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IDA C. LABAGALA, petitioner, vs. NICOLASA T. SANTIAGO, AMANDA T. SANTIAGO On the other hand, petitioner claimed that her true name is not Ida C.
and HON. COURT OF APPEALS, respondents. Labagala as claimed by respondent but Ida C. Santiago. She claimed not to know
any person by the name of Ida C. Labagala. She claimed to be the daughter of
This petition for review on certiorari seeks to annul the decision dated March Jose and thus entitled to his share in the subject property. She maintained that
4, 1997,[1] of the Court of Appeals in CA-G.R. CV No. 32817, which reversed and she had always stayed on the property, ever since she was a child. She argued
set aside the judgment dated October 17, 1990,[2] of the Regional Trial Court of that the purported sale of the property was in fact a donation to her, and that
Manila, Branch 54, in Civil Case No. 87-41515, finding herein petitioner to be the nothing could have precluded Jose from putting his thumbmark on the deed of
owner of 1/3 pro indiviso share in a parcel of land. sale instead of his signature. She pointed out that during his lifetime, Jose never
The pertinent facts of the case, as borne by the records, are as follows: acknowledged respondents claim over the property such that respondents had
Jose T. Santiago owned a parcel of land covered by TCT No. 64729, located in to sue to claim portions thereof. She lamented that respondents had to disclaim
Rizal Avenue Extension, Sta. Cruz, Manila. Alleging that Jose had fraudulently her in their desire to obtain ownership of the whole property.
registered it in his name alone, his sisters Nicolasa and Amanda (now Petitioner revealed that respondents had in 1985 filed two ejectment cases
respondents herein), sued Jose for recovery of 2/3 share of the property.[3] On against her and other occupants of the property. The first was decided in her and
April 20, 1981, the trial court in that case decided in favor of the sisters, the other defendants favor, while the second was dismissed. Yet respondents
recognizing their right of ownership over portions of the property covered by TCT persisted and resorted to the present action.
No. 64729. The Register of Deeds of Manila was required to include the names of Petitioner recognized respondents ownership of 2/3 of the property as
Nicolasa and Amanda in the certificate of title to said property.[4] decreed by the RTC. But she averred that she caused the issuance of a title in her
Jose died intestate on February 6, 1984. On August 5, 1987, respondents name alone, allegedly after respondents refused to
filed a complaint for recovery of title, ownership, and possession against herein
petitioner, Ida C. Labagala, before the Regional Trial Court of Manila, to recover
from her the 1/3 portion of said property pertaining to Jose but which came into
petitioners sole possession upon Joses death.
Respondents alleged that Joses share in the property belongs to them by
operation of law, because they are the only legal heirs of their brother, who died
intestate and without issue. They claimed that the purported sale of the property
made by their brother to petitioner sometime in March 1979[5] was executed
through petitioners machinations and with malicious intent, to enable her to
secure the corresponding transfer certificate of title (TCT No. 172334[6]) in
petitioners name alone.[7]
Respondents insisted that the deed of sale was a forgery. The deed showed
that Jose affixed his thumbmark thereon but respondents averred that, having
been able to graduate from college, Jose never put his thumbmark on documents
he executed but always signed his name in full. They claimed that Jose could not
have sold the property belonging to his poor and unschooled sisters who
sacrificed for his studies and personal welfare.[8] Respondents also pointed out
that it is highly improbable for petitioner to have paid the supposed
consideration of P150,000 for the sale of the subject property because petitioner
was unemployed and without any visible means of livelihood at the time of the
alleged sale. They also stressed that it was quite unusual and questionable that
petitioner registered the deed of sale only on January 26, 1987, or almost eight
years after the execution of the sale.[9] 1
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take steps that would prevent the property from being sold by public auction for decision.
their failure to pay realty taxes thereon. She added that with a title issued in her SO ORDERED.
name she could avail of a realty tax amnesty. Apart from respondents testimonies, the appellate court noted that the
On October 17, 1990, the trial court ruled in favor of petitioner, decreeing birth certificate of Ida Labagala presented by respondents showed that Ida was
thus: born of different parents, not Jose and his wife. It also took into account the
WHEREFORE, judgment is hereby rendered recognizing the plaintiffs [herein statement made by Jose in Civil Case No. 56226 that he did not have any child.
