost of litigation expenses in the amount of P5,000.00.
As earlier mentioned, the Court of Appeals reversed the ruling of the trial court on appeal.58 Hence, the present appeal by the
petitioners.
The primary issue in this appeal is whether the respondents may recover the four hundred fifty-seven (457) square meters of land from
TCT No. T-4,342, registered in the name of petitioner Atty. Tecson.
The petitioners would like this Court to answer in the negative.
The claim of petitioner Atty. Tecson over the entire nine hundred sixty-four (964) square meters of land covered by TCT No. T-4,342 is
intricately linked with the validity of the Second Plan and the Second Partition Agreement. As a perusal of the facts reveal, TCT No. T4,342, along with its precursors TCT Nos. T-4,338 and T-4,336, are but derivates of the division of Lot 2189 fixed by the Second Plan
and the Second Partition Agreement.
Understandably, the petitioners argue in favor of the validity of the Second Plan and the Second Partition Agreement.59 They deny Atty.
Tecsons participation in the preparation of the said instruments.60 The petitioners insist that the Second Plan and the Second Partition
Agreement were voluntary and intelligent deeds of Waldetrudes and the respondents themselves.61

The petitioners also claim that the Second Plan and the Second Partition Agreement present a more accurate reflection of the true
nature of the co-ownership between Atty. Fausto and Waldetrudes. Contrary to what the respondents profess, Waldetrudes and Atty.
Fausto were not actually co-owners in equal share of Lot 2189.62 In truth, the siblings were not even co-owners at all.63
According to the petitioners, Lot 2189 was originally the conjugal property of Waldetrudes and her late husband, Leon Nadela.64 At the
inception, Atty. Fausto was never a co-owner of Lot 2189.65 Suitably, it was only Waldetrudes who initially declared Lot 2189 for taxation
purposes per Tax Declaration No. 6521.66
During the cadastral proceedings in 1970, however, Waldetrudes allowed Lot 2189 to be registered in her name and the name of Atty.
Fausto as co-owners.67 The petitioners claim that Waldetrudes consented to such a registration only because Atty. Fausto had already
constructed his house on a portion of Lot 2189.68 The registered co-ownership between Waldetrudes and Atty. Fausto is, therefore,
based merely on the siblings actual occupancy of Lot 2189.69
The petitioners point out that the interest of Atty. Fausto in Lot 2189 was only limited to the house he constructed thereonwhich, as it
happened, lies evenly on the fifty-one (51) square meter portion eventually assigned to him under the Second Plan and Second
Partition Agreement.70 Hence, the Second Plan and the Second Partition Agreement must be sustained as perfectly valid instruments.
We are not convinced.
Waldetrudes and Atty. Fausto are Co-owners in Equal Share
After reviewing the arguments and evidence presented in this case, We rule that Waldetrudes and Atty. Fausto are, indeed, co-owners
of Lot 2189. Moreover, We hold that the siblings have equal shares in the said lot.
First. The mother title of Lot 2189, OCT No. 734, states in no unclear terms that Waldetrudes and Atty. Fausto were co-owners of the
subject lot. The inscription in the original title for Lot 2189 carries more than sufficient weight to prove the existence of a co-ownership
between Waldetrudes and Atty. Fausto.
Second. Other than the bare assertion of the petitioners, there is absolutely no proof on record that Waldetrudes was the sole beneficial
owner of Lot 2189. Tax Declaration No. 6521 simply cannot prevail over OCT No. 734 as conclusive evidence of the true ownership of
Lot 2189.71
Third. During the cadastral proceeding involving Lot 2189, Waldetrudes herself stated that Atty. Fausto was a co-owner of the subject
lot. The transcript taken from the proceeding shows:72
Commissioner: What is your relation with Waldetrudes Fausto who is the claimant of Lot No. 2189 (portion) of a parcel of land located
at Pagadian City and more particularly bounded as follows: On the North by Lot No. 2190, on the East by Zulueta St., on the South by
National Highway and on the West by Gatas Creek with an area of 1015 sq. meters and a house as a permanent improvement.
A: I am the very one sir.
Q: How did you acquire the said land?
A: I purchase (sic) it from Sofia Vda. Claro in the year 1945 but a copy of the document was lost.
xxxx
Q: Who is your co-owner of this land?
A: My co-owner is my brother Atty. Agustin Fausto.
Fourth. There was likewise no evidence behind the petitioners allegation that the registered co-ownership between Waldetrudes and
Atty. Fausto was based on their actual occupancy of Lot 2189. On the contrary, OCT No. 734 categorically states that Waldetrudes and
Atty. Fausto are co-owners "in undivided share" of Lot 2189. The conspicuous silence of OCT No. 734 as to the definite extent of the
respective shares of Atty. Fausto and Waldetrudes in Lot 2189 gives rise to a presumption that they are in equal measure. We are at
once reminded of Article 485 of the Civil Code,73 to wit:

Article 485. x x x.
The portions belonging to the co-owners in the co-ownership shall be presumed equal, unless the contrary is proved.
Fifth. The equality in terms of share in Lot 2189, was affirmed by Waldetrudes when she testified in open court, to wit:74
DIRECT EXAMINATION
ATTY. PERALTA
Q: Now considering that you are, you owned that parcel of land jointly with your younger brother Atty. Agustin Fausto, what is the extent
of your ownership?
A: We have co-equal shares sir.
Clearly, the evidence preponderates in favor of the position that Waldetrudes and Atty. Fausto were co-owners in equal share of Lot
2189.
Second Plan and Second Partition Agreement is Invalid
Having settled the existence and extent of the co-ownership between Waldetrudes and Atty. Fausto, We next inquire into the validity of
the Second Plan and Second Partition Agreement.
We find the Second Plan and Second Partition Agreement to be invalid.
We agree with the findings of the Court of Appeals that Atty. Tecson was behind the execution of the Second Partition Agreement. 75 It
was Atty. Tecson who misled Waldetrudes and the respondents into signing the Second Partition Agreeement without giving them notice
of the existence of a Second Plan.76 As a consequence, Waldetrudes and the respondents were misinformed as to the true nature of
the Second Partition Agreement. These factual findings are adequately supported by the positive testimonies of respondents Romualdo
Fausto,77Minerva Fausto78 and Isabel,79 to wit:
ROMUALDOS DIRECT EXAMINATION
ATTY. PERALTA:
Q: Will you please go over if this is the machine copy of the Deed of partition which was brought to you by Atty. Tecson and requested
you to sign the same?
A: Yes sir that is the one.
xxxx
Q: When was that Deed of Partition marked as Exhibit "G" presented to you by Atty. Tecson?
A: Early part of 1977. I was already connected with the Provincial Assessor that was the time I have seen so many Deed of Sale and
the area is specified so before I signed I asked Atty. Tecson where is the area and he told me never mind the area it will be surveyed
and I did not insist because I trusted him very much.
Q: By the time this was presented to you by Atty. Tecson there was no survey of 2189?
A: There was no survey.
xxxx
COURT:

This document which you said you were present during the signing of your brothers and sisters but you cannot remember whether you
were present for the others where did you sign this document?
A: At our house.
COURT:
Who delivered this document to you[r] house?
A: Atty. Tecson.
COURT:
You want to impress this court that when you affixed your signatures in your house Atty. Tecson was present?
A: Yes sir.
COURT:
After signing what was done to this document?
A: We are not aware of that but we just waited for the survey because Atty. Tecson told us that the survey follows later.
COURT:
Who kept this document?
A: My Auntie Waldetrudes Nadela.
COURT:
It is clear now that this document was signed in your house and it was kept by your Auntie?
A: Yes, sir.
xxxx
ATTY. PERALTA:
Q: When Atty. Tecson went your house to request you to sign how did he tell you?
A: He told us just to sign the document and the survey will just follow we just sign the document without the area and he told us that the
area will just follow later.
Q: When you signed the document with your mother, brothers and sisters Atty. Tecson brought the documents?
A: Yes, sir.
MINERVA FAUSTOS DIRECT EXAMINATION
ATTY. PERALTA:
Q: Why, at the time when who brought this deed of partition for signature?
A: Jose L. Tecson.

Q: You are referring to one of the defendants, Jose L. Tecson?

A: Yes, sir.
Q: Now, when this was brought by Jose L. Tecson, the defendant Jose L. Tecson, where did he
COURT: For a moment.
Q: You said that defendant Jose L. Tecson brought that deed of partition. Were you there when defendant Jose L. Tecson brought that
deed of partition?
A: Yes, your Honor.
Q: Where was it brought?
A: In the house.
COURT: Proceed.
ATTY. PERALTA:
Q: Who were present in your house when this was brought by defendant Jose L. Tecson?
A: Myself, Neneth or Agustin, Romualdo and Jose Fausto. There were four (4) of us when that deed of partition was brought to the
house, myself, my sister Agustina, my brothers Romualdo and Jose.
Q: Do you want to convey to the Court that when this was brought to you Francisco Fausto, Victor Fausto and your sister Elizabeth,
Maria Fausto were not around when this was brought by Jose L. Tecson for signature in your house?
A: Yes, sir.
xxxx
Q: Why did you sign above the typewritten name of Francisco Fausto knowing that he was not around?
A: Because defendant Jose L. Tecson told me to affix the signature of Francisco Fausto because this deed of partition is just to facilitate
the transferring (sic) of the title of the land.
xxxx
Q: Who signed for her, for and behalf of Maria Lilia Fausto?
A: I signed myself.
Q: Why did you sign for Maria Lilia Fausto?
A: Because Jose L. Tecson told me to sign the document in order that the deed of partition could be accomplished.
xxxx
Q: Now, how about the residence certificates appearing after the name of Agustina Fausto, with her own residence certificate 3976584
to have been issued January 6, 1977, Pagadian City, and the Residence Certificate of Jose Fausto which has the same number
3976584 issued on January 6, 1977, Pagadian City, who placed this residence certificate?
A: All of us sir never exhibited our residence certificates. It was the Tecsons who supplied the residence certificate numbers.

ISABELS DIRECT EXAMINATION

ATTY. PERALTA:
Q: Do you remember having signed a Deed of Partition together with some of your children?
A: Yes sir[.] I can remember.
Q: Who brought that Deed of Partition for signature together with some of your children?
A: Governor Tecson.
Q: Were you able to sign the Deed of Partition?
A: I signed that Deed of Partition because according to him "just sign this for purposes of subdividing the property."
xxxx
Q: Do you recall if you have filed guardianship proceeding?
A: I have not remembered having filed a guardianship proceeding.
Q: Have you heard that there was guardianship proceeding?
A: All I can remember about that guardianship proceeding was that when Gov. Tecson let me sign a guardianship because some of my
children were not around.
Q: Do you want to convey to this court that personally you have not filed guardianship proceeding but it was Governor Tecson who let
you sign some documents regarding guardianship?
A: It was Governor Tecson who explained to me to sign that guardianship proceeding because according to him it will facilitate and I
thought that guardianship was only for purposes of being guardian to my children as a mother.
Indeed, the lack of a plausible explanation why a co-owner would gratuitously cede a very substantial portion of his rightful share to
another co-owner in partition renders the foregoing testimonies more credible as against the plain general denial of Atty. Tecson. On
this point, We find no reversible error on the part of the Court of Appeals.
The established facts have several legal consequences:
First. The Second Plan, having been prepared without the knowledge and consent of any of the co-owners of Lot 2189, have
no binding effect on them.
Second. The Second Partition Agreement is null and void as an absolute simulation,80 albeit induced by a third party. The fraud
perpetrated by Atty. Tecson did more than to vitiate the consent of Waldetrudes and the respondents. It must be emphasized
that Waldetrudes and the respondents never had any intention of entering into a new partition distinct from the First Partition
Agreement. The established facts reveal that Waldetrudes and the respondents assented to the Second Partition Agreement
because Atty. Tecson told them that the instrument was merely required to expedite the sale of Waldetrudes share.81
In other words, the deceit employed by Atty. Tecson goes into the very nature of the Second Partition Agreement and not
merely to its object or principal condition. Evidently, there is an absence of a genuine intent on the part of the co-owners to be
bound under a new partition proposing a new division of Lot 2189. The apparent consent of Waldetrudes and the respondents
to the Second Partition Agreement is, in reality, totally wanting. For that reason, the Second Partition Agreement is null and
void.1avvphi1
Third. The Second Partition Agreement being a complete nullity, it cannot be ratified either by the lapse of time or by its
approval by the guardianship court.82

Fourth. The First Plan and the First Partition Agreement remain as the valid and binding division of Lot 2189. Hence, pursuant
to the First Partition Agreement, Waldetrudes is the absolute owner of Lot 2189-A with an area of only five hundred seven
(507) square meters. Atty. Fausto, on the other hand, has dominion over Lot 2189-B with an area of five hundred eight (508)
square meters.
Fifth. Inevitably, Waldetrudes can only sell her lawful share of five hundred seven (507) square meters. The sales in favor of
Aurora and, subsequently, Atty. Tecson, are thereby null and void insofar as it exceeded the 507 square meter share of
Waldetrudes in Lot 2189. Nemo dat quod non habet.83
Atty. Tecson is not an innocent purchaser for value
The remaining bar to the recovery by the respondents of the excess area held by Atty. Tecson is the principle of an innocent purchaser
for value of land under the Torrens System of Registration.
The petitioners claim that they are bona fide purchasers of the entire nine hundred sixty-four (964) square meters of land covered by
Lot 2189-Bwith Aurora merely relying on the strength of TCT No. T-4,336 in the name of Waldetrudes, while Atty. Tecson placing
confidence in TCT No. T-4,338 in the name of Aurora. Both TCT Nos. T-4,336 and T-4,338 define the area of Lot 2189-B as nine
hundred sixty-four (964) square meters.84 The petitioners allege that at the time they made their respective purchase, they did not know
of the existing partition of Lot 2189 per the First Plan and the First Partition Agreement.85
We disagree. The proven facts indicate that Atty. Tecson knew or, at the very least, should have known that Atty. Fausto and
Waldetrudes were co-owners in equal share of Lot 2189. We must be reminded of the following circumstances:
1. Atty. Tecson was a long-time friend and neighbor of the Faustos.86 Atty. Tecson himself testified that he considered Atty.
Fausto as a good friend and even admitted that he would sometimes visit the latter in his house to play mahjong.87 By this,
Atty. Tecson knew that Atty. Fausto has an actual interest in Lot 2189.
2. Atty. Tecson was the one who presented the Second Partition Agreement to Waldetrudes and the respondents;88
3. Waldetrudes and the respondents were not involved in the preparation of the Second Partition Agreement and, at the time
they signed the said agreement, had no knowledge of the existence of the Second Plan;89 and
4. The Second Partition Agreement failed to state the specific areas allotted for each component of Lot 2189 and made no
mention of the division proposed by the Second Plan.90
Being the one behind the execution of the Second Partition Agreement, there is no doubt that Atty. Tecson knew that Lot 2189 was
owned in common by Waldetrudes and Atty. Fausto. This, taken together with the instruments unusual silence as to the definite area
allotted for each component lot and the Second Plan, reveals a deliberate attempt on the part of Atty. Tecson to conceal from
Waldetrudes and the respondents the unequal division of Lot 2189.
The necessity to conceal the disproportionate division of Lot 2189 can only be explained by Atty. Tecsons prior knowledge that such a
partition is inherently defective for being contrary to the actual sharing between Waldetrudes and Atty. Fausto. Atty. Tecson is clearly in
bad faith.
Verily, Atty. Tecson cannot be considered as an innocent purchaser of the excess area of Lot 2189-B. Based on the facts and
circumstances prevailing in this case, Atty. Tecson may be charged with actual notice of the defect plaguing the Second Partition
Agreement. The respondents may, therefore, recover.
WHEREFORE, the petition is hereby DENIED. Accordingly, the appealed Court of Appeals decision in CA-G.R. CV No. 70303 dated 12
December 2006 is hereby AFFIRMED.
Costs against petitioner.
LAND BANK OF THE PHILIPPINES, Petitioner, vs.BARBARA SAMPAGA POBLETE, Respondent.

