G.R. No. 104482 January 22, 1996 Sale (Exh. 6) and the Deed of Sale (Exh.
Sale (Exh. 6) and the Deed of Sale (Exh. 4) in favor of private respondents.
BELINDA TAEDO, for herself and in representation of her brothers and
sisters, and TEOFILA CORPUZ TAEDO, representing her minor daughter
VERNA TAEDO, petitioners,
vs.
THE COURT OF APPEALS, SPOUSES RICARDO M. TAEDO AND
TERESITA BARERA TAEDO,respondents.
DECISION PANGANIBAN, J.:
Is a sale of future inheritance valid? In multiple sales of the same real property,
who has preference in ownership? What is the probative value of the lower court's
finding of good faith in registration of such sales in the registry of property? These
are the main questions raised in this Petition for review on certiorari under Rule
45 of the Rules of Court to set aside and reverse the Decision1 of the Court of
Appeals2 in CA-G.R. CV NO. 24987 promulgated on September 26, 1991
affirming the decision of the Regional Trial Court, Branch 63, Third Judicial
Region, Tarlac, Tarlac in Civil Case No. 6328, and its Resolution denying
reconsideration thereof, promulgated on May 27, 1992.
By the Court's Resolution on October 25, 1995, this case (along with several
others) was transferred from the First to the Third Division and after due
deliberation, the Court assigned it to the undersigned ponente for the writing of
this Decision.
The Facts
On October 20, 1962, Lazardo Taedo executed a notarized deed of absolute sale
in favor of his eldest brother, Ricardo Taedo, and the latter's wife, Teresita
Barera, private respondents herein, whereby he conveyed to the latter in
consideration of P1,500.00, "one hectare of whatever share I shall have over Lot
No. 191 of the cadastral survey of Gerona, Province of Tarlac and covered by Title
T-13829 of the Register of Deeds of Tarlac", the said property being his "future
inheritance" from his parents (Exh. 1). Upon the death of his father Matias, Lazaro
executed an "Affidavit of Conformity" dated February 28, 1980 (Exh. 3) to "re-
affirm, respect, acknowledge and validate the sale I made in 1962." On January
13, 1981, Lazaro executed another notarized deed of sale in favor of private
respondents covering his "undivided ONE TWELVE (1/12) of a parcel of land
known as Lot 191 . . . " (Exh. 4). He acknowledged therein his receipt of
P10,000.00 as consideration therefor. In February 1981, Ricardo learned that
Lazaro sold the same property to his children, petitioners herein, through a deed
of sale dated December 29, 1980 (Exh. E). On June 7, 1982, private respondents
recorded the Deed of Sale (Exh. 4) in their favor in the Registry of Deeds and the
corresponding entry was made in Transfer Certificate of Title No. 166451 (Exh.
5).
Petitioners on July 16, 1982 filed a complaint for rescission (plus damages) of the
deeds of sale executed by Lazaro in favor of private respondents covering the
property inherited by Lazaro from his father.
Petitioners claimed that their father, Lazaro, executed an "Absolute Deed of Sale"
dated December 29, 1980 (Exit. E). Conveying to his ten children his allotted
portion tinder the extrajudicial partition executed by the heirs of Matias, which
deed included the land in litigation (Lot 191).
Petitioners also presented in evidence: (1) a private writing purportedly prepared
and signed by Matias dated December 28, 1978, stating that it was his desire that
whatever inheritance Lazaro would receive from him should be given to his
(Lazaro's) children (Exh. A); (2) a typewritten document dated March 10, 1979
signed by Lazaro in the presence of two witnesses, wherein he confirmed that he
would voluntarily abide by the wishes of his father, Matias, to give to his
(Lazaro's) children all the property he would inherit from the latter (Exh. B); and
(3) a letter dated January 1, 1980 of Lazaro to his daughter, Carmela, stating that
his share in the extrajudicial settlement of the estate of his father was intended for
his children, petitioners herein (Exh. C).
Private respondents, however presented in evidence a "Deed of Revocation of a
Deed of Sale" dated March 12, 1981 (Exh. 6), wherein Lazaro revoked the sale in
favor of petitioners for the reason that it was "simulated or fictitious without any
consideration whatsoever".
Shortly after the case a quo was filed, Lazaro executed a sworn statement (Exh.
G) which virtually repudiated the contents of the Deed of Revocation of a Deed of
However, Lazaro testified that he sold the property to Ricardo, and that it was a
lawyer who induced him to execute a deed of sale in favor of his children after
giving him five pesos (P5.00) to buy a "drink" (TSN September 18, 1985, pp. 204-
205).
The trial court decided in favor of private respondents, holding that petitioners
failed "to adduce a proponderance of evidence to support (their) claim." On appeal,
the Court of Appeals affirmed the decision of the trial court, ruling that the Deed
of Sale dated January 13, 1981 (Exh. 9) was valid and that its registration in good
faith vested title in said respondents.
The Issues
Petitioners raised the following "errors" in the respondent Court, which they also
now allege in the instant Petition:
I. The trial court erred in concluding that the Contract of Sale of October 20, 1962
(Exhibit 7, Answer) is merely voidable or annulable and not void ab
initio pursuant to paragraph 2 of Article 1347 of the New Civil Code involving as
it does a "future inheritance".
II. The trial court erred in holding that defendants-appellees acted in good faith in
registering the deed of sale of January 13, 1981 (Exhibit 9) with the Register of
Deeds of Tarlac and therefore ownership of the land in question passed on to
defendants-appellees.
III. The trial court erred in ignoring and failing to consider the testimonial and
documentary evidence of plaintiffs-appellants which clearly established by
preponderance of evidence that they are indeed the legitimate and lawful owners
of the property in question.
IV. The decision is contrary to law and the facts of the case and the conclusions
drawn from the established facts are illogical and off-tangent.
From the foregoing, the issues may be restated as follows:
1. Is the sale of a future inheritance valid?
2. Was the subsequent execution on January 13, 1981 (and registration with the
Registry of Property) of a deed of sale covering the same property to the same
buyers valid?
3. May this Court review the findings of the respondent Court (a) holding that the
buyers acted in good faith in registering the said subsequent deed of sale and (b)
in "failing to consider petitioners' evidence"? Are the conclusions of the
respondent Court "illogical and off-tangent"?
The Court's Ruling
At the outset, let it be clear that the "errors" which are reviewable by this Court in
this petition for review on certiorariare only those allegedly committed by the
respondent Court of Appeals and not directly those of the trial court, which is not
a party here. The "assignment of errors" in the petition quoted above are therefore
totally misplaced, and for that reason, the petition should be dismissed. But in
order to give the parties substantial justice we have decided to delve into the issues
as above re-stated. The errors attributed by petitioners to the latter (trial) court will
be discussed only insofar as they are relevant to the appellate court's assailed
Decision and Resolution.
The sale made in 1962 involving future inheritance is not really at issue here. In
context, the assailed Decision conceded "it may be legally correct that a contract
of sale of anticipated future inheritance is null and void."3
But to remove all doubts, we hereby categorically rule that, pursuant to Article
1347 of the Civil Code, "(n)o contract may be entered into upon a future
inheritance except in cases expressly authorized by law."
Consequently, said contract made in 1962 is not valid and cannot be the source of
any right nor the creator of any obligation between the parties.
Hence, the "affidavit of conformity" dated February 28, 1980, insofar as it sought
to validate or ratify the 1962 sale, is also useless and, in the words of the
respondent Court, "suffers from the same infirmity." Even private respondents in
their memorandum4 concede this.
1
However, the documents that are critical to the resolution of this case are: (a) the
deed of sale of January 13, 1981 in favor of private respondents covering Lazaro's
undivided inheritance of one-twelfth (1/12) share in Lot No. 191, which was
subsequently registered on June 7, 1982; and (b) the deed of sale dated December
29, 1980 in favor of petitioners covering the same property. These two documents
were executed after the death of Matias (and his spouse) and after a deed of extra-
judicial settlement of his (Matias') estate was executed, thus vesting in Lazaro
actual title over said property. In other words, these dispositions, though
conflicting, were no longer infected with the infirmities of the 1962 sale.
Petitioners contend that what was sold on January 13, 1981 was only one-half
hectare out of Lot No. 191, citing as authority the trial court's decision. As earlier
pointed out, what is on review in these proceedings by this Court is the Court of
Appeals' decision which correctly identified the subject matter of the January
13, 1981 sale to be the entire undivided 1/12 share of Lazaro in Lot No. 191 and
which is the same property disposed of on December 29, 1980 in favor of
petitioners.
Critical in determining which of these two deeds should be given effect is the
registration of the sale in favor of private respondents with the register of deeds on
June 7, 1982.
Article 1544 of the Civil Code governs the preferential rights of vendees in cases
of multiple sales, as follows:
Art. 1544. If the same thing should have been sold to different vendees, the
ownership shall be transferred to the person who may have first taken possession
thereof in good faith, if it should be movable property.
Should it be immovable property, the ownership shall belong to the person
acquiring it who in good faith first recorded it in the Registry of Property.
Should there be no inscription, the ownership shall pertain to the person who in
good faith was first in the possession; and, in the absence thereof, to the person
who presents the oldest title, provided there is good faith.
The property in question is land, an immovable, and following the above-quoted
law, ownership shall belong to the buyer who in good faith registers it first in the
registry of property. Thus, although the deed of sale in favor of private respondents
was later than the one in favor of petitioners, ownership would vest in the former
because of the undisputed fact of registration. On the other hand, petitioners have
not registered the sale to them at all.
Petitioners contend that they were in possession of the property and that private
respondents never took possession thereof. As between two purchasers, the one
who registered the sale in his favor has a preferred right over the other who has
not registered his title, even if the latter is in actual possession of the immovable
property.5
As to third issue, while petitioners conceded the fact of registration, they
nevertheless contended that it was done in bad faith. On this issue, the respondent
Court ruled;
Under the second assignment of error, plaintiffs-appellants contend that
defendants-appellees acted in bad faith when they registered the Deed of Sale in
their favor as appellee Ricardo already knew of the execution of the deed of sale
in favor of the plaintiffs; appellants cite the testimony of plaintiff Belinda Taedo
to the effect that defendant Ricardo Taedo called her up on January 4 or 5, 1981
to tell her that he was already the owner of the land in question "but the contract
of sale between our father and us were (sic) already consumated" (pp. 9-10, tsn,
January 6, 1984). This testimony is obviously self-serving, and because it was a
telephone conversation, the deed of sale dated December 29, 1980 was not shown;
Belinda merely told her uncle that there was already a document showing that
plaintiffs are the owners (p. 80). Ricardo Taedo controverted this and testified
that he learned for the first time of the deed of sale executed by Lazaro in favor of
his children "about a month or sometime in February 1981" (p. 111, tsn, Nov. 28,
1984). . . .6
The respondent Court, reviewing the trial court's findings, refused to overturn the
latter's assessment of the testimonial evidence, as follows;
We are not prepared to set aside the finding of the lower court upholding Ricardo
Taedo's testimony, as it involves a matter of credibility of witnesses which the
trial judge, who presided at the hearing, was in a better position to resolve. (Court
of Appeals' Decision, p. 6.)
In this connection, we note the tenacious allegations made by petitioners, both in
their basic petition and in their memorandum, as follows:
1. The respondent Court allegedly ignored the claimed fact that respondent
Ricardo "by fraud and deceit and with foreknowledge" that the property in
question had already been sold to petitioners, made Lazaro execute the deed of
January 13, 1981;
2. There is allegedly adequate evidence to show that only 1/2 of the purchase price
of P10,000.00 was paid at the time of the execution of the deed of sale, contrary
to the written acknowledgment, thus showing bad faith;
3. There is allegedly sufficient evidence showing that the deed of revocation of the
sale in favor of petitioners "was tainted with fraud or deceit."
4. There is allegedly enough evidence to show that private respondents "took
undue advantage over the weakness and unschooled and pitiful situation of Lazaro
Taedo . . ." and that respondent Ricardo Taedo "exercised moral ascendancy
over his younger brother he being the eldest brother and who reached fourth year
college of law and at one time a former Vice-Governor of Tarlac, while his
younger brother only attained first year high school . . . ;
5. The respondent Court erred in not giving credence to petitioners' evidence,
especially Lazaro Taedo's Sinumpaang Salaysay dated July 27, 1982 stating that
Ricardo Taedo deceived the former in executing the deed of sale in favor of
private respondents.
To be sure, there are indeed many conflicting documents and testimonies as well
as arguments over their probative value and significance. Suffice it to say,
however, that all the above contentions involve questions of fact, appreciation of
evidence and credibility of witnesses, which are not proper in this review. It is
well-settled that the Supreme Court is not a trier of facts. In petitions for review
under Rule 45 of the Revised Rules of Court, only questions of law may be raised
and passed upon. Absent any whimsical or capricious exercise of judgment, and
unless the lack of any basis for the conclusions made by the lower courts be amply
demonstrated, the Supreme Court will not disturb their findings. At most, it
appears that petitioners have shown that their evidence was not believed by both
the trial and the appellate courts, and that the said courts tended to give more
credence to the evidence presented by private respondents. But this in itself is not
a reason for setting aside such findings. We are far from convinced that both courts
gravely abused their respective authorities and judicial prerogatives.
As held in the recent case of Chua Tiong Tay vs. Court of Appeals and Goldrock
Construction and Development Corp.7
The Court has consistently held that the factual findings of the trial court, as well
as the Court of Appeals, are final and conclusive and may not be reviewed on
appeal. Among the exceptional circumstances where a reassessment of facts found
by the lower courts is allowed are when the conclusion is a finding grounded
entirely on speculation, surmises or conjectures; when the inference made is
manifestly absurd, mistaken or impossible; when there is grave abuse of discretion
in the appreciation of facts; when the judgment is premised on a misapprehension
of facts; when the findings went beyond the issues of the case and the same are
contrary to the admissions of both appellant and appellee. After a careful study of
the case at bench, we find none of the above grounds present to justify the re-
evaluation of the findings of fact made by the courts below.
In the same vein, the ruling in the recent case of South Sea Surety and Insurance
Company, Inc. vs. Hon. Court of Appeals, et al.8 is equally applicable to the
present case:
We see no valid reason to discard the factual conclusions of the appellate court. .
. . (I)t is not the function of this Court to assess and evaluate all over again the
evidence, testimonial and documentary, adduced by the parties, particularly where,
such as here, the findings of both the trial court and the appellate court on the
matter coincide. (emphasis supplied)
WHEREFORE, the petition is DENIED and the assailed Decision of the Court of
Appeals is AFFIRMED. No Costs. SO ORDERED
2
G.R. No. 176474 November 27, 2008
HEIRS OF ARTURO REYES, represented by Evelyn R. San
Buenaventura, petitioners,
vs.
ELENA SOCCO-BELTRAN, respondent.
DECISION
CHICO-NAZARIO, J.:
This is a Petition for Review on Certiorari under Rule 45 of the Rules of Court,
assailing the Decision1dated 31 January 2006 rendered by the Court of Appeals in
CA-G.R. SP No. 87066, which affirmed the Decision 2 dated 30 June 2003 of the
Office of the President, in O.P. Case No. 02-A-007, approving the application of
respondent Elena Socco-Beltran to purchase the subject property.
The subject property in this case is a parcel of land originally identified as Lot No.
6-B, situated in Zamora Street, Dinalupihan, Bataan, with a total area of 360 square
meters. It was originally part of a larger parcel of land, measuring 1,022 square
meters, allocated to the Spouses Marcelo Laquian and Constancia Socco (Spouses
Laquian), who paid for the same with Japanese money. When Marcelo died, the
property was left to his wife Constancia. Upon Constancias subsequent death, she
left the original parcel of land, along with her other property, with her heirs her
siblings, namely: Filomena Eliza Socco, Isabel Socco de Hipolito, Miguel R.
Socco, and Elena Socco-Beltran.3 Pursuant to an unnotarized document entitled
"Extrajudicial Settlement of the Estate of the Deceased Constancia R. Socco,"
executed by Constancias heirs sometime in 1965, the parcel of land was
partitioned into three lotsLot No. 6-A, Lot No. 6-B, and Lot No. 6-C.4 The subject
property, Lot No. 6-B, was adjudicated to respondent, but no title had been issued
in her name.
On 25 June 1998, respondent Elena Socco-Beltran filed an application for the
purchase of Lot No. 6-B before the Department of Agrarian Reform (DAR),
alleging that it was adjudicated in her favor in the extra-judicial settlement of
Constancia Soccos estate.5
Petitioners herein, the heirs of the late Arturo Reyes, filed their protest to
respondents petition before the DAR on the ground that the subject property was
sold by respondents brother, Miguel R. Socco, in favor of their father, Arturo
Reyes, as evidenced by the Contract to Sell, dated 5 September 1954, stipulating
that:6
That I am one of the co-heirs of the Estate of the deceased Constancia Socco; and
that I am to inherit as such a portion of her lot consisting of Four Hundred Square
Meters (400) more or less located on the (sic) Zamora St., Municipality of
Dinalupihan, Province of Bataan, bounded as follows:
xxxx
That for or in consideration of the sum of FIVE PESOS (P5.00) per square meter,
hereby sell, convey and transfer by way of this conditional sale the said 400 sq.m.
more or less unto Atty. Arturo C. Reyes, his heirs, administrator and assigns x x
x. (Emphasis supplied.)
Petitioners averred that they took physical possession of the subject property in
1954 and had been uninterrupted in their possession of the said property since then.
Legal Officer Brigida Pinlac of the DAR Bataan Provincial Agrarian Reform
Office conducted an investigation, the results of which were contained in her
Report/ Recommendation dated 15 April 1999. Other than recounting the afore-
mentioned facts, Legal Officer Pinlac also made the following findings in her
Report/Recommendation:7
Further investigation was conducted by the undersigned and based on the
documentary evidence presented by both parties, the following facts were
gathered: that the house of [the] Reyes family is adjacent to the landholding in
question and portion of the subject property consisting of about 15 meters [were]
occupied by the heirs of Arturo Reyes were a kitchen and bathroom [were]
constructed therein; on the remaining portion a skeletal form made of hollow
block[s] is erected and according to the heirs of late Arturo Reyes, this was
constructed since the year (sic) 70s at their expense; that construction of the said
skeletal building was not continued and left unfinished which according to the
affidavit of Patricia Hipolito the Reyes family where (sic) prevented by Elena
Socco in their attempt of occupancy of the subject landholding; (affidavit of
Patricia Hipolito is hereto attached as Annex "F"); that Elena Socco cannot
physically and personally occupy the subject property because of the skeletal
building made by the Reyes family who have been requesting that they be paid for
the cost of the construction and the same be demolished at the expense of Elena
Socco; that according to Elena Socco, [she] is willing to waive her right on the
portion where [the] kitchen and bathroom is (sic) constructed but not the whole of
Lot [No.] 6-B adjudicated to her; that the Reyes family included the subject
property to the sworn statement of value of real properties filed before the
municipality of Dinalupihan, Bataan, copies of the documents are hereto attached
as Annexes "G" and "H"; that likewise Elena Socco has been continuously and
religiously paying the realty tax due on the said property.
In the end, Legal Officer Pinlac recommended the approval of respondents
petition for issuance of title over the subject property, ruling that respondent was
qualified to own the subject property pursuant to Article 1091 of the New Civil
Code.8 Provincial Agrarian Reform Officer (PARO) Raynor Taroy concurred in
the said recommendation in his Indorsement dated 22 April 1999. 9
In an Order dated 15 September 1999, DAR Regional Director Nestor R. Acosta,
however, dismissed respondents petition for issuance of title over the subject
property on the ground that respondent was not an actual tiller and had abandoned
the said property for 40 years; hence, she had already renounced her right to
recover the same.10 The dispositive part of the Order reads:
1. DISMISSING the claims of Elena Socco-Beltran, duly represented by Myrna
Socco for lack of merit;
2. ALLOCATING Lot No. 6-B under Psd-003-008565 with an area of 360 square
meters, more or less, situated Zamora Street, Dinalupihan, Bataan, in favor of the
heirs of Arturo Reyes.
3. ORDERING the complainant to refrain from any act tending to disturb the
peaceful possession of herein respondents.
4. DIRECTING the MARO of Dinalupihan, Bataan to process the pertinent
documents for the issuance of CLOA in favor of the heirs of Arturo Reyes. 11
Respondent filed a Motion for Reconsideration of the foregoing Order, which was
denied by DAR Regional Director Acosta in another Order dated 15 September
1999.12
Respondent then appealed to the Office of the DAR Secretary. In an Order, dated
9 November 2001, the DAR Secretary reversed the Decision of DAR Regional
Director Acosta after finding that neither petitioners predecessor-in-interest,
Arturo Reyes, nor respondent was an actual occupant of the subject property.
However, since it was respondent who applied to purchase the subject property,
she was better qualified to own said property as opposed to petitioners, who did
not at all apply to purchase the same. Petitioners were further disqualified from
purchasing the subject property because they were not landless. Finally, during the
investigation of Legal Officer Pinlac, petitioners requested that respondent pay
them the cost of the construction of the skeletal house they built on the subject
property. This was construed by the DAR Secretary as a waiver by petitioners of
their right over the subject property.13 In the said Order, the DAR Secretary
ordered that:
WHEREFORE, premises considered, the September 15, 1999 Order is hereby
SET ASIDE and a new Order is hereby issued APPROVING the application to
purchase Lot [No.] 6-B of Elena Socco-Beltran.14
Petitioners sought remedy from the Office of the President by appealing the 9
November 2001 Decision of the DAR Secretary. Their appeal was docketed as
O.P. Case No. 02-A-007. On 30 June 2003, the Office of the President rendered
its Decision denying petitioners appeal and affirming the DAR Secretarys
Decision.15 The fallo of the Decision reads:
WHEREFORE, premises considered, judgment appealed from
is AFFIRMED and the instant appeal DISMISSED.16
Petitioners Motion for Reconsideration was likewise denied by the Office of the
President in a Resolution dated 30 September 2004.17 In the said Resolution, the
Office of the President noted that petitioners failed to allege in their motion the
date when they received the Decision dated 30 June 2003. Such date was material
considering that the petitioners Motion for Reconsideration was filed only on 14
April 2004, or almost nine months after the promulgation of the decision sought
3
to be reconsidered. Thus, it ruled that petitioners Motion for Reconsideration,
filed beyond fifteen days from receipt of the decision to be reconsidered, rendered
the said decision final and executory.
Consequently, petitioners filed an appeal before the Court of Appeals, docketed as
CA-G.R. SP No. 87066. Pending the resolution of this case, the DAR already
issued on 8 July 2005 a Certificate of Land Ownership Award (CLOA) over the
subject property in favor of the respondents niece and representative, Myrna
Socco-Beltran.18 Respondent passed away on 21 March 2001,19 but the records do
not ascertain the identity of her legal heirs and her legatees.
Acting on CA-G.R. SP No. 87066, the Court of Appeals subsequently promulgated
its Decision, dated 31 January 2006, affirming the Decision dated 30 June 2003 of
the Office of the President. It held that petitioners could not have been actual
occupants of the subject property, since actual occupancy requires the positive act
of occupying and tilling the land, not just the introduction of an unfinished skeletal
structure thereon. The Contract to Sell on which petitioners based their claim over
the subject property was executed by Miguel Socco, who was not the owner of the
said property and, therefore, had no right to transfer the same. Accordingly, the
Court of Appeals affirmed respondents right over the subject property, which was
derived form the original allocatees thereof.20 The fallo of the said Decision reads:
WHEREFORE, premises considered, the instant PETITION FOR
REVIEW is DISMISSED. Accordingly, the Decision dated 30 June 2003 and the
Resolution dated 30 December 2004 both issued by the Office of the President are
hereby AFFIRMED in toto.21
The Court of Appeals denied petitioners Motion for Reconsideration of its
Decision in a Resolution dated 16 August 2006.22
Hence, the present Petition, wherein petitioners raise the following issues:
I In Sandoval, petitioners therein sought the enforcement of Section 54, paragraph
WHETHER OR NOT THE HONORABLE COURT OF APPEALS ERRED IN
AFFIRMING THE FINDINGS OF THE OFFICE OF THE PRESIDENT THAT
THE SUBJECT LOT IS VACANT AND THAT PETITIONERS ARE NOT
ACTUAL OCCUPANTS THEREOF BY DENYING THE LATTERS CLAIM
THAT THEY HAVE BEEN IN OPEN, CONTINUOUS, EXCLUSIVE,
NOTORIOUS AND AVDERSE POSSESSION THEREOF SINCE 1954 OR
FOR MORE THAN THIRTY (30) YEARS.
II
WHETHER OR NOT THE COURT OF APPEALS ERRED WHEN IT HELD
THAT PETITIONERS "CANNOT LEGALLY ACQUIRE THE SUBJECT
PROPERTY AS THEY ARE NOT CONSIDERED LANDLESS AS
EVIDENCED BY A TAX DECLARATION."
III
WHETHER OR NOT THE COURT OF APPEALS ERRED IN HOLDING
THAT "WHATEVER RESERVATION WE HAVE OVER THE RIGHT OF
MYRNA SOCCO TO SUCCEED WAS ALREADY SETTLED WHEN NO
LESS THAN MIGUEL SOCCO (PREDECESSOR-IN INTEREST OF HEREIN
PETITIONERS) EXECUTED HIS WAIVER OF RIGHT DATED APRIL 19,
2005 OVER THE SUBJECT PROPERTY IN FAVOR OF MYRNA SOCCO.
IV
WHETHER OR NOT THE COURT OF APPEALS ERRED WHEN IT DENIED
PETITIONERS MOTION FOR NEW TRIAL THEREBY BRUSHING ASIDE
THE FACT THAT MYRNA V. SOCCO-ARIZO GROSSLY
MISREPRESENTED IN HER INFORMATION SHEET OF BENEFICIARIES
AND APPLICATION TO PURCHASE LOT IN LANDED ESTATES THAT
SHE IS A FILIPINO CITIZEN, WHEN IN TRUTH AND IN FACT, SHE IS
ALREADY AN AMERICAN NATIONAL.23
The main issue in this case is whether or not petitioners have a better right to the
subject property over the respondent. Petitioners claim over the subject property
is anchored on the Contract to Sell executed between Miguel Socco and Arturo
Reyes on 5 September 1954. Petitioners additionally allege that they and their
predecessor-in-interest, Arturo Reyes, have been in possession of the subject lot
since 1954 for an uninterrupted period of more than 40 years.
The Court is unconvinced.
Petitioners cannot derive title to the subject property by virtue of the Contract to
Sell. It was unmistakably stated in the Contract and made clear to both parties
thereto that the vendor, Miguel R. Socco, was not yet the owner of the subject
property and was merely expecting to inherit the same as his share as a co-heir of
Constancias estate.24 It was also declared in the Contract itself that Miguel R.
Soccos conveyance of the subject to the buyer, Arturo Reyes, was a conditional
sale. It is, therefore, apparent that the sale of the subject property in favor of Arturo
Reyes was conditioned upon the event that Miguel Socco would actually inherit
and become the owner of the said property. Absent such occurrence, Miguel R.
Socco never acquired ownership of the subject property which he could validly
transfer to Arturo Reyes.
Under Article 1459 of the Civil Code on contracts of sale, "The thing must be licit
and the vendor must have a right to transfer ownership thereof at the time it is
delivered." The law specifically requires that the vendor must have ownership of
the property at the time it is delivered. Petitioners claim that the property was
constructively delivered to them in 1954 by virtue of the Contract to Sell.
However, as already pointed out by this Court, it was explicit in the Contract itself
that, at the time it was executed, Miguel R. Socco was not yet the owner of the
property and was only expecting to inherit it. Hence, there was no valid sale from
which ownership of the subject property could have transferred from Miguel
Socco to Arturo Reyes. Without acquiring ownership of the subject property,
Arturo Reyes also could not have conveyed the same to his heirs, herein
petitioners.
Petitioners, nevertheless, insist that they physically occupied the subject lot for
more than 30 years and, thus, they gained ownership of the property through
acquisitive prescription, citing Sandoval v. Insular Government 25 and San Miguel
Corporation v. Court of Appeals. 26
6 of Act No. 926, otherwise known as the Land Registration Act, which required
-- for the issuance of a certificate of title to agricultural public lands -- the open,
continuous, exclusive, and notorious possession and occupation of the same in
good faith and under claim of ownership for more than ten years. After evaluating
the evidence presented, consisting of the testimonies of several witnesses and
proof that fences were constructed around the property, the Court in the afore-
stated case denied the petition on the ground that petitioners failed to prove that
they exercised acts of ownership or were in open, continuous, and peaceful
possession of the whole land, and had caused it to be enclosed to the exclusion of
other persons. It further decreed that whoever claims such possession shall
exercise acts of dominion and ownership which cannot be mistaken for the
momentary and accidental enjoyment of the property. 27
In San Miguel Corporation, the Court reiterated the rule that the open, exclusive,
and undisputed possession of alienable public land for the period prescribed by
law creates the legal fiction whereby land ceases to be public land and is, therefore,
private property. It stressed, however, that the occupation of the land for 30 years
must be conclusively established. Thus, the evidence offered by petitioner therein
tax declarations, receipts, and the sole testimony of the applicant for registration,
petitioners predecessor-in-interest who claimed to have occupied the land before
selling it to the petitioner were considered insufficient to satisfy the quantum of
proof required to establish the claim of possession required for acquiring alienable
public land.28
As in the two aforecited cases, petitioners herein were unable to prove actual
possession of the subject property for the period required by law. It was
underscored in San Miguel Corporation that the open, continuous, exclusive, and
notorious occupation of property for more than 30 years must be no less
than conclusive, such quantum of proof being necessary to avoid the erroneous
validation of actual fictitious claims of possession over the property that is being
claimed.29
In the present case, the evidence presented by the petitioners falls short of being
conclusive. Apart from their self-serving statement that they took possession of
the subject property, the only proof offered to support their claim was a general
statement made in the letter30 dated 4 February 2002 of Barangay Captain Carlos
Gapero, certifying that Arturo Reyes was the occupant of the subject property
"since peace time and at present." The statement is rendered doubtful by the fact
that as early as 1997, when respondent filed her petition for issuance of title before
4
the DAR, Arturo Reyes had already died and was already represented by his heirs, Socco-Arizo pending determination of respondents legal heirs in appropriate
petitioners herein. proceedings. No costs.