respondents] as being entitled to the ownership and possession each of one- Hence, the present petition wherein the following issues are raised for
third (1/3) pro indiviso share of the property originally covered by Transfer consideration:
Certificate of Title No. 64729, in the name of Jose T. Santiago and presently 1. Whether or not petitioner has adduced preponderant evidence to prove
covered by Transfer Certificate of Title No. 172334, in the name of herein that she is the daughter of the late Jose T. Santiago, and
defendant [herein petitioner] and which is located at No. 3075-A Rizal Avenue 2. Whether or not respondents could still impugn the filiation of the
Extension, Sta. Cruz, Manila, as per complaint, and the adjudication to plaintiffs petitioner as the daughter of the late Jose T. Santiago.
per decision in Civil Case No. 56226 of this Court, Branch VI, and the remaining Petitioner contends that the trial court was correct in ruling that she had
one-third (1/3) pro indiviso share adjudicated in said decision to defendant Jose T. adduced sufficient evidence to prove her filiation by Jose Santiago, making her his
Santiago in said case, is hereby adjudged and adjudicated to herein defendant as sole heir and thus entitled to inherit his 1/3 portion. She points out that
owner and entitled to possession of said share. The Court does not see fit to respondents had, before the filing of the instant case, previously considered[11]
adjudge damages, attorneys fees and costs. Upon finality of this judgment,  her as the daughter of Jose who, during his lifetime, openly regarded her as his
Transfer Certificate of Title No. 172334 is ordered cancelled and a new title issued legitimate daughter. She asserts that her identification as Joses daughter in his
in the names of the two (2) plaintiffs and the defendant as owners in equal ITR outweighs the strange answers he gave when he testified in Civil Case No.
shares, and the Register of Deeds of Manila is so directed to effect the same 56226.
upon payment of the proper fees by the parties herein. Petitioner asserts further that respondents cannot impugn her filiation
SO ORDERED.[10] collaterally, citing the case of Sayson v. Court of Appeals[12] in which we held that (t)he
According to the trial court, while there was indeed no consideration for the legitimacy of (a) child can be impugned only
deed of sale executed by Jose in favor of petitioner, said deed constitutes a valid
donation. Even if it were not, petitioner would still be entitled to Joses 1/3 portion
of the property as Joses daughter. The trial court ruled that the following
evidence shows petitioner to be the daughter of Jose: (1) the decisions in the two
ejectment cases filed by respondents which stated that petitioner is Joses
daughter, and (2) Joses income tax return which listed petitioner as his
daughter. It further said that respondents knew of petitioners existence and her
being the daughter of Jose, per records of the earlier ejectment cases they filed
against petitioner. According to the court, respondents were not candid with the
court in refusing to recognize petitioner as Ida C. Santiago and insisting that she
was Ida C. Labagala, thus affecting their credibility.
Respondents appealed to the Court of Appeals, which reversed the decision
of the trial court.
WHEREFORE, the appealed decision is REVERSED and one is entered declaring the
appellants Nicolasa and Amanda Santiago the co-owners in equal shares of the
one-third (1/3) pro indiviso share of the late Jose Santiago in the land and
building covered by TCT No. 172334. Accordingly, the Register of Deeds of Manila
is directed to cancel said title and issue in its place a new one reflecting this 2
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in a direct action brought for that purpose, by the proper parties and within the
period limited by law.[13] Petitioner also cites Article 263 of the Civil Code in
support of this contention.[14]
For their part, respondents contend that petitioner is not the daughter of
Jose, per her birth certificate that indicate her parents as Leo Labagala and
Cornelia Cabrigas, instead of Jose Santiago and Esperanza Cabrigas.[15] They
argue that the provisions of Article 263 of the Civil Code do not apply to the
present case since this is not an action impugning a childs legitimacy but one for
recovery of title, ownership, and possession of property.
The issues for resolution in this case, to our mind, are (1) whether or not
respondents may impugn petitioners filiation in this action for recovery of title
and possession; and (2) whether or not petitioner is entitled to Joses 1/3 portion
of the property he co-owned with respondents, through succession, sale, or
donation.