This Petition for Review on Certiorari1 seeks to reverse the Court of Appeals' Decision2 dated 28 September 20 I 0 and its
Resolution3 dated 19 April 2011 in C A-G.R. CV No. 91666. The Court of Appeals (C A) affirmed in totothe Decision4 of the Regional
Trial Court (RTC) of San Jose, Occidental Mindoro, Branch 46, in Civil Case No. R-1331.
The Facts
The facts, as culled from the records, are as follows:
Petitioner Land Bank of the Philippines (Land Bank) is a banking institution organized and existing under Philippine laws. Respondent
Barbara Sampaga Poblete (Poblete) is the registered owner of a parcel of land, known as Lot No. 29, with an area of 455 square
meters, located in Buenavista, Sablayan, Occidental Mindoro, under Original Certificate of Title (OCT) No. P-12026. In October 1997,
Poblete obtained a P300,000.00 loan from Kabalikat ng Pamayanan ng Nagnanais Tumulong at Yumaman Multi-Purpose Cooperative
(Kapantay). Poblete mortgaged Lot No. 29 to Kapantay to guarantee payment of the loan. Kapantay, in turn, used OCT No. P-12026 as
collateral under its Loan Account No. 97-CC-013 with Land Bank-Sablayan Branch.
In November 1998, Poblete decided to sell Lot No. 29 to pay her loan. She instructed her son-in-law Domingo Balen (Balen) to look for
a buyer. Balen referred Angelito Joseph Maniego (Maniego) to Poblete. According to Poblete, Maniego agreed to buy Lot No. 29
for P900,000.00, but Maniego suggested that a deed of absolute sale for P300,000.00 be executed instead to reduce the taxes. Thus,
Poblete executed the Deed of Absolute Sale dated 9 November 1998 (Deed dated 9 November 1998) with P300,000.00 as
consideration.5 In the Deed dated 9 November 1998, Poblete described herself as a "widow." Poblete, then, asked Balen to deliver the
Deed dated 9 November 1998 to Maniego and to receive the payment in her behalf. Balen testified that he delivered the Deed dated 9
November 1998 to Maniego. However, Balen stated that he did not receive from Maniego the agreed purchase price. Maniego told
Balen that he would pay the amount upon his return from the United States. In an Affidavit dated 19 November 1998, Poblete stated
that she agreed to have the payment deposited in her Land Bank Savings Account.6
Based on a Certification issued by Land Bank-Sablayan Branch Department Manager Marcelino Pulayan on 20 August 1999,7 Maniego
paid Kapantays Loan Account No. 97-CC-013 for P448,202.08. On 8 June 2000, Maniego applied for a loan of P1,000,000.00 with
Land Bank, using OCT No. P 12026 as collateral. Land Bank alleged that as a condition for the approval of the loan, the title of the
collateral should first be transferred to Maniego.
On 14 August 2000, pursuant to a Deed of Absolute Sale dated 11 August 2000 (Deed dated 11 August 2000),8the Register of Deeds of
Occidental Mindoro issued Transfer Certificate of Title (TCT) No. T-20151 in Maniegos name. On 15 August 2000, Maniego and Land
Bank executed a Credit Line Agreement and a Real Estate Mortgage over TCT No. T- 20151. On the same day, Land Bank released
the P1,000,000.00 loan proceeds to Maniego. Subsequently, Maniego failed to pay the loan with Land Bank. On 4 November 2002,
Land Bank filed an Application for Extra-judicial Foreclosure of Real Estate Mortgage stating that Maniegos total indebtedness
amounted to P1,154,388.88.
On 2 December 2002, Poblete filed a Complaint for Nullification of the Deed dated 11 August 2000 and TCT No. T-20151,
Reconveyance of Title and Damages with Prayer for Temporary Restraining Order and/or Issuance of Writ of Preliminary Injunction.
Named defendants were Maniego, Land Bank, the Register of Deeds of Occidental Mindoro and Elsa Z. Aguirre in her capacity as
Acting Clerk of Court of RTC San Jose, Occidental Mindoro. In her Complaint, Poblete alleged that despite her demands on Maniego,
she did not receive the consideration ofP900,000.00 for Lot No. 29. She claimed that without her knowledge, Maniego used the Deed
dated 9 November 1998 to acquire OCT No. P-12026 from Kapantay. Upon her verification with the Register of Deeds, the Deed dated
11 August 2000 was used to obtain TCT No. T-20151. Poblete claimed that the Deed dated 11 August 2000 bearing her and her
deceased husbands, Primo Poblete, supposed signatures was a forgery as their signatures were forged. As proof of the forgery,
Poblete presented the Death Certificate dated 27 April 1996 of her husband and Report No. 294-502 of the Technical Services
Department of the National Bureau of Investigation showing that the signatures in the Deed dated 11 August 2000 were forgeries.
Accordingly, Poblete also filed a case for estafa through falsification of public document against Maniego and sought injunction of the
impending foreclosure proceeding.
On 7 January 2003, Land Bank filed its Answer with Compulsory Counterclaim and Cross-claim. Land Bank claimed that it is a
mortgagee in good faith and it observed due diligence prior to approving the loan by verifying Maniegos title with the Office of the
Register of Deeds. Land Bank likewise interposed a cross-claim against Maniego for the payment of the loan, with interest, penalties
and other charges. Maniego, on the other hand, separately filed his Answer. Maniego denied the allegations of Poblete and claimed
that it was Poblete who forged the Deed dated 11 August 2000. He also alleged that he paid the consideration of the sale to Poblete
and even her loans from Kapantay and Land Bank.
The Ruling of the Regional Trial Court

On 28 December 2007, the RTC of San Jose, Occidental Mindoro, Branch 46, rendered a Decision in favor of Poblete, the dispositive
portion of which reads:
WHEREFORE, by preponderance of evidence, judgment is hereby rendered in favor of the plaintiff and against the defendants, as
follows:
1. Declaring the Deed of Sale dated August 11, 2000 over O.C.T. No. P-12026, as null and void;
2. Declaring Transfer of Certificate of Title No. T-20151 as null and void, it having been issued on the basis of a spurious and
forged document;
3. The preliminary [i]njunction issued directing the defendants to refrain from proceedings [sic] with the auction sale of the
plaintiffs properties, dated February 10, 2002, is hereby made permanent;
4. Ordering defendant Angelito Joseph Maniego to return to the plaintiff O.C.T. No. P-12026; and
5. Ordering defendant Angelito Joseph Maniego to pay plaintiff the amount of P50,000.00, as and for reasonable attorneys
fees.
Judgment is furthermore rendered on the cross-claim of defendant Land Bank of the Philippines against defendant Angelito Joseph
Maniego, as follows:
A. Ordering defendant Angelito Joseph Maniego to pay his co-defendant [L]and Bank of the Philippines his loan with a
principal of P1,000,000.00, plus interests, penalties and other charges thereon; and
B. Ordering defendant Angelito Joseph Maniego to pay the costs of this suit.
SO ORDERED.9
The RTC ruled that the sale between Poblete and Maniego was a nullity. The RTC found that the agreed consideration
was P900,000.00 and Maniego failed to pay the consideration. Furthermore, the signatures of Poblete and her deceased husband were
proven to be forgeries. The RTC also ruled that Land Bank was not a mortgagee in good faith because it failed to exercise the diligence
required of banking institutions. The RTC explained that had Land Bank exercised due diligence, it would have known before approving
the loan that the sale between Poblete and Maniego had not been consummated. Nevertheless, the RTC granted Land Banks crossclaim against Maniego.
In an Order dated 17 March 2008, the RTC denied the Motion for Reconsideration filed by Land Bank for want of merit. Thereafter,
Land Bank and Maniego separately challenged the RTCs Decision before the CA.
The Ruling of the Court of Appeals
On 28 September 2010, the CA promulgated its Decision affirming in toto the Decision of the RTC.10 Both Land Bank and Maniego filed
their Motions for Reconsideration but the CA denied both motions on 19 April 2011.11
In a Resolution dated 13 July 2011,12 the Second Division of this Court denied the Petition for Review on Certiorari filed by Maniego.
This Resolution became final and executory on 19 January 2012.
On the other hand, Land Bank filed this petition.
The Issues
Land Bank seeks a reversal and raises the following issues for resolution:
1. THE COURT OF APPEALS (FORMER SPECIAL ELEVENTH DIVISION) ERRED IN UPHOLDING THE FINDING OF THE
TRIAL COURT DECLARING TCT NO. T-20151 AS NULL AND VOID. THE COURT OF APPEALS MISCONSTRUED AND
MISAPPRECIATED THE EVIDENCE AND THE LAW IN NOT FINDING TCT NO. T-20151 REGISTERED IN THE NAME OF
ANGELITO JOSEPH MANIEGO AS VALID.

2. THE COURT OF APPEALS (FORMER SPECIAL ELEVENTH DIVISION) MISCONSTRUED THE EVIDENCE AND THE
LAW IN NOT FINDING LAND BANK A MORTGAGEE IN GOOD FAITH.
3. THE COURT OF APPEALS (FORMER SPECIAL ELEVENTH DIVISION) MISCONSTRUED THE EVIDENCE AND THE
LAW IN NOT FINDING THE RESPONDENT AND ANGELITO JOSEPH MANIEGO ASIN PARI DELICTO.
4. THE COURT OF APPEALS (FORMER SPECIAL ELEVENTH DIVISION) ERRED IN NOT APPLYING THE PRINCIPLE OF
ESTOPPEL OR LACHES ON RESPONDENT IN THAT THE PROXIMATE CAUSE OF HER LOSS WAS HER NEGLIGENCE
TO SAFEGUARD HER RIGHTS OVER THE SUBJECT PROPERTY, THEREBY ENABLING ANGELITO JOSEPH MANIEGO
TO MORTGAGE THE SAME WITH LAND BANK.13
The Ruling of the Court
We do not find merit in the petition.
A petition for review under Rule 45 of the Rules of Court specifically provides that only questions of law may be raised, subject to
exceptional circumstances14 which are not present in this case. Hence, factual findings of the trial court, especially if affirmed by the CA,
are binding on us.15 In this case, both the RTC and the CA found that the signatures of Poblete and her deceased husband in the Deed
dated 11 August 2000 were forged by Maniego. In addition, the evidence is preponderant that Maniego did not pay the consideration for
the sale. Since the issue on the genuineness of the Deed dated 11 August 2000 is essentially a question of fact, we are not dutybound
to analyze and weigh the evidence again.16
It is a well-entrenched rule, as aptly applied by the CA, that a forged or fraudulent deed is a nullity and conveys no title.17 Moreover,
where the deed of sale states that the purchase price has been paid but in fact has never been paid, the deed of sale is void ab
initio for lack of consideration.18 Since the Deed dated 11 August 2000 is void, the corresponding TCT No. T-20151 issued pursuant to
the same deed is likewise void. In Yu Bun Guan v. Ong,19 the Court ruled that there was no legal basis for the issuance of the certificate
of title and the CA correctly cancelled the same when the deed of absolute sale was completely simulated, void and without effect.
In Erea v. Querrer-Kauffman,20 the Court held that when the instrument presented for registration is forged, even if accompanied by
the owners duplicate certificate of title, the registered owner does not thereby lose his title, and neither does the mortgagee acquire
any right or title to the property. In such a case, the mortgagee under the forged instrument is not a mortgagee protected by law.21
The issue on the nullity of Maniegos title had already been foreclosed when this Court denied Maniegos petition for review in the
Resolution dated 13 July 2011, which became final and executory on 19 January 2012.22 It is settled that a decision that has acquired
finality becomes immutable and unalterable and may no longer be modified in any respect, even if the modification is meant to correct
erroneous conclusions of fact or law and whether it will be made by the court that rendered it or by the highest court of the land.23 This
is without prejudice, however, to the right of Maniego to recover from Poblete what he paid to Kapantay for the account of Poblete,
otherwise there will be unjust enrichment by Poblete.
Since TCT No. T-20151 has been declared void by final judgment, the Real Estate Mortgage constituted over it is also void. In a real
estate mortgage contract, it is essential that the mortgagor be the absolute owner of the property to be mortgaged; otherwise, the
mortgage is void.24
Land Bank insists that it is a mortgagee in good faith since it verified Maniegos title, did a credit investigation, and inspected Lot No. 29.
The issue of being a mortgagee in good faith is a factual matter, which cannot be raised in this petition.25 However, to settle the issue,
we carefully examined the records to determine whether or not Land Bank is a mortgagee in good faith.1wphi1
There is indeed a situation where, despite the fact that the mortgagor is not the owner of the mortgaged property, his title being
fraudulent, the mortgage contract and any foreclosure sale arising therefrom are given effect by reason of public policy.26 This is the
doctrine of "the mortgagee in good faith" based on the rule that buyers or mortgagees dealing with property covered by a Torrens
Certificate of Title are not required to go beyond what appears on the face of the title.27 However, it has been consistently held that this
rule does not apply to banks, which are required to observe a higher standard of diligence.28 A bank whose business is impressed with
public interest is expected to exercise more care and prudence in its dealings than a private individual, even in cases involving
registered lands.29 A bank cannot assume that, simply because the title offered as security is on its face free of any encumbrances or
lien, it is relieved of the responsibility of taking further steps to verify the title and inspect the properties to be mortgaged. 30
Applying the same principles, we do not find Land Bank to be a mortgagee in good faith.

Good faith, or the lack of it, is a question of intention.31 In ascertaining intention, courts are necessarily controlled by the evidence as to
the conduct and outward acts by which alone the inward motive may, with safety, be determined. 32
Based on the evidence, Land Bank processed Maniegos loan application upon his presentation of OCT No. P-12026, which was still
under the name of Poblete. Land Bank even ignored the fact that Kapantay previously used Pobletes title as collateral in its loan
account with Land Bank.33 In Bank of Commerce v. San Pablo, Jr.,34 we held that when "the person applying for the loan is other than
the registered owner of the real property being mortgaged, [such fact] should have already raised a red flag and which should have
induced the Bank x x x to make inquiries into and confirm x x x [the] authority to mortgage x x x. A person who deliberately ignores a
significant fact that could create suspicion in an otherwise reasonable person is not an innocent purchaser for value."
The records do not even show that Land Bank investigated and inspected the property to ascertain its actual occupants. Land Bank
merely mentioned that it inspected Lot No. 29 to appraise the value of the property. We take judicial notice of the standard practice of
banks, before approving a loan, to send representatives to the premises of the land offered as collateral to investigate its real
owners.35 In Prudential Bank v. Kim Hyeun Soon,36 the Court held that the bank failed to exercise due diligence although its
representative conducted an ocular inspection, because the representative concentrated only on the appraisal of the property and failed
to inquire as to who were the then occupants of the property.
Land Bank claims that it conditioned the approval of the loan upon the transfer of title to Maniego, but admits processing the loan based
on Maniegos assurances that title would soon be his.37 Thus, only one day after Maniego obtained TCT No. T-20151 under his name,
Land Bank and Maniego executed a Credit Line Agreement and a Real Estate Mortgage. Because of Land Banks haste in granting the
loan, it appears that Maniegos loan was already completely processed while the collateral was still in the name of Poblete. This is also
supported by the testimony of Land Bank Customer Assistant Andresito Osano.38
Where the mortgagee acted with haste in granting the mortgage loan and did not ascertain the ownership of the land being mortgaged,
as well as the authority of the supposed agent executing the mortgage, it cannot be considered an innocent mortgagee.39
Since Land Bank is not a mortgagee in good faith, it is not entitled to protection. The injunction against the foreclosure proceeding in the
present case should be made permanent. Since Lot No. 29 has not been transferred to a third person who is an innocent purchaser for
value, ownership of the lot remains with Poblete. This is without prejudice to the right of either party to proceed against Maniego.
On the allegation that Poblete is in pari delicto with Maniego, we find the principle inapplicable. The pari delictorule provides that "when
two parties are equally at fault, the law leaves them as they are and denies recovery by either one of them."40 We adopt the factual
finding of the RTC and the CA that only Maniego is at fault.
Finally, on the issues of estoppel and laches, such were not raised before the trial court.1wphi1 I fence, we cannot rule upon the
same. It is settled that an issue which was neither alleged in the complaint nor raised during the trial cannot be raised for the tirst time
on appeal, as such a recourse would be offensive to the basic rules of t}1ir play, justice and due process, since the opposing party
would be deprived of the opp01iunity to introduce evidence rebutting such new issue.41
WHEREFORE, we DENY the petition. We AFFIRM the 28 September 2010 Decision and the 19 April 2011 Resolution of the Court of
Appeals in CA-Ci.R. CV No. 91666. The injunction against the foreclosure proceeding, issued by the Regional Trial Court of San Jose,
Occidental Mindoro, Branch 46, is made permanent. Costs against Land Bank.
JOSELITO C. BORROMEO, Petitioner, vs.JUAN T. MINA, Respondent.
Assailed in this petition for review on certiorari1 are the April 30, 2010 Decision2 and September 13, 2010 Resolution3 of the Court of
Appeals (CA) in CA-G.R. SP No. 101185, dismissing petitioner Joselito C. Borromeos petitions which identically prayed for the
exemption of his landholding from the coverage of the governments Operation Land Transfer (OLT) program as well as the cancellation
of respondent Juan T. Minas title over the property subject of the said landholding.
The Facts
Subject of this case is a 1.1057 hectare parcel of agriculture land, situated in Barangay Magsaysay, Naguilian, Isabela, denominated as
Lot No. 5378 and covered by Transfer Certificate of Title (TCT) No. EP-43526,4registered in the name of respondent (subject property).
It appears from the foregoing TCT that respondents title over the said property is based on Emancipation Patent No. 393178 issued by
the Department of Agrarian Reform (DAR) on May 2, 1990.5