Moreover, the certification given by Barangay Captain Gapero that Arturo Reyes SO ORDERED.
occupied the premises for an unspecified period of time, i.e., since peace time until
the present, cannot prevail over Legal Officer Pinlacs more particular findings in
her Report/Recommendation. Legal Officer Pinlac reported that petitioners
admitted that it was only in the 1970s that they built the skeletal structure found
on the subject property. She also referred to the averments made by Patricia
Hipolito in an Affidavit,31 dated 26 February 1999, that the structure was left
unfinished because respondent prevented petitioners from occupying the subject
property. Such findings disprove petitioners claims that their predecessor-in-
interest, Arturo Reyes, had been in open, exclusive, and continuous possession of
the property since 1954. The adverted findings were the result of Legal Officer
Pinlacs investigation in the course of her official duties, of matters within her
expertise which were later affirmed by the DAR Secretary, the Office of the
President, and the Court of Appeals. The factual findings of such administrative
officer, if supported by evidence, are entitled to great respect.32

In contrast, respondents claim over the subject property is backed by sufficient

evidence. Her predecessors-in-interest, the spouses Laquian, have been identified
as the original allocatees who have fully paid for the subject property. The subject
property was allocated to respondent in the extrajudicial settlement by the heirs of
Constancias estate. The document entitled "Extra-judicial Settlement of the Estate
of the Deceased Constancia Socco" was not notarized and, as a private document,
can only bind the parties thereto. However, its authenticity was never put into
question, nor was its legality impugned. Moreover, executed in 1965 by the heirs
of Constancia Socco, or more than 30 years ago, it is an ancient document which
appears to be genuine on its face and therefore its authenticity must be
upheld.33 Respondent has continuously paid for the realty tax due on the subject
property, a fact which, though not conclusive, served to strengthen her claim over
the property.34

From the foregoing, it is only proper that respondents claim over the subject
property be upheld. This Court must, however, note that the Order of the DAR
Secretary, dated 9 November 2001, which granted the petitioners right to
purchase the property, is flawed and may be assailed in the proper proceedings.
Records show that the DAR affirmed that respondents predecessors-in-interest,
Marcelo Laquian and Constancia Socco, having been identified as the original
allocatee, have fully paid for the subject property as provided under an agreement
to sell. By the nature of a contract or agreement to sell, the title over the subject
property is transferred to the vendee upon the full payment of the stipulated
consideration. Upon the full payment of the purchase price, and absent any
showing that the allocatee violated the conditions of the agreement, ownership of
the subject land should be conferred upon the allocatee.35 Since the extrajudicial
partition transferring Constancia Soccos interest in the subject land to the
respondent is valid, there is clearly no need for the respondent to purchase the
subject property, despite the application for the purchase of the property
erroneously filed by respondent. The only act which remains to be performed is
the issuance of a title in the name of her legal heirs, now that she is deceased.

Moreover, the Court notes that the records have not clearly established the right of
respondents representative, Myrna Socco-Arizo, over the subject property. Thus,
it is not clear to this Court why the DAR issued on 8 July 2005 a CLOA36 over the
subject property in favor of Myrna Socco-Arizo. Respondents death does not
automatically transmit her rights to the property to Myrna Socco-Beltran.
Respondent only authorized Myrna Socco-Arizo, through a Special Power of
Attorney37dated 10 March 1999, to represent her in the present case and to
administer the subject property for her benefit. There is nothing in the Special
Power of Attorney to the effect that Myrna Socco-Arizo can take over the subject
property as owner thereof upon respondents death. That Miguel V. Socco,
respondents only nephew, the son of the late Miguel R. Socco, and Myrna Socco-
Arizos brother, executed a waiver of his right to inherit from respondent, does not
automatically mean that the subject property will go to Myrna Socco-Arizo, absent
any proof that there is no other qualified heir to respondents estate. Thus, this
Decision does not in any way confirm the issuance of the CLOA in favor of Myrna
Socco-Arizo, which may be assailed in appropriate proceedings.

IN VIEW OF THE FOREGOING, the instant Petition is DENIED. The assailed

Decision of the Court of Appeals in CA-G.R. SP No. 87066, promulgated on 31
January 2006, is AFFIRMED with MODIFICATION. This Court withholds the
confirmation of the validity of title over the subject property in the name of Myrna

5
G.R. No. L-31271 April 29, 1974
ROMEO MARTINEZ and LEONOR SUAREZ, spouses, petitioners-
appellants,
vs.
HON. COURT OF APPEALS, SECRETARY and UNDERSECRETARY OF
PUBLIC WORKS & COMMUNICATIONS, respondents-appellees.
Flores Macapagal, Ocampo and Balbastro for petitioners-appellants.
Office of the Solicitor General Felix Q. Antonio, Acting Assistant Solicitor General
Dominador L. Quiroz and Solicitor Concepcion T. Agapinan for respondents-
appellees.
ESGUERRA, J.:p
Petition for review by certiorari of the judgment of the Court of Appeals dated
November 17, 1969 in its CA-G.R. 27655-R which reverses the judgment of the
Court of First Instance of Pampanga in favor of petitioners-appellants against the
Secretary and Undersecretary of Public Works & Communications in the case
instituted to annul the order of November 25, 1958 of respondent Secretary of
Public Works & Communications directing the removal by the petitioners of the
dikes they had constructed on Lot No. 15856 of the Register of Deeds of
Pampanga, which order was issued pursuant to the provisions of Republic Act No.
2056. The dispositive portion of the judgment of reversal of the Court of Appeals
reads as follows:
IN VIEW OF THE FOREGOING CONSIDERATIONS, the judgment appealed
from is hereby reversed, and another entered: [1] upholding the validity of the
decision reached by the respondent officials in the administrative case; [2]
dissolving the injunction issued by the Court below; and [3] cancelling the
registration of Lot No. 2, the disputed area, and ordering its reconveyance to the
public domain. No costs in this instance.
The background facts are stated by the Court of Appeals as follows:
The spouses Romeo Martinez and Leonor Suarez, now petitioners-appellees, are
the registered owners of two (2) parcels of land located in Lubao, Pampanga,
covered by transfer certificate of title No. 15856 of the Register of Deeds of the
said province. Both parcels of land are fishponds. The property involved in the
instant case is the second parcel mentioned in the above-named transfer certificate
of title.
The disputed property was originally owned by one Paulino Montemayor, who
secured a "titulo real" over it way back in 1883. After the death of Paulino
Montemayor the said property passed to his successors-in-interest, Maria
Montemayor and Donata Montemayor, who in turn, sold it, as well as the first
parcel, to a certain Potenciano Garcia.
Because Potenciano Garcia was prevented by the then municipal president of
Lubao, Pedro Beltran, from restoring the dikes constructed on the contested
property, the former, on June 22, 1914, filed Civil Case No. 1407 with the Court
of First Instance against the said Pedro Beltran to restrain the latter in his official
capacity from molesting him in the possession of said second parcel, and on even
date, applied for a writ of preliminary injunction, which was issued against said
municipal president. The Court, by decision promulgated June 12, 1916, declared
permanent the preliminary injunction, which, decision, on appeal, was affirmed by
the Supreme Court on August 21, 1918. From June 22, 1914, the dikes around the
property in question remained closed until a portion thereof was again opened just
before the outbreak of the Pacific War.
On April 17, 1925. Potenciano Garcia applied for the registration of both parcels
of land in his name, and the Court of First Instance of Pampanga, sitting as land
registration court, granted the registration over and against the opposition of the
Attorney-General and the Director of Forestry. Pursuant to the Court's decision,
original certificate of title No. 14318, covering said parcels 1 and 2 was issued to
the spouses Potenciano Garcia and Lorenza Sioson.
These parcels of land were subsequently bought by Emilio Cruz de Dios in whose
name transfer certificate of title No. 1421 was first issued on November 9, 1925.
Thereafter, the ownership of these properties changed hands until eventually they
were acquired by the herein appellee spouses who hold them by virtue of transfer
certificate of title No. 15856.
To avoid any untoward incident, the disputants agreed to refer the matter to the
Committee on Rivers and Streams, by then composed of the Honorable Pedro
Tuason, at that time Secretary of Justice, as chairman, and the Honorable Salvador
Araneta and Vicente Orosa, Secretary of Agriculture and National Resources and
Secretary of Public Works and Communications, respectively, as members. This
committee thereafter appointed a Sub-Committee to investigate the case and to
conduct an ocular inspection of the contested property, and on March 11, 1954,
said Sub-Committee submitted its report to the Committee on Rivers and Streams
to the effect that Parcel No. 2 of transfer certificate of title No. 15856 was not a
public river but a private fishpond owned by the herein spouses.
On July 7, 1954, the Committee on Rivers and Streams rendered its decision the
dispositive part of which reads:
"In view of the foregoing considerations, the spouses Romeo Martinez and Leonor
Suarez should be restored to the exclusive possession, use and enjoyment of the
creek in question which forms part of their registered property and the decision of
the courts on the matter be given full force and effect."
The municipal officials of Lubao, led by Acting Mayor Mariano Zagad, apparently
refused to recognize the above decision, because on September 1, 1954, the
spouses Romeo Martinez and Leonor Suarez instituted Civil Case No. 751 before
the Court of First Instance of Pampanga against said Mayor Zagad, praying that
the latter be enjoined from molesting them in their possession of their property and
in the construction of the dikes therein. The writ of preliminary injunction applied
for was issued against the respondent municipal Mayor, who immediately elevated
the injunction suit for review to the Supreme Court, which dismissed Mayor
Zagad's petition on September 7, 1953. With this dismissal order herein appellee
spouses proceeded to construct the dikes in the disputed parcel of land.
Some four (4) years later, and while Civil Case No. 751 was still pending the
Honorable Florencio Moreno, then Secretary of Public Works and
Communications, ordered another investigation of the said parcel of land,
directing the appellees herein to remove the dikes they had constructed, on the
strength of the authority vested in him by Republic Act No. 2056, approved on
June 13, 1958, entitled "An Act To Prohibit, Remove and/or Demolish the
Construction of Dams. Dikes, Or Any Other Walls In Public Navigable Waters,
Or Waterways and In Communal Fishing Grounds, To Regulate Works in Such
Waters or Waterways And In Communal Fishing Grounds, And To Provide
Penalties For Its Violation, And For Other Purposes. 1 The said order which gave
rise to the instant proceedings, embodied a threat that the dikes would be
demolished should the herein appellees fail to comply therewith within thirty (30)
days.
The spouses Martinez replied to the order by commencing on January 2, 1959 the
present case, which was decided in their favor by the lower Court in a decision
dated August 10, 1959, the dispositive part of which reads:
"WHEREFORE, in view of the foregoing considerations, the Court hereby
declares the decision, Exhibit S, rendered by the Undersecretary of Public Works
and Communications null and void; declares the preliminary injunction, hereto for
issued, permanent, and forever enjoining both respondents from molesting the
spouses Romeo Martinez and Leonor Suarez in their possession, use and
enjoyment of their property described in Plan Psu-9992 and referred to in their
petition."
"Without pronouncement as to costs."
"SO ORDERED."
As against this judgment respondent officials of the Department of Public Works
and Communications took the instant appeal, contending that the lower Court
erred:
1. In holding that then Senator Rogelio de la Rosa, complainant in the
administrative case, is not an interested party and his letter-complaint dated
August 15, 1958 did not confer jurisdiction upon the respondent Undersecretary
of Public Works and Communications to investigate the said administrative case;
6
2. In holding that the duty to investigate encroachments upon public rivers
conferred upon the respondent Secretary under Republic Act No. 7056 cannot be
lawfully delegated by him to his subordinates;
3. In holding that the investigation ordered by the respondent Secretary in this case
is illegal on the ground that the said respondent Secretary has arrogated unto
himself the power, which he does not possess, of reversing, making nugatory, and
setting aside the two lawful decisions of the Court Exhibits K and I, and even
annulling thereby, the one rendered by the highest Tribunal of the land;
4. In not sustaining respondent's claim that petitioners have no cause of action
because the property in dispute is a public river and in holding that the said claim
has no basis in fact and in law;
5. In not passing upon and disposing of respondent's counterclaim;
6. In not sustaining respondent's claim that the petition should not have been
entertained on the ground that the petitioners have not exhausted administrative
remedies; and
7. In holding that the decision of the respondents is illegal on the ground that it
violates the principles that laws shall have no retroactive effect unless the contrary
is provided and in holding that the said Republic Act No. 2056 is unconstitutional
on the ground that respondents' threat of prosecuting petitioners under Section 3
thereof for acts done four years before its enactment renders the said law ex post
facto.
The Court of Appeals sustained the above-mentioned assignment of errors
committed by the Court of First Instance of Pampanga and, as previously stated,
reversed the judgment of the latter court. From this reversal this appeal by
certiorari was taken, and before this Court, petitioners-appellants assigned the
following errors allegedly committed by the Court of Appeals:
1. THE COURT OF APPEALS ERRED IN DECLARING IN THE INSTANT
CASE THAT PARCEL NO. 2 OF TRANSFER CERTIFICATE OF TITLE NO.
15856 IS A PUBLIC RIVER AND ORDERING THE CANCELLATION OF ITS
REGISTRATION BECAUSE THIS CONSTITUTES A COLLATERAL
ATTACK ON A TORRENS TITLE IN VIOLATION OF THE LAW AND THE
WELL-SETTLED JURISPRUDENCE ON THE MATTER.
2. THE COURT OF APPEALS ERRED IN REOPENING AND RE-
LITIGATING THE ISSUE AS TO WHETHER OR NOT LOT NO. 2 OF
TRANSFER CERTIFICATE OF TITLE NO. 15856 REGISTER OF DEEDS OF
PAMPANGA, IS A PUBLIC RIVER NOTWITHSTANDING THE FACT THAT
THIS ISSUE HAS BEEN LONG RESOLVED AND SETTLED BY THE LAND
REGISTRATION COURT OF PAMPANGA IN LAND REGISTRATION
PROCEEDING NO. 692 AND IS NOW RES JUDICATA.
3. THE COURT OF APPEALS ERRED IN ORDERING THE CANCELLATION
OF THE REGISTRATION OF LOT NO. 2 OF TRANSFER CERTIFICATE OF
TITLE NO. 15856 NOTWITHSTANDING THE FACT THAT THE TORRENS
TITLE COVERING IT HAS BEEN VESTED IN THE PETITIONERS WHO
ARE THE SEVENTH OF THE SUCCESSIVE INNOCENT PURCHASERS
THEREOF AND WHO IN PURCHASING THE SAME RELIED ON THE
PRINCIPLE THAT THE PERSONS DEALING WITH REGISTERED LAND
NEED NOT GO BEHIND THE REGISTER TO DETERMINE THE
CONDITION OF THE PROPERTY.
The 1st and 2nd assignment of errors, being closely related, will be taken up
together.
The ruling of the Court of Appeals that Lot No. 2 covered by Transfer Certificate
of Title No. 15856 of the petitioners-appellants is a public stream and that said title
should be cancelled and the river covered reverted to public domain, is assailed by
the petitioners-appellants as being a collateral attack on the indefeasibility of the
torrens title originally issued in 1925 in favor of the petitioners-appellants'
predecessor-in-interest, Potenciano Garcia, which is violative of the rule of res
judicata. It is argued that as the decree of registration issued by the Land
Registration Court was not re-opened through a petition for review filed within
one (1) year from the entry of the decree of title, the certificate of title issued
pursuant thereto in favor of the appellants for the land covered thereby is no longer
open to attack under Section 38 of the Land Registration Act (Act 496) and the
jurisprudence on the matter established by this Tribunal. Section 38 of the Land
Registration Act cited by appellants expressly makes a decree of registration,
which ordinarily makes the title absolute and indefeasible, subject to the
exemption stated in Section 39 of the said Act among which are: "liens, claims or
rights arising or existing under the laws or Constitution of the United States or of
the Philippine Islands which the statute of the Philippine Islands cannot require to
appear of record in the registry."
At the time of the enactment of Section 496, one right recognized or existing under
the law is that provided for in Article 339 of the old Civil Code which reads as
follows:
Property of public ownership is:
1. That destined to the public use, such as roads, canals, rivers, torrents, ports, and
bridges constructed by the State, and banks shores, roadsteads, and that of a similar
character. (Par. 1)
The above-mentioned properties are parts of the public domain intended for public
use, are outside the commerce of men and, therefore, not subject to private
appropriation. ( 3 Manresa, 6th ed. 101-104.)
In Ledesma v. Municipality of Iloilo, 49 Phil. 769, this Court held:
A simple possession of a certificate of title under the Torrens system does not
necessarily make the possessor a true owner of all the property described therein.
If a person obtains title under the Torrens system which includes by mistake or
oversight, lands which cannot be registered under the Torrens system, he does not
by virtue of said certificate alone become the owner of the land illegally included.
In Mercado v. Municipal President of Macabebe, 59 Phil. 592, it was also said:
It is useless for the appellant now to allege that she has obtained certificate of title
No. 329 in her favor because the said certificate does not confer upon her any right
to the creek in question, inasmuch as the said creek, being of the public domain, is
included among the various exceptions enumerated in Section 39 of Act 496 to
which the said certificate is subject by express provision of the law.
The same ruling was laid down in Director of Lands v. Roman Catholic Bishop of
Zamboanga, 61 Phil. 644, as regards public plaza.
In Dizon, et al. v. Rodriguez, et al., G.R. No. L-20300-01 and G.R. No. L-20355-
56, April 30, 1965, 20 SCRA 704, it was held that the incontestable and
indefeasible character of a Torrens certificate of title does not operate when the
land covered thereby is not capable of registration.
It is, therefore, clear that the authorities cited by the appellants as to the
conclusiveness and incontestability of a Torrens certificate of title do not apply
here. The Land Registration Court has no jurisdiction over non-registerable
properties, such as public navigable rivers which are parts of the public domain,
and cannot validly adjudge the registration of title in favor of a private applicant.
Hence, the judgment of the Court of First Instance of Pampanga as regards the Lot
No. 2 of Certificate of Title No. 15856 in the name of petitioners-appellants may
be attacked at any time, either directly or collaterally, by the State which is not
bound by any prescriptive period provided for by the Statute of Limitations
(Article 1108, par. 4, new Civil Code). The right of reversion or reconveyance to
the State of the public properties fraudulently registered and which are not capable
of private appropriation or private acquisition does not prescribe. (Republic v.
Ramona Ruiz, et al., G.R. No. L-23712, April 29, 1968, 23 SCRA 348; Republic
v. Ramos, G.R. No.
L-15484, January 31, 1963, 7 SCRA 47.)
When it comes to registered properties, the jurisdiction of the Secretary of Public
Works & Communications under Republic Act 2056 to order the removal or
obstruction to navigation along a public and navigable creek or river included
therein, has been definitely settled and is no longer open to question (Lovina v.
Moreno, G.R. No L-17821, November 29, 1963, 9 SCRA 557; Taleon v. Secretary
of Public Works & Communications G.R. No. L-24281, May 16, 1961, 20 SCRA
69, 74).
The evidence submitted before the trial court which was passed upon by the
respondent Court of Appeals shows that Lot No. 2 (Plan Psu 992) of Transfer
Certificate of Title No. 15856, is a river of the public domain. The technical
description of both Lots Nos. 1 and 2 appearing in Original Certificate of Title No.
14318 of the Register of Deeds of Pampanga, from which the present Transfer
Certificate of Title No. 15856 was derived, confirms the fact that Lot No. 2
embraced in said title is bounded practically on all sides by rivers. As held by the
7
Court of First Instance of Pampanga in Civil Case No. 1247 for injunction filed by
the petitioners' predecessors-in-interest against the Municipal Mayor of Lubao and
decided in 1916 (Exh. "L"), Lot No. 2 is a branch of the main river that has been
covered with water since time immemorial and, therefore, part of the public
domain. This finding having been affirmed by the Supreme Court, there is no
longer any doubt that Lot No. 2 of Transfer Certificate of Title No. 15856 of
petitioners is a river which is not capable of private appropriation or acquisition
by prescription. (Palanca v. Com. of the Philippines, 69 Phil. 449; Meneses v.
Com. of the Philippines, 69 Phil. 647). Consequently, appellants' title does not
include said river.