On the first issue, we find petitioners reliance on Article 263 of the Civil Code
to be misplaced. Said article provides:
Art. 263. The action to impugn the legitimacy of the child shall be brought within
one year from the recording of the birth in the Civil Register, if the husband
should be in the same place, or in a proper case, any of his heirs.
If he or his heirs are absent, the period shall be eighteen months if they should
reside in the Philippines; and two years if abroad. If the birth of the child has
been concealed, the term shall be counted from the discovery of the fraud.
This article should be read in conjunction with the other articles in the same
chapter on paternity and filiation in the Civil Code. A careful reading of said
chapter would reveal that it contemplates situations where a doubt exists that a
child is indeed a mans child by his wife, and the husband (or, in proper cases, his
heirs) denies the childs filiation. It does not refer to situations where a child is
alleged not to be the child at all of a particular couple.[16]
Article 263 refers to an action to impugn the legitimacy of a child, to assert and
prove that a person is not a mans child by his wife. However, the present case is
not one impugning petitioners legitimacy. Respondents are asserting not merely
that petitioner is not a legitimate child of Jose, but that she is not a child of Jose at
all.[17] Moreover, the present action is one for recovery of title and possession,
and thus outside the scope of Article 263 on prescriptive periods.
Petitioners reliance on Sayson is likewise improper. The factual milieu
present in Sayson does not obtain in the instant case. What was being challenged
by petitioners in Sayson was (1) the validity of the adoption of Delia and Edmundo
by the deceased Teodoro and Isabel Sayson, and (2) the legitimate status of
Doribel Sayson. While asserting that Delia and Edmundo could not have been
validly adopted since Doribel had already been born to the Sayson couple at the
time, petitioners at the same time made the conflicting claim that Doribel was not
the child of the couple. The Court ruled in that case that it was too late to
question the decree of adoption that became final years before.Besides, such a
challenge to the validity of the adoption cannot be made collaterally but in a
direct proceeding.[18]
In this case, respondents are not assailing petitioners legitimate status but
are, instead, asserting that she is not at all their brothers child. The birth
certificate presented by respondents support this allegation.
We agree with the Court of Appeals that::
The Certificate of Record of Birth (Exhibit H)[19] plainly states that Ida was the
child of the spouses Leon Labagala and [Cornelia] Cabrigas. This document states
that it was Leon Labagala who made the report to the Local Civil Registrar and
therefore the supplier of the entries in said Certificate. Therefore, this certificate
is proof of the filiation of Ida. Appellee however denies that Exhibit H is her Birth
Certificate. She insists that she is not Ida Labagala but Ida Santiago. If Exhibit H is
not her birth certificate, then where is hers? She did not present any though it
would have been the easiest thing to do considering that according to her
baptismal certificate she was born in Manila in 1969.This court rejects such
denials and holds that Exhibit H is the certificate of the record of birth of appellee
Ida
Against such evidence, the appellee Ida could only present her testimony and a
baptismal certificate (Exhibit 12) stating that appellees parents were Jose
Santiago and Esperanza Cabrigas. But then, a decisional rule in evidence states
that a baptismal certificate is not a proof of the parentage of the baptized
person. This document can only prove the identity of the baptized, the date and
place of her baptism, the identities of the baptismal sponsors and the priest who
administered the sacrament -- nothing more.[20] (Citations omitted.)