Petitioner filed a Petition dated June 9, 20036 before the Provincial Agrarian Reform Office (PARO) of Isabela, seeking that: (a) his
landholding over the subject property (subject landholding) be exempted from the coverage of the governments OLT program under
Presidential Decree No. 27 dated October 21, 19727 (PD 27); and (b) respondents emancipation patent over the subject property be
consequently revoked and cancelled.8 To this end, petitioner alleged that he purchased the aforesaid property from its previous owner,
one Serafin M. Garcia (Garcia), as evidenced by a deed of sale notarized on February 19, 1982 (1982 deed of sale). For various
reasons, however, he was not able to effect the transfer of title in his name. Subsequently, to his surprise, he learned that an
emancipation patent was issued in respondents favor without any notice to him. He equally maintained that his total agricultural
landholdings was only 3.3635 hectares and thus, within the landowner's retention limits under both PD 27 and Republic Act No. 6647,
otherwise known as the "Comprehensive Agrarian Reform Law of 1988." In this regard, he claimed that the subject landholding should
have been excluded from the coverage of the governments OLT program.9
Petitioner filed a subsequent Petition dated September 1, 200310 also with the PARO which contained identical allegations as those
stated in his June 9, 2003 Petition (PARO petitions) and similarly prayed for the cancellation of respondents emancipation patent.
After due investigation, the Municipal Agrarian Reform Officer (MARO) Joey Rolando M. Unblas issued a Report dated September 29,
2003,11 finding that the subject property was erroneously identified by the same office as the property of petitioners father, the late
Cipriano Borromeo. In all actuality, however, the subject property was never owned by Cipriano Borromeo as its true owner was Garcia
notably, a perennial PD 27 landowner12 who later sold the same to petitioner.
Based on these findings, the MARO recommended that: (a) the subject landholding be exempted from the coverage of the OLT; and (b)
petitioner be allowed to withdraw any amortizations deposited by respondent with the Land Bank of the Philippines (LBP) to serve as
rental payments for the latters use of the subject property.13
The Ruling of the PARO
In an undated Resolution, the PARO adopted the recommendation of the MARO and accordingly (a) cancelled respondent's
emancipation patent; (b) directed petitioner to allow respondent to continue in the peaceful possession and cultivation of the subject
property and to execute a leasehold contract over the same pursuant to the provisions of Republic Act No. 3844 (RA 3844), otherwise
known as the "Agricultural Land Reform Code"; and (c) authorized petitioner to withdraw from the LBP all amortizations deposited by
respondent as rental payments for the latter's use of the said property.14
Aggrieved, respondent filed an administrative appeal to the DAR Regional Director.
The Ruling of the DAR Regional Director
On November 30, 2004, DAR Regional Director Renato R. Navata issued an Order,15 finding that petitioner, being the true owner of the
subject property, had the right to impugn its coverage from the governments OLT program. Further, considering that the subject
property was erroneously identified as owned by Cipriano Borromeo, coupled with the fact that petitioner's total agricultural
landholdings was way below the retention limits prescribed under existing agrarian laws, he declared the subject landholding to be
exempt from OLT coverage.
While affirming the PARO's Decision, the DAR Regional Director did not, however, order the cancellation of respondents emancipation
patent. He merely directed petitioner to institute the proper proceedings for such purpose before the DAR Adjudication Board (DARAB).
Consequently, respondent moved for reconsideration,16 challenging petitioner's ownership of the subject property for lack of sufficient
basis to show that his averred predecessor-in-interest, Garcia, was its actual owner. In addition, respondent pointed out that petitioner
never filed a protest against the issuance of an emancipation patent in his favor. Hence, petitioner should be deemed to have slept on
his rights on account of his inaction for 21 years.
The aforesaid motion was, however, denied in the Resolution dated February 10, 2006,17 prompting respondent to elevate the matter to
the DAR Secretary.
The Ruling of the DAR Secretary
On September 12, 2007, then DAR Secretary Nasser C. Pagandaman issued DARCO Order No. EXC-0709-333, series of
2007,18 affirming in toto the DAR Regional Directors ruling. It upheld the latters findings that the subject landholding was improperly
placed under the coverage of the governments OLT program on account of the erroneous identification of the landowner,19 considering

as well the fact that petitioners total agricultural landholdings, i.e., 3.3635 hectares, was way below the retention limits under existing
agrarian laws.20
Undaunted, respondent filed a petition for review with the CA.
The Ruling of the CA
In a Decision dated April 30, 2010,21 the CA reversed and set aside the DAR Secretary's ruling. It doubted petitioners claim of
ownership based on the 1982 deed of sale due to the inconsistent allegations regarding the dates of its notarization divergently stated
in the two (2) PARO Petitions, this alongside the fact that a copy of the same was not even attached to the records of the case for its
examination. In any case, the CA found the said sale to be null and void for being a prohibited transaction under PD 27 which forbids
the transfers or alienation of covered agricultural lands after October 21, 1972 except to the tenant-beneficiaries thereof, of which
petitioner was not.22 It also held23 that petitioner cannot mount any collateral attack against respondents title to the subject property as
the same is prohibited under Section 48 of the Presidential Decree No. 1529 (PD 1529), otherwise known as the "Property Registration
Decree."
Petitioner moved for reconsideration which was, however, denied in a Resolution dated September 13, 2010.24
Hence, this petition.
The Petition
Petitioner contends that the CA erred in declaring the sale between him and Garcia as null and void. In this connection, he avers that
there was actually an oral sale entered into by him and Garcia (through his son Lorenzo Garcia) in 1976. The said oral sale was
consummated on the same year as petitioner had already occupied and tilled the subject property and started paying real estate taxes
thereon. He further alleges that he allowed respondent to cultivate and possess the subject property in 1976 only out of mercy and
compassion since the latter begged him for work. The existing sale agreement had been merely formalized by virtue of the 1982 deed
of sale which in fact, expressly provided that the subject property was not tenanted and that the provisions of law on pre-emption had
been complied with.25 In this regard, petitioner claims that respondent cannot be considered as a tenant and as such, the issuance of
an emancipation patent in his favor was erroneous. Likewise, petitioner claims that his right to due process was violated by the
issuance of the aforesaid emancipation patent without any notice on his part.
In his Comment,26 respondent counters that petitioner cannot change his theory regarding the date of sale between him and Garcia nor
even raise the same factual issue on appeal before the Court.27 Moreover, he asserts that the 1982 deed of sale was not registered and
therefore, does not bind him. In any event, he posits that the sale between petitioner and Garcia was null and void.28 Finally, he argues
that petitioners PARO petitions constitute collateral attacks to his title to the subject property which are disallowed under PD 1529.29
The Court's Ruling
The petition lacks merit.
A. Petitioners change of theory on appeal
The Court first resolves the procedural matter.
Settled is the rule that a party who adopts a certain theory upon which the case is tried and decided by the lower courts or tribunals will
not be permitted to change his theory on appeal,30 not because of the strict application of procedural rules, but as a matter of
fairness.31 Basic considerations of due process dictate that theories, issues and arguments not brought to the attention of the trial court
would not ordinarily be considered by a reviewing court,32 except when their factual bases would not require presentation of any further
evidence by the adverse party in order to enable him to properly meet the issue raised,33 such as when the factual bases of such novel
theory, issue or argument is (a) subject of judicial notice; or (b) had already been judicially admitted,34 which do not obtain in this case.
Records show that petitioner changed his theory on appeal with respect to two (2) matters:
First, the actual basis of his ownership rights over the subject property, wherein he now claims that his ownership was actually based
on a certain oral sale in 1976 which was merely formalized by the 1982 deed of sale;35 and

Second, the status of respondent as tenant of the subject property, which he never questioned during the earlier stages of the
proceedings before the DAR but presently disputes before the Court.
Clearly, the factual bases of the foregoing theories require the presentation of proof as neither of them had been judicially admitted by
respondent nor subject of judicial notice. Therefore, the Court cannot entertain petitioners novel arguments raised in the instant
petition. Accordingly, he must rely on his previous positions that (a) his basis of ownership over the subject property rests on the 1982
deed of sale; and (b) that respondents status as the tenant of the subject property remains undisputed.
Having settled the foregoing procedural issue, the Court now proceeds to resolve the substantive issue in this case.
B. Validity of the sale of the
subject property to petitioner
PD 27 prohibits the transfer of ownership over tenanted rice and/or corn lands after October 21, 1972 except only in favor of the actual
tenanttillers thereon. As held in the case of Sta. Monica Industrial and Development Corporation v. DAR Regional Director for Region
III,36 citing Heirs of Batongbacal v. CA:37
x x x P.D. No. 27, as amended, forbids the transfer or alienation of covered agricultural lands after October 21, 1972 except to the
tenant-beneficiary. x x x.
In Heirs of Batongbacal v. Court of Appeals, involving the similar issue of sale of a covered agricultural land under P.D. No. 27, this
Court held:
Clearly, therefore, Philbanking committed breach of obligation as an agricultural lessor.1wphi1 As the records show, private
respondent was not informed about the sale between Philbanking and petitioner, and neither was he privy to the transfer of ownership
from Juana Luciano to Philbanking. As an agricultural lessee, the law gives him the right to be informed about matters affecting the land
he tills, without need for him to inquire about it.
xxxx
In other words, transfer of ownership over tenanted rice and/or corn lands after October 21, 1972 is allowed only in favor of the actual
tenant-tillers thereon. Hence, the sale executed by Philbanking on January 11, 1985 in favor of petitioner was in violation of the
aforequoted provision of P.D. 27 and its implementing guidelines, and must thus be declared null and void. (Emphasis and underscoring
supplied)
Records reveal that the subject landholding fell under the coverage of PD 27 on October 21, 197238 and as such, could have been
subsequently sold only to the tenant thereof, i.e., the respondent. Notably, the status of respondent as tenant is now beyond dispute
considering petitioners admission of such fact.39 Likewise, as earlier discussed, petitioner is tied down to his initial theory that his claim
of ownership over the subject property was based on the 1982 deed of sale. Therefore, as Garcia sold the property in 1982 to the
petitioner who is evidently not the tenant-beneficiary of the same, the said transaction is null and void for being contrary to law.40
In consequence, petitioner cannot assert any right over the subject landholding, such as his present claim for landholding exemption,
because his title springs from a null and void source. A void contract is equivalent to nothing; it produces no civil effect; and it does not
create, modify or extinguish a juridical relation.41 Hence, notwithstanding the erroneous identification of the subject landholding by the
MARO as owned by Cipriano Borromeo, the fact remains that petitioner had no right to file a petition for landholding exemption since
the sale of the said property to him by Garcia in 1982 is null and void. Proceeding from this, the finding that petitioners total agricultural
landholdings is way below the retention limits set forth by law thus, becomes irrelevant to his claim for landholding exemption precisely
because he has no right over the aforementioned landholding.
In view of the foregoing disquisition, the Court sees no reason to delve on the issue regarding the cancellation of respondents
emancipation patent, without prejudice to petitioners right to raise his other claims and objections thereto through the appropriate
action filed before the proper forum.42
WHEREFORE, the petition is DENIED. The assailed April 30, 2010 Decision and September 13, 2010 Resolution of the Court of
Appeals in CA-G.R. SP No. 101185 are hereby AFFIRMED.

DOMINGO GONZALO, Petitioner, vs.JOHN TARNATE, JR., Respondent.

The doctrine of in pari delicto which stipulates that the guilty parties to an illegal contract are not entitled to any relief, cannot prevent a
recovery if doing so violates the public policy against unjust enrichment.
Antecedents
After the Department of Public Works and Highways (DPWH) had awarded on July 22, 1997 the contract for the improvement of the
Sadsadan-Maba-ay Section of the Mountain Province-Benguet Road in the total amount of 7 014 963 33 to his company, Gonzalo
Construction,1 petitioner Domingo Gonzalo (Gonzalo) subcontracted to respondent John Tarnate, Jr. (Tarnate) on October 15, 1997, the
supply of materials and labor for the project under the latter s business known as JNT Aggregates. Their agreement stipulated, among
others, that Tarnate would pay to Gonzalo eight percent and four percent of the contract price, respectively, upon Tarnate s first and
second billing in the project.2
In furtherance of their agreement, Gonzalo executed on April 6, 1999 a deed of assignment whereby he, as the contractor, was
assigning to Tarnate an amount equivalent to 10% of the total collection from the DPWH for the project. This 10% retention fee
(equivalent to P233,526.13) was the rent for Tarnates equipment that had been utilized in the project. In the deed of assignment,
Gonzalo further authorized Tarnate to use the official receipt of Gonzalo Construction in the processing of the documents relative to the
collection of the 10% retention fee and in encashing the check to be issued by the DPWH for that purpose.3 The deed of assignment
was submitted to the DPWH on April 15, 1999. During the processing of the documents for the retention fee, however, Tarnate learned
that Gonzalo had unilaterally rescinded the deed of assignment by means of an affidavit of cancellation of deed of assignment dated
April 19, 1999 filed in the DPWH on April 22, 1999;4 and that the disbursement voucher for the 10% retention fee had then been issued
in the name of Gonzalo, and the retention fee released to him.5
Tarnate demanded the payment of the retention fee from Gonzalo, but to no avail. Thus, he brought this suit against Gonzalo on
September 13, 1999 in the Regional Trial Court (RTC) in Mountain Province to recover the retention fee of P233,526.13, moral and
exemplary damages for breach of contract, and attorneys fees.6
In his answer, Gonzalo admitted the deed of assignment and the authority given therein to Tarnate, but averred that the project had not
been fully implemented because of its cancellation by the DPWH, and that he had then revoked the deed of assignment. He insisted
that the assignment could not stand independently due to its being a mere product of the subcontract that had been based on his
contract with the DPWH; and that Tarnate, having been fully aware of the illegality and ineffectuality of the deed of assignment from the
time of its execution, could not go to court with unclean hands to invoke any right based on the invalid deed of assignment or on the
product of such deed of assignment.7
Ruling of the RTC
On January 26, 2001, the RTC, opining that the deed of assignment was a valid and binding contract, and that Gonzalo must comply
with his obligations under the deed of assignment, rendered judgment in favor of Tarnate as follows:
WHEREFORE, premises considered and as prayed for by the plaintiff, John Tarnate, Jr. in his Complaint for Sum of Money, Breach of
Contract With Damages is hereby RENDERED in his favor and against the above-named defendant Domingo Gonzalo, the Court now
hereby orders as follows:
1. Defendant Domingo Gonzalo to pay the Plaintiff, John Tarnate, Jr., the amount of TWO HUNDRED THIRTY THREE
THOUSAND FIVE HUNDRED TWENTY SIX and 13/100 PESOS (P233,526.13) representing the rental of equipment;
2. Defendant to pay Plaintiff the sum of THIRTY THOUSAND (P30,000.00) PESOS by way of reasonable Attorneys Fees for
having forced/compelled the plaintiff to litigate and engage the services of a lawyer in order to protect his interest and to
enforce his right. The claim of the plaintiff for attorneys fees in the amount of FIFTY THOUSAND PESOS (P50,000.00) plus
THREE THOUSAND PESOS (P3,000.00) clearly appears to be unconscionable and therefore reduced to Thirty Thousand
Pesos (P30,000.00) as aforestated making the same to be reasonable;
3. Defendant to pay Plaintiff the sum of FIFTEEN THOUSAND PESOS (P15,000.00) by way of litigation expenses;
4. Defendant to pay Plaintiff the sum of TWENTY THOUSAND PESOS (P20,000.00) for moral damages and for the breach of
contract; and

5. To pay the cost of this suit.

Award of exemplary damages in the instant case is not warranted for there is no showing that the defendant acted in a wanton,
fraudulent, reckless, oppressive or malevolent manner analogous to the case of Xentrex Automotive, Inc. vs. Court of Appeals, 291
SCRA 66.8
Gonzalo appealed to the Court of Appeals (CA).
Decision of the CA
On February 18, 2003, the CA affirmed the RTC.9
Although holding that the subcontract was an illegal agreement due to its object being specifically prohibited by Section 6 of
Presidential Decree No. 1594; that Gonzalo and Tarnate were guilty of entering into the illegal contract in violation of Section 6 of
Presidential Decree No. 1594; and that the deed of assignment, being a product of and dependent on the subcontract, was also illegal
and unenforceable, the CA did not apply the doctrine of in pari delicto, explaining that the doctrine applied only if the fault of one party
was more or less equivalent to the fault of the other party. It found Gonzalo to be more guilty than Tarnate, whose guilt had been limited
to the execution of the two illegal contracts while Gonzalo had gone to the extent of violating the deed of assignment. It declared that
the crediting of the 10% retention fee equivalent to P233,256.13 to his account had unjustly enriched Gonzalo; and ruled, accordingly,
that Gonzalo should reimburse Tarnate in that amount because the latters equipment had been utilized in the project.
Upon denial of his motion for reconsideration,10 Gonzalo has now come to the Court to seek the review and reversal of the decision of
the CA.
Issues
Gonzalo contends that the CA erred in affirming the RTC because: (1) both parties were in pari delicto; (2) the deed of assignment was
void; and (3) there was no compliance with the arbitration clause in the subcontract.
Gonzalo submits in support of his contentions that the subcontract and the deed of assignment, being specifically prohibited by law, had
no force and effect; that upon finding both him and Tarnate guilty of violating the law for executing the subcontract, the RTC and the CA
should have applied the rule of in pari delicto, to the effect that the law should not aid either party to enforce the illegal contract but
should leave them where it found them; and that it was erroneous to accord to the parties relief from their predicament.11
Ruling
We deny the petition for review, but we delete the grant of moral damages, attorneys fees and litigation expenses.
There is no question that every contractor is prohibited from subcontracting with or assigning to another person any contract or project
that he has with the DPWH unless the DPWH Secretary has approved the subcontracting or assignment. This is pursuant to Section 6
of Presidential Decree No. 1594, which provides:
Section 6. Assignment and Subcontract. The contractor shall not assign, transfer, pledge, subcontract or make any other disposition
of the contract or any part or interest therein except with the approval of the Minister of Public Works, Transportation and
Communications, the Minister of Public Highways, or the Minister of Energy, as the case may be. Approval of the subcontract shall not
relieve the main contractor from any liability or obligation under his contract with the Government nor shall it create any contractual
relation between the subcontractor and the Government.
Gonzalo, who was the sole contractor of the project in question, subcontracted the implementation of the project to Tarnate in violation
of the statutory prohibition. Their subcontract was illegal, therefore, because it did not bear the approval of the DPWH Secretary.
Necessarily, the deed of assignment was also illegal, because it sprung from the subcontract. As aptly observed by the CA:
x x x. The intention of the parties in executing the Deed of Assignment was merely to cover up the illegality of the sub-contract
agreement. They knew for a fact that the DPWH will not allow plaintiff-appellee to claim in his own name under the Sub-Contract
Agreement.