II

As regards the 3rd assignment of error, there is no weight in the appellants'

argument that, being a purchaser for value and in good faith of Lot No. 2, the
nullification of its registration would be contrary to the law and to the applicable
decisions of the Supreme Court as it would destroy the stability of the title which
is the core of the system of registration. Appellants cannot be deemed purchasers
for value and in good faith as in the deed of absolute conveyance executed in their
favor, the following appears:

6. Que la segunda parcela arriba descrita y mencionada esta actualmente abierta,

sin malecones y excluida de la primera parcela en virtud de la Orden
Administrative No. 103, tal como fue enmendada, del pasado regimen o Gobierno.

7. Que los citados compradores Romeo Martinez y Leonor Suarez se encargan de

gestionar de las autoridades correspondientes para que la citada segunda parcela
pueda ser convertida de nuevo en pesqueria, corriendo a cuenta y cargo de los
mismos todos los gastos.

8. Que en el caso de que dichos compradores no pudiesen conseguir sus propositos

de convertir de nuevo en pesquera la citada segunda parcela, los aqui vendedores
no devolveran ninguna cantidad de dinero a los referidos compradores; este es, no
se disminuiriat el precio de esta venta. (Exh. 13-a, p. 52, respondents record of
exhibits)

These stipulations were accepted by the petitioners-appellants in the same

conveyance in the following terms:

Romeo Martinez y Leonor Suarez, mayores de edad, filipinos y residentes en al

Barrio de Julo Municipio de Malabon, Provincia de Rizal, por la presente, declaran
que estan enterados del contenido de este documento y lo aceptan en los precisos
terminos en que arriba uedan consignados. (Exh. 13-a, ibid)

Before purchasing a parcel of land, it cannot be contended that the appellants who
were the vendees did not know exactly the condition of the land that they were
buying and the obstacles or restrictions thereon that may be put up by the
government in connection with their project of converting Lot No. 2 in question
into a fishpond. Nevertheless, they willfully and voluntarily assumed the risks
attendant to the sale of said lot. One who buys something with knowledge of defect
or lack of title in his vendor cannot claim that he acquired it in good faith (Leung
Lee v. Strong Machinery Co., et al., 37 Phil. 664).

The ruling that a purchaser of a registered property cannot go beyond the record
to make inquiries as to the legality of the title of the registered owner, but may rely
on the registry to determine if there is no lien or encumbrances over the same,
cannot be availed of as against the law and the accepted principle that rivers are
parts of the public domain for public use and not capable of private appropriation
or acquisition by prescription.

FOR ALL THE FOREGOING, the judgment of the Court of Appeals appealed
from is in accordance with law, and the same is hereby affirmed with costs against
the petitioners-appellants.

8
G.R. No. 143958 July 11, 2003
ALFRED FRITZ FRENZEL, petitioner,
vs.
EDERLINA P. CATITO, respondent.
CALLEJO, SR., J.:
Before us is a petition for review of the Decision 1 of the Court of Appeals in CA-
G.R. CV No. 53485 which affirmed the Decision 2 of the Regional Trial Court of
Davao City, Branch 14, in Civil Case No. 17,817 dismissing the petitioner's
complaint, and the resolution of the Court of Appeals denying his motion for
reconsideration of the said decision.
The Antecedents3
As gleaned from the evidence of the petitioner, the case at bar stemmed from the
following factual backdrop:
Petitioner Alfred Fritz Frenzel is an Australian citizen of German descent. He is
an electrical engineer by profession, but worked as a pilot with the New Guinea
Airlines. He arrived in the Philippines in 1974, started engaging in business in the
country two years thereafter, and married Teresita Santos, a Filipino citizen. In
1981, Alfred and Teresita separated from bed and board without obtaining a
divorce.
Sometime in February 1983, Alfred arrived in Sydney, Australia for a vacation.
He went to King's Cross, a night spot in Sydney, for a massage where he met
Ederlina Catito, a Filipina and a native of Bajada, Davao City. Unknown to Alfred,
she resided for a time in Germany and was married to Klaus Muller, a German
national. She left Germany and tried her luck in Sydney, Australia, where she
found employment as a masseuse in the King's Cross nightclub. She was fluent in
German, and Alfred enjoyed talking with her. The two saw each other again; this
time Ederlina ended up staying in Alfred's hotel for three days. Alfred gave
Ederlina sums of money for her services.4
Alfred was so enamored with Ederlina that he persuaded her to stop working at
King's Cross, return to the Philippines, and engage in a wholesome business of her
own. He also proposed that they meet in Manila, to which she assented. Alfred
gave her money for her plane fare to the Philippines. Within two weeks of
Ederlina's arrival in Manila, Alfred joined her. Alfred reiterated his proposal for
Ederlina to stay in the Philippines and engage in business, even offering to finance
her business venture. Ederlina was delighted at the idea and proposed to put up a
beauty parlor. Alfred happily agreed.
Alfred told Ederlina that he was married but that he was eager to divorce his wife
in Australia. Alfred proposed marriage to Ederlina, but she replied that they should
wait a little bit longer.
Ederlina found a building at No. 444 M.H. del Pilar corner Arquiza Street, Ermita,
Manila, owned by one Atty. Jose Hidalgo who offered to convey his rights over
the property for P18,000.00. Alfred and Ederlina accepted the offer. Ederlina put
up a beauty parlor on the property under the business name Edorial Beauty Salon,
and had it registered with the Department of Trade and Industry under her name.
Alfred paid Atty. Hidalgo P20,000.00 for his right over the property and gave
P300,000.00 to Ederlina for the purchase of equipment and furniture for the parlor.
As Ederlina was going to Germany, she executed a special power of attorney on
December 13, 19835 appointing her brother, Aser Catito, as her attorney-in-fact in
managing the beauty parlor business. She stated in the said deed that she was
married to Klaus Muller. Alfred went back to Papua New Guinea to resume his
work as a pilot.
When Alfred returned to the Philippines, he visited Ederlina in her Manila
residence and found it unsuitable for her. He decided to purchase a house and lot
owned by Victoria Binuya Steckel in San Francisco del Monte, Quezon City,
covered by Transfer Certificate of Title No. 218429 for US$20,000.00. Since
Alfred knew that as an alien he was disqualified from owning lands in the
Philippines, he agreed that only Ederlina's name would appear in the deed of sale
as the buyer of the property, as well as in the title covering the same. After all, he
was planning to marry Ederlina and he believed that after their marriage, the two
of them would jointly own the property. On January 23, 1984, a Contract to Sell
was entered into between Victoria Binuya Steckel as the vendor and Ederlina as
the sole vendee. Alfred signed therein as a witness.6 Victoria received from Alfred,
for and in behalf of Ederlina, the amount of US$10,000.00 as partial payment, for
which Victoria issued a receipt.7 When Victoria executed the deed of absolute sale
over the property on March 6, 1984,8 she received from Alfred, for and in behalf
of Ederlina, the amount of US$10,000.00 as final and full payment. Victoria
likewise issued a receipt for the said amount.9 After Victoria had vacated the
property, Ederlina moved into her new house. When she left for Germany to visit
Klaus, she had her father Narciso Catito and her two sisters occupy the property.
Alfred decided to stay in the Philippines for good and live with Ederlina. He
returned to Australia and sold his fiber glass pleasure boat to John Reid for
$7,500.00 on May 4, 1984.10 He also sold his television and video business in
Papua New Guinea for K135,000.00 to Tekeraoi Pty. Ltd. 11 He had his personal
properties shipped to the Philippines and stored at No. 14 Fernandez Street, San
Francisco del Monte, Quezon City. The proceeds of the sale were deposited in
Alfred's account with the Hong Kong Shanghai Banking Corporation (HSBC),
Kowloon Branch under Bank Account No. 018-2-807016.12 When Alfred was in
Papua New Guinea selling his other properties, the bank sent telegraphic letters
updating him of his account.13 Several checks were credited to his HSBC bank
account from Papua New Guinea Banking Corporation, Westpac Bank of
Australia and New Zealand Banking Group Limited and Westpac Bank-PNG-
Limited. Alfred also had a peso savings account with HSBC, Manila, under
Savings Account No. 01-725-183-01.14
Once, when Alfred and Ederlina were in Hong Kong, they opened another account
with HSBC, Kowloon, this time in the name of Ederlina, under Savings Account
No. 018-0-807950.15 Alfred transferred his deposits in Savings Account No. 018-
2-807016 with the said bank to this new account. Ederlina also opened a savings
account with the Bank of America Kowloon Main Office under Account No.
30069016.16
On July 28, 1984, while Alfred was in Papua New Guinea, he received a Letter
dated December 7, 1983 from Klaus Muller who was then residing in Berlin,
Germany. Klaus informed Alfred that he and Ederlina had been married on
October 16, 1978 and had a blissful married life until Alfred intruded therein.
Klaus stated that he knew of Alfred and Ederlina's amorous relationship, and
discovered the same sometime in November 1983 when he arrived in Manila. He
also begged Alfred to leave Ederlina alone and to return her to him, saying that
Alfred could not possibly build his future on his (Klaus') misfortune. 17
Alfred had occasion to talk to Sally MacCarron, a close friend of Ederlina. He
inquired if there was any truth to Klaus' statements and Sally confirmed that Klaus
was married to Ederlina. When Alfred confronted Ederlina, she admitted that she
and Klaus were, indeed, married. But she assured Alfred that she would divorce
Klaus. Alfred was appeased. He agreed to continue the amorous relationship and
wait for the outcome of Ederlina's petition for divorce. After all, he intended to
marry her. He retained the services of Rechtsanwaltin Banzhaf with offices in
Berlin, as her counsel who informed her of the progress of the
proceedings.18 Alfred paid for the services of the lawyer.
In the meantime, Alfred decided to purchase another house and lot, owned by
Rodolfo Morelos covered by TCT No. 92456 located in Pea Street, Bajada,
Davao City.19 Alfred again agreed to have the deed of sale made out in the name
of Ederlina. On September 7, 1984, Rodolfo Morelos executed a deed of absolute
sale over the said property in favor of Ederlina as the sole vendee for the amount
of P80,000.00.20 Alfred paid US$12,500.00 for the property.
Alfred purchased another parcel of land from one Atty. Mardoecheo
Camporedondo, located in Moncado, Babak, Davao, covered by TCT No. 35251.
Alfred once more agreed for the name of Ederlina to appear as the sole vendee in
the deed of sale. On December 31, 1984, Atty. Camporedondo executed a deed of
sale over the property for P65,000.00 in favor of Ederlina as the sole
vendee.21 Alfred, through Ederlina, paid the lot at the cost of P33,682.00 and
US$7,000.00, respectively, for which the vendor signed receipts.22 On August 14,
1985, TCT No. 47246 was issued to Ederlina as the sole owner of the said
property.23
Meanwhile, Ederlina deposited on December 27, 1985, the total amount of
US$250,000 with the HSBC Kowloon under Joint Deposit Account No. 018-
462341-145.24
The couple decided to put up a beach resort on a four-hectare land in Camudmud,
Babak, Davao, owned by spouses Enrique and Rosela Serrano. Alfred purchased
the property from the spouses for P90,000.00, and the latter issued a receipt
therefor.25 A draftsman commissioned by the couple submitted a sketch of the
beach resort.26 Beach houses were forthwith constructed on a portion of the
9
property and were eventually rented out by Ederlina's father, Narciso Catito. The
rentals were collected by Narciso, while Ederlina kept the proceeds of the sale of
copra from the coconut trees in the property. By this time, Alfred had already spent
P200,000.00 for the purchase, construction and upkeep of the property.
Ederlina often wrote letters to her family informing them of her life with Alfred.
In a Letter dated January 21, 1985, she wrote about how Alfred had financed the
purchases of some real properties, the establishment of her beauty parlor business,
and her petition to divorce Klaus.27
Because Ederlina was preoccupied with her business in Manila, she executed on
July 8, 1985, two special powers of attorney28 appointing Alfred as attorney-in-
fact to receive in her behalf the title and the deed of sale over the property sold by
the spouses Enrique Serrano.
In the meantime, Ederlina's petition for divorce was denied because Klaus opposed
the same. A second petition filed by her met the same fate. Klaus wanted half of
all the properties owned by Ederlina in the Philippines before he would agree to a
divorce. Worse, Klaus threatened to file a bigamy case against Ederlina. 29
Alfred proposed the creation of a partnership to Ederlina, or as an alternative, the
establishment of a corporation, with Ederlina owning 30% of the equity thereof.
She initially agreed to put up a corporation and contacted Atty. Armando
Dominguez to prepare the necessary documents. Ederlina changed her mind at the
last minute when she was advised to insist on claiming ownership over the
properties acquired by them during their coverture.
Alfred and Ederlina's relationship started deteriorating. Ederlina had not been able
to secure a divorce from Klaus. The latter could charge her for bigamy and could
even involve Alfred, who himself was still married. To avoid complications,
Alfred decided to live separately from Ederlina and cut off all contacts with her.
In one of her letters to Alfred, Ederlina complained that he had ruined her life. She
admitted that the money used for the purchase of the properties in Davao were his.
She offered to convey the properties deeded to her by Atty. Mardoecheo
Camporedondo and Rodolfo Morelos, asking Alfred to prepare her affidavit for
the said purpose and send it to her for her signature. 30 The last straw for Alfred
came on September 2, 1985, when someone smashed the front and rear
windshields of Alfred's car and damaged the windows. Alfred thereafter executed
an affidavit-complaint charging Ederlina and Sally MacCarron with malicious
mischief.31
On October 15, 1985, Alfred wrote to Ederlina's father, complaining that Ederlina
had taken all his life savings and because of this, he was virtually penniless. He
further accused the Catito family of acquiring for themselves the properties he had
purchased with his own money. He demanded the return of all the amounts that
Ederlina and her family had "stolen" and turn over all the properties acquired by
him and Ederlina during their coverture.32
Shortly thereafter, Alfred filed a Complaint33 dated October 28, 1985, against
Ederlina, with the Regional Trial Court of Quezon City, for recovery of real and
personal properties located in Quezon City and Manila. In his complaint, Alfred
alleged, inter alia, that Ederlina, without his knowledge and consent, managed to
transfer funds from their joint account in HSBC Hong Kong, to her own account
with the same bank. Using the said funds, Ederlina was able to purchase the
properties subject of the complaints. He also alleged that the beauty parlor in
Ermita was established with his own funds, and that the Quezon City property was
likewise acquired by him with his personal funds. 34
Ederlina failed to file her answer and was declared in default. Alfred adduced his
evidence ex parte.
In the meantime, on November 7, 1985, Alfred also filed a complaint 35 against
Ederlina with the Regional Trial Court, Davao City, for specific performance,
declaration of ownership of real and personal properties, sum of money, and
damages. He alleged, inter alia, in his complaint:
4. That during the period of their common-law relationship, plaintiff
solely through his own efforts and resources acquired in the Philippines real and
personal properties valued more or less at P724,000.00; The defendant's common-
law wife or live-in partner did not contribute anything financially to the acquisition
of the said real and personal properties. These properties are as follows:
I. Real Properties
a. TCT No. T-92456 located at Bajada, Davao City, consisting of 286 square
meters, (with residential house) registered in the name of the original title owner
Rodolfo M. Morelos but already fully paid by plaintiff. Valued at P342,000.00;
b. TCT No. T-47246 (with residential house) located at Babak, Samal, Davao,
consisting of 600 square meters, registered in the name of Ederlina Catito, with
the Register of Deeds of Tagum, Davao del Norte valued at P144,000.00;
c. A parcel of agricultural land located at Camudmud, Babak, Samal, Davao del
Norte, consisting of 4.2936 hectares purchased from Enrique Serrano and Rosela
B. Serrano. Already paid in full by plaintiff. Valued at P228,608.32;
II. Personal Properties:
a. Furniture valued at P10,000.00.
...
5. That defendant made no contribution at all to the acquisition, of the above-
mentioned properties as all the monies (sic) used in acquiring said properties
belonged solely to plaintiff;36
Alfred prayed that after hearing, judgment be rendered in his favor:
WHEREFORE, in view of the foregoing premises, it is respectfully prayed that
judgment be rendered in favor of plaintiff and against defendant:
a) Ordering the defendant to execute the corresponding deeds of transfer and/or
conveyances in favor of plaintiff over those real and personal properties
enumerated in Paragraph 4 of this complaint;
b) Ordering the defendant to deliver to the plaintiff all the above real and personal
properties or their money value, which are in defendant's name and custody
because these were acquired solely with plaintiffs money and resources during the
duration of the common-law relationship between plaintiff and defendant, the
description of which are as follows:
(1) TCT No. T-92456 (with residential house) located at Bajada, Davao City,
consisting of 286 square meters, registered in the name of the original title owner
Rodolfo Morelos but already fully paid by plaintiff. Valued at P342,000.00;
(2) TCT No. T-47246 (with residential house) located at Babak, Samal, Davao,
consisting of 600 square meters, registered in the name of Ederlina Catito, with
the Register of Deeds of Tagum, Davao del Norte, valued at P144,000.00;
(3) A parcel of agricultural land located at Camudmud, Babak, Samal, Davao del
Norte, consisting of 4.2936 hectares purchased from Enrique Serrano and Rosela
B. Serrano. Already fully paid by plaintiff. Valued at P228,608.32;
c) Declaring the plaintiff to be the sole and absolute owner of the above-mentioned
real and personal properties;
d) Awarding moral damages to plaintiff in an amount deemed reasonable by the
trial court;
e) To reimburse plaintiff the sum of P12,000.00 as attorney's fees for having
compelled the plaintiff to litigate;
f) To reimburse plaintiff the sum of P5,000.00 incurred as litigation expenses also
for having compelled the plaintiff to litigate; and
g) To pay the costs of this suit;
Plaintiff prays other reliefs just and equitable in the premises.37
In her answer, Ederlina denied all the material allegations in the complaint,
insisting that she acquired the said properties with her personal funds, and as such,
Alfred had no right to the same. She alleged that the deeds of sale, the receipts,
and certificates of titles of the subject properties were all made out in her
name.38 By way of special and affirmative defense, she alleged that Alfred had no
cause of action against her. She interposed counterclaims against the petitioner. 39
In the meantime, the petitioner filed a Complaint dated August 25, 1987, against
the HSBC in the Regional Trial Court of Davao City40 for recovery of bank
deposits and damages.41 He prayed that after due proceedings, judgment be
rendered in his favor, thus:
10
WHEREFORE, plaintiff respectfully prays that the Honorable Court adjudge
defendant bank, upon hearing the evidence that the parties might present, to pay
plaintiff:
1. ONE HUNDRED TWENTY SIX THOUSAND TWO HUNDRED AND
THIRTY U.S. DOLLARS AND NINETY EIGHT CENTS (US$126,230.98) plus
legal interests, either of Hong Kong or of the Philippines, from 20 December 1984
up to the date of execution or satisfaction of judgment, as actual damages or in
restoration of plaintiffs lost dollar savings;
2. The same amount in (1) above as moral damages;
3. Attorney's fees in the amount equivalent to TWENTY FIVE PER CENT (25%)
of (1) and (2) above;
4. Litigation expenses in the amount equivalent to TEN PER CENT (10%) of the
amount in (1) above; and
5. For such other reliefs as are just and equitable under the circumstances.42
On April 28, 1986, the RTC of Quezon City rendered its decision in Civil Case
No. Q-46350, in favor of Alfred, the decretal portion of which reads as follows:
WHEREFORE, premises considered, judgment is hereby rendered ordering the
defendant to perform the following:
(1) To execute a document waiving her claim to the house and lot in No. 14
Fernandez St., San Francisco Del Monte, Quezon City in favor of plaintiff or to
return to the plaintiff the acquisition cost of the same in the amount of $20,000.00,
or to sell the said property and turn over the proceeds thereof to the plaintiff;
(2) To deliver to the plaintiff the rights of ownership and management of the
beauty parlor located at 444 Arquiza St., Ermita, Manila, including the equipment
and fixtures therein;
(3) To account for the earnings of rental of the house and lot in No. 14 Fernandez
St., San Francisco Del Monte, Quezon City, as well as the earnings in the beauty
parlor at 444 Arquiza St., Ermita, Manila and turn over one-half of the net earnings
of both properties to the plaintiff;
(4) To surrender or return to the plaintiff the personal properties of the latter left
in the house at San Francisco Del Monte, to wit:
"(1) Mamya automatic camera
(1) 12 inch "Sonny" T.V. set, colored with remote control.
(1) Micro oven
(1) Electric fan (tall, adjustable stand)
(1) Office safe with (2) drawers and safe
(1) Electric Washing Machine
(1) Office desk and chair
(1) Double bed suits
(1) Mirror/dresser
(1) Heavy duty voice/working mechanic
(1) "Sony" Beta-Movie camera
(1) Suitcase with personal belongings
(1) Cardboard box with belongings
(1) Guitar Amplifier
(1) Hanger with men's suit (white)."
To return to the plaintiff, (1) Hi-Fi Stereo equipment left at 444 Arquiza Street,
Ermita, Manila, as well as the Fronte Suzuki car.
(4) To account for the monies (sic) deposited with the joint account of the plaintiff
and defendant (Account No. 018-0-807950); and to restore to the plaintiff all the
monies (sic) spent by the defendant without proper authority;
(5) To pay the amount of P5,000.00 by way of attorney's fees, and the costs of suit.
SO ORDERED.43
However, after due proceedings in the RTC of Davao City, in Civil Case No.
17,817, the trial court rendered judgment on September 28, 1995 in favor of
Ederlina, the dispositive portion of which reads:
WHEREFORE, the Court cannot give due course to the complaint and hereby
orders its dismissal. The counterclaims of the defendant are likewise dismissed.
SO ORDERED.44
The trial court ruled that based on documentary evidence, the purchaser of the
three parcels of land subject of the complaint was Ederlina. The court further stated
that even if Alfred was the buyer of the properties; he had no cause of action
against Ederlina for the recovery of the same because as an alien, he was
disqualified from acquiring and owning lands in the Philippines. The sale of the
three parcels of land to the petitioner was null and void ab initio. Applying the pari
delicto doctrine, the petitioner was precluded from recovering the properties from
the respondent.
Alfred appealed the decision to the Court of Appeals 45 in which the petitioner
posited the view that although he prayed in his complaint in the court a quo that
he be declared the owner of the three parcels of land, he had no intention of owning
the same permanently. His principal intention therein was to be declared the
transient owner for the purpose of selling the properties at public auction,
ultimately enabling him to recover the money he had spent for the purchase
thereof.
On March 8, 2000, the CA rendered a decision affirming in toto the decision of
the RTC. The appellate court ruled that the petitioner knowingly violated the
Constitution; hence, was barred from recovering the money used in the purchase
of the three parcels of land. It held that to allow the petitioner to recover the money
used for the purchase of the properties would embolden aliens to violate the
Constitution, and defeat, rather than enhance, the public policy. 46
Hence, the petition at bar.
The petitioner assails the decision of the court contending that:
THE HONORABLE COURT OF APPEALS ERRED IN APPLYING THE
RULE OF IN PARI DELICTO IN THE INSTANT CASE BECAUSE BY THE
FACTS AS NARRATED IN THE DECISION IT IS APPARENT THAT THE
PARTIES ARE NOT EQUALLY GUILTY BUT RATHER IT WAS THE
RESPONDENT WHO EMPLOYED FRAUD AS WHEN SHE DID NOT
INFORM PETITIONER THAT SHE WAS ALREADY MARRIED TO
ANOTHER GERMAN NATIONAL AND WITHOUT SUCH FRAUDULENT
DESIGN PETITIONER COULD NOT HAVE PARTED WITH HIS MONEY
FOR THE PURCHASE OF THE PROPERTIES.47
and
THE HONORABLE COURT OF APPEALS ERRED IN NOT HOLDING THAT
THE INTENTION OF THE PETITIONER IS NOT TO OWN REAL
PROPERTIES IN THE PHILIPPINES BUT TO SELL THEM AT PUBLIC
AUCTION TO BE ABLE TO RECOVER HIS MONEY USED IN
PURCHASING THEM.48
Since the assignment of errors are intertwined with each other, the Court shall
resolve the same simultaneously.
The petitioner contends that he purchased the three parcels of land subject of his
complaint because of his desire to marry the respondent, and not to violate the
Philippine Constitution. He was, however, deceived by the respondent when the
latter failed to disclose her previous marriage to Klaus Muller. It cannot, thus, be
said that he and the respondent are "equally guilty;" as such, the pari
delicto doctrine is not applicable to him. He acted in good faith, on the advice of
the respondent's uncle, Atty. Mardoecheo Camporedondo. There is no evidence
on record that he was aware of the constitutional prohibition against aliens
acquiring real property in the Philippines when he purchased the real properties
11
subject of his complaint with his own funds. The transactions were not illegal per A. In 14 Fernandez St., San Francisco, del Monte, Manila.
se but merely prohibited, and under Article 1416 of the New Civil Code, he is
entitled to recover the money used for the purchase of the properties. At any rate, Q. In whose name was the house placed?
the petitioner avers, he filed his complaint in the court a quo merely for the
purpose of having him declared as the owner of the properties, to enable him to A. Ederlina Catito because I was informed being not a Filipino, I cannot own
sell the same at public auction. Applying by analogy Republic Act No. 133 49 as the property. (tsn, p. 11, August 27, 1986).
amended by Rep. Act No. 4381 and Rep. Act No. 4882, the proceeds of the sale
xxx xxx xxx
would be remitted to him, by way of refund for the money he used to purchase the
said properties. To bar the petitioner from recovering the subject properties, or at COURT:
the very least, the money used for the purchase thereof, is to allow the respondent
to enrich herself at the expense of the petitioner in violation of Article 22 of the Q. So you understand that you are a foreigner that you cannot buy land in the
New Civil Code. Philippines?