At the pre-trial conducted on August 11, 1988, petitioners counsel admitted
that petitioner did not have a birth certificate indicating that she is Ida Santiago,
though she had been using this name all her life.[21]
Petitioner opted not to present her birth certificate to prove her relationship
with Jose and instead offered in evidence her baptismal certificate.[22] However,
as we held in Heirs of Pedro Cabais v. Court of Appeals:
a baptismal certificate is evidence only to prove the administration of the
sacrament on the dates therein specified, but not the veracity of the
declarations therein stated with respect to [a persons] kinsfolk. The same is
conclusive only of the baptism administered, according to the rites of the
Catholic Church, by the priest who baptized subject child, but it does not
prove the veracity of the declarations and statements contained in the
certificate concerning the relationship of the person baptized.[23]
A baptismal certificate, a private document, is not conclusive proof of
filiation.[24] More so are the entries made in an income tax return, which only 3
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shows that income tax has been paid and the amount thereof.[25]
We note that the trial court had asked petitioner to secure a copy of her
birth certificate but petitioner, without advancing any reason therefor, failed to
do so. Neither did petitioner obtain a certification that no record of her birth
could be found in the civil registry, if such were the case. We find petitioners
silence concerning the absence of her birth certificate telling. It raises doubt as to
the existence of a birth certificate that would show petitioner to be the daughter
of Jose Santiago and Esperanza Cabrigas. Her failure to show her birth certificate
would raise the presumption that if such evidence were presented, it would be
adverse to her claim. Petitioners counsel argued that petitioner had been using
Santiago all her life. However, use of a family name certainly does not establish
pedigree.
Further, we note that petitioner, who claims to be Ida Santiago, has the
same birthdate as Ida Labagala.[26] The similarity is too uncanny to be a mere
coincidence.
During her testimony before the trial court, petitioner denied knowing
Cornelia Cabrigas, who was listed as the mother in the birth certificate of Ida
Labagala. In her petition before this Court, however, she stated that Cornelia is
the sister of her mother, Esperanza. It appears that petitioner made conflicting
statements that affect her credibility and could cast a long shadow of doubt on
her claims of filiation.
Thus, we are constrained to agree with the factual finding of the Court of
Appeals that petitioner is in reality the child of Leon Labagala and Cornelia
Cabrigas, and contrary to her averment, not of Jose Santiago and Esperanza
Cabrigas. Not being a child of Jose, it follows that petitioner can not inherit from
him through intestate succession. It now remains to be seen whether the
property in dispute was validly transferred to petitioner through sale or donation.
On the validity of the purported deed of sale, however, we agree with the
Court of Appeals that:
This deed is shot through and through with so many intrinsic defects that a
reasonable mind is inevitably led to the conclusion that it is fake. The
intrinsic defects are extractable from the following questions: a) If Jose
Santiago intended to donate the properties in question to Ida, what was the
big idea of hiding the nature of the contract in the faade of the sale? b) If the
deed is a genuine document, how could it have happened that Jose Santiago
who was of course fully aware that he owned only 1/3 pro indiviso of the
properties covered by his title sold or donated the whole properties to Ida?
c) Why in heavens name did Jose Santiago, a college graduate, who always
signed his name in documents requiring his signature (citation omitted)
[affix] his thumbmark on this deed of sale? d) If Ida was [the] child of Jose
Santiago, what was the sense of the latter donating his properties to her
when she would inherit them anyway upon his death? e) Why did Jose
Santiago affix his thumbmark to a deed which falsely stated that: he was
single (for he was earlier married to Esperanza Cabrigas); Ida was of legal
age (for [s]he was then just 15 years old); and the subject properties were
free from liens and encumbrances (for Entry No. 27261, Notice of Adverse
Claim and Entry No. 6388, Notice of Lis Pendens were already annotated in
the title of said properties). If the deed was executed in 1979, how come it
surfaced only in 1984 after the death of Jose Santiago and of all people, the
one in possession was the baptismal sponsor of Ida?[27]
Clearly, there is no valid sale in this case. Jose did not have the right to
transfer ownership of the entire property to petitioner since 2/3 thereof
belonged to his sisters.[28] Petitioner could not have given her consent to the
contract, being a minor at the time.[29] Consent of the contracting parties is
among the essential requisites of a contract,[30] including one of sale, absent
which there can be no valid contract. Moreover, petitioner admittedly did not pay
any centavo for the property,[31] which makes the sale void. Article 1471 of the
Civil Code provides:
Art. 1471. If the price is simulated, the sale is void, but the act may be shown to
have been in reality a donation, or some other act or contract.