Obviously, without the Sub-Contract Agreement there will be no Deed of Assignment to speak of. The illegality of the Sub-Contract
Agreement necessarily affects the Deed of Assignment because the rule is that an illegal agreement cannot give birth to a valid
contract. To rule otherwise is to sanction the act of entering into transaction the object of which is expressly prohibited by law and
thereafter execute an apparently valid contract to subterfuge the illegality. The legal proscription in such an instance will be easily
rendered nugatory and meaningless to the prejudice of the general public.12
Under Article 1409 (1) of the Civil Code, a contract whose cause, object or purpose is contrary to law is a void or inexistent contract. As
such, a void contract cannot produce a valid one.13 To the same effect is Article 1422 of the Civil Code, which declares that "a contract,
which is the direct result of a previous illegal contract, is also void and inexistent."
We do not concur with the CAs finding that the guilt of Tarnate for violation of Section 6 of Presidential Decree No. 1594 was lesser
than that of Gonzalo, for, as the CA itself observed, Tarnate had voluntarily entered into the agreements with Gonzalo.14 Tarnate also
admitted that he did not participate in the bidding for the project because he knew that he was not authorized to contract with the
DPWH.15 Given that Tarnate was a businessman who had represented himself in the subcontract as "being financially and
organizationally sound and established, with the necessary personnel and equipment for the performance of the project,"16 he justifiably
presumed to be aware of the illegality of his agreements with Gonzalo. For these reasons, Tarnate was not less guilty than Gonzalo.
According to Article 1412 (1) of the Civil Code, the guilty parties to an illegal contract cannot recover from one another and are not
entitled to an affirmative relief because they are in pari delicto or in equal fault. The doctrine of in pari delicto is a universal doctrine that
holds that no action arises, in equity or at law, from an illegal contract; no suit can be maintained for its specific performance, or to
recover the property agreed to be sold or delivered, or the money agreed to be paid, or damages for its violation; and where the parties
are in pari delicto, no affirmative relief of any kind will be given to one against the other.17
Nonetheless, the application of the doctrine of in pari delicto is not always rigid.1wphi1 An accepted exception arises when its
application contravenes well-established public policy.18 In this jurisdiction, public policy has been defined as "that principle of the law
which holds that no subject or citizen can lawfully do that which has a tendency to be injurious to the public or against the public
good."19
Unjust enrichment exists, according to Hulst v. PR Builders, Inc.,20 "when a person unjustly retains a benefit at the loss of another, or
when a person retains money or property of another against the fundamental principles of justice, equity and good conscience." The
prevention of unjust enrichment is a recognized public policy of the State, for Article 22 of the Civil Code explicitly provides that "[e]very
person who through an act of performance by another, or any other means, acquires or comes into possession of something at the
expense of the latter without just or legal ground, shall return the same to him." It is well to note that Article 22 "is part of the chapter of
the Civil Code on Human Relations, the provisions of which were formulated as basic principles to be observed for the rightful
relationship between human beings and for the stability of the social order; designed to indicate certain norms that spring from the
fountain of good conscience; guides for human conduct that should run as golden threads through society to the end that law may
approach its supreme ideal which is the sway and dominance of justice."21
There is no question that Tarnate provided the equipment, labor and materials for the project in compliance with his obligations under
the subcontract and the deed of assignment; and that it was Gonzalo as the contractor who received the payment for his contract with
the DPWH as well as the 10% retention fee that should have been paid to Tarnate pursuant to the deed of assignment.22 Considering
that Gonzalo refused despite demands to deliver to Tarnate the stipulated 10% retention fee that would have compensated the latter for
the use of his equipment in the project, Gonzalo would be unjustly enriched at the expense of Tarnate if the latter was to be barred from
recovering because of the rigid application of the doctrine of in pari delicto. The prevention of unjust enrichment called for the exception
to apply in Tarnates favor. Consequently, the RTC and the CA properly adjudged Gonzalo liable to pay Tarnate the equivalent amount
of the 10% retention fee (i.e., P233,526.13).
Gonzalo sought to justify his refusal to turn over the P233,526.13 to Tarnate by insisting that he (Gonzalo) had a debt of P200,000.00 to
Congressman Victor Dominguez; that his payment of the 10% retention fee to Tarnate was conditioned on Tarnate paying that debt to
Congressman Dominguez; and that he refused to give the 10% retention fee to Tarnate because Tarnate did not pay to Congressman
Dominguez.23 His justification was unpersuasive, however, because, firstly, Gonzalo presented no proof of the debt to Congressman
Dominguez; secondly, he did not competently establish the agreement on the condition that supposedly bound Tarnate to pay to
Congressman Dominguez;24 and, thirdly, burdening Tarnate with Gonzalos personal debt to Congressman Dominguez to be paid first
by Tarnate would constitute another case of unjust enrichment.
The Court regards the grant of moral damages, attorneys fees and litigation expenses to Tarnate to be inappropriate. We have ruled
that no damages may be recovered under a void contract, which, being nonexistent, produces no juridical tie between the parties
involved.25 It is notable, too, that the RTC and the CA did not spell out the sufficient factual and legal justifications for such damages to
be granted.

Lastly, the letter and spirit of Article 22 of the Civil Code command Gonzalo to make a full reparation or compensation to Tarnate. The
illegality of their contract should not be allowed to deprive Tarnate from being fully compensated through the imposition of legal interest.
Towards that end, interest of 6% per annum reckoned from September 13, 1999, the time of the judicial demand by Tarnate, is imposed
on the amount of P233,526.13. Not to afford this relief will make a travesty of the justice to which Tarnate was entitled for having
suffered too long from Gonzalos unjust enrichment.
WHEREFORE, we AFFIRM the decision promulgated on February 18, 2003, but DELETE the awards of moral damages, attorneys
fees and litigation expenses; IMPOSE legal interest of 6% per annum on the principal oLP233,526.13 reckoned from September 13,
1999; and DIRECT the petitioner to pay the costs of suit.
JEFFERSON LIM, petitioner, vs. QUEENSLAND TOKYO COMMODITIES, INC., respondent.
Before us is a petition for review assailing the June 25, 1998, decision[1] of the Court of Appeals in CA-G.R. CV No. 46495 which
reversed and set aside the decision of the Regional Trial Court of Cebu, Branch 24, dismissing the complaint by respondent for a sum
of money as well as petitioners counterclaim.
Private respondent Queensland Tokyo Commodities, Incorporated (Queensland, for brevity) is a duly licensed broker engaged in
the trading of commodities futures with full membership and with a floor trading right at the Manila Futures Exchange, Inc..[2]
Sometime in 1992, Benjamin Shia, a market analyst and trader of Queensland, was introduced to petitioner Jefferson Lim by
Marissa Bontia,[3] one of his employees. Marissas father was a former employee of Lims father.[4]
Shia suggested that Lim invest in the Foreign Exchange Market, trading U.S. dollar against the Japanese yen, British pound,
Deutsche Mark and Swiss Franc.
Before investing, Lim requested Shia for proof that the foreign exchange was really lucrative. They conducted mock tradings
without money involved. As the mock trading showed profitability, Lim decided to invest with a marginal deposit of US$5,000 in
managers check. The marginal deposit represented the advance capital for his future tradings. It was made to apply to any authorized
future transactions, and answered for any trading account against which the deposit was made, for any loss of whatever nature, and for
all obligations, which the investor would incur with the broker.[5]
Because respondent Queensland dealt in pesos only, it had to convert US$5,000 in managers check to pesos, amounting
to P125,000 since the exchange rate at that time was P25 to US$1.00. To accommodate petitioners request to trade right away, it
advanced the P125,000 from its own funds while waiting for the managers check to clear. Thereafter, a deposit notice in the amount
of P125,000 was issued to Queensland, marked as Exhibit E. This was sent to Lim who received it as indicated by his signature
marked as Exhibit E-1. Then, Lim signed the Customers Agreement, marked as Exhibit F, which provides as follows:
25. Upon signing of this Agreement, I shall deposit an initial margin either by personal check, managers check or cash. In the case of the first, I shall
not be permitted to trade until the check has been cleared by my bank and credited to your account. In respect of margin calls or additional deposits
required, I shall likewise pay them either by personal check, managers check or cash. In the event my personal check is dishonored, the company
has the right without call or notice to settle/close my trading account against which the deposit was made. In such event, any loss of whatever nature
shall be borne by me and I shall settle such loss upon demand together with interest and reasonable cost of collection. However, in the event such
liquidation gives rise to a profit then such amount shall be credited to the Company. The above notwithstanding, I am not relieved of any legal
responsibility as a result of my check being dishonored by my bank. [6]
Petitioner Lim was then allowed to trade with respondent company which was coursed through Shia by virtue of the blank order
forms, marked as Exhibits G, G-1 to G-13,[7] all signed by Lim. Respondent furnished Lim with the daily market report and
statements of transactions as evidenced by the receiving forms, marked as Exhibits J, J-1 to J-4, [8] some of which were received by
Lim.
During the first day of trading or on October 22, 1992, Lim made a net profit of P6,845.57.[9] Shia went to the office of Lim and
informed him about it. He was elated. He agreed to continue trading. During the second day of trading or on October 23, 1992, they
lost P44,465.[10]
Meanwhile, on October 22, 1992, respondent learned that it would take seventeen (17) days to clear the managers check given
by petitioner. Hence, on October 23, 1992, at about11:00 A.M., upon managements request, Shia returned the check to petitioner who
informed Shia that petitioner would rather replace the managers check with a travelers check. [11]Considering that it
was 12:00 noon already, petitioner requested Shia to come back at 2:00 P.M.. Shia went with petitioner to the bank to purchase a

travelers check at the PCI Bank, Juan Luna Branch at 2:00 P.M.. Shia noticed that the travelers check was not indorsed but Lim told
Shia that Queensland could sign the indorsee portion.[12] Because Shia trusted the latters good credit rating, and out of ignorance, he
brought the check back to the office unsigned.[13] Inasmuch as that was a busy Friday, the check was kept in the drawer of respondents
consultant. Later, the travelers check was deposited with Citibank.[14]
On October 26, 1992, Shia informed petitioner that they incurred a floating loss of P44,695[15] on October 23, 1992. He told
petitioner that they could still recover their losses. He could unlock the floating loss on Friday. By unlocking the floating loss, the loss on
a particular day is minimized.
On October 27, 1992, Citibank informed respondent that the travelers check could not be cleared unless it was duly signed by
Lim, the original purchaser of the travelers check. A Miss Arajo, from the accounting staff of Queensland, returned the check to Lim for
his signature, but the latter, aware of his P44,465 loss, demanded for a liquidation of his account and said he would get back what was
left of his investment.[16] Meanwhile, Lim signed only one portion of the travelers check, leaving the other half blank. He then kept it.
[17]
Arajo went back to the office without it.
Respondent asked Shia to talk to petitioner for a settlement of his account but petitioner refused to talk with Shia. Shia made
follow-ups for more than a week beginning October 27, 1992. Because petitioner disregarded this request, respondent was compelled
to engage the services of a lawyer, who sent a demand letter [18] to petitioner. This letter went unheeded. Thus, respondent filed a
complaint[19] against petitioner, docketed as Civil Case No. CEB-13737, for collection of a sum of money.
On April 22, 1994, the trial court rendered its decision, thus:
WHEREFORE, in view of all the foregoing, the complaint is dismissed without pronouncement as to costs. The defendants counterclaim is likewise
dismissed.
SO ORDERED.[20]
On appeal by Queensland, the Court of Appeals reversed and set aside the trial courts decision, with the following fallo:
WHEREFORE, the decision appealed from is hereby REVERSED AND SET ASIDE, and another one is entered ordering appellee [Jefferson Lim] to
pay appellant the sum of P125,000.00, with interest at the legal rate until the whole amount is fully paid, P10,000.00 as attorneys fees, and costs. [21]
Petitioner herein filed a motion for reconsideration before the Court of Appeals, which was denied in a resolution dated October 6,
1998.[22]
Dissatisfied, petitioner filed the instant recourse alleging that the appellate court committed errors:
I - IN REVERSING THE DECISION OF THE RTC WHICH DISMISSED RESPONDENTS COMPLAINT;
II - IN HOLDING THAT THE PETITIONER IS ESTOPPED IN QUESTIONING THE VALIDITY OF THE CUSTOMERS
AGREEMENT AND FROM DENYING THE EFFECTS OF HIS CONDUCT;
III - IN NOT TAKING JUDICIAL NOTICE OF THE LETTER OF RESPONDENT THAT THE SEC HAS ISSUED A CEASE
AND DESIST ORDER AGAINST THE MANILA INTERNATIONAL FUTURES EXCHANGE COMMISSION AND ALL
COMMODITY TRADERS INCLUDING THE RESPONDENT.
Despite the petitioners formulation of alleged errors, we find that the main issue is whether or not the appellate court erred in
holding that petitioner is estopped from questioning the validity of the Customers Agreement that he signed.
The essential elements of estoppel are: (1) conduct of a party amounting to false representation or concealment of material facts
or at least calculated to convey the impression that the facts are otherwise than, and inconsistent with, those which the party
subsequently attempts to assert; (2) intent, or at least expectation, that this conduct shall be acted upon by, or at least influence, the
other party; and (3) knowledge, actual or constructive, of the real facts.[23]
Here, it is uncontested that petitioner had in fact signed the Customers Agreement in the morning of October 22, 1992, [24] knowing
fully well the nature of the contract he was entering into. The Customers Agreement was duly notarized and as a public document it is
evidence of the fact, which gave rise to its execution and of the date of the latter. [25] Next, petitioner paid his investment deposit to

respondent in the form of a managers check in the amount of US$5,000 as evidenced by PCI Bank Managers Check No. 69007,
dated October 22, 1992.[26] All these are indicia that petitioner treated the Customers Agreement as a valid and binding contract.
Moreover, we agree that, on petitioners part, there was misrepresentation of facts. He replaced the managers check with an
unendorsed travelers check, instead of cash, while assuring Shia that respondent Queensland could sign the indorsee portion thereof.
[27]
As it turned out, Citibank informed respondent that only the original purchaser (i.e. the petitioner) could sign said check. When the
check was returned to petitioner for his signature, he refused to sign. Then, as petitioner himself admitted in his Memorandum, [28] he
used the travelers check for his travel expenses.[29]
More significantly, petitioner already availed himself of the benefits of the Customers Agreement whose validity he now
impugns. As found by the CA, even before petitioners initial marginal deposit (in the form of the PCI managers check dated October
22, 1992)[30] was converted into cash, he already started trading on October 22, 1992, thereby making a net profit of P6,845.57. On
October 23, he continued availing of said agreement, although this time he incurred a floating loss of P44,645.[31] While he claimed he
had not authorized respondent to trade on those dates, this claim is belied by his signature affixed in the order forms, marked as
Exhibits G, G-1 to G-13.[32]
Clearly, by his own acts, petitioner is estopped from impugning the validity of the Customers Agreement. For a party to a contract
cannot deny the validity thereof after enjoying its benefits without outrage to ones sense of justice and fairness.
It appears that petitioners reason to back out of the agreement is that he began sustaining losses from the trade. However, this
alone is insufficient to nullify the contract or disregard its legal effects. By its very nature it is already a perfected, if not a consummated,
contract. Courts have no power to relieve parties from obligations voluntarily assumed, simply because their contracts turned out to be
disastrous or unwise investments.[33] Notably, in the Customers Agreement, petitioner has been forewarned of the high risk involved in
the foreign currency investment as stated in the Risk Disclosure Statement,[34] located in the same box where petitioner signed.
Further, petitioner contends that the Customers Agreement was rendered nugatory because: (1) the marginal deposit he gave
was in dollars and (2) respondent allowed him to trade even before the US$5,000 managers check was cleared. This contention is
disingenuous to say the least, but hardly meritorious.
Petitioner himself was responsible for the issuance of the US$5,000 managers check. It was he who failed to replace the
managers check with cash. He authorized Shia to start trading even before the US$5,000 check had cleared. He could not, in fairness
to the other party concerned, now invoke his own misdeeds to exculpate himself, conformably with the basic principle in law that he
who comes to court must come with clean hands.
Contrary to petitioners contention, we also find that respondent did not violate paragraph 14 of the Guidelines for Spot/Futures
Currency Trading, which provides:
14. DEPOSITS & PAYMENTS
All deposits, payments and repayments, etc. will be in Philippine Currency. When a deposit with the Company is not in cash or bank draft, such
deposit will not take effect in the account concerned until it has been confirmed NEGOTIABLE for payment by authorized management personnel. [35]
Respondent claims it informed petitioner of its policy not to accept dollar investment. For this reason, it converted the petitioners
US$5,000 managers check to pesos (P125,000) out of respondents own funds to accommodate petitioners request to trade right
away.[36] On record, it appears that petitioner agreed to the conversion of his dollar deposit to pesos. [37]
Neither is there merit in petitioners contention that respondent violated the Customers Agreement by allowing him to trade even if
his managers check was not yet cleared, as he had no margin deposit as required by the Customers Agreement, viz:
5. Margin Receipt
A Margin Receipt issued by the Company shall only be for the purpose of acknowledging receipt of an amount as margin deposit for Spot/Futures
Currency Trading. All checks received for the purpose of margin deposits have to be cleared through such bank account as may be opened by the
Company before any order can be accepted.[38]
But as stated earlier, respondent advanced petitioners marginal deposit of P125,000 out of its own funds while waiting for the
US$5,000 managers check to clear, relying on the good credit standing of petitioner. Contrary to petitioners averment now, respondent
had advanced his margin deposit with his approval. Nowhere in the Guidelines adverted to by petitioner was such an arrangement