The petition is bereft of merit. A. That is correct but as she would eventually be my wife that would be
owned by us later on. (tsn, p. 5, September 3, 1986)
Section 14, Article XIV of the 1973 Constitution provides, as follows:
xxx xxx xxx
Save in cases of hereditary succession, no private land shall be transferred or
conveyed except to individuals, corporations, or associations qualified to acquire Q. What happened after that?
or hold lands in the public domain.50
A. She said you foreigner you are using Filipinos to buy property.
Lands of the public domain, which include private lands, may be transferred or
conveyed only to individuals or entities qualified to acquire or hold private lands Q. And what did you answer?
or lands of the public domain. Aliens, whether individuals or corporations, have
been disqualified from acquiring lands of the public domain. Hence, they have also A: I said thank you very much for the property I bought because I gave you
been disqualified from acquiring private lands.51 a lot of money (tsn., p. 14, ibid).

Even if, as claimed by the petitioner, the sales in question were entered into by
him as the real vendee, the said transactions are in violation of the Constitution;
hence, are null and void ab initio.52 A contract that violates the Constitution and
the law, is null and void and vests no rights and creates no obligations. It produces
no legal effect at all.53 The petitioner, being a party to an illegal contract, cannot
come into a court of law and ask to have his illegal objective carried out. One who
loses his money or property by knowingly engaging in a contract or transaction
which involves his own moral turpitude may not maintain an action for his losses.
To him who moves in deliberation and premeditation, the law is unyielding.54 The
law will not aid either party to an illegal contract or agreement; it leaves the parties
where it finds them.55 Under Article 1412 of the New Civil Code, the petitioner
cannot have the subject properties deeded to him or allow him to recover the
money he had spent for the purchase thereof.56 Equity as a rule will follow the law
and will not permit that to be done indirectly which, because of public policy,
cannot be done directly.57 Where the wrong of one party equals that of the other,
the defendant is in the stronger position . . . it signifies that in such a situation,
neither a court of equity nor a court of law will administer a remedy. 58 The rule is
expressed. in the maxims: EX DOLO ORITUR ACTIO and IN PARI DELICTO
POTIOR EST CONDITIO DEFENDENTIS.59
It is evident that the plaintiff was fully aware that as a non-citizen of the
Philippines, he was disqualified from validly purchasing any land within the
country.61
The petitioner's claim that he acquired the subject properties because of his desire
to marry the respondent, believing that both of them would thereafter jointly own
the said properties, is belied by his own evidence. It is merely an afterthought to
salvage a lost cause. The petitioner admitted on cross-examination that he was all
along legally married to Teresita Santos Frenzel, while he was having an amorous
relationship with the respondent:
ATTY. YAP:
Q When you were asked to identify yourself on direct examination you
claimed before this Honorable Court that your status is that of being married, do
you confirm that?
A Yes, sir.
Q To whom are you married?

The petitioner cannot feign ignorance of the constitutional proscription, nor claim A To a Filipina, since 1976.
that he acted in good faith, let alone assert that he is less guilty than the respondent.
Q Would you tell us who is that particular person you are married since 1976?
The petitioner is charged with knowledge of the constitutional prohibition. 60 As
can be gleaned from the decision of the trial court, the petitioner was fully aware A Teresita Santos Frenzel.
that he was disqualified from acquiring and owning lands under Philippine law
even before he purchased the properties in question; and, to skirt the constitutional Q Where is she now?
prohibition, the petitioner had the deed of sale placed under the respondent's name
as the sole vendee thereof: A In Australia.

Such being the case, the plaintiff is subject to the constitutional restrictions
governing the acquisition of real properties in the Philippines by aliens.
From the plaintiff's complaint before the Regional Trial Court, National Capital
Judicial Region, Branch 84, Quezon City in Civil Case No. Q-46350 he alleged:
Q Is this not the person of Teresita Frenzel who became an Australian citizen?
A I am not sure, since 1981 we were separated.
Q You were only separated, in fact, but not legally separated?

x x x "That on account that foreigners are not allowed by the Philippine laws to
acquire real properties in their name as in the case of my vendor Miss Victoria
Vinuya (sic) although married to a foreigner, we agreed and I consented in having
the title to subject property placed in defendant's name alone although I paid for
the whole price out of my own exclusive funds." (paragraph IV, Exhibit "W.")
and his testimony before this Court which is hereby quoted:
ATTY. ABARQUEZ:
Q. In whose name the said house and lot placed, by the way, where is his
house and lot located?
A Thru my counsel in Australia I filed a separation case.
Q As of the present you are not legally divorce[d]?
A I am still legally married.62
The respondent was herself married to Klaus Muller, a German citizen. Thus, the
petitioner and the respondent could not lawfully join in wedlock. The evidence on
record shows that the petitioner in fact knew of the respondent's marriage to
another man, but nonetheless purchased the subject properties under the name of
the respondent and paid the purchase prices therefor. Even if it is assumed gratia
arguendi that the respondent and the petitioner were capacitated to marry, the

12
petitioner is still disqualified to own the properties in tandem with the
respondent.63

The petitioner cannot find solace in Article 1416 of the New Civil Code which
reads:

Art. 1416. When the agreement is not illegal per se but is merely prohibited, and
the prohibition by the law is designed for the protection of the plaintiff, he may, if
public policy is thereby enhanced, recover what he has paid or delivered. 64

The provision applies only to those contracts which are merely prohibited, in order
to benefit private interests. It does not apply to contracts void ab initio. The sales
of three parcels of land in favor of the petitioner who is a foreigner is illegal per
se. The transactions are void ab initio because they were entered into in violation
of the Constitution. Thus, to allow the petitioner to recover the properties or the
money used in the purchase of the parcels of land would be subversive of public
policy.

Neither may the petitioner find solace in Rep. Act No. 133, as amended by Rep.
Act No. 4882, which reads:

SEC. 1. Any provision of law to the contrary notwithstanding, private real property
may be mortgaged in favor of any individual, corporation, or association, but the
mortgagee or his successor-in-interest, if disqualified to acquire or hold lands of
the public domain in the Philippines, shall not take possession of the mortgaged
property during the existence of the mortgage and shall not take possession of
mortgaged property except after default and for the sole purpose of foreclosure,
receivership, enforcement or other proceedings and in no case for a period of more
than five years from actual possession and shall not bid or take part in any sale of
such real property in case of foreclosure: Provided, That said mortgagee or
successor-in-interest may take possession of said property after default in
accordance with the prescribed judicial procedures for foreclosure and
receivership and in no case exceeding five years from actual possession.65

From the evidence on record, the three parcels of land subject of the complaint
were not mortgaged to the petitioner by the owners thereof but were sold to the
respondent as the vendee, albeit with the use of the petitioner's personal funds.

Futile, too, is petitioner's reliance on Article 22 of the New Civil Code which
reads:

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.66

The provision is expressed in the maxim: "MEMO CUM ALTERIUS DETER

DETREMENTO PROTEST" (No person should unjustly enrich himself at the
expense of another). An action for recovery of what has been paid without just
cause has been designated as an accion in rem verso.67 This provision does not
apply if, as in this case, the action is proscribed by the Constitution or by the
application of the pari delicto doctrine. 68 It may be unfair and unjust to bar the
petitioner from filing an accion in rem verso over the subject properties, or from
recovering the money he paid for the said properties, but, as Lord Mansfield stated
in the early case of Holman vs. Johnson:69 "The objection that a contract is
immoral or illegal as between the plaintiff and the defendant, sounds at all times
very ill in the mouth of the defendant. It is not for his sake, however, that the
objection is ever allowed; but it is founded in general principles of policy, which
the defendant has the advantage of, contrary to the real justice, as between him and
the plaintiff."

IN LIGHT OF ALL THE FOREGOING, the petition is DISMISSED. The

decision of the Court of Appeals is AFFIRMED in toto.

Costs against the petitioner.

SO ORDERED.

13
G.R. No. 135634 May 31, 2000
HEIRS OF JUAN SAN ANDRES (VICTOR S. ZIGA) and SALVACION S.
TRIA, petitioners,
vs.
VICENTE RODRIGUEZ, respondent.
MENDOZA, J.:
This is a petition for review on certiorari of the decision of the Court of
Appeals 1 reversing the decision of the Regional Trial Court, Naga City, Branch
19, in Civil Case No. 87-1335, as well as the appellate court's resolution denying
reconsideration.
The antecedent facts are as follows:
Juan San Andres was the registered owner of Lot No. 1914-B-2 situated in
Liboton, Naga City. On September 28, 1964, he sold a portion thereof, consisting
of 345 square meters, to respondent Vicente S. Rodriguez for P2,415.00. The sale
is evidenced by a Deed of Sale. 2
Upon the death of Juan San Andres on May 5, 1965, Ramon San Andres was
appointed judicial administrator of the decedent's estate in Special Proceedings
No. R-21, RTC, Branch 19, Naga City. Ramon San Andres engaged the services
of a geodetic engineer, Jose Peero, to prepare a consolidated plan (Exh. A) of the
estate. Engineer Peero also prepared a sketch plan of the 345-square meter lot
sold to respondent. From the result of the survey, it was found that respondent had
enlarged the area which he purchased from the late Juan San Andres by 509 square
meters. 3
Accordingly, the judicial administrator sent a letter, 4 dated July 27, 1987, to
respondent demanding that the latter vacate the portion allegedly encroached by
him. However, respondent refused to do so, claiming he had purchased the same
from the late Juan San Andres. Thereafter, on November 24, 1987, the judicial
administrator brought an action, in behalf of the estate of Juan San Andres, for
recovery of possession of the 509-square meter lot.
In his Re-amended Answer filed on February 6, 1989, respondent alleged that
apart from the 345-square meter lot which had been sold to him by Juan San
Andres on September 28, 1964, the latter likewise sold to him the following day
the remaining portion of the lot consisting of 509 square meters, with both parties
treating the two lots as one whole parcel with a total area of 854 square meters.
Respondent alleged that the full payment of the 509-square meter lot would be
effected within five (5) years from the execution of a formal deed of sale after a
survey is conducted over said property. He further alleged that with the consent of
the former owner, Juan San Andres, he took possession of the same and introduced
improvements thereon as early as 1964.
As proof of the sale to him of 509 square meters, respondent attached to his answer
a receipt (Exh. 2) 5 signed by the late Juan San Andres, which reads in full as
follows:
Received from Vicente Rodriguez the sum of Five Hundred (P500.00) Pesos
representing an advance payment for a residential lot adjoining his previously paid
lot on three sides excepting on the frontage with the agreed price of Fifteen (15.00)
Pesos per square meter and the payment of the full consideration based on a survey
shall be due and payable in five (5) years period from the execution of the formal
deed of sale; and it is agreed that the expenses of survey and its approval by the
Bureau of Lands shall be borne by Mr. Rodriguez.
Naga City, September 29, 1964.
(Sgd.)
JUAN R. SAN ANDRES
Vendor
Noted:
(Sgd.)
VICENTE RODRIGUEZ
Vendee
Respondent also attached to his answer a letter of judicial administrator Ramon
San Andres (Exh. 3), 6 asking payment of the balance of the purchase price. The
letter reads:
Dear Inting,
Please accommodate my request for Three Hundred (P300.00) Pesos as I am in
need of funds as I intimated to you the other day.
We will just adjust it with whatever balance you have payable to the subdivision.
Thanks.
Sincerely,
(Sgd.)
RAMON SAN ANDRES
Vicente Rodriguez
Penafrancia Subdivision, Naga City
P.S.
You can let bearer Enrique del Castillo sign for the amount.
Received One Hundred Only
(Sgd.)
RAMON SAN ANDRES
3/30/66
Respondent deposited in court the balance of the purchase price amounting to
P7,035.00 for the aforesaid 509-square meter lot.
While the proceedings were pending, judicial administrator Ramon San Andres
died and was substituted by his son Ricardo San Andres. On the other band,
respondent Vicente Rodriguez died on August 15, 1989 and was substituted by his
heirs. 7
Petitioner, as plaintiff, presented two witnesses. The first witness, Engr. Jose
Peero, 8 testified that based on his survey conducted sometime between 1982 and
1985, respondent had enlarged the area which he purchased from the late Juan San
Andres by 509 square meters belonging to the latter's estate. According to Peero,
the titled property (Exh. A-5) of respondent was enclosed with a fence with metal
holes and barbed wire, while the expanded area was fenced with barbed wire and
bamboo and light materials.
The second witness, Ricardo San Andres, 9 administrator of the estate, testified that
respondent had not filed any claim before Special Proceedings No. R-21 and
denied knowledge of Exhibits 2 and 3. However, he recognized the signature in
Exhibit 3 as similar to that of the former administrator, Ramon San Andres.
Finally, he declared that the expanded portion occupied by the family of
respondent is now enclosed with barbed wire fence unlike before where it was
found without fence.
On the other hand, Bibiana B. Rodriguez, 10 widow of respondent Vicente
Rodriguez, testified that they had purchased the subject lot from Juan San Andres,
who was their compadre, on September 29, 1964, at P15.00 per square meter.
According to her, they gave P500.00 to the late Juan San Andres who later affixed
his signature to Exhibit 2. She added that on March 30, 1966; Ramon San Andres
wrote them a letter asking for P300.00 as partial payment for the subject lot, but
they were able to give him only P100.00. She added that they had paid the total
purchase price of P7,035.00 on November 21, 1988 by depositing it in court.
Bibiana B. Rodriquez stated that they had been in possession of the 509-square
meter lot since 1964 when the late Juan San Andres signed the receipt. (Exh. 2)
Lastly, she testified that they did not know at that time the exact area sold to them
because they were told that the same would be known after the survey of the
subject lot.
14
On September 20, 1994, the trial court 11 rendered judgment in favor of petitioner.
It ruled that there was no contract of sale to speak of for lack of a valid object
because there was no sufficient indication in Exhibit 2 to identify the property
subject of the sale, hence, the need to execute a new contract.
Respondent appealed to the Court of Appeals, which on April 21, 1998 rendered
a decision reversing the decision of the trial court. The appellate court held that
the object of the contract was determinable, and that there was a conditional sale
with the balance of the purchase price payable within five years from the execution
of the deed of sale. The dispositive portion of its decision's reads:
IN VIEW OF ALL THE FOREGOING, the judgment appealed from is hereby
REVERSED and SET ASIDE and a new one entered DISMISSING the complaint
and rendering judgment against the plaintiff-appellee:
1. to accept the P7,035.00 representing the balance of the purchase price of the
portion and which is deposited in court under Official Receipt No. 105754 (page
122, Records);
2. to execute the formal deed of sale over the said 509 square meter portion of Lot
1914-B-2 in favor of appellant Vicente Rodriguez;
3. to pay the defendant-appellant the amount of P50,000.00 as damages and
P10,000.00 attorney's fees as stipulated by them during the trial of this case; and
4. to pay the costs of the suit.
SO ORDERED.
Hence, this petition. Petitioner assigns the following errors as having been
allegedly committed by the trial court:
I. THE HON. COURT OF APPEALS ERRED IN HOLDING THAT THE
DOCUMENT (EXHIBIT "2") IS A CONTRACT TO SELL DESPITE ITS
LACKING ONE OF THE ESSENTIAL ELEMENTS OF A CONTRACT,
NAMELY, OBJECT CERTAIN AND SUFFICIENTLY DESCRIBED.
II. THE HON. COURT OF APPEALS ERRED IN HOLDING THAT
PETITIONER IS OBLIGED TO HONOR THE PURPORTED CONTRACT TO
SELL DESPITE NON-FULFILLMENT BY RESPONDENT OF THE
CONDITION THEREIN OF PAYMENT OF THE BALANCE OF THE
PURCHASE PRICE.
III. THE HON. COURT OF APPEALS ERRED IN HOLDING THAT
CONSIGNATION WAS VALID DESPITE NON-COMPLIANCE WITH THE
MANDATORY REQUIREMENTS THEREOF.
IV. THE HON. COURT OF APPEALS ERRED IN HOLDING THAT LACHES
AND PRESCRIPTION DO NOT APPLY TO RESPONDENT WHO SOUGHT
INDIRECTLY TO ENFORCE THE PURPORTED CONTRACT AFTER THE
LAPSE OF 24 YEARS.
The petition has no merit.
First. Art. 1458 of the Civil Code provides:
By the contract of sale one of the contracting parties obligates himself to transfer
the ownership of and to deliver a determinate thing, and the other to pay therefor
a price certain in money or its equivalent.
A contract of sale may be absolute or conditional.
As thus defined, the essential elements of sale are the following:
a) Consent or meeting of the minds, that is, consent to transfer ownership in
exchange for the price;
b) Determinate subject matter; and,
c) Price certain in money or its equivalent. 12
As shown in the receipt, dated September 29, 1964, the late Juan San Andres
received P500.00 from respondent as "advance payment for the residential lot
adjoining his previously paid lot on three sides excepting on the frontage; the
agreed purchase price was P15.00 per square meter; and the full amount of the
purchase price was to be based on the results of a survey and would be due and
payable in five (5) years from the execution of a deed of sale.
Petitioner contends, however, that the "property subject of the sale was not
described with sufficient certainty such that there is a necessity of another
agreement between the parties to finally ascertain the identity; size and purchase
price of the property which is the object of the alleged sale." 1 He argues that the
"quantity of the object is not determinate as in fact a survey is needed to determine
its exact size and the full purchase price therefor" 14 In support of his contention,
petitioner cites the following provisions of the Civil Code:
Art. 1349. The object of every contract must be determinate as to its kind. The fact
that the quantity is not determinable shall not be an obstacle to the existence of a
contract, provided it is possible to determine the same without the need of a new
contract between the parties.
Art. 1460. . . . The requisite that a thing be determinate is satisfied if at the time
the contract is entered into, the thing is capable of being made determinate without
the necessity of a new and further agreement between the parties.
Petitioner's contention is without merit. There is no dispute that respondent
purchased a portion of Lot 1914-B-2 consisting of 345 square meters. This portion
is located in the middle of Lot 1914-B-2, which has a total area of 854 square
meters, and is clearly what was referred to in the receipt as the "previously paid
lot." Since the lot subsequently sold to respondent is said to adjoin the "previously
paid lot" on three sides thereof, the subject lot is capable of being determined
without the need of any new contract. The fact that the exact area of these adjoining
residential lots is subject to the result of a survey does not detract from the fact
that they are determinate or determinable. As the Court of Appeals explained: 15
Concomitantly, the object of the sale is certain and determinate. Under Article
1460 of the New Civil Code, a thing sold is determinate if at the time the contract
is entered into, the thing is capable of being determinate without necessity of a
new or further agreement between the parties. Here, this definition finds
realization.
Appellee's Exhibit "A" (page 4, Records) affirmingly shows that the original 345
sq. m. portion earlier sold lies at the middle of Lot 1914-B-2 surrounded by the
remaining portion of the said Lot 1914-B-2 on three (3) sides, in the east, in the
west and in the north. The northern boundary is a 12 meter road. Conclusively,
therefore, this is the only remaining 509 sq. m. portion of Lot 1914-B-2
surrounding the 345 sq. m. lot initially purchased by Rodriguez. It is quite difined,
determinate and certain. Withal, this is the same portion adjunctively occupied and
possessed by Rodriguez since September 29, 1964, unperturbed by anyone for
over twenty (20) years until appellee instituted this suit.
Thus, all of the essential elements of a contract of sale are present, i.e., that there
was a meeting of the minds between the parties, by virtue of which the late Juan
San Andres undertook to transfer ownership of and to deliver a determinate thing
for a price certain in money. As Art. 1475 of the Civil Code provides:
The contract of sale is perfected at the moment there is a meeting of minds upon
the thing which is the object of the contract and upon the price. . . .
That the contract of sale is perfected was confirmed by the former administrator
of the estates, Ramon San Andres, who wrote a letter to respondent on March 30,
1966 asking for P300.00 as partial payment for the subject lot. As the Court of
Appeals observed:
Without any doubt, the receipt profoundly speaks of a meeting of the mind
between San Andres and Rodriguez for the sale of the property adjoining the 345
square meter portion previously sold to Rodriguez on its three (3) sides excepting
the frontage. The price is certain, which is P15.00 per square meter. Evidently, this
is a perfected contract of sale on a deferred payment of the purchase price. All the
pre-requisite elements for a valid purchase transaction are present. Sale does not
require any formal document for its existence and validity. And delivery of
possession of land sold is a consummation of the sale (Galar vs. Husain, 20 SCRA
186 [1967]). A private deed of sale is a valid contract between the parties
(Carbonell v. CA, 69 SCRA 99 [1976]).
In the same vein, after the late Juan R. San Andres received the P500.00
downpayment on March 30, 1966, Ramon R. San Andres wrote a letter to
Rodriguez and received from Rodriguez the amount of P100.00 (although P300.00
was being requested) deductible from the purchase price of the subject portion.
15
Enrique del Castillo, Ramon's authorized agent, correspondingly signed the receipt
for the P100.00. Surely, this is explicitly a veritable proof of he sale over the
remaining portion of Lot 1914-B-2 and a confirmation by Ramon San Andres of
the existence thereof. 16
There is a need, however, to clarify what the Court of Appeals said is a conditional
contract of sale. Apparently, the appellate court considered as a "condition" the
stipulation of the parties that the full consideration, based on a survey of the lot,
would be due and payable within five (5) years from the execution of a formal
deed of sale. It is evident from the stipulations in the receipt that the vendor Juan
San Andres sold the residential lot in question to respondent and undertook to
transfer the ownership thereof to respondent without any qualification, reservation
or condition. In Ang Yu Asuncion v. Court of Appeals, 17 we held:
In Dignos v. Court of Appeals (158 SCRA 375), we have said that, although
denominated a "Deed of Conditional Sale," a sale is still absolute where the
contract is devoid of any proviso that title is reserved or the right to unilaterally
rescind is stipulated, e.g., until or unless the price is paid. Ownership will then be
transferred to the buyer upon actual or constructive delivery (e.g., by the execution
of a public document) of the property sold. Where the condition is imposed upon
the perfection of the contract itself, the failure of the condition would prevent such
perfection. If the condition is imposed on the obligation of a party which is not
fulfilled, the other party may either waive the condition or refuse to proceed with
the sale. (Art. 1545, Civil Code).
Simply put, courts cannot stipulate for the parties nor amend the latter's agreement,
for to do so would be to alter the real intentions of the contracting parties when the
contrary function of courts is to give force and effect to the intentions of the parties.
Fourth. Finally, petitioners argue that respondent is barred by prescription and
laches from enforcing the contract. This contention is likewise untenable. The
contract of sale in this case is perfected, and the delivery of the subject lot to
respondent effectively transferred ownership to him. For this reason, respondent
seeks to comply with his obligation to pay the full purchase price, but because the
deed of sale is yet to be executed, he deemed it appropriate to deposit the balance
of the purchase price in court. Accordingly, Art. 1144 of the Civil Code has no
application to the instant case. 21 Considering that a survey of the lot has already
been conducted and approved by the Bureau of Lands, respondent's heirs, assign
or successors-in-interest should reimburse the expenses incurred by herein
petitioners, pursuant to the provisions of the contract.
WHEREFORE, the decision of the Court of Appeals is AFFIRMED with the
modification that respondent is ORDERED to reimburse petitioners for the
expenses of the survey.
SO ORDERED.