prohibited. Note that the advance was made with petitioners consent, as indicated by his signature, Exhibit E-1, [39] affixed in the
deposit notice, Exhibit E,[40]sent to him by respondent. By his failure to seasonably object to this arrangement and by affixing his
signature to the notice of deposit, petitioner is barred from questioning said arrangement now.
Anent the last assigned error, petitioner faults the appellate court for not taking judicial notice of the cease and desist order
against the Manila International Futures Exchange Commission and all commodity traders including respondent. However, we find that
this issue was first raised only in petitioners motion for reconsideration of the Court of Appeals decision. It was never raised in the
Memorandum[41] filed by petitioner before the trial court. Hence, this Court cannot now, for the first time on appeal, pass upon this
issue. For an issue cannot be raised for the first time on appeal. It must be raised seasonably in the proceedings before the lower
court. Questions raised on appeal must be within the issues framed by the parties and, consequently, issues not raised in the trial court
cannot be raised for the first time on appeal.[42]
WHEREFORE, the instant petition is DENIED for lack of merit. The decision of the Court of Appeals dated June 25, 1998, in CAG.R. CV No. 46495 is AFFIRMED. Costs against petitioner.
HEIRS OF SALVADOR HERMOSILLA, namely: ADELAIDA H. DOLLETON, RUBEN HERMOSILLA, LOLITA H. DE LA VEGA,
ERLINDA H. INOVIO, CELIA H. VIVIT, ZENAIDA H. ACHOY, PRECILLA H. LIMPIAHOY, and EDGARDO
HERMOSILLA, Petitioners, vs.Spouses JAIME REMOQUILLO and LUZ REMOQUILLO, Respondents.
Petitioners Heirs of Salvador Hermosilla, namely: Adelaida H. Dolleton, Ruben Hermosilla, Lolita H. de la Vega, Erlinda H.
Inovio,1 Celia2 H. Vivit, Zenaida H. Achoy, Precilla3 H. Limpiahoy, and Edgardo Hermosilla, assail the Court of Appeals Decision4 dated
September 29, 2004 which reversed the trial courts decision in their favor and accordingly dismissed their complaint.
Subject of the controversy is a 65-square meter portion of a lot located in Poblacion, San Pedro, Laguna.
On August 31, 1931, the Republic of the Philippines acquired through purchase the San Pedro Tunasan Homesite.
Apolinario Hermosilla (Apolinario), who was occupying a lot in San Pedro Tunasan Homesite until his death in 1964, caused the
subdivision of the lot into two, Lot 12 with an area of 341 square meters, and Lot 19 with an area of 341 square meters of which the 65
square meters subject of this controversy form part.
On April 30, 1962, Apolinario executed a Deed of Assignment transferring possession of Lot 19 in favor of his grandson, herein
respondent Jaime Remoquillo (Jaime). As the Land Tenure Administration (LTA) later found that Lot 19 was still available for disposition
to qualified applicants, Jaime, being its actual occupant, applied for its acquisition before the LTA on May 10, 1963.
On July 8, 1963, Apolinario conveyed Lot 12 to his son Salvador Hermosilla (Salvador), Jaimes uncle.
Salvador later filed an application to purchase Lot 12 which was awarded to him by the defunct Land Authority on December 16, 1971.
On February 10, 1972, Jaime and his uncle Salvador forged a "Kasunduan ng Paglipat Ng Karapatan sa Isang Lagay na Lupang Solar"
(Kasunduan) whereby Jaime transferred ownership of the 65 square meters (the questioned property) in favor of Salvador.
After Apolinario died, his daughter Angela Hermosilla filed a protest before the Land Authority, which became the National Housing
Authority (NHA),5 contending that as an heir of the deceased, she is also entitled to Lots 12 and 19. By Resolution of June 10, 1981, the
NHA dismissed the protest.
The NHA later awarded on March 16, 1986 Lot 19 to Jaime for which he and his wife were issued a title, Transfer Certificate of Title No.
T-156296, on September 15, 1987.6
On May 25, 1992, petitioners filed an action for Annulment of Title on the ground of fraud with damages against Jaime and his spouse,
together with the Register of Deeds, before the Regional Trial Court (RTC) of Bian, Laguna, alleging that by virtue of the Kasunduan
executed in 1972, Jaime had conveyed to his uncle Salvador the questioned propertypart of Lot 19 covered by TCT No. T-156296
which was issued in 1987.
By Decision7 of May 11, 1999, the RTC of Bian, Laguna, Branch 25, found the Kasunduan a perfected contract of sale, there being a
meeting of the minds upon an identified object and upon a specific price, and that ownership over the questioned property had already
been transferred and delivered to Salvador.

On the alleged failure of consideration of the Kasunduan, the trial court held that the same did not render the contract void, but merely
allowed an action for specific performance. The dispositive portion of the trial courts Decision reads:
WHEREFORE, judgment is hereby rendered declaring plaintiffs as co-owners of the 65 square meters of the 341square meters
covered by TCT T-156296, registered in the name of defendants. The Court hereby directs the Register of Deeds of Laguna, Calamba
Branch, to cancel said Transfer Certificate of Title, and in lieu thereof, to issue another [to] plaintiffs [as] co-owners of the above portion.
No pronouncement as to costs.
SO ORDERED.8 (Underscoring supplied)
The Court of Appeals, reversing the decision of the trial court, held that the Kasunduan was void because at the time of its execution in
1972, the Republic of the Philippines was still the owner of Lot 19, hence, no right thereover was transmitted by Jaime who was
awarded the Lot in 1986, and consequently no right was transmitted by Salvador through succession to petitioners. And it found no
evidence of fraud in Jaimes act of having Lot 19, including the questioned property, registered in his and his wifes name in 1987.
At all events, the appellate court held that the action had prescribed, it having been filed in 1992, more than four years from the
issuance to Jaime and his wife of the Transfer Certificate of Title.
Hence, the present petition for review on certiorari.
Petitioners argue that the application of the law on prescription would perpetrate fraud and spawn injustice, they citing Cometa v. Court
of Appeals;9 and that at any rate, prescription does not lie against a co-owner. Cometa involves a different factual milieu concerning the
right of redemption, however. And petitioners contention that prescription does not lie against a co-owner fails because only the title
covering the questioned property, which petitioners claim to solely own, is being assailed.
While this Court finds that the action is, contrary to the appellate courts ruling, not barred by the statute of limitations, it is still
dismissible as discussed below.
Albeit captioned as one for Annulment of Title, the Complaint ultimately seeks the reconveyance of the property.
From the allegations of the Complaint, petitioners seek the reconveyance of the property based on implied trust. The prescriptive period
for the reconveyance of fraudulently registered real property is 10 years, reckoned from the date of the issuance of the certificate of
title,10 if the plaintiff is not in possession, but imprescriptible if he is in possession of the property.
An action for reconveyance based on an implied trust prescribes in ten years. The ten-year prescriptive periodapplies only if there is
an actual need to reconvey the property as when the plaintiff is not in possession of the property. However, if the plaintiff, as the
real owner of the property also remains in possession of the property, the prescriptive period to recover the title and possession of the
property does not run against him. In such a case, an action for reconveyance, if nonetheless filed, would be in the nature of a suit for
quieting of title, an action that is imprescriptible.11 (Emphasis and underscoring supplied)
It is undisputed that petitioners houses occupy the questioned property and that respondents have not been in possession
thereof.12 Since there was no actual need to reconvey the property as petitioners remained in possession thereof, the action took the
nature of a suit for quieting of title, it having been filed to enforce an alleged implied trust after Jaime refused to segregate title over Lot
19. One who is in actual possession of a piece of land claiming to be the owner thereof may wait until his possession is disturbed or
his title is attacked before taking steps to vindicate his right.13 From the body of the complaint, this type of action denotes
imprescriptibility.
As priorly stated, however, when the Kasunduan was executed in 1972 by Jaime in favor of Salvador petitioners predecessor-ininterest Lot 19, of which the questioned property forms part, was still owned by the Republic. Nemo dat quod non habet.14 Nobody
can give what he does not possess. Jaime could not thus have transferred anything to Salvador via the Kasunduan.
Claiming exception to the rule, petitioners posit that at the time the Kasunduan was executed by Jaime in 1972, his application which
was filed in 1963 for the award to him of Lot 19 was still pending, hence, the Kasunduan transferred to Salvador Jaimes vested right to
purchase the same, in support of which they cite a law on estoppel, Art. 1434 of the Civil Code, which provides that "[w]hen a person
who is not the owner of a thing sells or alienates and delivers it and later, the seller or grantor acquires title thereto, such title passes by
operation of law to the buyer or grantee."15

Petitioners reliance on Article 1434 of the Civil Code does not lie. The principles of estoppel apply insofar as they are not in conflict with
the provisions of the Civil Code, the Code of Commerce, the Rules of Court and speciallaws.161avvphi1.net
Land Authority Administrative Order No. 4 (1967), "Rules and Regulations governing Disposition of the Laguna Settlement Project in
San Pedro, Laguna," proscribes the conveyance of the privilege or preference to purchase a land from the San Pedro Tunasan
project before it is awarded to a tenant or bona fide occupant, thus:
SEC. 6. Privilege of Preference to Purchase Intransferable; Waiver or Forfeiture Thereof. From the date of acquisition of the estate by
the Government and before issuance of the Order of Award, no tenant or bona fideoccupant in whose favor the land may be sold shall
transfer or encumber the privilege or preference to purchase the land, and any transfer or encumbrance made in violation hereof
shall be null and void: Provided, however, That such privilege or preference may be waived or forfeited only in favor of the Land
Authority . . .17(Italics in the original, emphasis and underscoring supplied)
Petitioners insistence on any right to the property under the Kasunduan thus fails.
[T]he transfer "became one in violation of law (the rules of the PHHC being promulgated in pursuance of law have the force of law) and
therefore void ab initio." Hence, appellant acquired no right over the lot from a contract voidab initio, no rights are created. Estoppel, as
postulated by petitioner, will not apply for it cannot be predicated on an illegal act. It is generally considered that as between the parties
to a contract, validity cannot be given to it by estoppel if it is prohibited by law or is against public policy.18 (Emphasis and underscoring
supplied)
Petitioners go on to postulate that if the Kasunduan is void, it follows that the 1962 Deed of Assignment executed by Apolinario in favor
of Jaime is likewise void to thus deprive the latter of any legal basis for his occupation and acquisition of Lot 19.
Petitioners position fails. Petitioners lose sight of the fact that, as reflected above, Jaime acquired Lot 19 in his own right, independently
of the Deed of Assignment.
In another vein, since the property was previously a public land, petitioners have no personality to impute fraud or misrepresentation
against the State or violation of the law.19 If the title was in fact fraudulently obtained, it is the State which should file the suit to recover
the property through the Office of the Solicitor General. The title originated from a grant by the government, hence, its cancellation is a
matter between the grantor and the grantee.20
At all events, for an action for reconveyance based on fraud to prosper, the plaintiff must prove by clear and convincing evidence not
only his title to the property but also the fact of fraud. Fraud is never presumed. Intentional acts to deceive and deprive another of his
right, or in some manner injure him must be specifically alleged and proved by the plaintiff by clear and convincing
evidence.21 Petitioners failed to discharge this burden, however.
WHEREFORE, the petition is, in light of the foregoing ratiocination, DENIED.
ACCESSORIES SPECIALIST INC., a.k.a. ARTS 21 CORPORATION, and TADAHIKO HASHIMOTO, Petitioners, vs.ERLINDA B.
ALABANZA, for and in behalf of her deceased husband, JONES B. ALABANZA, Respondent.
Before the Court is a petition for review on certiorari under Rule 45 of the Rules of Court assailing the Decision1dated April 15, 2005 and
the Resolution2 dated July 12, 2005 of the Court of Appeals (CA) in CA-G.R. SP No. 84206.
The Facts
The facts of the case, as narrated in the Decision of the CA:
On September 27, 2002, private respondent Erlinda B. Alabanza (Erlinda, for brevity), for and in behalf of her husband Jones B.
Alabanza (Jones, for brevity) filed a complaint against petitioners Accessories Specialists, Inc. (ASI, for brevity) also known as ARTS 21
Corporation, and Tadahiko Hashimoto for non-payment of salaries, separation pay, and 13th month pay.
In her position paper, respondent Erlinda alleged, among others, that her husband Jones was the Vice-President, Manager and Director
of ASI. Jones rendered outstanding services for the petitioners from 1975 to October 1997. On October 17, 1997, Jones was compelled
by the owner of ASI, herein petitioner Tadahiko Hashimoto, to file his involuntary resignation on the ground that ASI allegedly suffered
losses due to lack of market and incurred several debts caused by a slam in the market. At the time of his resignation, Jones had

unpaid salaries for eighteen (18) months from May 1995 to October 1997 equivalent to P396,000.00 and US$38,880.00. He was
likewise not paid his separation pay commensurate to his 21 years of service in the amount of P462,000.00 and US$45,360.00 and
13th month pay amounting to P33,000.00. Jones demanded payment of his money claims upon resignation but ASI informed him that it
would just settle first the money claims of the rank- and-file employees, and his claims will be paid thereafter. Knowing the predicament
of the company, Jones patiently waited for his turn to be paid. Several demands were made by Jones but ASI just kept on assuring him
that he will be paid his monetary claims. Jones died on August 5, 2002 and failed to receive the same.
On the other hand, the petitioners contend that Jones voluntarily resigned on October 31, 1997. Thus, Erlindas cause of action has
already prescribed and is forever barred on the ground that under Article 291 of the Labor Code, all money claims arising from an
employer-employee relationship shall be filed within three (3) years from the time the cause of action accrues. Since the complaint was
filed only on September 27, 2002, or almost five (5) years from the date of the alleged illegal dismissal of her husband Jones, Erlindas
complaint is now barred.
On September 14, 2003, Labor Arbiter Reynaldo V. Abdon rendered a decision ordering the petitioners to pay Erlinda the amount
of P693,000.00 and US$74,040.00 or its equivalent in peso or amounting to a total ofP4,765,200.00 representing her husbands unpaid
salaries, 13th month pay, and separation pay, and five [percent] (5%) on the said total award as attorneys fees.
On October 10, 2003, the petitioners filed a notice of appeal with motion to reduce bond and attached thereto photocopies of the
receipts for the cash bond in the amount of P290,000.00, and appeal fee in the amount ofP170.00.
On January 15, 2004, public respondent NLRC issued an order denying the petitioners motion to reduce bond and directing the latter
to post an additional bond, and in case the petitioners opted to post a surety bond, the latter were required to submit a joint declaration,
indemnity agreement and collateral security within ten (10) days from receipt of the said order, otherwise their appeal shall be
dismissed. The pertinent portion of such order reads:
After a review however of respondents-appellants['] instant motion, We find that the same does not proffer any valid or justifiable reason
that would warrant a reduction of the appeal bond. Hence, the same must be denied.
WHEREFORE, respondents-appellants are hereby ordered to post a cash or surety bond in the amount equivalent to the monetary
award of Four Million Seven Hundred Sixty-Five Thousand and Two Hundred Pesos (P4,765,200.00) granted in the appealed Decision
(less the Two Hundred and Ninety Thousand Pesos [P290,000.00] cash bond already posted), and joint declaration, indemnity
agreement and collateral security in case respondents-appellants opted to post a surety bond, as required by Art. 223 of the Labor
Code as amended and Section 6, Rule VI of the NLRC New Rules of Procedure as amended within an unextendible period of ten (10)
calendar days from receipt of this Order; otherwise, the appeal shall be dismissed for non-perfection thereof.
SO ORDERED.
On February 19, 2004, the petitioners moved for a reconsideration of the said order. However, the public respondent in its resolution
dated March 18, 2004 denied the same and dismissed the appeal of the petitioners, thus:
The reduction of appeal bond is not a matter of right but rests upon our sound discretion. Thus, after We denied respondentsappellants['] Motion to Reduce [B]ond, they should have immediately complied with our 15 January 2004 Order directing them to post
an additional cash or surety bond in the amount equivalent to the judgment award less the cash bond already posted within the
extended period of ten (10) days. In all, respondents had twenty (20) days, including the ten (10)-day period, prescribed under Article
223 of the Labor Code and under Section 6, Rule VI of the NLRC New Rules of Procedure, within which to post a cash or surety bond.
To seek a reconsideration of our 15 January 2004 order is tantamount to seeking another extension of the period within which to perfect
an appeal, which is however, not allowed under Section 7, Rule VI of the NLRC Rule. x x x
xxxx
WHEREFORE, premises considered, the Motion for Reconsideration filed by respondents-appellants is hereby DENIED and the instant
appeal DISMISSED for non-perfection thereof.
SO ORDERED.
On April 22, 2004, the aforesaid resolution became final and executory. Thus, herein private respondent Erlinda filed a motion for
execution.