Thus, in. one case, when the sellers declared in a "Receipt of Down Payment" that
they received an amount as purchase price for a house and lot without any
reservation of title until full payment of the entire purchase price, the implication
was that they sold their property. 18 In People's Industrial Commercial
Corporation v. Court of Appeals, 19it was stated:

A deed of sale is considered absolute in nature where there is neither a stipulation

in the deed that title to the property sold is reserved in the seller until full payment
of the price, nor one giving the vendor the right to unilaterally resolve the contract
the moment the buyer fails to pay within a fixed period.

Applying these principles to this case, it cannot be gainsaid that the contract of
sale between the parties is absolute, not conditional. There is no reservation of
ownership nor a stipulation providing for a unilateral rescission by either party. In
fact, the sale was consummated upon the delivery of the lot to respondent. 20 Thus,
Art. 1477 provides that the ownership of the thing sold shall be transferred to the
vendee upon the actual or constructive delivery thereof.

The stipulation that the "payment of the full consideration based on a survey shall
be due and payable in five (5) years from the execution of a formal deed of sale"
is not a condition which affects the efficacy of the contract of sale. It merely
provides the manner by which the full consideration is to be computed and the
time within which the same is to be paid. But it does not affect in any manner the
effectivity of the contract. Consequently, the contention that the absence of a
formal deed of sale stipulated in the receipt prevents the happening of a sale has
no merit.

Second. With respect to the contention that the Court of Appeals erred in upholding
the validity of a consignation of P7,035.00 representing the balance of the
purchase price of the lot, nowhere in the decision of the appellate court is there
any mention of consignation. Under Art. 1257 of this Civil Code, consignation is
proper only in cases where an existing obligation is due. In this case, however, the
contracting parties agreed that full payment of purchase price shall be due and
payable within five (5) years from the execution of a formal deed of sale. At the
time respondent deposited the amount of P7,035.00 in the court, no formal deed
of sale had yet been executed by the parties, and, therefore, the five-year period
during which the purchase price should be paid had not commenced. In short, the
purchase price was not yet due and payable.

This is not to say, however, that the deposit of the purchase price in the court is
erroneous. The Court of Appeals correctly ordered the execution of a deed of sale
and petitioners to accept the amount deposited by respondent.

Third. The claim of petitioners that the price of P7,035.00 is iniquitous is

untenable. The amount is based on the agreement of the parties as evidenced by
the receipt (Exh. 2). Time and again, we have stressed the rule that a contract is
the law between the parties, and courts have no choice but to enforce such contract
so long as they are not contrary to law, morals, good customs or public policy.
Otherwise, court would be interfering with the freedom of contract of the parties.

16
G.R. No. L-24732 April 30, 1968
PIO SIAN MELLIZA, petitioner,
vs.
CITY OF ILOILO, UNIVERSITY OF THE PHILIPPINES and THE
COURT APPEALS, respondents.
Cornelio P. Ravena for petitioner.
Office of the Solicitor General for respondents.
BENGZON, J.P., J.:
Juliana Melliza during her lifetime owned, among other properties, three parcels
of residential land in Iloilo City registered in her name under Original Certificate
of Title No. 3462. Said parcels of land were known as Lots Nos. 2, 5 and 1214.
The total area of Lot No. 1214 was 29,073 square meters.
On November 27, 1931 she donated to the then Municipality of Iloilo, 9,000
square meters of Lot 1214, to serve as site for the municipal hall. 1 The donation
was however revoked by the parties for the reason that the area donated was found
inadequate to meet the requirements of the development plan of the municipality,
the so-called "Arellano Plan". 2
Subsequently, Lot No. 1214 was divided by Certeza Surveying Co., Inc. into Lots
1214-A and 1214-B. And still later, Lot 1214-B was further divided into Lots
1214-B-1, Lot 1214-B-2 and Lot 1214-B-3. As approved by the Bureau of Lands,
Lot 1214-B-1 with 4,562 square meters, became known as Lot 1214-B; Lot 1214-
B-2, with 6,653 square meters, was designated as Lot 1214-C; and Lot 1214-B-
13, with 4,135 square meters, became Lot 1214-D.
On November 15, 1932 Juliana Melliza executed an instrument without any
caption containing the following:
Que en consideracion a la suma total de SEIS MIL CUATRO CIENTOS
VEINTIDOS PESOS (P6,422.00), moneda filipina que por la presente declaro
haber recibido a mi entera satisfaccion del Gobierno Municipal de Iloilo, cedo y
traspaso en venta real y difinitiva a dicho Gobierno Municipal de Iloilo los lotes y
porciones de los mismos que a continuacion se especifican a saber: el lote No. 5
en toda su extension; una porcion de 7669 metros cuadrados del lote No. 2, cuya
porcion esta designada como sub-lotes Nos. 2-B y 2-C del piano de subdivision de
dichos lotes preparado por la Certeza Surveying Co., Inc., y una porcion de 10,788
metros cuadrados del lote No. 1214 cuya porcion esta designada como sub-
lotes Nos. 1214-B-2 y 1214-B-3 del mismo plano de subdivision.
Asimismo nago constar que la cesion y traspaso que ariba se mencionan es de
venta difinitiva, y que para la mejor identificacion de los lotes y porciones de los
mismos que son objeto de la presente, hago constar que dichos lotes y porciones
son los que necesita el Gobierno Municipal de Iloilo para la construccion de
avenidas, parques y City Hall site del Municipal Government Center de iloilo,
segun el plano Arellano.
On January 14, 1938 Juliana Melliza sold her remaining interest in Lot 1214 to
Remedios Sian Villanueva who thereafter obtained her own registered title thereto,
under Transfer Certificate of Title No. 18178. Remedios in turn on November 4,
1946 transferred her rights to said portion of land to Pio Sian Melliza, who
obtained Transfer Certificate of Title No. 2492 thereover in his name. Annotated
at the back of Pio Sian Melliza's title certificate was the following:
... (a) that a portion of 10,788 square meters of Lot 1214 now designated as Lots
Nos. 1214-B-2 and 1214-B-3 of the subdivision plan belongs to the Municipality
of Iloilo as per instrument dated November 15, 1932....
On August 24, 1949 the City of Iloilo, which succeeded to the Municipality of
Iloilo, donated the city hall site together with the building thereon, to the
University of the Philippines (Iloilo branch). The site donated consisted of Lots
Nos. 1214-B, 1214-C and 1214-D, with a total area of 15,350 square meters, more
or less.
Sometime in 1952, the University of the Philippines enclosed the site donated with
a wire fence. Pio Sian Melliza thereupon made representations, thru his lawyer,
with the city authorities for payment of the value of the lot (Lot 1214-B). No
recovery was obtained, because as alleged by plaintiff, the City did not have funds
(p. 9, Appellant's Brief.)
The University of the Philippines, meanwhile, obtained Transfer Certificate of
Title No. 7152 covering the three lots, Nos. 1214-B, 1214-C and 1214-D.
On December 10, 1955 Pio Sian Melliza filed an action in the Court of First
Instance of Iloilo against Iloilo City and the University of the Philippines for
recovery of Lot 1214-B or of its value.
The defendants answered, contending that Lot 1214-B was included in the public
instrument executed by Juliana Melliza in favor of Iloilo municipality in 1932.
After stipulation of facts and trial, the Court of First Instance rendered its decision
on August 15, 1957, dismissing the complaint. Said court ruled that the instrument
executed by Juliana Melliza in favor of Iloilo municipality included in the
conveyance Lot 1214-B. In support of this conclusion, it referred to the portion of
the instrument stating:
Asimismo hago constar que la cesion y traspaso que arriba se mencionan es de
venta difinitiva, y que para la major identificacion de los lotes y porciones de los
mismos que son objeto de la presente, hago constar que dichos lotes y porciones
son los que necesita el Gobierno municipal de Iloilo para la construccion de
avenidas, parques y City Hall site del Municipal Government Center de Iloilo,
segun el plano Arellano.
and ruled that this meant that Juliana Melliza not only sold Lots 1214-C and 1214-
D but also such other portions of lots as were necessary for the municipal hall site,
such as Lot 1214-B. And thus it held that Iloilo City had the right to donate Lot
1214-B to the U.P.
Pio Sian Melliza appealed to the Court of Appeals. In its decision on May 19,
1965, the Court of Appeals affirmed the interpretation of the Court of First
Instance, that the portion of Lot 1214 sold by Juliana Melliza was not limited to
the 10,788 square meters specifically mentioned but included whatever was
needed for the construction of avenues, parks and the city hall site. Nonetheless, it
ordered the remand of the case for reception of evidence to determine the area
actually taken by Iloilo City for the construction of avenues, parks and for city hall
site.
The present appeal therefrom was then taken to Us by Pio Sian Melliza. Appellant
maintains that the public instrument is clear that only Lots Nos. 1214-C and 1214-
D with a total area of 10,788 square meters were the portions of Lot 1214 included
in the sale; that the purpose of the second paragraph, relied upon for a contrary
interpretation, was only to better identify the lots sold and none other; and that to
follow the interpretation accorded the deed of sale by the Court of Appeals and the
Court of First Instance would render the contract invalid because the law requires
as an essential element of sale, a "determinate" object (Art. 1445, now 1448, Civil
Code).
Appellees, on the other hand, contend that the present appeal improperly raises
only questions of fact. And, further, they argue that the parties to the document in
question really intended to include Lot 1214-B therein, as shown by the silence of
the vendor after Iloilo City exercised ownership thereover; that not to include it
would have been absurd, because said lot is contiguous to the others admittedly
included in the conveyance, lying directly in front of the city hall, separating that
building from Lots 1214-C and 1214-D, which were included therein. And, finally,
appellees argue that the sale's object was determinate, because it could be
ascertained, at the time of the execution of the contract, what lots were needed by
Iloilo municipality for avenues, parks and city hall site "according to the Arellano
Plan", since the Arellano plan was then already in existence.
The appeal before Us calls for the interpretation of the public instrument dated
November 15, 1932. And interpretation of such contract involves a question of
law, since the contract is in the nature of law as between the parties and their
successors-in-interest.
At the outset, it is well to mark that the issue is whether or not the conveyance by
Juliana Melliza to Iloilo municipality included that portion of Lot 1214 known as
Lot 1214-B. If not, then the same was included, in the instrument subsequently
executed by Juliana Melliza of her remaining interest in Lot 1214 to Remedios
Sian Villanueva, who in turn sold what she thereunder had acquired, to Pio Sian
Melliza. It should be stressed, also, that the sale to Remedios Sian Villanueva
from which Pio Sian Melliza derived title did not specifically designate Lot
1214-B, but only such portions of Lot 1214 as were not included in the previous
sale to Iloilo municipality (Stipulation of Facts, par. 5, Record on Appeal, p. 23).
And thus, if said Lot 1214-B had been included in the prior conveyance to Iloilo
17
municipality, then it was excluded from the sale to Remedios Sian Villanueva and,
later, to Pio Sian Melliza.
The point at issue here is then the true intention of the parties as to the object of
the public instrument Exhibit "D". Said issue revolves on the paragraph of the
public instrument aforequoted and its purpose, i.e., whether it was intended merely
to further describe the lots already specifically mentioned, or whether it was
intended to cover other lots not yet specifically mentioned.
First of all, there is no question that the paramount intention of the parties was to
provide Iloilo municipality with lots sufficient or adequate in area for the
construction of the Iloilo City hall site, with its avenues and parks. For this matter,
a previous donation for this purpose between the same parties was revoked by
them, because of inadequacy of the area of the lot donated.
by the University of the Philippines of Lot 1214-B as part of the city hall site
conveyed under that public instrument, and raised proper objections thereto if it
was his position that the same was not included in the same. The fact remains
that, instead, for twenty long years, Pio Sian Melliza and his predecessors-in-
interest, did not object to said possession, nor exercise any act of possession over
Lot 1214-B. Applying, therefore, principles of civil law, as well as laches,
estoppel, and equity, said lot must necessarily be deemed included in the
conveyance in favor of Iloilo municipality, now Iloilo City.
WHEREFORE, the decision appealed from is affirmed insofar as it affirms that of
the Court of First Instance, and the complaint in this case is dismissed. No costs.
So ordered.

Secondly, reading the public instrument in toto, with special reference to the
paragraphs describing the lots included in the sale, shows that said instrument
describes four parcels of land by their lot numbers and area; and then it goes on to
further describe, not only those lots already mentioned, but the lots object of the
sale, by stating that said lots are the ones needed for the construction of the city
hall site, avenues and parks according to the Arellano plan. If the parties intended
merely to cover the specified lots Lots 2, 5, 1214-C and 1214-D, there would
scarcely have been any need for the next paragraph, since these lots are already
plainly and very clearly described by their respective lot number and area. Said
next paragraph does not really add to the clear description that was already given
to them in the previous one.

It is therefore the more reasonable interpretation, to view it as describing those

other portions of land contiguous to the lots aforementioned that, by reference to
the Arellano plan, will be found needed for the purpose at hand, the construction
of the city hall site.

Appellant however challenges this view on the ground that the description of said
other lots in the aforequoted second paragraph of the public instrument would
thereby be legally insufficient, because the object would allegedly not be
determinate as required by law.

Such contention fails on several counts. The requirement of the law that a sale
must have for its object a determinate thing, is fulfilled as long as, at the time the
contract is entered into, the object of the sale is capable of being made determinate
without the necessity of a new or further agreement between the parties (Art. 1273,
old Civil Code; Art. 1460, New Civil Code). The specific mention of some of the
lots plus the statement that the lots object of the sale are the ones needed for city
hall site, avenues and parks, according to the Arellano plan, sufficiently provides
a basis, as of the time of the execution of the contract, for rendering determinate
said lots without the need of a new and further agreement of the parties.

The Arellano plan was in existence as early as 1928. As stated, the previous
donation of land for city hall site on November 27, 1931 was revoked on March 6,
1932 for being inadequate in area under said Arellano plan. Appellant claims that
although said plan existed, its metes and bounds were not fixed until 1935, and
thus it could not be a basis for determining the lots sold on November 15, 1932.
Appellant however fails to consider that the area needed under that plan for city
hall site was then already known; that the specific mention of some of the lots
covered by the sale in effect fixed the corresponding location of the city hall site
under the plan; that, therefore, considering the said lots specifically mentioned in
the public instrument Exhibit "D", and the projected city hall site, with its area, as
then shown in the Arellano plan (Exhibit 2), it could be determined which, and
how much of the portions of land contiguous to those specifically named, were
needed for the construction of the city hall site.

And, moreover, there is no question either that Lot 1214-B is contiguous to Lots
1214-C and 1214-D, admittedly covered by the public instrument. It is stipulated
that, after execution of the contract Exhibit "D", the Municipality of Iloilo
possessed it together with the other lots sold. It sits practically in the heart of the
city hall site. Furthermore, Pio Sian Melliza, from the stipulation of facts, was the
notary public of the public instrument. As such, he was aware of its terms. Said
instrument was also registered with the Register of Deeds and such registration
was annotated at the back of the corresponding title certificate of Juliana Melliza.
From these stipulated facts, it can be inferred that Pio Sian Melliza knew of the
aforesaid terms of the instrument or is chargeable with knowledge of them; that
knowing so, he should have examined the Arellano plan in relation to the public
instrument Exhibit "D"; that, furthermore, he should have taken notice of the
possession first by the Municipality of Iloilo, then by the City of Iloilo and later

18
G.R. No. L-22487 May 21, 1969 the certificate of title. In the particular case before us, the portion correctly referred
to as lot No. 535-A was already in the possession of the vendee, Eulogio Atilano
ASUNCION ATILANO, CRISTINA ATILANO, ROSARIO ATILANO, II, who had constructed his residence therein, even before the sale in his favor even
assisted by their respective husbands, HILARIO ROMANO, FELIPE before the subdivision of the entire lot No. 535 at the instance of its owner, Eulogio
BERNARDO, and MAXIMO LACANDALO, ISABEL ATILANO and Atillano I. In like manner the latter had his house on the portion correctly
GREGORIO ATILANO, plaintiffs-appellees, identified, after the subdivision, as lot No. 535-E, even adding to the area thereof
vs. by purchasing a portion of an adjoining property belonging to a different owner.
LADISLAO ATILANO and GREGORIO M. ATILANO, defendants- The two brothers continued in possession of the respective portions the rest of their
appellants. lives, obviously ignorant of the initial mistake in the designation of the lot subject
of the 1920 until 1959, when the mistake was discovered for the first time.
Climaco and Azcarraga for plaintiff-appellee.
T. de los Santos for defendants-appellants. The real issue here is not adverse possession, but the real intention of the parties
to that sale. From all the facts and circumstances we are convinced that the object
MAKALINTAL, J.: thereof, as intended and understood by the parties, was that specific portion where
the vendee was then already residing, where he reconstructed his house at the end
In 1916 Eulogio Atilano I acquired, by purchase from one Gerardo Villanueva, lot
of the war, and where his heirs, the plaintiffs herein, continued to reside thereafter:
No. 535 of the then municipality of Zamboanga cadastre. The vendee thereafter
namely, lot No. 535-A; and that its designation as lot No. 535-E in the deed of sale
obtained transfer certificate of title No. 1134 in his name. In 1920 he had the land
was simple mistake in the drafting of the document.1wphi1.et The mistake did
subdivided into five parts, identified as lots Nos. 535-A, 535-B, 535-C, 535-D and
not vitiate the consent of the parties, or affect the validity and binding effect of the
535-E, respectively. On May 18 of the same year, after the subdivision had been
contract between them. The new Civil Code provides a remedy for such a situation
effected, Eulogio Atilano I, for the sum of P150.00, executed a deed of sale
by means of reformation of the instrument. This remedy is available when, there
covering lot No. 535-E in favor of his brother Eulogio Atilano II, who thereupon
having been a meeting of the funds of the parties to a contract, their true intention
obtained transfer certificate of title No. 3129 in his name. Three other portions,
is not expressed in the instrument purporting to embody the agreement by reason
namely lots Nos. 535-B, 535-C and 535-D, were likewise sold to other persons,
of mistake, fraud, inequitable conduct on accident (Art. 1359, et seq.) In this case,
the original owner, Eulogio Atilano I, retaining for himself only the remaining
the deed of sale executed in 1920 need no longer reformed. The parties have
portion of the land, presumably covered by the title to lot No. 535-A. Upon his
retained possession of their respective properties conformably to the real intention
death the title to this lot passed to Ladislao Atilano, defendant in this case, in
of the parties to that sale, and all they should do is to execute mutual deeds of
whose name the corresponding certificate (No. T-5056) was issued.
conveyance.
On December 6, 1952, Eulogio Atilano II having become a widower upon the
WHEREFORE, the judgment appealed from is reversed. The plaintiffs are ordered
death of his wife Luisa Bautista, he and his children obtained transfer certificate
to execute a deed of conveyance of lot No. 535-E in favor of the defendants, and
of title No. 4889 over lot No. 535-E in their names as co-owners. Then, on July
the latter in turn, are ordered to execute a similar document, covering lot No. 595-
16, 1959, desiring to put an end to the co-ownership, they had the land resurveyed
A, in favor of the plaintiffs. Costs against the latter.
so that it could properly be subdivided; and it was then discovered that the land
they were actually occupying on the strength of the deed of sale executed in 1920
was lot No. 535-A and not lot 535-E, as referred to in the deed, while the land
which remained in the possession of the vendor, Eulogio Atilano I, and which
passed to his successor, defendant Ladislao Atilano, was lot No. 535-E and not lot
No. 535-A.

On January 25, 1960, the heirs of Eulogio Atilano II, who was by then also
deceased, filed the present action in the Court of First Instance of Zamboanga,
alleging, inter alia, that they had offered to surrender to the defendants the
possession of lot No. 535-A and demanded in return the possession of lot No. 535-
E, but that the defendants had refused to accept the exchange. The plaintiffs'
insistence is quite understandable, since lot No. 535-E has an area of 2,612 square
meters, as compared to the 1,808 square-meter area of lot No. 535-A.

In their answer to the complaint the defendants alleged that the reference to lot No.
535-E in the deed of sale of May 18, 1920 was an involuntary error; that the
intention of the parties to that sale was to convey the lot correctly identified as lot
No. 535-A; that since 1916, when he acquired the entirety of lot No. 535, and up
to the time of his death, Eulogio Atilano I had been possessing and had his house
on the portion designated as lot No. 535-E, after which he was succeeded in such
possession by the defendants herein; and that as a matter of fact Eulogio Atilano I
even increased the area under his possession when on June 11, 1920 he bought a
portion of an adjoining lot, No. 536, from its owner Fruto del Carpio. On the basis
of the foregoing allegations the defendants interposed a counterclaim, praying that
the plaintiffs be ordered to execute in their favor the corresponding deed of transfer
with respect to lot No. 535-E.

The trial court rendered judgment for the plaintiffs on the sole ground that since
the property was registered under the Land Registration Act the defendants could
not acquire it through prescription. There can be, of course, no dispute as to the
correctness of this legal proposition; but the defendants, aside from alleging
adverse possession in their answer and counterclaim, also alleged error in the deed
of sale of May 18, 1920, thus: "Eulogio Atilano 1.o, por equivocacion o error
involuntario, cedio y traspaso a su hermano Eulogio Atilano 2.do el lote No. 535-
E en vez del Lote No. 535-A."lawphi1.et

The logic and common sense of the situation lean heavily in favor of the
defendants' contention. When one sells or buys real property a piece of land,
for example one sells or buys the property as he sees it, in its actual setting and
by its physical metes and bounds, and not by the mere lot number assigned to it in

19
G.R. No. 74470 March 8, 1989
NATIONAL GRAINS AUTHORITY and WILLLAM CABAL, petitioners
vs.
THE INTERMEDIATE APPELLATE COURT and LEON
SORIANO, respondents.
Cordoba, Zapanta, Rola & Garcia for petitioner National Grains Authority.
Plaridel Mar Israel for respondent Leon Soriano.
MEDIALDEA, J.:
This is a petition for review of the decision (pp. 9-21, Rollo) of the Intermediate
Appellate Court (now Court of Appeals) dated December 23, 1985 in A.C. G.R.
CV No. 03812 entitled, "Leon Soriano, Plaintiff- Appellee versus National Grains
Authority and William Cabal, Defendants Appellants", which affirmed the
decision of the Court of First Instance of Cagayan, in Civil Case No. 2754 and its
resolution (p. 28, Rollo) dated April 17, 1986 which denied the Motion for
Reconsideration filed therein.
The antecedent facts of the instant case are as follows:
Petitioner National Grains Authority (now National Food Authority, NFA for
short) is a government agency created under Presidential Decree No. 4. One of its
incidental functions is the buying of palay grains from qualified farmers.
On August 23, 1979, private respondent Leon Soriano offered to sell palay grains
to the NFA, through William Cabal, the Provincial Manager of NFA stationed at
Tuguegarao, Cagayan. He submitted the documents required by the NFA for pre-
qualifying as a seller, namely: (1) Farmer's Information Sheet accomplished by
Soriano and certified by a Bureau of Agricultural Extension (BAEX) technician,
Napoleon Callangan, (2) Xerox copies of four (4) tax declarations of the riceland
leased to him and copies of the lease contract between him and Judge Concepcion
Salud, and (3) his Residence Tax Certificate. Private respondent Soriano's
documents were processed and accordingly, he was given a quota of 2,640 cavans
of palay. The quota noted in the Farmer's Information Sheet represented the
maximum number of cavans of palay that Soriano may sell to the NFA.
In the afternoon of August 23, 1979 and on the following day, August 24, 1979,
Soriano delivered 630 cavans of palay. The palay delivered during these two days
were not rebagged, classified and weighed. when Soriano demanded payment of
the 630 cavans of palay, he was informed that its payment will be held in abeyance
since Mr. Cabal was still investigating on an information he received that Soriano
was not a bona tide farmer and the palay delivered by him was not produced from
his farmland but was taken from the warehouse of a rice trader, Ben de Guzman.
On August 28, 1979, Cabal wrote Soriano advising him to withdraw from the NFA
warehouse the 630 cavans Soriano delivered stating that NFA cannot legally
accept the said delivery on the basis of the subsequent certification of the BAEX
technician, Napoleon Callangan that Soriano is not a bona fide farmer.
Instead of withdrawing the 630 cavans of palay, private respondent Soriano
insisted that the palay grains delivered be paid. He then filed a complaint for
specific performance and/or collection of money with damages on November 2,
1979, against the National Food Authority and Mr. William Cabal, Provincial
Manager of NFA with the Court of First Instance of Tuguegarao, and docketed as
Civil Case No. 2754.
Meanwhile, by agreement of the parties and upon order of the trial court, the 630
cavans of palay in question were withdrawn from the warehouse of NFA. An
inventory was made by the sheriff as representative of the Court, a representative
of Soriano and a representative of NFA (p. 13, Rollo).
On September 30, 1982, the trial court rendered judgment ordering petitioner
National Food Authority, its officers and agents to pay respondent Soriano (as
plaintiff in Civil Case No. 2754) the amount of P 47,250.00 representing the
unpaid price of the 630 cavans of palay plus legal interest thereof (p. 1-2, CA
Decision). The dispositive portion reads as follows:
WHEREFORE, the Court renders judgment in favor of the plaintiff and against
the defendants National Grains Authority, and William Cabal and hereby orders:
1. The National Grains Authority, now the National Food Authority, its officers
and agents, and Mr. William Cabal, the Provincial Manager of the National Grains
Authority at the time of the filing of this case, assigned at Tuguegarao, Cagayan,
whomsoever is his successors, to pay to the plaintiff Leon T. Soriano, the amount
of P47,250.00, representing the unpaid price of the palay deliveries made by the
plaintiff to the defendants consisting of 630 cavans at the rate Pl.50 per kilo of 50
kilos per cavan of palay;
2. That the defendants National Grains Authority, now National Food Authority,
its officer and/or agents, and Mr. William Cabal, the Provincial Manager of the
National Grains Authority, at the time of the filing of this case assigned at
Tuguegarao, Cagayan or whomsoever is his successors, are likewise ordered to
pay the plaintiff Leon T. Soriano, the legal interest at the rate of TWELVE (12%)
percent per annum, of the amount of P 47,250.00 from the filing of the complaint
on November 20, 1979, up to the final payment of the price of P 47,250.00;
3. That the defendants National Grains Authority, now National Food Authority,
or their agents and duly authorized representatives can now withdraw the total
number of bags (630 bags with an excess of 13 bags) now on deposit in the bonded
warehouse of Eng. Ben de Guzman at Tuguegarao, Cagayan pursuant to the order
of this court, and as appearing in the written inventory dated October 10, 1980,
(Exhibit F for the plaintiff and Exhibit 20 for the defendants) upon payment of the
price of P 47,250.00 and TWELVE PERCENT (12%) legal interest to the plaintiff,
4. That the counterclaim of the defendants is hereby dismissed;
5. That there is no pronouncement as to the award of moral and exemplary
damages and attorney's fees; and
6. That there is no pronouncement as to costs.
SO ORDERED (pp. 9-10, Rollo)
Petitioners' motion for reconsideration of the decision was denied on December 6,
1982.
Petitioners' appealed the trial court's decision to the Intermediate Appellate Court.
In a decision promulgated on December 23, 1986 (pp. 9-21, Rollo) the then
Intermediate Appellate Court upheld the findings of the trial court and affirmed
the decision ordering NFA and its officers to pay Soriano the price of the 630
cavans of rice plus interest. Petitioners' motion for reconsideration of the appellate
court's decision was denied in a resolution dated April 17, 1986 (p. 28, Rollo).
Hence, this petition for review filed by the National Food Authority and Mr.
William Cabal on May 15, 1986 assailing the decision of the Intermediate
Appellate Court on the sole issue of whether or not there was a contract of sale in
the case at bar.
Petitioners contend that the 630 cavans of palay delivered by Soriano on August
23, 1979 was made only for purposes of having it offered for sale. Further,
petitioners stated that the procedure then prevailing in matters of palay
procurement from qualified farmers were: firstly, there is a rebagging wherein the
palay is transferred from a private sack of a farmer to the NFA sack; secondly,
after the rebagging has been undertaken, classification of the palay is made to
determine its variety; thirdly, after the determination of its variety and convinced
that it passed the quality standard, the same will be weighed to determine the
number of kilos; and finally, it will be piled inside the warehouse after the
preparation of the Warehouse Stock Receipt (WSP) indicating therein the number
of kilos, the variety and the number of bags. Under this procedure, rebagging is
the initial operative act signifying acceptance, and acceptance will be considered
complete only after the preparation of the Warehouse Stock Receipt (WSR). When
the 630 cavans of palay were brought by Soriano to the Carig warehouse of NFA
they were only offered for sale. Since the same were not rebagged, classified and
weighed in accordance with the palay procurement program of NFA, there was no
acceptance of the offer which, to petitioners' mind is a clear case of solicitation or
an unaccepted offer to sell.
The petition is not impressed with merit.
Article 1458 of the Civil Code of the Philippines defines sale as a contract whereby
one of the contracting parties obligates himself to transfer the ownership of and to
deliver a determinate thing, and the other party to pay therefore a price certain in
money or its equivalent. A contract, on the other hand, is a meeting of minds
between two (2) persons whereby one binds himself, with respect to the other, to
20
give something or to render some service (Art. 1305, Civil Code of the
Philippines). The essential requisites of contracts are: (1) consent of the
contracting parties, (2) object certain which is the subject matter of the contract,
and (3) cause of the obligation which is established (Art. 1318, Civil Code of the
Philippines.

In the case at bar, Soriano initially offered to sell palay grains produced in his
farmland to NFA. When the latter accepted the offer by noting in Soriano's
Farmer's Information Sheet a quota of 2,640 cavans, there was already a meeting
of the minds between the parties. The object of the contract, being the palay grains
produced in Soriano's farmland and the NFA was to pay the same depending upon
its quality. The fact that the exact number of cavans of palay to be delivered has
not been determined does not affect the perfection of the contract. Article 1349 of
the New Civil Code provides: ". . .. The fact that the quantity is not determinate
shall not be an obstacle to the existence of the contract, provided it is possible to
determine the same, without the need of a new contract between the parties." In
this case, there was no need for NFA and Soriano to enter into a new contract to
determine the exact number of cavans of palay to be sold. Soriano can deliver so
much of his produce as long as it does not exceed 2,640 cavans.

In its memorandum (pp. 66-71, Rollo) dated December 4, 1986, petitioners further
contend that there was no contract of sale because of the absence of an essential
requisite in contracts, namely, consent. It cited Section 1319 of the Civil Code
which states: "Consent is manifested by the meeting of the offer and the acceptance
of the thing and the cause which are to constitute the contract. ... " Following this
line, petitioners contend that there was no consent because there was no acceptance
of the 630 cavans of palay in question.

The above contention of petitioner is not correct Sale is a consensual contract, " ...
, there is perfection when there is consent upon the subject matter and price, even
if neither is delivered." (Obana vs. C.A., L-36249, March 29, 1985, 135 SCRA
557, 560) This is provided by Article 1475 of the Civil Code which states:

Art. 1475. The contract of sale is perfected at the moment there is a meeting of
minds upon the thing which is the object of the contract and upon the price.

xxx

The acceptance referred to which determines consent is the acceptance of the offer
of one party by the other and not of the goods delivered as contended by
petitioners.

From the moment the contract of sale is perfected, it is incumbent upon the parties
to comply with their mutual obligations or "the parties may reciprocally demand
performance" thereof. (Article 1475, Civil Code, 2nd par.).

The reason why NFA initially refused acceptance of the 630 cavans of palay
delivered by Soriano is that it (NFA) cannot legally accept the said delivery
because Soriano is allegedly not a bona fide farmer. The trial court and the
appellate court found that Soriano was a bona fide farmer and therefore, he was
qualified to sell palay grains to NFA.

Both courts likewise agree that NFA's refusal to accept was without just cause.
The above factual findings which are supported by the record should not be
disturbed on appeal.

ACCORDINGLY, the instant petition for review is DISMISSED. The assailed

decision of the then Intermediate Appellate Court (now Court of Appeals) is
affirmed. No costs.

SO ORDERED.

21
G.R. No. 105387 November 11, 1993 Schuback Hamburg paid NDK. The latter confirmed receipt of payments made on
February 16, 1984 (Exh.C-Deposition).
JOHANNES SCHUBACK & SONS PHILIPPINE TRADING
CORPORATION, petitioner, On October 18, 1982, Plaintiff again reminded defendant of his order and advised
vs. that the case may be endorsed to its lawyers (Exh. L). Defendant replied that he
THE HON. COURT OF APPEALS, RAMON SAN JOSE, JR., doing did not make any valid Purchase Order and that there was no definite contract
business under the name and style "PHILIPPINE SJ INDUSTRIAL between him and plaintiff (Exh. M). Plaintiff sent a rejoinder explaining that there
TRADING," respondents. is a valid Purchase Order and suggesting that defendant either proceed with the
order and open a letter of credit or cancel the order and pay the cancellation fee of
Hernandez, Velicaria, Vibar & Santiago for petitioner. 30% of F.O.B. value, or plaintiff will endorse the case to its lawyers (Exh. N).

Ernesto M. Tomaneng for private respondent. Schuback Hamburg issued a Statement of Account (Exh. P) to plaintiff enclosing
therewith Debit Note (Exh. O) charging plaintiff 30% cancellation fee, storage and
interest charges in the total amount of DM 51,917.81. Said amount was deducted
from plaintiff's account with Schuback Hamburg (Direct Interrogatories, 07
ROMERO, J.:
October, 1985).
In this petition for review on certiorari, petitioner questions the reversal by the
Demand letters sent to defendant by plaintiff's counsel dated March 22, 1983 and
Court of Appeals 1 of the trial court's ruling that a contract of sale had been
June 9, 1983 were to no avail (Exhs R and S).
perfected between petitioner and private respondent over bus spare parts.
Consequently, petitioner filed a complaint for recovery of actual or compensatory
The facts as quoted from the decision of the Court of Appeals are as follows:
damages, unearned profits, interest, attorney's fees and costs against private
Sometime in 1981, defendant 2 established contact with plaintiff 3 through the respondent.
Philippine Consulate General in Hamburg, West Germany, because he wanted to
In its decision dated June 13, 1988, the trial court 4 ruled in favor of petitioner by
purchase MAN bus spare parts from Germany. Plaintiff communicated with its
ordering private respondent to pay petitioner, among others, actual compensatory
trading partner. Johannes Schuback and Sohne Handelsgesellschaft m.b.n. & Co.
damages in the amount of DM 51,917.81, unearned profits in the amount of DM
(Schuback Hamburg) regarding the spare parts defendant wanted to order.
14,061.07, or their peso equivalent.
On October 16, 1981, defendant submitted to plaintiff a list of the parts (Exhibit
Thereafter, private respondent elevated his case before the Court of Appeals. On
B) he wanted to purchase with specific part numbers and description. Plaintiff
February 18, 1992, the appellate court reversed the decision of the trial court and
referred the list to Schuback Hamburg for quotations. Upon receipt of the
dismissed the complaint of petitioner. It ruled that there was no perfection of
quotations, plaintiff sent to defendant a letter dated 25 November, 1981 (Exh. C)
contract since there was no meeting of the minds as to the price between the last
enclosing its offer on the items listed by defendant.
week of December 1981 and the first week of January 1982.
On December 4, 1981, defendant informed plaintiff that he preferred genuine to
The issue posed for resolution is whether or not a contract of sale has been
replacement parts, and requested that he be given 15% on all items (Exh. D).
perfected between the parties.
On December 17, 1981, plaintiff submitted its formal offer (Exh. E) containing the
We reverse the decision of the Court of Appeals and reinstate the decision of the
item number, quantity, part number, description, unit price and total to defendant.
trial court. It bears emphasizing that a "contract of sale is perfected at the moment
On December, 24, 1981, defendant informed plaintiff of his desire to avail of the
there is a meeting of minds upon the thing which is the object of the contract and
prices of the parts at that time and enclosed Purchase Order No. 0101 dated 14
upon the price. . . . " 5
December 1981 (Exh. F to F-4). Said Purchase Order contained the item number,
part number and description. Defendant promised to submit the quantity per unit Article 1319 of the Civil Code states: "Consent is manifested by the meeting of
he wanted to order on December 28 or 29 (Exh. F). the offer and acceptance upon the thing and the cause which are to constitute the
contract. The offer must be certain and the acceptance absolute. A qualified
On December 29, 1981, defendant personally submitted the quantities he wanted
acceptance constitutes a counter offer." The facts presented to us indicate that
to Mr. Dieter Reichert, General Manager of plaintiff, at the latter's residence (t.s.n.,
consent on both sides has been manifested.
13 December, 1984, p. 36). The quantities were written in ink by defendant in the
same Purchase Order previously submitted. At the bottom of said Purchase Order, The offer by petitioner was manifested on December 17, 1981 when petitioner
defendant wrote in ink above his signature: "NOTE: Above P.O. will include a 3% submitted its proposal containing the item number, quantity, part number,
discount. The above will serve as our initial P.O." (Exhs. G to G-3-a). description, the unit price and total to private respondent. On December 24, 1981,
private respondent informed petitioner of his desire to avail of the prices of the
Plaintiff immediately ordered the items needed by defendant from Schuback
parts at that time and simultaneously enclosed its Purchase Order No. 0l01 dated
Hamburg to enable defendant to avail of the old prices. Schuback Hamburg in turn
December 14, 1981. At this stage, a meeting of the minds between vendor and
ordered (Order No. 12204) the items from NDK, a supplier of MAN spare parts in
vendee has occurred, the object of the contract: being the spare parts and the
West Germany. On January 4, 1982, Schuback Hamburg sent plaintiff a proforma
consideration, the price stated in petitioner's offer dated December 17, 1981 and
invoice (Exhs. N-1 to N-3) to be used by defendant in applying for a letter of credit.
accepted by the respondent on December 24,1981.
Said invoice required that the letter of credit be opened in favor of Schuback
Hamburg. Defendant acknowledged receipt of the invoice (t.s.n., 19 December Although said purchase order did not contain the quantity he wanted to order,
1984, p. 40). private respondent made good, his promise to communicate the same on December
29, 1981. At this juncture, it should be pointed out that private respondent was
An order confirmation (Exhs. I, I-1) was later sent by Schuback Hamburg to
already in the process of executing the agreement previously reached between the
plaintiff which was forwarded to and received by defendant on February 3, 1981
parties.
(t.s.n., 13 Dec. 1984, p. 42).
Below Exh. G-3, marked as Exhibit G-3-A, there appears this statement made by
On February 16, 1982, plaintiff reminded defendant to open the letter of credit to
private respondent: "Note. above P.O. will include a 3% discount. The above will
avoid delay in shipment and payment of interest (Exh. J). Defendant replied,
serve as our initial P.O." This notation on the purchase order was another
mentioning, among others, the difficulty he was encountering in securing: the
indication of acceptance on the part of the vendee, for by requesting a 3% discount,
required dollar allocations and applying for the letter of credit, procuring a loan
he implicitly accepted the price as first offered by the vendor. The immediate
and looking for a partner-financier, and of finding ways 'to proceed with our
acceptance by the vendee of the offer was impelled by the fact that on January 1,
orders" (Exh. K).
1982, prices would go up, as in fact, the petitioner informed him that there would
In the meantime, Schuback Hamburg received invoices from, NDK for partial be a 7% increase, effective January 1982. On the other hand, concurrence by the
deliveries on Order No.12204 (Direct Interrogatories., 07 Oct, 1985, p. 3). vendor with the said discount requested by the vendee was manifested when

22
petitioner immediately ordered the items needed by private respondent from
Schuback Hamburg which in turn ordered from NDK, a supplier of MAN spare
parts in West Germany.