On May 31, 2004, the petitioners filed an opposition to the said motion for execution. On June 11, 2004, Labor Arbiter Reynaldo Abdon
issued an order directing the issuance of a writ of execution.3
On May 28, 2004, petitioners filed a petition for certiorari under Rule 65 of the Rules of Court before the CA and prayed for the issuance
of a temporary restraining order (TRO) and a writ of preliminary injunction. On June 30, 2004, the CA issued a TRO directing the
respondents, their agents, assigns, and all persons acting on their behalf to refrain and/or cease and desist from executing the Decision
dated September 14, 2003 and Resolution dated March 18, 2004 of the Labor Arbiter (LA).
On April 15, 2005, the CA issued the assailed Decision dismissing the petition. Petitioner filed a motion for reconsideration. On July 12,
2005, the CA issued the assailed Resolution denying the motion for reconsideration for lack of merit.
On September 8, 2005, petitioners posted the instant petition presenting the following grounds in support of their arguments: 1) the
cause of action of respondent has already prescribed; 2) the National Labor Relations Commission (NLRC) gravely abused its
discretion when it dismissed the appeal of petitioners for failure to post the complete amount of the appeal bond; and 3) the monetary
claim was resolved by the LA with uncertainty.
The Issues
The following are the issues that should be resolved in order to come up with a just determination of the case:
I. Whether the cause of action of respondents has already prescribed;
II. Whether the posting of the complete amount of the bond in an appeal from the decision of the LA to the NLRC is an
indispensable requirement for the perfection of the appeal despite the filing of a motion to reduce the amount of the appeal
bond; and
III. Whether there were sufficient bases for the grant of the monetary award of the LA to the respondent.
The Ruling of the Court
We resolve to deny the petition.
I
Petitioners aver that the action of the respondents for the recovery of unpaid wages, separation pay and 13th month pay has already
prescribed since the action was filed almost five years from the time Jones severed his employment from ASI. Jones filed his
resignation on October 31, 1997, while the complaint before the LA was instituted on September 29, 2002. Petitioners contend that the
three-year prescriptive period under Article 2914 of the Labor Code had already set-in, thereby barring all of respondents money claims
arising from their employer-employee relations.
Based on the findings of facts of the LA, it was ASI which was responsible for the delay in the institution of the complaint. When Jones
filed his resignation, he immediately asked for the payment of his money claims. However, the management of ASI promised him that
he would be paid immediately after the claims of the rank-and-file employees had been paid. Jones relied on this representation.
Unfortunately, the promise was never fulfilled even until the time of Jones death.
In light of these circumstances, we can apply the principle of promissory estoppel, which is a recognized exception to the three-year
prescriptive period enunciated in Article 291 of the Labor Code.
Promissory estoppel may arise from the making of a promise, even though without consideration, if it was intended that the promise
should be relied upon, as in fact it was relied upon, and if a refusal to enforce it would virtually sanction the perpetration of fraud or
would result in other injustice.5 Promissory estoppel presupposes the existence of a promise on the part of one against whom estoppel
is claimed.1avvphi1 The promise must be plain and unambiguous and sufficiently specific so that the court can understand the
obligation assumed and enforce the promise according to its terms.6
In order to make out a claim of promissory estoppel, a party bears the burden of establishing the following elements: (1) a promise was
reasonably expected to induce action or forbearance; (2) such promise did, in fact, induce such action or forbearance; and (3) the party
suffered detriment as a result.7

All the requisites of promissory estoppel are present in this case. Jones relied on the promise of ASI that he would be paid as soon as
the claims of all the rank-and-file employees had been paid. If not for this promise that he had held on to until the time of his death, we
see no reason why he would delay filing the complaint before the LA. Thus, we find ample justification not to follow the prescriptive
period imposed under Article 291 of the Labor Code. Great injustice will be committed if we will brush aside the employees claims on a
mere technicality, especially when it was petitioners own action that prevented respondent from interposing the claims within the
required period.8
II
Petitioners argue that the NLRC committed grave abuse of discretion in dismissing their appeal for failure to post the complete amount
of the bond. They assert that they cannot post an appeal bond equivalent to the monetary award rendered by the LA due to financial
incapacity. They say that strict enforcement of the NLRC Rules of Procedure9 that the appeal bond shall be equivalent to the monetary
award is oppressive and would have the effect of depriving petitioners of their right to appeal.10
Article 223 of the Labor Code mandates that in case of a judgment of the LA involving a monetary award, an appeal by the employer to
the NLRC may be perfected only upon the posting of a cash or surety bond issued by a reputable bonding company duly accredited by
the Commission, in the amount equivalent to the monetary award in the judgment appealed from.
The posting of a bond is indispensable to the perfection of an appeal in cases involving monetary awards from the decision of the
LA.11 The intention of the lawmakers to make the bond a mandatory requisite for the perfection of an appeal by the employer is clearly
limned in the provision that an appeal by the employer may be perfected "only upon the posting of a cash or surety bond." The word
"only" makes it perfectly plain that the lawmakers intended the posting of a cash or surety bond by the employer to be the essential and
exclusive means by which an employer's appeal may be perfected. The word "may" refers to the perfection of an appeal as optional on
the part of the defeated party, but not to the compulsory posting of an appeal bond, if he desires to appeal. The meaning and the
intention of the legislature in enacting a statute must be determined from the language employed; and where there is no ambiguity in
the words used, then there is no room for construction.12
The filing of the bond is not only mandatory but also a jurisdictional requirement that must be complied with in order to confer
jurisdiction upon the NLRC.13 Non-compliance therewith renders the decision of the LA final and executory.14 This requirement is
intended to assure the workers that if they prevail in the case, they will receive the money judgment in their favor upon the dismissal of
the employer's appeal. It is intended to discourage
employers from using an appeal to delay or evade their obligation to satisfy their employees' just and lawful claims.15
In the instant case, the failure of petitioners to comply with the requirement of posting a bond equivalent in amount to the monetary
award is fatal to their appeal. Section 6 of the New Rules of Procedure of the NLRC mandates, among others, that no motion to reduce
bond shall be entertained except on meritorious grounds and upon the posting of a bond in a reasonable amount in relation to the
monetary award. The NLRC has the full discretion to grant or deny their motion to reduce the amount of the appeal bond. The finding of
the NLRC that petitioners did not present sufficient justification for the reduction thereof is generally conclusive upon this Court absent a
showing that the denial was tainted with bad faith.
Furthermore, we would like to reiterate that appeal is not a constitutional right, but a mere statutory privilege. Thus, parties who seek to
avail themselves of it must comply with the statutes or rules allowing it. Perfection of an appeal in the manner and within the period
permitted by law is mandatory and jurisdictional. The requirements for perfecting an appeal must, as a rule, be strictly followed. Such
requirements are considered indispensable interdictions against needless delays and are necessary for the orderly discharge of the
judicial business. Failure to perfect the appeal renders the judgment of the court final and executory. Just as a losing party has the
privilege to file an appeal within the prescribed period, so does the winner also have the correlative right to enjoy the finality of the
decision.16
III
The propriety of the monetary award of the LA is already binding upon this Court. As we have repeatedly pointed out, petitioners failure
to perfect their appeal in the manner and period required by the rules makes the award final and executory. Petitioners stance that
there was no sufficient basis for the award of the payment of withheld wages, separation pay and 13th month pay must fail. Such
matters are questions of facts requiring the presentation of evidence. Findings of facts of administrative and quasi-judicial bodies, which
have acquired expertise on specific matters, are accorded weight and respect by the Court. They are deemed final and conclusive,
unless compelling reasons are presented for us to digress therefrom.

WHEREFORE, in view of the foregoing, the petition is DENIED for lack of merit. The Decision dated April 15, 2005 and the Resolution
dated July 12, 2005 of the Court of Appeals in CA-G.R. SP No. 84206 are hereby AFFIRMED.
PAULINO S. ASILO, JR., Petitioner,
vs.
THE PEOPLE OF THE PHILIPPINES and Spouses VISITACION AND CESAR C. BOMBASI, Respondents.
At bench are appeals by certiorari1 from the Decision2 of the Fourth Division of the Sandiganbayan; (1) finding Demetrio T.
Comendador3 (Mayor Comendador) and Paulino S. Asilo, Jr.4 guilty beyond reasonable doubt of violation of Sec. 3(e) of Republic Act
No. 3019; (2) dismissing the cases against accused Alberto S. Angeles;5 (3) ordering the defendants Municipality of Nagcarlan, Laguna,
Demetrio T. Comendador and Paulino S. Asilo, Jr. to pay the plaintiffs now respondents Visitacion C. Bombasi (Visitacion) and Cesar C.
Bombasi damages; and (4) dismissing the cases against the spouses Alida and Teddy Coroza6 and Benita and Isagani Coronado.7
The factual antecedents of the case are:
On 15 March 1978, Private Respondent Visitacions late mother Marciana Vda. De Coronado (Vda. De Coronado) and the Municipality
of Nagcarlan, Laguna (represented by the then Municipal Mayor Crisostomo P. Manalang) entered into a lease contract whereby the
Municipality allowed the use and enjoyment of property comprising of a lot and a store located at the corner of Coronado and E.
Fernandez Sts. at Poblacion, Nagcarlan, Laguna, in favor of the respondents mother for a period of twenty (20) years beginning on 15
March 1978 until 15 March 1998, extendible for another 20 years.8
The lease contract provided that the late Vda. De Coronado could build a firewall on her rented property which must be at least as high
as the store; and in case of modification of the public market, she or her heir/s would be given preferential rights.
Visitacion took over the store when her mother died sometime in 1984.9 From then on up to January 1993, Visitacion secured the yearly
Mayors permits.10
Sometime in 1986, a fire razed the public market of Nagcarlan. Upon Visitacions request for inspection on 15 May 1986, District
Engineer Marcelino B. Gorospe (Engineer Gorospe) of the then Ministry of Public Works and Highways,11 Regional Office No. IV-A,
found that the store of Visitacion remained intact and stood strong. This finding of Engineer Gorospe was contested by the Municipality
of Nagcarlan.
The store of Visitacion continued to operate after the fire until 15 October 1993.
On 1 September 1993, Visitacion received a letter12 from Mayor Comendador directing her to demolish her store within five (5) days
from notice. Attached to the letter were copies of Sangguniang Bayan Resolution No. 15613dated 30 August 1993 and a Memorandum
issued by Asst. Provincial Prosecutor Marianito Sasondoncillo of Laguna.
The relevant provisos of the Resolution No. 156 states that:
NOW THEREFORE, be it RESOLVED, as it hereby resolved to authorize Hon. Demetrio T. Comendador to enforce and order the
Coronados to demolish the building constructed on the space previously rented to them in order to give way for the construction of a
new municipal market building.
RESOLVED FURTHER, to authorize Demetrio T. Comendador, Honorable Mayor of Nagcarlan to file an Unlawful Detainer Case with
damages for the expenses incurred due to the delay in the completion of the project if the Coronados continuously resists the order.
On 3 September 1993, Visitacion wrote a reply letter to Mayor Comendador saying that: (1) the lease contract was still existing and
legally binding; (2) she was willing to vacate the store as long as same place and area would be given to her in the new public market;
and (3) in case her proposals are not acceptable to Mayor Comendador, for the latter to just file an unlawful detainer case against her
pursuant to Sangguniang Bayan Resolution No. 156. Pertinent portions of the letter read:
x x x With all due respect to the resolution of the Municipal Council and the opinion rendered by the Laguna Asst. Provincial Prosecutor,
it is my considered view, however, arrived at after consultation with my legal counsel, that our existing lease contract is still legally
binding and in full force and effect. Lest I appear to be defiant, let me reiterate to you and the council that we are willing to vacate the
said building provided that a new contract is executed granting to us the same space or lot and the same area. I believe that our
proposal is most reasonable and fair under the circumstance. If you are not amenable to the said proposal, I concur with the position

taken by the Council for you to file the appropriate action in court for unlawful detainer to enable our court to finally thresh out our
differences.141avvphi1
On 15 September 1993, Asst. Provincial Prosecutor Florencio Buyser sent a letter to Visitacion ordering her to vacate the portion of the
public market she was occupying within 15 days from her receipt of the letter; else, a court action will be filed against her.
On 11 October 1993, the Sangguniang Bayan of Nagcarlan, Laguna issued Resolution No. 183 authorizing Mayor Comendador to
demolish the store being occupied by Visitacion using legal means. The significant portion of the Resolution reads:
Kung kaya ang Sangguniang Bayan ay buong pagkakaisang IPINASIYA: Ang pagbibigay kapangyarihan kay Kgg. Demetrio T.
Comendador na ipagiba ang anumang istrakturang nagiging sagabal sa mabilis at maayos na pagbabangon ng pamilihang bayan.15
On 14 October 1993, Municipal Administrator Paulino S. Asilo, Jr. (Asilo) also sent a letter16 to Visitacion informing her of the impending
demolition of her store the next day. Within the same day, Visitacion wrote a reply letter17 to Asilo, alleging that there is no legal right to
demolish the store in the absence of a court order and that the Resolutions did not sanction the demolition of her store but only the
filing of an appropriate unlawful detainer case against her. She further replied that if the demolition will take place, appropriate
administrative, criminal and civil actions will be filed against Mayor Comendador, Asilo and all persons who will take part in the
demolition.
On 15 October 1993, Mayor Comendador relying on the strength of Sangguniang Bayan Resolution Nos. 183 and 156 authorized the
demolition of the store with Asilo and Angeles supervising the work.
Engineer Winston Cabrega (Engineer Cabrega), a licensed civil engineer, estimated the cost of the demolished property as amounting
to P437,900.0018
On 19 August 1994, Visitacion, together with her husband Cesar Bombasi (Spouses Bombasi) filed with the Regional Trial Court of San
Pablo City, Laguna a Civil Case19 for damages with preliminary injunction against the Municipality of Nagcarlan, Laguna, Mayor
Demetrio T. Comendador, Paulino S. Asilo, Jr., and Alberto S. Angeles. The complaint was soon after amended to include the Spouses
Benita and Isagani Coronado and Spouses Alida and Teddy Coroza as formal defendants because they were then the occupants of the
contested area.
The spouses prayed for the following disposition:
1. RESTRAINING or ENJOINING defendant Municipality and defendant Municipal Mayor from leasing the premises subject of
lease Annex "A" hereof, part of which is now occupied by PNP Outpost and by the Municipal Collectors Office, and the
equivalent adjacent area thereof, and to cause the removal of said stalls;
2. UPHOLDING the right of plaintiffs to occupy the equivalent corner area of the leased areas being now assigned to other
persons by defendants Municipality and/or by defendant Municipal Mayor, and to allow plaintiffs to construct their stalls
thereon;
3. MAKING the injunction permanent, after trial;
4. ORDERING defendants to pay plaintiffs, jointly and severally, the following
(a) P437,900.00 for loss of building/store and other items therein;
(b) P200,000.00 for exemplary damages;
(c) P200,000.00 for moral damages;
(d) P30,.00 for attorneys fees and P700.00 for every attendance of counsel in court.
5. GRANTING further reliefs upon plaintiffs as justice and equity may warrant in the premises.20

Spouses Bombasi, thereafter, filed a criminal complaint21 against Mayor Comendador, Asilo and Angeles for violation of Sec. 3(e) of
Republic Act No. 3019 otherwise known as the "Anti-Graft and Corrupt Practices Act" before the Office of the Ombudsman. On 22
February 1996, an Information22 against Mayor Comendador, Asilo and Angeles was filed, which reads:
That on or about October 15, 1993, at Nagcarlan, Laguna, Philippines, and within the jurisdiction of this Honorable Court, the abovenamed accused, all public officers, accused Demetrio T. Comendador, being then the Municipal Mayor, accused Paulino S. Asilo, Jr.
being then the Municipal Administrator and accused Alberto S. Angeles being then the Municipal Planning and Development
Coordinator, all of the Municipality of Nagcarlan, Laguna, committing the crime herein charged in relation to, while in the performance
and taking advantage of their official functions, conspiring and confederating with each other, and with evident bad faith, manifest
partiality or through gross inexcusable negligence, did then and there willfully, unlawfully, criminally cause the demolition of a public
market stall leased by the municipal government in favor of one Visitacion Coronado-Bombasi without legal or justifiable ground
therefor, thus, causing undue injury to the latter in the amount of PESOS: FOUR HUNDRED THIRTY SEVEN THOUSAND AND NINE
HUNDRED ONLY (P437,900.00).
Upon their arraignments, all the accused entered their separate pleas of "Not Guilty."
On 4 March 1997, the Sandiganbayan promulgated a Resolution ordering the consolidation of Civil Case No. SP-4064 (94)23 with
Criminal Case No. 23267 pending before the Third Division pursuant to Section 4, Presidential Decree No. 1606, which pertinently
reads:
Any provision of law or Rules of Court to the contrary notwithstanding, the criminal action and the corresponding civil action for the
recovery of civil liability arising from the offense charged shall at all times be simultaneously instituted with, and jointly determined in the
same proceeding by the Sandiganbayan or the appropriate courts, the filing of the criminal action being deemed to necessarily carry
with it the filing of the civil action, and no right to reserve the filing of such civil action separately from the criminal action shall be
recognized; Provided, however, that where the civil action had heretofore been filed separately but judgment therein has not yet been
rendered, and the criminal case is hereafter filed with the Sandiganbayan or the appropriate court, said civil action shall be transferred
to the Sandiganbayan or the appropriate court as the case may be, for consolidation and joint determination with the criminal action,
otherwise the separate civil action shall be deemed abandoned.24
During the pendency of the case, Alberto S. Angeles died on 16 November 1997. Accordingly, the counsel of Angeles filed a motion to
drop accused Angeles. On 22 September 1999, the Third Division of Sandiganbayan issued an Order25 DISMISSING the case against
Angeles. The germane portion of the Order reads:
In view of the submission of the death certificate of accused/defendant Alberto S. Angeles, and there being no objection on the part of
the Public Prosecutor, cases against deceased accused/defendant Angeles only, are hereby DISMISSED.
The death of Mayor Comendador followed on 17 September 2002. As a result, the counsel of the late Mayor filed on 3 March 2003 a
Manifestation before the Sandiganbayan informing the court of the fact of Mayor Comendadors death.
On 28 April 2003, the Sandiganbayan rendered a decision, the dispositive portion of which reads as follows:
WHEREFORE, premises considered, judgment is hereby rendered as follows:
In Criminal Case No. 23267, the court finds accused Demetrio T. Comendador and Paulino S. Asilo, Jr. guilty beyond reasonable doubt
of violation of Sec. 3(e) of Republic Act. No. 3019 as amended, and in the absence of aggravating and mitigating circumstances,
applying the Indeterminate Sentence Law, said accused are sentenced to suffer the indeterminate penalty of 6 years and 2 months
imprisonment as minimum to 10 years and 1 day as maximum.
The order of the court dated September 22, 1999 dismissing the cases against the accused Alberto S. Angeles, who died on November
16, 1997 is hereby reiterated.
In Civil Case No. 4064, defendants Municipality of Nagcarlan, Laguna, Demetrio T. Comendador and Paulino S. Asilo, Jr. are hereby
ordered jointly and severally to pay plaintiff P437,900.00 as actual damages for the destruction of the store; P100,000.00 as moral
damages; P30,000.00 as attorneys fees, and to pay the cost of the suit. The prayer for exemplary damages is denied as the court
found no aggravating circumstances in the commission of the crime.
In view of this courts finding that the defendant spouses Alida and Teddy Coroza are lawful occupants of the subject market stalls from
which they cannot be validly ejected without just cause, the complaint against them is dismissed. The complaint against defendant

spouses Benita and Isagani Coronado is likewise dismissed, it appearing that they are similarly situated as the spouses Coroza.
Meanwhile, plaintiff Visitacion Bombasi is given the option to accept market space being given to her by the municipality, subject to her
payment of the appropriate rental and permit fees.
The prayer for injunctive relief is denied, the same having become moot and academic.
The compulsory counterclaim of defendant Comendador is likewise denied for lack of merit.26
Within the same day, Asilo, through his counsel, filed a Motion for Reconsideration27 of the Decision alleging that there was only an
error of judgment when he complied with and implemented the order of his superior, Mayor Comendador. He likewise alleged that there
is no liability when a public officer commits in good faith an error of judgment. The Sandiganbayan, on its Resolution28 dated 21 July
2003 denied the Motion for Reconsideration on the ground that good faith cannot be argued to support his cause in the face of the
courts finding that bad faith attended the commission of the offense charged. The Court further explained that the invocation of
compliance with an order of a superior is of no moment for the "demolition [order] cannot be described as having the semblance of
legality inasmuch as it was issued without the authority and therefore the same was patently illegal."29
The counsel for the late Mayor also filed its Motion for Reconsideration30 on 12 May 2003 alleging that the death of the late Mayor had
totally extinguished both his criminal and civil liability. The Sandiganbayan on its Resolution31 granted the Motion insofar as the
extinction of the criminal liability is concerned and denied the extinction of the civil liability holding that the civil action is an independent
civil action.
Hence, these Petitions for Review on Certiorari.32
Petitioner Asilo argues that in order to sustain conviction under Sec. 3(e) of Republic Act No. 3019 or "The Anti-Graft and Corrupt
Practices Act," the public officer must have acted with manifest partiality, evident bad faith or gross negligence. He also contended that
he and his co-accused acted in good faith in the demolition of the market and, thereby, no liability was incurred.
On the other hand, Petitioner Victoria argues that the death of Mayor Comendador prior to the promulgation of the decision
extinguished NOT ONLY Mayor Comendadors criminal liability but also his civil liability. She also asserted good faith on the part of the
accused public officials when they performed the demolition of the market stall. Lastly, she contended that assuming arguendo that
there was indeed liability on the part of the accused public officials, the actual amount of damages being claimed by the Spouses
Bombasi has no basis and was not duly substantiated.
Liability of the accused public officials
under Republic Act No. 3019
Section 3(e) of Republic Act No. 3019 provides:
In addition to acts or omissions of public officers already penalized by existing law, the following shall constitute corrupt practices of any
public officer and are hereby declared to be unlawful:
xxxx
(e) Causing any undue injury to any party, including the Government, or giving any private party any unwarranted benefits, advantage
or preference in the discharge of his official, administrative or judicial functions throughmanifest partiality, evident bad faith or gross
inexcusable negligence. This provision shall apply to officers and employees of offices or government corporations charged with the
grant of licenses or permits or other concessions.
The elements of the offense are as follows: (1) that the accused are public officers or private persons charged in conspiracy with them;
(2) that said public officers commit the prohibited acts during the performance of their official duties or in relation to their public
positions; (3) that they caused undue injury to any party, whether the Government or a private party; (4) OR that such injury is caused
by giving unwarranted benefits, advantage or preference to the other party; and (5) that the public officers have acted with manifest
partiality, evident bad faithor gross inexcusable negligence.33
We sustain the Sandiganbayan in its finding of criminal and civil liabilities against petitioner Asilo and petitioner Mayor Comendador as
here represented by his widow Victoria Bueta.

We agree with the Sandiganbayan that it is undisputable that the first two requisites of the criminal offense were present at the time of
the commission of the complained acts and that, as to the remaining elements, there is sufficient amount of evidence to establish that
there was an undue injury suffered on the part of the Spouses Bombasi and that the public officials concerned acted with evident bad
faith when they performed the demolition of the market stall.
Causing undue injury to any party, including the government, could only mean actual injury or damage which must be established by
evidence.34
In jurisprudence, "undue injury" is consistently interpreted as "actual." Undue has been defined as "more than necessary, not proper,
[or] illegal;" and injury as "any wrong or damage done to another, either in his person, rights, reputation or property [that is, the] invasion
of any legally protected interest of another." Actual damage, in the context of these definitions, is akin to that in civil law.35
It is evident from the records, as correctly observed by the Sandiganbayan, that Asilo and Mayor Comendador as accused below did
not deny that there was indeed damage caused the Spouses Bombasi on account of the demolition. We affirm the finding that:
xxx. Clearly, the demolition of plaintiffs store was carried out without a court order, and notwithstanding a restraining order which the
plaintiff was able to obtain. The demolition was done in the exercise of official duties which apparently was attended by evident bad
faith, manifest partiality or gross inexcusable negligence as there is nothing in the two (2) resolutions which gave the herein accused
the authority to demolish plaintiffs store.
"Evident bad faith" connotes not only bad judgment but also palpably and patently fraudulent and dishonest purpose to do moral
obliquity or conscious wrongdoing for some perverse motive or ill will.36 [It] contemplates a state of mind affirmatively operating with
furtive design or with some motive or self-interest or ill will or for ulterior purposes.37
It is quite evident in the case at bar that the accused public officials committed bad faith in performing the demolition.
First, there can be no merit in the contention that respondents structure is a public nuisance. The abatement of a nuisance without
judicial proceedings is possible if it is nuisance per se.38 Nuisance per se is that which is nuisance at all times and under any
circumstance, regardless of location and surroundings.39 In this case, the market stall cannot be considered as a nuisance per se
because as found out by the Court, the buildings had not been affected by the 1986 fire. This finding was certified to by Supervising
Civil Engineer Wilfredo A. Sambrano of the Laguna District Engineer Office.40 To quote:
An inspection has been made on the building (a commercial establishment) cited above and found out the following:
1. It is a two-storey building, sketch of which is attached.
2. It is located within the market site.
3. The building has not been affected by the recent fire.
4. The concrete wall[s] does not even show signs of being exposed to fire.41
Second, the Sangguniang Bayan resolutions are not enough to justify demolition. Unlike its predecessor law,42the present Local
Government Code43 does not expressly provide for the abatement of nuisance.44 And even assuming that the power to abate nuisance
is provided for by the present code, the accused public officials were under the facts of this case, still devoid of any power to demolish
the store. A closer look at the contested resolutions reveals that Mayor Comendador was only authorized to file an unlawful detainer
case in case of resistance to obey the order or to demolish the building using legal means. Clearly, the act of demolition without legal
order in this case was not among those provided by the resolutions, as indeed, it is a legally impossible provision.
Furthermore, the Municipality of Nagcarlan, Laguna, as represented by the then Mayor Comendador, was placed in estoppel after it
granted yearly business permits45 in favor of the Spouses Bombasi. Art. 1431 of the New Civil Code provides that, 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. The representation made by the municipality that the Spouses Bombasi had the right to continuously operate its
store binds the municipality. It is utterly unjust for the Municipality to receive the benefits of the store operation and later on claim the
illegality of the business.

The bad faith of the petitioners completes the elements of the criminal offense of violation of Sec. 3(e) of Republic Act No. 3019. The
same bad faith serves as the source of the civil liability of Asilo, Angeles, and Mayor Comendador.
It must be noted that when Angeles died on 16 November 1997, a motion to drop him as an accused was filed by his counsel with no
objection on the part of the prosecution. The Sandiganbayan acted favorably on the motion and issued an Order dismissing all the
cases filed against Angeles. On the other hand, when Mayor Comendador died and an adverse decision was rendered against him
which resulted in the filing of a motion for reconsideration by Mayor Comendadors counsel, the prosecution opposed the Motion
specifying the ground that the civil liability did not arise from delict, hence, survived the death of the accused. The Sandiganbayan
upheld the opposition of the prosecution which disposition was not appealed.
We note, first off, that the death of Angeles and of Mayor Comendador during the pendency of the case extinguished their criminal
liabilities.
We now hold, as did the Sandiganbayan that the civil liability of Mayor Comendador survived his death; and that of Angeles could have
likewise survived had it not been for the fact that the resolution of the Sandiganbayan that his death extinguished the civil liability was
not questioned and lapsed into finality.
We laid down the following guidelines in People v. Bayotas:46
Death of the accused pending appeal of his conviction extinguishes his criminal liability as well as the civil liability based solely thereon.
As opined by Justice Regalado, in this regard, "the death of the accused prior to final judgment terminates his criminal liability and only
the civil liability directly arising from and based solely on the offense committed, i.e., civil liability ex delicto in senso strictiore."
Corollarily, the claim for civil liability survives notwithstanding the death of (the) accused, if the same may also be predicated on a
source of obligation other than delict. Article 1157 of the Civil Code enumerates these other sources of obligation from which the civil
liability may arise as a result of the same act or omission:
a) Law
b) Contracts
c) Quasi-contracts
d) Acts or omissions punished by law; and
e) Quasi-delicts. (Emphasis ours)
Where the civil liability survives, as explained [above], an action for recovery therefore may be pursued but only by way of filing a
separate civil action47 and subject to Section 1, Rule 111 of the 1985 Rules on Criminal Procedure as amended. This separate civil
action may be enforced either against the executor/administrator or the estate of the accused, depending on the source of obligation
upon which the same is based as explained above.
Finally, the private offended party need not fear a forfeiture of his right to file this separate civil action by prescription, in cases where
during the prosecution of the criminal action and prior to its extinction, the private-offended party instituted together therewith the civil
action. In such case, the statute of limitations on the civil liability is deemed interrupted during the pendency of the criminal case,
conformably with provisions of Article 1155 of the New Civil Code, which should thereby avoid any apprehension on a possible privation
of right by prescription.
Upon death of the accused pending appeal of his conviction, the criminal action is extinguished inasmuch as there is no longer a
defendant to stand as the accused; the civil action instituted therein for recovery of civil liability ex delicto is ipso facto extinguished,
grounded as it is on the criminal.48
The New Civil Code provisions under the Chapter, Human Relations, were cited by the prosecution to substantiate its argument that the
civil action based therein is an independent one, thus, will stand despite the death of the accused during the pendency of the case.

On the other hand, the defense invoked Section 4 of Presidential Decree No. 1606, as amended by Republic Act No. 8249, in support
of its argument that the civil action was dependent upon the criminal action, thus, was extinguished upon the death of the accused. The
law provides that:
Any provision of law or the Rules of Court to the contrary notwithstanding, the criminal action and the corresponding civil action for the
recovery of civil liability arising from the offense charged shall at all times be simultaneously instituted with, and jointly determined in the
same proceeding by, the Sandiganbayan, the filing of the criminal action being deemed to necessarily carry with it the filing of the civil
action, and no right to reserve the filing of such action shall be recognized. (Emphasis ours)
We agree with the prosecution.
Death of Mayor Comendador during the pendency of the case could have extinguished the civil liability if the same arose directly from
the crime committed. However, in this case, the civil liability is based on another source of obligation, the law on human relations.49 The
pertinent articles follow:
Art. 31 of the Civil Code states:
When the civil action is based on an obligation not arising from the act or omission complained of as a felony, such civil action may
proceed independently of the criminal proceedings and regardless of the result of the latter.
And, Art. 32(6) states:
Any public officer or employee, or any private individual, who directly or indirectly obstructs, defeats, violates or in any manner impedes
or impairs any of the following rights and liberties of another person shall be liable to the latter for damages:
(6) The right against deprivation of property without due process of law;
xxxx
In any of the cases referred to in this article, whether or not the defendant's act or omission constitutes a criminal offense, the aggrieved
party has a right to commence an entirely separate and distinct civil action for damages, and for other relief. Such civil action shall
proceed independently of any criminal prosecution (if the latter be instituted), and may be proved by a preponderance of evidence.
As held in Aberca v. Ver:
It is obvious that the purpose of the above codal provision [Art. 32 of the New Civil Code] is to provide a sanction to the deeply
cherished rights and freedoms enshrined in the Constitution. Its message is clear; no man may seek to violate those sacred rights with
impunity. x x x.50
Indeed, the basic facts of this case point squarely to the applicability of the law on human relations. First, the complaint for civil liability
was filed way AHEAD of the information on the Anti-Graft Law. And, the complaint for damages specifically invoked defendant Mayor
Comendadors violation of plaintiffs right to due process. Thus:
xxxx
In causing or doing the forcible demolition of the store in question, the individual natural defendants did not only act with grave abuse of
authority but usurped a power which belongs to our courts of justice; such actuations were done with malice or in bad faith and
constitute an invasion of the property rights of plaintiff(s) without due process of law.
xxxx
The Court is in one with the prosecution that there was a violation of the right to private property of the Spouses Bombasi. The accused
public officials should have accorded the spouses the due process of law guaranteed by the Constitution and New Civil Code. The
Sangguniang Bayan Resolutions as asserted by the defense will not, as already shown, justify demolition of the store without court
order. This Court in a number of decisions51 held that even if there is already a writ of execution, there must still be a need for a special
order for the purpose of demolition issued by the court before the officer in charge can destroy, demolish or remove improvements over
the contested property.52 The pertinent provisions are the following:

Before the removal of an improvement must take place, there must be a special order, hearing and reasonable notice to remove.
Section 10(d), Rule 39 of the Rules of Court provides:
(d) Removal of improvements on property subject of execution. When the property subject of execution contains improvements
constructed or planted by the judgment obligor or his agent, the officer shall not destroy, demolish or remove said improvements except
upon special order of the court, issued upon motion of the judgment obligee after due hearing and after the former has failed to remove
the same within a reasonable time fixed by the court.
The above-stated rule is clear and needs no interpretation. If demolition is necessary, there must be a hearing on the motion filed and
with due notices to the parties for the issuance of a special order of demolition.53
This special need for a court order even if an ejectment case has successfully been litigated, underscores the independent basis for
civil liability, in this case, where no case was even filed by the municipality.
The requirement of a special order of demolition is based on the rudiments of justice and fair play. It frowns upon arbitrariness and
oppressive conduct in the execution of an otherwise legitimate act. It is an amplification of the provision of the Civil Code that every
person must, in the exercise of his rights and in the performance of his duties, act with justice, give everyone his due, and observe
honesty and good faith.54
Notably, the fact that a separate civil action precisely based on due process violations was filed even ahead of the criminal case, is
complemented by the fact that the deceased plaintiff Comendador was substituted by his widow, herein petitioner Victoria who specified
in her petition that she has "substituted him as petitioner in the above captioned case." Section 1, Rule III of the 1985 Rules in Criminal
Procedure mentioned in Bayotas is, therefore, not applicable. Truly, the Sandiganbayan was correct when it maintained the separate
docketing of the civil and criminal cases before it although their consolidation was erroneously based on Section 4 of Presidential
Decree No. 1606 which deals with civil liability "arising from the offense charged."
We must, however, correct the amount of damages awarded to the Spouses Bombasi.
To seek recovery of actual damages, it is necessary to prove the actual amount of loss with a reasonable degree of certainty, premised
upon competent proof and on the best evidence obtainable.55 In this case, the Court finds that the only evidence presented to prove the
actual damages incurred was the itemized list of damaged and lost items56 prepared by Engineer Cabrega, an engineer commissioned
by the Spouses Bombasi to estimate the costs.
As held by this Court in Marikina Auto Line Transport Corporation v. People of the Philippines,57
x x x [W]e agree with the contention of petitioners that respondents failed to prove that the damages to the terrace caused by the
incident amounted to P100,000.00. The only evidence adduced by respondents to prove actual damages claimed by private respondent
were the summary computation of damage made by Engr. Jesus R. Regal, Jr. amounting to P171,088.46 and the receipt issued by the
BB Construction and Steel Fabricator to private respondent for P35,000.00 representing cost for carpentry works, masonry, welding,
and electrical works. Respondents failed to present Regal to testify on his estimation. In its five-page decision, the trial court
awardedP150,000.00 as actual damages to private respondent but failed to state the factual basis for such award. Indeed, the trial
court merely declared in the decretal portion of its decision that the "sum of P150,000.00 as reasonable compensation sustained by
plaintiff for her damaged apartment." The appellate court, for its part, failed to explain how it arrived at the amount of P100,000.00 in its
three-page decision. Thus, the appellate court merely declared:
With respect to the civil liability of the appellants, they contend that there was no urgent necessity to completely demolish the apartment
in question considering the nature of the damages sustained as a result of the accident. Consequently, appellants continue, the award
of P150,000.00 as compensation sustained by the plaintiff-appellee for her damaged apartment is an unconscionable amount.
Further, in one case,58 this Court held that the amount claimed by the respondent-claimants witness as to the actual amount of
damages "should be admitted with extreme caution considering that, because it was a bare assertion, it should be supported by
independent evidence." The Court further said that whatever claim the respondent witness would allege must be appreciated in
consideration of his particular self-interest.59 There must still be a need for the examination of the documentary evidence presented by
the claimants to support its claim with regard to the actual amount of damages.
The price quotation made by Engineer Cabrega presented as an exhibit60 partakes of the nature of hearsay evidence considering that
the person who issued them was not presented as a witness.61 Any evidence, whether oral or documentary, is hearsay if its probative
value is not based on the personal knowledge of the witness but on the knowledge of another person who is not on the witness stand.

Hearsay evidence, whether objected to or not, has no probative value unless the proponent can show that the evidence falls within the
exceptions to the hearsay evidence rule.62 Further, exhibits do not fall under any of the exceptions provided under Sections 37 to 47 of
Rule 130 of the Rules of Court.
Though there is no sufficient evidence to award the actual damages claimed, this Court grants temperate damages for P200,000.00 in
view of the loss suffered by the Spouses Bombasi. Temperate damages are awarded in accordance with Art. 2224 of the New Civil
Code when the court finds that some pecuniary loss has been suffered but its amount cannot, from the nature of the case, be proven
with certainty. The amount of temperate or moderated damages is usually left to the discretion of the courts but the same should be
reasonable, bearing in mind that the temperate damages should be more than nominal but less than compensatory.63 Without a doubt,
the Spouses Bombasi suffered some form of pecuniary loss in the impairment of their store. Based on the record of the case, 64 the
demolished store was housed on a two-story building located at the markets commercial area and its concrete walls remained strong
and not affected by the fire. However, due to the failure of the Spouses Bombasi to prove the exact amount of damage in accordance
with the Rules of Evidence,65 this court finds that P200,000.00 is the amount just and reasonable under the circumstances.
WHEREFORE, the instant appeal is DENIED. Accordingly, the Decision of the Sandiganbayan dated 28 April 2003 is hereby
AFFIRMED WITH MODIFICATION. The Court affirms the decision finding the accused Paulino S. Asilo, Jr. and Demetrio T.
Comendador guilty of violating Section 3(e) of Republic Act No. 3019. We declare the finality of the dismissal of both the criminal and
civil cases against Alberto S. Angeles as the same was not appealed. In view of the death of Demetrio T. Comendador pending trial, his
criminal liability is extinguished; but his civil liability survives. The Municipality of Nagcarlan, Paulino Asilo and Demetrio T. Comendador,
as substituted by Victoria Bueta Vda. De Comendador, are hereby declared solidarily liable to the Spouses Bombasi for temperate
damages in the amount of P200,000.00 and moral damages in the amount of P100,000.00.
Costs against the petitioners-appellants.
SPOUSES RUBIN AND PORTIA HOJAS, Petitioners, vs.PHILIPPINE AMANAH BANK AND RAMON KUE, Respondents.
This is a petition for review on certiorari assailing the July 28, 2010 Decision1 of the Court of Appeals (CA), in CA-G.R. CV No. 55722,
which affirmed the May 27, 1996 Decision of the Regional Trial Court, Branch 13, Zamboanga City (RTC), dismissing Civil Case No.
1028 (3952), an action for "Determination of True Balance of Mortgage, Debt, Annulment/Setting
Aside of Extrajudicial Foreclosure of Mortgage and Damages, with Prayer for Preliminary Injunction."
The petitioners, Spouses Rubin and Portia Hojas (petitioners), alleged that on April 11, 1980, they secured a loan from respondent
Philippine Amanah Bank (PAB) in the amount of P450,000.00; that this loan was secured by a mortgage, covering both personal and
real properties; that from May 14, 1981 to June 27, 1986, they made various payments amounting to P486,162.13; that PAB, however,
did not properly credit their payments; that based on the summary of payments furnished by PAB to them on February 24, 1989, only
13 payments were credited, erroneously amounting to P317,048.83; that PAB did not credit the payment they made
totalingP165,623.24; and that, in the statement of their account as of October 17, 1984, PAB listed their total payment as 412,211.54
on the principal, and P138,472.09 as 30% interest, all amounting to P550,683.63, despite the fact that at that time, petitioners had
already paid the total sum of P486,162.13.2
Petitioners further averred that for failure to pay the loan, PAB applied for the extrajudicial foreclosure of the mortgaged real properties
of petitioners with the Ex-Officio Sheriff; that consequently, a Notice of Extrajudicial Foreclosure was issued on January 12, 1987 setting
the foreclosure sale on April 21, 1987 and, stating therein the mortgage debt in the sum of P450,000.00; and that, in the public auction
conducted, PAB acquired said real property.3
It was further alleged that on March 9, 1988, through the intervention of then Senator Aquilino Pimentel, Farouk A. Carpizo (Carpizo),
the OICPresident of PAB, wrote Roberto Hojas (Roberto), petitioners son, informing him that although the one-year redemption period
would expire on April 21, 1988, by virtue of the banks incentive scheme, the redemption period was extended until December 31, 1988;
that despite said letter from the OIC-President, the OIC of the Project Development Department of PAB wrote Rubin Hojas that the real
properties acquired by PAB would be sold in a public bidding before the end of August, 1988; that on November 4, 1988, a public
bidding was conducted; that in the said bidding, the mortgaged properties were awarded to respondent Ramon Kue (Kue); that
subsequently, they received a letter from the OIC of the Project Development Department, dated January 3, 1989, informing them that
they had fifteen (15) days from receipt within which to vacate the premises; that Kue then sent another letter, dated January 31, 1989,
informing them that he had already acquired the said property and that they were requested to vacate the premises within fifteen (15)
days from receipt thereof;4 and that because of this development, on May 7, 1991, petitioners filed an action for "Determination of True
Balance of Mortgage Debt, Annulment/Setting Aside of Extrajudicial Foreclosure of Mortgage and Damages, with Prayer for Preliminary
Injunction" against PAB.5

On May 27, 1996, the RTC dismissed petitioners complaint. It ruled, among others, that: 1) PAB was not guilty of bad faith in
conducting the extrajudicial foreclosure as it, at one time, even suspended the conduct of the foreclosure upon the request of
petitioners, who, nevertheless, failed to exert effort to settle their accounts; 2) because petitioners failed to redeem their properties
within the period allowed, PAB became its absolute owner and, as such, it had the right to sell the same to Kue, who acquired the
property for value and in good faith; and 3) the subsequent foreclosure and auction sale having been conducted above board and in
accordance with the requisite legal procedure, collusion between PAB and Kue was certainly alien to the issue.6
Aggrieved, petitioners filed an appeal assailing the May 27, 1996 RTC Decision. They asserted that the March 9, 1988 Letter of Carpizo
to Roberto Hojas extended the redemption period from April 21 to December 31, 1988. Considering that they had relied on Carpizos
representation, PAB violated the principle of estoppel when it conducted the public sale on November 4, 1988.7 Their basis was the
portion of said letter which stated:
xxxx
As the Bank has adopted an incentive scheme whereby payments are liberalized to give chances to former owners to repossess their
properties, we suggest that you advise your parents to drop by at our Zamboanga Office so they can avail of this rare privilege which
shall be good only up to December 31, 1988. (Emphasis supplied)8
The CA was not sympathetic with petitioners position. It held that the period of redemption was never extended. The date "December
31, 1988" was not an extension of the redemption period. It was merely the last day for the availment of the liberalized payment for the
repossession of foreclosed assets under PABs incentive scheme. PAB, through said letter, did not make an unqualified representation
to petitioners that it had extended the redemption period. As such, PAB could not be said to have violated the principle of estoppel when
it conducted a public sale on November 4, 1988.9 Thus, the dispositive portion of the CA decision reads:
ACCORDINGLY, the instant appeal is DENIED. The Decision dated May 27, 1996, of the Regional Trial Court, 9th Judicial Region,
Branch No. 13 of Zamboanga City, in Civil Case No. 1028 (3952), is AFFIRMED.
SO ORDERED.10
Undaunted, petitioners filed the present petition for review. It postulated the sole issue:
WHETHER OR NOT THE CA ERRED IN NOT HOLDING PAB TO HAVE VIOLATED THE PRINCIPLE OF ESTOPPEL WHEN THE
LATTER CONDUCTED THE NOVEMBER 4, 1988 PUBLIC SALE.
Petitioners reiterated their argument that the November 4, 1988 public sale by PAB was violative of the principle of estoppel because
said bank made it appear that the one-year redemption period was extended. As such, when PAB sold the property before said date,
they suffered damages and were greatly prejudiced.11 They also argued that since they manifested their interest in availing of the said
"incentive scheme," PAB should have, at the very least, waited until December 31, 1988, before it sold the subject foreclosed property
in a public auction.12
On the other hand, PAB explains that the purpose of the "incentive scheme" was to give previous owners the chance to redeem their
properties on easy payment term basis, through condonation of some charges and penalties and allowing payment by installment
based on their proposals which may be acceptable to PAB. Therefore, the March 9, 1988 Letter of Carpizo was an invitation for
petitioners to submit a proposal to PAB.13 It was not meant to extend the one-year redemption period.
As early as August 11, 1988, PAB wrote petitioners informing them of the scheduled public bidding. After receipt of the letter, petitioners
went to PAB to signify their willingness to avail of the said incentive scheme. They, however, failed to submit a proposal. In fact, PAB did
not hear from petitioners again. As such, the respondent sold the subject property in a public sale on November 4, 198814 PAB cited the
RTCs finding that although the petitioners manifested their intention to avail of the incentive scheme desire alone was not sufficient.
Redemption is not a matter of intent but involved making the proper payment or tender of the price of the land within the specified
period.15
The petition is bereft of merit.
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 on it.16 This doctrine is based on the grounds of public policy, fair dealing, good faith, and justice
and its purpose is to forbid one to speak against his own act, representations or commitments to the injury of one to whom they were
directed and who reasonably relied on it.17 Thus, in order for this doctrine to operate, a representation must have been made to the

detriment of another who relied on it. In other words, estoppel would not lie against one who, in the first place, did not make any
representation.
In this case, a perusal of the letter, on which petitioners based their position that the redemption period had been extended, shows
otherwise. Pertinent portions of the said letter read:
Our records show that the above account has already been foreclosed by the bank. However, the borrowers concerned can still
exercise the one (1) year right of redemption over the foreclosed properties until April 21, 1988.
As the Bank has adopted an incentive scheme whereby payments are liberalized to give chances to former owners to repossess their
properties, we suggest that you advise your parents to drop by at our Zamboanga Office so they can avail of this rare privilege which
shall be good only up to December 31, 1988. [Emphases and Underscoring Supplied]18
As correctly held by the RTC and upheld by the CA, the date "December 31, 1988" refers to the last day when owners of foreclosed
properties, like petitioners, could submit their payment proposals to the bank. The letter was very clear. It was about the availment of
the liberalized payment scheme of the bank. On the last day for redemption, the letter was also clear. It was April 21, 1988. It was never
extended.
The opportunity given to the petitioners was to avail of the liberalized payment scheme which program would expire on December 31,
1988. As explained by Abraham Iribani (Iribani), the OIC of the Project Development Department of PAB, it was to give a chance to
previous owners to repossess their properties on easy term basis, possibly by condonation of charges and penalties and payment on
instalment. The letter of Carpizo was an invitation to the petitioners to come to the bank with their proposal. It appears that the
petitioners could not come up with a proposal acceptable to the bank.
For said reason, the mortgaged property was included in the list of mortgaged properties that would be sold through a scheduled public
bidding. Thus, on August 11, 1988, Iribani wrote the petitioners about the scheduled bidding. In response, the petitioners told Iribani that
they would go Manila to explain their case. They did not, however, return even after the public bidding. In this regard, the CA was
correct when it wrote:
Here, there is no estoppel to speak of. The letter does not show that the Bank had unqualifiedly represented to the Hojases that it had
extended the redemption period to December 31, 1988. Thus, the Hojases have no basis in positing that the public sale conducted on
November 4, 1988 was null and void for having been prematurely conducted.19
Moreover, petitioners allegation that they had signified their intention to avail of the incentive scheme (which they have equated to their
intention to redeem the property), did not amount to an exercise of redemption precluding the bank from making the public sale.20 In the
case of China Banking Corporation v. Martir,21 this Court expounded on what constitutes a proper exercise of the right of redemption, to
wit:
The general rule in redemption is that it is not sufficient that a person offering to redeem manifests his desire to do so. The statement of
intention must be accompanied by an actual and simultaneous tender of payment. This constitutes the exercise of the right to
repurchase.
In several cases decided by the Court where the right to repurchase was held to have been properly exercised, there was an
unequivocal tender of payment for the full amount of the repurchase price. Otherwise, the offer to redeem is ineffectual. Bona fide
redemption necessarily implies a reasonable and valid tender of the entire repurchase price, otherwise the rule on the redemption
period fixed by law can easily be circumvented.
Moreover, jurisprudence also characterizes a valid tender of payment as one where the full redemption price is tendered. Consequently,
in this case, the offer by respondents on July 24, 1986 to redeem the foreclosed properties for 1,872,935 and the subsequent
consignation in court of P1,500,000 on August 27, 1986, while made within the period of redemption, was ineffective since the amount
offered and actually consigned not only did not include the interest but was in fact also way below the P2,782,554.66 paid by the
highest bidder/purchaser of the properties during the auction sale.
In Bodiongan vs. Court of Appeals, we held:
In order to effect a redemption, the judgment debtor must pay the purchaser the redemption price composed of the following: (1) the
price which the purchaser paid for the property; (2) interest of 1% per month on the purchase price; (3) the amount of any assessments

or taxes which the purchaser may have paid on the property after the purchase; and (4) interest of 1% per month on such assessments
and taxes x x x.
Furthermore, Article 1616 of the Civil Code of the Philippines provides:
The vendor cannot avail himself of the right to repurchase without returning to the vendee the price of the sale x x x.
It is not difficult to understand why the redemption price should either be fully offered in legal tender or else validly consigned in court.
Only by such means can the auction winner be assured that the offer to redeem is being made in good faith.1wphi1
Respondents' repeated requests for information as regards the amount of loan availed from the credit line and the amount of
redemption, and petitioner's failure to accede to said requests do not invalidate the foreclosure. Respondents can find other ways to
know the redemption price. For one, they can examine the Certificate of Sale registered with the Register of Deeds to verify the
purchase price, or upon the filing of their complaint, they could have moved for a computation of the redemption price and consigned
the same to the court. At any rate, whether or not respondents '"were diligent in asserting their willingness to pay is irrelevant.
Redemption within the period allowed by law is not a matter of intent but a question of payment or valid tender of the full redemption
price within said period.
Even the complaint instituted by respondents cannot aid their plight because the institution of an action to annul a foreclosure sale does
not suspend the running of the redemption period. (Underscoring supplied)22
In the case at bench, the record is bereft of concrete evidence that would show that, aside from the fact that petitioners manifested their
intention to avail of the scheme, they were also ready to pay the redemption price. Hence, as they failed to exercise their right of
redemption and failed to take advantage of the liberalized incentive scheme, PAB was well within its right to sell its property in a public
sale.WHEREFORE, the petition is DENIED.