When petitioner forwarded its purchase order to NDK, the price was still pegged
at the old one. Thus, the pronouncement of the Court Appeals that there as no
confirmed price on or about the last week of December 1981 and/or the first week
of January 1982 was erroneous.

While we agree with the trial court's conclusion that indeed a perfection of contract
was reached between the parties, we differ as to the exact date when it occurred,
for perfection took place, not on December 29, 1981. Although the quantity to be
ordered was made determinate only on December 29, 1981, quantity is immaterial
in the perfection of a sales contract. What is of importance is the meeting of the
minds as to the object and cause, which from the facts disclosed, show that as of
December 24, 1981, these essential elements had already occurred.

On the part of the buyer, the situation reveals that private respondent failed to open
an irrevocable letter of credit without recourse in favor of Johannes Schuback of
Hamburg, Germany. This omission, however. does not prevent the perfection of
the contract between the parties, for the opening of the letter of credit is not to be
deemed a suspensive condition. The facts herein do not show that petitioner
reserved title to the goods until private respondent had opened a letter of credit.
Petitioner, in the course of its dealings with private respondent, did not incorporate
any provision declaring their contract of sale without effect until after the
fulfillment of the act of opening a letter of credit.

The opening of a etter of credit in favor of a vendor is only a mode of payment. It

is not among the essential requirements of a contract of sale enumerated in Article
1305 and 1474 of the Civil Code, the absence of any of which will prevent the
perfection of the contract from taking place.

To adopt the Court of Appeals' ruling that the contract of sale was dependent on
the opening of a letter of credit would be untenable from a pragmatic point of view
because private respondent would not be able to avail of the old prices which were
open to him only for a limited period of time. This explains why private respondent
immediately placed the order with petitioner which, in turn promptly contacted its
trading partner in Germany. As succinctly stated by petitioner, "it would have been
impossible for respondent to avail of the said old prices since the perfection of the
contract would arise much later, or after the end of the year 1981, or when he
finally opens the letter of credit." 6

WHEREFORE, the petition is GRANTED and the decision of the trial court dated
June 13, 1988 is REINSTATED with modification.

SO ORDERED.

23
G.R. No. 149750 June 16, 2003
AURORA ALCANTARA-DAUS, Petitioner,
vs.
Spouses HERMOSO and SOCORRO DE LEON, Respondents.
DECISION
PANGANIBAN, J.:
While a contract of sale is perfected by mere consent, ownership of the thing sold
is acquired only upon its delivery to the buyer. Upon the perfection of the sale, the
seller assumes the obligation to transfer ownership and to deliver the thing sold,
but the real right of ownership is transferred only "by tradition" or delivery thereof
to the buyer.
The Case
Before us is a Petition for Review1 under Rule 45 of the Rules of Court, seeking to
set aside the February 9, 2001 Decision and the August 31, 2001 Resolution of the
Court of Appeals2 (CA) in CA-GR CV No. 47587. The dispositive portion of the
assailed Decision reads as follows:
"WHEREFORE, premises considered, the decision of the trial court is hereby
REVERSED, and judgment rendered:
1. Declaring null and void and of no effect, the [D]eed of [A]bsolute [S]ale dated
December 6, 1975, the [D]eed of [E]xtra-judicial [P]artition and [Q]uitclaim dated
July 1, 1985, and T.C.T. No. T-31262;
2. Declaring T.C.T. No. 42238 as valid and binding;
3. Eliminating the award of 5,000.00 each to be paid to defendants-appellees."3
The assailed Resolution4 denied petitioners Motion for Reconsideration.
The Facts
The antecedents of the case were summarized by the Regional Trial Court (RTC)
and adopted by the CA as follows:
"This is a [C]omplaint for annulment of documents and title, ownership,
possession, injunction, preliminary injunction, restraining order and damages.
"[Respondents] alleged in their [C]omplaint that they are the owners of a parcel of
land hereunder described as follows, to wit:
A parcel of land (Lot No. 4786 of the Cadastral Survey of San Manuel) situated
in the Municipality of San Manuel, Bounded on the NW., by Lot No. 4785; and
on the SE., by Lot Nos. 11094 & 11096; containing an area of Four Thousand Two
Hundred Twelve (4,212) sq. m., more or less. Covered by Original Certificate of
Title No. 22134 of the Land Records of Pangasinan.
which [Respondent] Hermoso de Leon inherited from his father Marcelino de
Leon by virtue of a [D]eed of [E]xtra-judicial [P]artition. Sometime in the early
1960s, [respondents] engaged the services of the late Atty. Florencio Juan to take
care of the documents of the properties of his parents. Atty. Juan let them sign
voluminous documents. After the death of Atty. Juan, some documents surfaced
and most revealed that their properties had been conveyed by sale or quitclaim to
[Respondent] Hermosos brothers and sisters, to Atty. Juan and his sisters, when
in truth and in fact, no such conveyances were ever intended by them. His signature
in the [D]eed of [E]xtra-judicial [P]artition with [Q]uitclaim made in favor of x x
x Rodolfo de Leon was forged. They discovered that the land in question was sold
by x x x Rodolfo de Leon to [Petitioner] Aurora Alcantara. They demanded
annulment of the document and reconveyance but defendants refused x x x.
xxx xxx xxx
"[Petitioner] Aurora Alcantara-Daus [averred] that she bought the land in question
in good faith and for value on December 6, 1975. [She] has been in continuous,
public, peaceful, open possession over the same and has been appropriating the
produce thereof without objection from anyone."5
On August 23, 1994, the RTC (Branch 48) of Urdaneta, Pangasinan6 rendered its
Decision7 in favor of herein petitioner. It ruled that respondents claim was barred
by laches, because more than 18 years had passed since the land was sold. It further
ruled that since it was a notarial document, the Deed of Extrajudicial Partition in
favor of Rodolfo de Leon was presumptively authentic.
Ruling of the Court of Appeals
In reversing the RTC, the CA held that laches did not bar respondents from
pursuing their claim.1wphi1 Notwithstanding the delay, laches is a doctrine in
equity and may not be invoked to resist the enforcement of a legal right.
The appellate court also held that since Rodolfo de Leon was not the owner of the
land at the time of the sale, he could not transfer any land rights to petitioner. It
further declared that the signature of Hermoso de Leon on the Deed of
Extrajudicial Partition and Quitclaim -- upon which petitioner bases her claim --
was a forgery. It added that under the above circumstances, petitioner could not be
said to be a buyer in good faith.1wphi1
Hence, this Petition.8
The Issues
Petitioner raises the following issues for our consideration:
"1. Whether or not the Deed of Absolute Sale dated December 6, 1975 executed
by Rodolfo de Leon (deceased) over the land in question in favor of petitioner was
perfected and binding upon the parties therein?
"2. Whether or not the evidentiary weight of the Deed of Extrajudicial Partition
with Quitclaim, executed by [R]espondent Hermoso de Leon, Perlita de Leon and
Carlota de Leon in favor of Rodolfo de Leon was overcome by more than [a]
preponderance of evidence of respondents?
"3. Whether or not the possession of petitioner including her predecessor-in-
interest Rodolfo de Leon over the land in question was in good faith?
"4. And whether or not the instant case initiated and filed by respondents on
February 24, 1993 before the trial court has prescribed and respondents are guilty
of laches?"9
The Courts Ruling
The Petition has no merit.
First Issue:
Validity of the Deed of Absolute Sale
Petitioner argues that, having been perfected, the Contract of Sale executed on
December 6, 1975 was thus binding upon the parties thereto.
A contract of sale is consensual. It is perfected by mere consent, 10 upon a meeting
of the minds11 on the offer and the acceptance thereof based on subject matter,
price and terms of payment.12 At this stage, the sellers ownership of the thing sold
is not an element in the perfection of the contract of sale.
The contract, however, creates an obligation on the part of the seller to transfer
ownership and to deliver the subject matter of the contract.13 It is during the
delivery that the law requires the seller to have the right to transfer ownership of
the thing sold.14 In general, a perfected contract of sale cannot be challenged on
the ground of the sellers non-ownership of the thing sold at the time of the
perfection of the contract.15
Further, even after the contract of sale has been perfected between the parties, its
consummation by delivery is yet another matter. It is through tradition or delivery
that the buyer acquires the real right of ownership over the thing sold. 16
Undisputed is the fact that at the time of the sale, Rodolfo de Leon was not the
owner of the land he delivered to petitioner. Thus, the consummation of the
contract and the consequent transfer of ownership would depend on whether he
subsequently acquired ownership of the land in accordance with Article 1434 of
the Civil Code.17Therefore, we need to resolve the issue of the authenticity and the
due execution of the Extrajudicial Partition and Quitclaim in his favor.
Second Issue:
Authenticity of the Extrajudicial Partition
24
Petitioner contends that the Extrajudicial Partition and Quitclaim is authentic, SO ORDERED.
because it was notarized and executed in accordance with law. She claims that
there is no clear and convincing evidence to set aside the presumption of regularity
in the issuance of such public document. We disagree.

As a general rule, the due execution and authenticity of a document must be

reasonably established before it may be admitted in evidence. 18 Notarial
documents, however, may be presented in evidence without further proof of their
authenticity, since the certificate of acknowledgment is prima facie evidence of
the execution of the instrument or document involved.19 To contradict facts in a
notarial document and the presumption of regularity in its favor, the evidence must
be clear, convincing and more than merely preponderant.20

The CA ruled that the signature of Hermoso de Leon on the Extrajudicial Partition
and Quitclaim was forged. However, this factual finding is in conflict with that of
the RTC. While normally this Court does not review factual issues,21 this rule does
not apply when there is a conflict between the holdings of the CA and those of the
trial court,22 as in the present case.

After poring over the records, we find no reason to reverse the factual finding of
the appellate court. A comparison of the genuine signatures of Hermoso de
Leon23 with his purported signature on the Deed of Extrajudicial Partition with
Quitclaim24 will readily reveal that the latter is a forgery. As aptly held by the CA,
such variance cannot be attributed to the age or the mechanical acts of the person
signing.25

Without the corroborative testimony of the attesting witnesses, the lone account of
the notary regarding the due execution of the Deed is insufficient to sustain the
authenticity of this document. He can hardly be expected to dispute the
authenticity of the very Deed he notarized.26 For this reason, his testimony was --
as it should be --minutely scrutinized by the appellate court, and was found
wanting.

Third Issue:

Possession in Good Faith

Petitioner claims that her possession of the land is in good faith and that,
consequently, she has acquired ownership thereof by virtue of prescription. We
are not persuaded.

It is well-settled that no title to registered land in derogation of that of the

registered owner shall be acquired by prescription or adverse possession.27 Neither
can prescription be allowed against the hereditary successors of the registered
owner, because they merely step into the shoes of the decedent and are merely the
continuation of the personality of their predecessor in interest. 28 Consequently,
since a certificate of registration29 covers it, the disputed land cannot be acquired
by prescription regardless of petitioners good faith.

Fourth Issue:

Prescription of Action and Laches

Petitioner also argues that the right to recover ownership has prescribed, and that
respondents are guilty of laches. Again, we disagree.

Article 1141 of the New Civil Code provides that real actions over immovable
properties prescribe after thirty years. This period for filing an action is interrupted
when a complaint is filed in court.30 Rodolfo de Leon alleged that the land had
been allocated to him by his brother Hermoso de Leon in March 1963, 31 but that
the Deed of Extrajudicial Partition assigning the contested land to the latter was
executed only on September 16, 1963.32 In any case, the Complaint to recover the
land from petitioner was filed on February 24, 1993,33 which was within the 30-
year prescriptive period.

On the claim of laches, we find no reason to reverse the ruling of the CA. Laches
is based upon equity and the public policy of discouraging stale claims. 34 Since
laches is an equitable doctrine, its application is controlled by equitable
considerations.35 It cannot be used to defeat justice or to perpetuate fraud and
injustice.36 Thus, the assertion of laches to thwart the claim of respondents is
foreclosed, because the Deed upon which petitioner bases her claim is a forgery.

WHEREFORE, the Petition is DENIED and the assailed Decision AFFIRMED.

Costs against petitioner.

25
G.R. No. 116635 July 24, 1997
CONCHITA NOOL and GAUDENCIO ALMOJERA, petitioner,
vs.
COURT OF APPEALS, ANACLETO NOOL and EMILIA
NEBRE, respondents.
PANGANIBAN, J.:
A contract of repurchase arising out of a contract of sale where the seller did not
have any title to the property "sold" is not valid. Since nothing was sold, then there
is also nothing to repurchase.
Statement of the Case
This postulate is explained by this Court as it resolves this petition for review
on certiorari assailing the January 20, 1993 Decision1 of Respondent Court of
Appeals2 in CA-G.R. CV No. 36473, affirming the decision3 of the trial
court4which disposed as follows:5
WHEREFORE, judgment is hereby rendered dismissing the complaint for no
cause of action, and hereby:
1. Declaring the private writing, Exhibit "C", to be an option to sell, not binding
and considered validly withdrawn by the defendants for want of consideration;
2. Ordering the plaintiffs to return to the defendants the sum of P30,000.00 plus
interest thereon at the legal rate, from the time of filing of defendants' counterclaim
until the same is fully paid;
3. Ordering the plaintiffs to deliver peaceful possession of the two hectares
mentioned in paragraph 7 of the complaint and in paragraph 31 of defendants'
answer (counterclaim);
4. Ordering the plaintiffs to pay reasonable rents on said two hectares at
P5,000.00 per annum or at P2,500.00 per cropping from the time of judicial
demand mentioned in paragraph 2 of the dispositive portion of this decision, until
the said two hectares shall have been delivered to the defendants; and
5. To pay the costs.
SO ORDERED.
The Antecedent Facts
The facts, which appear undisputed by the parties, are narrated by the Court of
Appeals as follows:
Two (2) parcels of land are in dispute and litigated upon here. The first has an area
of 1 hectare. It was formerly owned by Victorino Nool and covered by Transfer
Certificate of Title No. T-74950. With an area of 3.0880 hectares, the other parcel
was previously owned by Francisco Nool under Transfer Certificate of Title No.
T-100945. Both parcel's are situated in San Manuel, Isabela. The plaintiff spouses,
Conchita Nool and Gaudencio Almojera, now the appellants, seek recovery of the
aforementioned parcels of land from the defendants, Anacleto Nool, a younger
brother of Conchita, and Emilia Nebre, now the appellees.
In their complaint, plaintiff-appellants alleged inter alia that they are the owners
of subject parcels of land, and they bought the same from Conchita's other
brothers, Victorino Nool and Francisco Nool; that as plaintiffs were in dire need
of money, they obtained a loan from the Ilagan Branch of the Development Bank
of the Philippines, in Ilagan, Isabela, secured by a real estate mortgage on said
parcels of land, which were still registered in the names of Victorino Nool and
Francisco Nool, at the time, and for the failure of plaintiffs to pay the said loan,
including interest and surcharges, totaling P56,000.00, the mortgage was
foreclosed; that within the period of redemption, plaintiffs contacted defendant
Anacleto Nool for the latter to redeem the foreclosed properties from DBP, which
the latter did; and as a result, the titles of the two (2) parcels of land in question
were transferred to Anacleto Nool; that as part of their arrangement or
understanding, Anacleto Nool agreed to buy from plaintiff Conchita Nool the two
(2) parcels of land under controversy, for a total price of P100,000.00, P30,000.00
of which price was paid to Conchita, and upon payment of the balance of
P14,000.00, plaintiffs were to regain possession of the two (2) hectares of land,
which amounts defendants failed to pay, and the same day the said
arrangement6 was made; another covenant7 was entered into by the parties,
whereby defendants agreed to return to plaintiffs the lands in question, at anytime
the latter have the necessary amount; that plaintiffs asked the defendants to return
the same but despite the intervention of the Barangay Captain of their place,
defendants refused to return the said parcels of land to plaintiffs; thereby impelling
them (plaintiffs) to come to court for relief.
In their Answer, defendants-appellees theorized that they acquired the lands in
question from the Development Bank of the Philippines, through negotiated sale,
and were misled by plaintiffs when defendant Anacleto Nool signed the private
writing, agreeing to return subject lands when plaintiffs have the money to redeem
the same; defendant Anacleto having been made to believe, then, that his sister,
Conchita, still had the right to redeem the said properties.
The pivot of inquiry here, as aptly observed below, is the nature and significance
of the private document, marked Exhibit "D" for plaintiffs, which document has
not been denied by the defendants, as defendants even averred in their Answer that
they gave an advance payment of P30,000.00 therefor, and acknowledged that they
had a balance of P14,000.00 to complete their payment. On this crucial issue, the
lower court adjudged the said private writing (Exhibit "D") as an option to sell not
binding upon and considered the same validly withdrawn by defendants for want
of consideration; and decided the case in the manner above-mentioned.
There is no quibble over the fact that the two (2) parcels of land in dispute were
mortgaged to the Development Bank of the Philippines, to secure a loan obtained
by plaintiffs from DBP (Ilagan Branch), Ilagan, Isabela. For the non-payment of
said loan, the mortgage was foreclosed and in the process, ownership of the
mortgaged lands was consolidated in DBP (Exhibits 3 and 4 for defendants). After
DBP became the absolute owner of the two parcels of land, defendants negotiated
with DBP and succeeded in buying the same. By virtue of such sale by DBP in
favor of defendants, the titles of DBP were cancelled and the corresponding
Transfer Certificates of Title (Annexes "C" and "D" to the Complaint) issued to
the defendants.8
It should be stressed that Manuel S. Mallorca, authorized officer of DBP, certified
that the one-year redemption period was from March 16, 1982 up to March 15,
1983 and that the mortgagors' right of redemption was not exercised within this
period.9 Hence, DBP became the absolute owner of said parcels of land for which
it was issued new certificates of title, both entered on May 23, 1983 by the Registry
of Deeds for the Province of Isabela. 10 About two years thereafter, on April 1,
1985, DBP entered into a Deed of Conditional Sale 11 involving the same parcels
of land with Private Respondent Anacleto Nool as vendee. Subsequently, the latter
was issued new certificates of title on February 8, 1988. 12
The Court of Appeals ruled: 13
WHEREFORE, finding no reversible error infirming it, the appealed Judgment is
hereby AFFIRMED in toto. No pronouncement as to costs.
The Issues
Petitioners impute to Respondent Court the following alleged "errors":
1. The Honorable Court of Appeals, Second Division has misapplied the legal
import or meaning of Exhibit "C" in a way contrary to law and existing
jurisprudence in stating that it has no binding effect between the parties and
considered validly withdrawn by defendants-appellees for want of consideration.
2. The Honorable Court of Appeals, Second Division has miserably failed to give
legal significance to the actual possession and cultivation and appropriating
exclusively the palay harvest of the two (2) hectares land pending the payment of
the remaining balance of fourteen thousand pesos (P14,000.00) by defendants-
appellees as indicated in Exhibit "C".
3. The Honorable Court of Appeals has seriously erred in affirming the decision
of the lower court by awarding the payment of rents per annum and the return of
P30,000.00 and not allowing the plaintiffs-appellants to re-acquire the four (4)
hectares, more or less upon payment of one hundred thousand pesos (P100,000.00)
as shown in Exhibit "D". 14
The Court's Ruling
The petition is bereft of merit.
26
First Issue: Are Exhibits "C" and "D" Valid and Enforceable?
The petitioner-spouses plead for the enforcement of their agreement with private
respondents as contained in Exhibits "C" and "D," and seek damages for the latter's
alleged breach thereof. In Exhibit C, which was a private handwritten document
labeled by the parties as Resibo ti Katulagan or Receipt of Agreement, the
petitioners appear to have "sold" to private respondents the parcels of land in
controversy covered by TCT No. T-74950 and TCT No. T-100945. On the other
hand, Exhibit D, which was also a private handwritten document in Ilocano and
labeled as Kasuratan, private respondents agreed that Conchita Nool "can acquire
back or repurchase later on said land when she has the money." 15
In seeking to enforce her alleged right to repurchase the parcels of land, Conchita
(joined by her co-petitioner-husband) invokes Article 1370 of the Civil Code
which mandates that "(i)f the terms of a contract are clear and leave no doubt upon
the intention of the contracting parties, the literal meaning of its stipulations shall
control." Hence, petitioners contend that the Court of Appeals erred in affirming
the trial court's finding and conclusion that said Exhibits C and D were "not merely
voidable but utterly void and inexistent."
We cannot sustain petitioners' view. Article 1370 of the Civil Code is applicable
only to valid and enforceable contracts. The Regional Trial Court and the Court
of Appeals ruled that the principal contract of sale contained in Exhibit C and the
auxiliary contract of repurchase in Exhibit D are both void. This conclusion of the
two lower courts appears to find support in Dignos vs. Court of Appeals, 16 where
the Court held:
Be that as it may, it is evident that when petitioners sold said land to the Cabigas
spouses, they were no longer owners of the same and the sale is null and void.
In the present case, it is clear that the sellers no longer had any title to the parcels
of land at the time of sale. Since Exhibit D, the alleged contract of repurchase, was
dependent on the validity of Exhibit C, it is itself void. A void contract cannot give
rise to a valid one. 17 Verily, Article 1422 of the Civil Code provides that "(a)
contract which is the direct result of a previous illegal contract, is also void and
inexistent."
We should however add that Dignos did not cite its basis for ruling that a "sale is
null and void" where the sellers "were no longer the owners" of the property. Such
a situation (where the sellers were no longer owners) does not appear to be one of
the void contracts enumerated in Article 1409 of the Civil Code. 18 Moreover, the
Civil Code 19itself recognizes a sale where the goods are to be "acquired . . . by the
seller after the perfection of the contract of sale," clearly implying that a sale is
possible even if the seller was not the owner at the time of sale, provided he
acquires title to the property later on.
In the present case however, it is likewise clear that the sellers can no longer
deliver the object of the sale to the buyers, as the buyers themselves have already
acquired title and delivery thereof from the rightful owner, the DBP. Thus, such
contract may be deemed to be inoperative 20 and may thus fall, by analogy, under
item no. 5 of Article 1409 of the Civil Code: "Those which contemplate an
impossible service." Article 1459 of the Civil Code provides that "the vendor must
have a right to transfer the ownership thereof [object of the sale] at the time it is
delivered." Here, delivery of ownership is no longer possible. It has become
impossible.
Furthermore, Article 1505 of the Civil Code provides that "where goods are sold
by a person who is not the owner thereof, and who does not sell them under
authority or with consent of the owner, the buyer acquires no better title to the
goods than the seller had, unless the owner of the goods is by his conduct precluded
from denying the seller's authority to sell." Here, there is no allegation at all that
petitioners were authorized by DBP to sell the property to the private respondents.
Jurisprudence, on the other hand, teaches us that "a person can sell only what he
owns or is authorized to sell; the buyer can as a consequence acquire no more than
what the seller can legally transfer." 21 No one can give what he does not have
nono dat quod non habet. On the other hand, Exhibit D presupposes that
petitioners could repurchase the property that they "sold" to private respondents.
As petitioners "sold" nothing, it follows that they can also "repurchase" nothing.
Nothing sold, nothing to repurchase. In this light, the contract of repurchase is also
inoperative and by the same analogy, void.
Contract of Repurchase
Dependent on Validity of Sale
As borne out by the evidence on record, the private respondents bought the two
parcels of land directly from DBP on April 1, 1985 after discovering that
petitioners did not own said property, the subject of Exhibits C and D executed on
November 30, 1984. Petitioners, however, claim that they can exercise their
alleged right to "repurchase" the property, after private respondents had acquired
the same from DBP. 22 We cannot accede to this, for it clearly contravenes the
intention of the parties and the nature of their agreement. Exhibit D reads:
WRITING
Nov. 30, 1984
That I, Anacleto Nool have bought from my sister Conchita Nool a land an area of
four hectares (4 has.) in the value of One Hundred Thousand (100,000.00) Pesos.
It is our agreement as brother and sister that she can acquire back or
repurchase later on said land when she has the money. [Emphasis supplied].
As proof of this agreement we sign as brother and sister this written document this
day of Nov. 30, 1984, at District 4, San Manuel, Isabela.
Sgd ANACLETO NOOL
Anacleto Nool
Sgd Emilio Paron
Witness
Sgd Conchita Nool
Conchita Nool 23
One "repurchases" only what one has previously sold. In other words, the right to
repurchase presupposes a valid contract of sale between the same parties.
Undisputedly, private respondents acquired title to the property from DBP, and
not from petitioners.
Assuming arguendo that Exhibit D is separate and distinct from Exhibit C and is
not affected by the nullity of the latter, still petitioners do not thereby acquire a
right to repurchase the property. In that scenario, Exhibit D ceases to be a "right to
repurchase" ancillary and incidental to the contract of sale; rather, it becomes an
accepted unilateral promise to sell. Article 1479 of the Civil Code, however,
provides that "an accepted unilateral promise to buy or sell a determinate thing for
a price certain is binding upon the promissor if the promise is supported by a
consideration distinct from the price." In the present case, the alleged written
contract of repurchase contained in Exhibit D is bereft of any consideration distinct
from the price. Accordingly, as an independent contract, it cannot bind private
respondents. The ruling in Diamante vs. CA 24 supports this. In that case, the Court
through Mr. Justice Hilario G. Davide, Jr. explained:
Article 1601 of the Civil Code provides:
Conventional redemption shall take place when the vendor reserves the right to
repurchase the thing sold, with the obligation to comply with the provisions of
article 1616 and other stipulations which may have been agreed upon.
In Villarica, et al. Vs. Court of Appeals, et al., decided on 29 November 1968, or
barely seven (7) days before the respondent Court promulgated its decisions in this
case, this Court, interpreting the above Article, held:
The right of repurchase is not a right granted the vendor by the vendee in a
subsequent instrument, but is a right reserved by the vendor in the same instrument
of sale as one of the stipulations of the contract. Once the instrument of absolute
sale is executed, the vendor can not longer reserve the right to repurchase, and any
right thereafter granted the vendor by the vendee in a separate instrument cannot
be a right of repurchase but some other right like the option to buy in the instant
case. . . .
In the earlier case of Ramos, et al. vs. Icasiano, et al., decided in 1927, this Court
had already ruled that "an agreement to repurchase becomes a promise to sell
when made after the sale, because when the sale is made without such an
agreement, the purchaser acquires the thing sold absolutely, and if he afterwards
grants the vendor the right to purchase, it is a new contract entered into by the
purchaser, as absolute owner already of the object. In that case the vendor has nor
reserved to himself the right to repurchase.
27
In Vda. De Cruzo, et al. vs. Carriaga, et al. this Court found another occasion to We are not persuaded. Based on the previous discussion, the balance of
apply the foregoing principle. P14,000.00 under the void contract of sale may not be enforced. Petitioners are the
ones who have an obligation to return what they unduly and improperly received
Hence, the Option to Repurchase executed by private respondent in the present by reason of the invalid contract of sale. Since they cannot legally give title to what
case, was merely a promise to sell, which must be governed by Article 1479 of the they "sold," they cannot keep the money paid for the object of the sale. It is basic
Civil Code which reads as follows: 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
Art. 1479. A promise to buy and sell a determinate thing for a price certain is without just or legal ground, shall return the same." 32 Thus, if a void contract has
reciprocally demandable. already "been performed, the restoration of what has been given is in
order." 33 Corollarily and as aptly ordered by respondent appellate court, interest
An accepted unilateral promise to buy or to sell a determinate thing for a price
thereon will run only from the time of private respondents' demand for the return
certain is binding upon the promissor if the promise is supported by a consideration
of this amount in their counterclaim. 34 In the same vein, petitioners' possession
distinct from the price.
and cultivation of the two hectares are anchored on private respondents' tolerance.
Right to Repurchase Based on Clearly, the latter's tolerance ceased upon their counterclaim and demand on the
Homestead or Trust Non-Existent former to vacate. Hence, their right to possess and cultivate the land ipso
facto ceased.
Petitioners also base their alleged right to repurchase on (1) Sec. 119 of the Public
Land Act 25 and (2) an implied trust relation as "brother and sister." 26 WHEREFORE, the petition is DENIED and the assailed Decision of the Court of
Appeals affirming that of the trial court is hereby AFFIRMED.
The Court notes that Victorino Nool and Francisco Nool mortgaged the land to
DBP. The brothers, together with Conchita Nool and Anacleto Nool, were all SO ORDERED.
siblings and heirs qualified to repurchase the two parcels of land under Sec. 119
of the Public Land Act which provides that "(e)very conveyance of land acquired
under the free patent or homestead provisions, when proper, shall be subject to
repurchase by the applicant, his widow or legal heirs, within a period of five years
from the date of conveyance." Assuming the applicability of this statutory
provision to the case at bar, it is indisputable that Private Respondent Anacleto
Nool already repurchased from DBP the contested properties. Hence, there was no
more right of repurchase that his sister Conchita or brothers Victorino and
Francisco could exercise. The properties were already owned by an heir of the
homestead grantee and the rationale of the provision to keep homestead lands
within the family of the grantee was thus fulfilled. 27

The claim of a trust relation is likewise without merit. The records show that
private respondents did not purchase the contested properties from DBP in trust
for petitioners. The former, as previously mentioned, in fact bought the land from
DBP upon realization that the latter could not validly sell the same. Obviously,
petitioners bought it for themselves. There is no evidence at all in the records that
they bought the land in trust for private respondents. The fact that Anacleto Nool
was the younger brother of Conchita Nool and that they signed a contract of
repurchase, which as discussed earlier was void, does not prove the existence of
an implied trust in favor of petitioners.

Second Issue: No Estoppel in Impugning the

Validity of Void Contracts

Petitioners argue that "when Anacleto Nool took the possession of the two
hectares, more or less, and let the other two hectares to be occupied and cultivated
by plaintiffs-appellant, Anacleto Nool cannot later on disclaim the terms or
contions (sic) agreed upon and his actuation is within the ambit of estoppel . .
. 28 We disagree. The private respondents cannot be estopped from raising the
defense of nullity of contract, specially in this case where they acted in good faith,
believing that indeed petitioners could sell the two parcels of land in question.
Article 1410 of the Civil Code mandates that "(t)he action or defense for the
declaration of the inexistence of a contract does not prescribe." It is a well-settled
doctrine that "as between parties to a contract, validity cannot be given to it by
estoppel if it is prohibited by law or it is against public policy (19 Am. Jur. 802).
It is not within the competence of any citizen to barter away what public policy by
law seeks to preserve." 29 Thus, it is immaterial that private respondents initially
acted to implement the contract of sale, believing in good faith that the same was
valid. We stress that a contract void at inception cannot be validated by ratification
or prescription and certainly cannot be binding on or enforceable against private
respondents. 30

Third Issue: Return of P30,000.00 with Interest

and Payment of Rent

Petitioners further argue that it would be a "miscarriage of justice" to order them

(1) to return the sum of P30,000.00 to private respondents when allegedly it was
Private Respondent Anacleto Nool who owed the former a balance of P14,000.00
and (2) to order petitioners to pay rent when they "were allowed to cultivate the
said two hectares." 31

28
G.R. No. 136054 September 5, 2001
HEIRS OF SEVERINA SAN MIGUEL, namely: MAGNO LAPINA,
PACENCIA LAPINA, MARCELO LAPINA, SEVERINO LAPINA,
ROSARIO LAPINA, FRANCISCO LAPINA, CELIA LAPINA assisted by
husband RODOLFO TOLEDO, petitioners,
vs.
THE HONORABLE COURT OF APPEALS, DOMINADOR SAN
MIGUEL, GUILLERMO F. SAN ARTEMIO F. SAN MIGUEL,
PACIENCIA F. SAN MIGUEL, CELESTINO, assisted by husband,
ANTERO CELESTINO, represented by their Attorney-in-Fact ENRICO
CELESTINO, AUGUSTO SAN MIGUEL, ANTONIO SAN MIGUEL,
RODOLFO SAN MIGUEL, CONRADO SAN MIGUEL and LUCITA SAN
MIGUEL, respondents.
PARDO, J.:
The Case
The case is a petition for review on certiorari1 of the decision of the Court of
Appeals,2 affirming that of the Regional Trial Court, Cavite, Branch 19,
Bacoor3 ordering petitioners, Heirs of Severina San Miguel (hereafter, "Severina's
heirs") to surrender to respondents Dominador San Miguel, et al. (hereafter,
"Dominador, et al."), Transfer Certificate of Title No. 223511 and further directing
Severina's heirs to pay for the capital gains and related expenses for the transfer of
the two (2) lots to Dominador, et al.
The Facts
This case involves a parcel of land originally claimed by Severina San Miguel
(petitioners' predecessor-in-interest, hereafter, "Severina"). The land is situated in
Panapan, Bacoor, Cavite with an area of six hundred thirty two square meters (632
sq. m.), more or less.
Without Severina's knowledge, Dominador managed to cause the subdivision of
the land into three (3) lots, to wit:4
"LRC Psu-1312 - with an area of 108 square meters;
"LRC Psu-1313 - Lot 1, with an area of 299 square meters;
"LRC Psu-1313 - Lot 2, with an area of 225 square meters."
On September 25, 1974, Dominador, et al. filed a petition with the Court of First
Instance, Cavite, as a land registration court, to issue title over Lots 1 and 2 of
LRC Psu-1313, in their names.5
On July 19, 1977, the Land Registration Commission (hereafter "LRC") rendered
a decision directing the issuance of Original Certificate of Title No. 0-1816 in the
names of Dominador, et al.
On or about August 22, 1978, Severina filed with the Court of First Instance of
Cavite a petition for review of the decision alleging that the land registration
proceedings were fraudulently concealed by Dominador from her. 6
On December 27, 1982, the court resolved to set aside the decision of July 19,
1977, and declared Original Certificate of Title No. 0-1816 as null and void.
On July 13, 1987, the Register of Deeds of Cavite issued Transfer Certificate of
Title No. T-223511 in the names of Severina and her heirs.7
On February 15, 1990, the trial court issued an order in favor of Severina's heirs,
to wit:8
"WHEREFORE, as prayed for, let the writ of possession previously issued in favor
of petitioner Severina San Miguel be implemented."
However, the writ was returned unsatisfied.
On November 28, 1991, the trial court ordered:9
"WHEREFORE, as prayed for, let an alias writ of demolition be issued in favor of
petitioners, Severina San Miguel."
Again, the writ was not satisfied.
On August 6, 1993, Severina's heirs, decided not to pursue the writs of possession
and demolition and entered into a compromise with Dominador, et al. According
to the compromise, Severina's heirs were to sell the subject lots 10 to Dominador,
et al. for one and a half million pesos (P1.5 M) with the delivery of Transfer
Certificate of Title No. T-223511 (hereafter, "the certificate of title") conditioned
upon the purchase of another lot 11 which was not yet titled at an additional sum
of three hundred thousand pesos (P300,000.00). The salient features of the
compromise (hereafter "kasunduan") are:12
"5. Na ang Lot 1 at Lot 2, plano LRC Psu-1313 na binabanggit sa itaas na
ipinagkasundo ng mga tagapagmana ni Severina San Miguel na kilala sa
kasulatang ito sa taguring LAPINA (representing Severina's heirs), na ilipat sa
pangalan nina SAN MIGUEL (representing Dominador's heirs) alang alang sa
halagang ISANG MILYON AT LIMANG DAANG LIBONG PISO
(P1,500,000.00) na babayaran nina SAN MIGUEL kina LAPINA;
"6. Na si LAPINA at SAN MIGUEL ay nagkakasundo na ang lote na sakop ng
plano LRC-Psu-1312, may sukat na 108 metro cuadrado ay ipagbibili na rin kina
SAN MIGUEL sa halagang TATLONG DAANG LIBONG PISO (P300,000.00);
"7. Na kinikilala ni SAN MIGUEL na ang tunay na may-ari ng nasabing lote na
sakop ng plano LRC Psu-1312 ay sina LAPINA at sila na ang magpapatitulo nito
at sina LAPINA ay walang pananagutan sa pagpapatitulo nito at sa paghahabol ng
sino mang tao;
"8. Na ang nasabing halaga na TATLONG DAANG LIBONG PISO
(P300,000.00) ay babayaran nina SAN MIGUEL kina LAPINA sa loob ng
dalawang (2) buwan mula sa petsa ng kasulatang ito at kung hindi mabayaran nina
SAN MIGUEL ang nasabing halaga sa takdang panahon ay mawawalan ng
kabuluhan ang kasulatang ito;
"9. Na sina LAPINA at SAN MIGUEL ay nagkakadunso (sic) rin na ang owner's
copy ng Transfer Certificate of Title No. T-223511 na sumasakop sa Lots 1 at 2,
plano LRC Psu-1313 ay ilalagay lamang nina LAPINA kina SAN MIGUEL
pagkatapos mabayaran ang nabanggit na P300,000.00"
On the same day, on August 6, 1993, pursuant to the kasunduan, Severina's heirs
and Dominador, et al. executed a deed of sale designated as "kasulatan sa bilihan
ng lupa."13
On November 16, 1993, Dominador, et al. filed with the trial court, 14 Branch 19,
Bacoor, Cavite, a motion praying that Severina's heirs deliver the owner's copy of
the certificate of title to them.15
In time, Severina's heirs opposed the motion stressing that under the kasunduan,
the certificate of title would only be surrendered upon Dominador, et al.'s payment
of the amount of three hundred thousand pesos (P300,000.00) within two months
from August 6, 1993, which was not complied with.16
Dominador, et al. admitted non-payment of three hundred thousand pesos
(P300,000.00) for the reason that Severina's heirs have not presented any proof of
ownership over the untitled parcel of land covered by LRC-Psu-1312. Apparently,
the parcel of land is declared in the name of a third party, a certain Emiliano
Eugenio.17
Dominador, et al. prayed that compliance with the kasunduan be deferred until
such time that Severina's heirs could produce proof of ownership over the parcel
of land.18
Severina's heirs countered that the arguments of Dominador, et al. were untenable
in light of the provision in the kasunduan where Dominador, et al. admitted their
ownership over the parcel of land, hence dispensing with the requirement that they
produce actual proof of title over it.19 Specifically, they called the trial court's
attention to the following statement in the kasunduan:20
"7. Na kinikilala ni SAN MIGUEL na ang tunay na may-ari ng nasabing lote na
sakop ng plano LRC Psu-1312 ay sina LAPINA at sila na ang magpapatitulo nito
at sina LAPINA ay walang pananagutan sa pagpapatitulo nito at sa paghahabol ng
sino mang tao;"
According to Severina's heirs, since Dominador, et al. have not paid the amount of
three hundred thousand pesos (P300,000.00), then they were justified in
withholding release of the certificate of title.21
29
The trial court conducted no hearing and then rendered judgment based on the
pleadings and memoranda submitted by the parties.
The Trial Court's Ruling
On June 27, 1994, the trial court issued an order to wit:22
"WHEREFORE, finding the Motion to Order to be impressed with merit, the
defendants-oppositors-vendors Heirs of Severina San Miguel are hereby ordered
to surrender to the movant-plaintiffs-vendees-Heirs of Dominador San Miguel the
Transfer Certificates of Title No. 223511 and for herein defendants-oppositors-
vendors to pay for the capital gains and related expenses for the transfer of the two
lots subject of the sale to herein movants-plaintiffs-vendees-Heirs of Dominador
San Miguel."
"SO ORDERED."
On July 25, 1994, Severina's heirs filed with the trial court a motion for
reconsideration of the afore-quoted order.23
On January 23, 1995, the trial court denied the motion for reconsideration for lack
of merit and further ordered:24
"x x x . . . Considering that the Lots 1 and 2 covered by TCT No. T-223511 had
already been paid since August 6, 1993 by the plaintiffs-vendees Dominador San
Miguel, et al. (Vide, Kasulatan sa Bilihan ng Lupa, Rollo, pp. 174-176), herein
defendants-vendors-Heirs of Severina San Miguel is hereby ordered (sic) to
deliver the aforesaid title to the former (Dominador San Miguel, et al.) within
thirty (30) days from receipt of this order. In case the defendants-vendors-Heirs of
Severina San Miguel fail and refuse to do the same, then the Register of Deeds of
Cavite is ordered to immediately cancel TCT No. T-223511 in the name of
Severina San Miguel and issue another one in the name of plaintiffs Dominador
San Miguel, et al.
"Also send a copy of this Order to the Register of Deeds of the Province of Cavite,
Trece Martires City, for her information and guidance.
"SO ORDERED."
On February 7, 1995, Severina's heirs appealed the orders to the Court of
Appeals.25
The Court of Appeals' Ruling
On June 29, 1998, the Court of Appeals promulgated a decision denying the
appeal, and affirming the decision of the trial court. The Court of Appeals added
that the other matters raised in the petition were "extraneous" to
the kasunduan.26 The Court of Appeals upheld the validity of the contract of sale
and sustained the parties' freedom to contract. The Court of Appeals decided,
thus:27
"WHEREFORE, the decision appealed from is hereby AFFIRMED.
"SO ORDERED."
On August 4, 1998, Severina's heirs filed with the Court of Appeals a motion for
reconsideration of the above decision.28 On October 14, 1998, the Court of
Appeals denied the motion for reconsideration for lack of merit. 29
Hence, this appeal.30
The Issues
Severina's heirs submit that the Court of Appeals erred and committed grave abuse
of discretion: First, when it held that the kasunduan had no effect on the "kasulatan
sa bilihan ng lupa." Second, when it ordered them to surrender the certificate of
title to Dominador, et al., despite non-compliance with their prior obligations
stipulated under the kasunduan. Third, when it did not find that
the kasunduan was null and void for having been entered into by Dominador, et
al. fraudulently and in bad faith.31
We find the above issues raised by Severina's heirs to be factual. The question
whether the prerequisites to justify release of the certificate of title to Dominador,
et al. have been complied with is a question of fact.32
However, we sift through the arguments and identify the main legal issue, which
is whether Dominador, et al. may be compelled to pay the three hundred thousand
pesos (P300,000.00) as agreed upon in the kasunduan (as a pre-requisite for the
release of the certificate of title), despite Severina's heirs' lack of evidence of
ownership over the parcel of land covered by LRC Psu-1312.
The Court's Ruling
We resolve the issue in the negative, and find the petition without merit.
Severina's heirs anchor their claim on the kasunduan, stressing on their freedom
to stipulate and the binding effect of contracts. This argument is misplaced. 33 The
Civil Code provides:
ARTICLE 1306. The contracting parties may establish such stipulations, clauses,
terms and conditions as they may deem convenient provided they are not contrary
to law, morals, good customs, public order or public policy (italics ours).
It is basic that the law is deemed written into every contract.34 Although a contract
is the law between the parties, the provisions of positive law which regulate
contracts are deemed written therein and shall limit and govern the relations
between the parties.35 The Civil Code provisions on "sales" state:
ARTICLE 1458. By the contract of sale one of the contracting parties obligates
himself to transfer the ownership of and to deliver a determinate thing, and the
other to pay a price certain in money or its equivalent. . . .
ARTICLE 1459. The thing must be licit and the vendor must have a right to
transfer the ownership thereof at the time it is delivered.
ARTICLE 1495. The vendor is bound to transfer the ownership of and deliver, as
well as warrant the thing which is the object of sale (emphasis ours).
True, in contracts of sale, the vendor need not possess title to the thing sold at the
perfection of the contract.36However, the vendor must possess title and must be
able to transfer title at the time of delivery. In a contract of sale, title only passes
to the vendee upon full payment of the stipulated consideration, or upon delivery
of the thing sold.37
Under the facts of the case, Severina's heirs are not in a position to transfer title.
Without passing on the question of who actually owned the land covered by LRC
Psu -1312, we note that there is no proof of ownership in favor of Severina's heirs.
In fact, it is a certain Emiliano Eugenio, who holds a tax declaration over the said
land in his name.38 Though tax declarations do not prove ownership of the property
of the declarant, tax declarations and receipts can be strong evidence of ownership
of land when accompanied by possession for a period sufficient for
prescription.39 Severina's heirs have nothing to counter this document.
Therefore, to insist that Dominador, et al. pay the price under such circumstances
would result in Severina's heirs' unjust enrichment.40 Basic is the principle in law,
"Niguno non deue enriquecerse tortizamente condano de otro."41The essence of a
sale is the transfer of title or an agreement to transfer it for a price actually paid or
promised.42 In Nool v. Court of Appeals,43 we held that if the sellers cannot deliver
the object of the sale to the buyers, such contract may be deemed to be inoperative.
By analogy, such a contract may fall under Article 1405, No. 5 of the Civil Code,
to wit:
ARTICLE 1405. The following contracts are inexistent and void from the
beginning: . . .
(5) Those which contemplate an impossible service.
xxx xxx xxx
Severina's heirs insist that delivery of the certificate of title is predicated on a
condition payment of three hundred thousand pesos (P300,000.00) to cover the
sale of Lot 3 of LRO Psu 1312. We find this argument not meritorious. The
condition cannot be honored for reasons afore-discussed. Article 1183 of the Civil
Code provides that,
"Impossible conditions, those contrary to good customs or public policy and those
prohibited by law shall annul the obligation which depends upon them. If the
obligation is divisible, that part thereof which is not affected by the impossible or
unlawful condition shall be valid, x x x"
30
Hence, the non-payment of the three hundred thousand pesos (P300,000.00) is not
a valid justification for refusal to deliver the certificate of title.

Besides, we note that the certificate of title covers Lots 1 and 2 of LRC Psu-1313,
which were fully paid for by Dominador, et al. Therefore, Severina's heirs are
bound to deliver the certificate of title covering the lots.

The Fallo

WHEREFORE, the petition is DENIED and the decision of the Court of Appeals
in CA-G.R. CV No. 48430 is AFFIRMED in toto.

No costs.

SO ORDERED.

31