Neither may the purported deed of sale be a valid deed of donation. Again,
as explained by the Court of Appeals:
Even assuming that the deed is genuine, it cannot be a valid donation. It lacks the
acceptance of the donee required by Art. 725 of the Civil Code. Being a minor in
1979, the acceptance of the donation should have been made by her father, Leon
Labagala or [her] mother Cornelia Cabrigas or her legal representative pursuant
to Art. 741 of the same Code. No one of those mentioned in the law - in fact no
one at all - accepted the donation for Ida.[32]
In sum, we find no reversible error attributable to the assailed decision of
the Court of Appeals, hence it must be upheld.
WHEREFORE, the petition is DENIED, and the decision of the Court of
Appeals in CA-G.R. CV No. 32817 is AFFIRMED.
Costs against petitioner.
SO ORDERED.
4
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JULIAN FRANCISCO (Substituted by his Heirs, namely: CARLOS ALTEA heirs of Francisca A. Herrera, the wife of Eligio, Sr., considering that she died
FRANCISCO;  intestate on April 2, 1990, before the alleged sale to petitioner. Finally,
the heirs of late ARCADIO FRANCISCO, namely: CONCHITA SALANGSANG- respondent also alleged that the sale of the two lots was null and void on the
FRANCISCO (surviving spouse),  ground that at the time of sale, Eligio, Sr. was already incapacitated to give
and his children namely: TEODULO S. FRANCISCO, EMILIANO S. FRANCISCO, consent to a contract because he was already afflicted with senile dementia,
MARIA THERESA S. FRANCISCO,  characterized by deteriorating mental and physical condition including loss of
PAULINA S. FRANCISCO, THOMAS S. FRANCISCO;  memory.
PEDRO ALTEA FRANCISCO; CARINA FRANCISCO-ALCANTARA; EFREN ALTEA In his answer, petitioner as defendant below alleged that respondent was
FRANCISCO; DOMINGA LEA FRANCISCO-REGONDON;  estopped from assailing the sale of the lots. Petitioner contended that
BENEDICTO ALTEA FRANCISCO and ANTONIO ALTEA FRANCISCO), petitioner,  respondent had effectively ratified both contracts of sales, by receiving the
vs. consideration offered in each transaction.
PASTOR HERRERA, respondent. On November 14, 1994, the Regional Trial Court handed down its decision, the
dispositive portion of which reads:
This is a petition for review on certiorari of the decision1 of the Court of Appeals, WHEREFORE, in view of all the foregoing, this court hereby orders that:
dated August 30, 1999, in CA-G.R. CV No. 47869, which affirmed in toto the 1. The deeds of sale of the properties covered by Tax Dec. Nos. 01-00495
judgment2 of the Regional Trial Court (RTC) of Antipolo City, Branch 73, in Civil and 01-00497 are declared null and void;
Case No. 92-2267. The appellate court sustained the trial court’s ruling which: (a) 2. The defendant is to return the lots in question including all
declared null and void the deeds of sale of the properties covered by Tax improvements thereon to the plaintiff and the plaintiff is ordered to
Declaration Nos. 01-00495 and 01-00497; and (b) directed petitioner to return the simultaneously return to the defendant the purchase price of the lots
subject properties to respondent who, in turn, must refund to petitioner the sold totalling to P750,000.00 for lot covered by TD 01-00497 and P
purchase price of P1,750,000. 1,000,000.00 covered by TD 01-00495;
The facts, as found by the trial court and affirmed by the Court of Appeals, are as 3. The court also orders the defendant to pay the cost of the suit.
follows: <>4. The counter-claim of the defendant is denied for lack of merit.
Eligio Herrera, Sr., the father of respondent, was the owner of two parcels of land, SO ORDERED.4
one consisting of 500 sq. m. and another consisting of 451 sq. m., covered by Tax Petitioner then elevated the matter to the Court of Appeals in CA-G.R. CV No.
Declaration (TD) Nos. 01-00495 and 01-00497, respectively. Both were located at 47869. On August 30, 1999, however, the appellate court affirmed the decision of
Barangay San Andres, Cainta, Rizal.3 the Regional Trial Court, thus:
On January 3, 1991, petitioner bought from said landowner the first parcel, WHEREFORE, premises considered, the decision appealed from is hereby
covered by TD No. 01-00495, for the price of P1,000,000, paid in installments AFFIRMED in toto. Costs against defendant-appellant.
from November 30, 1990 to August 10, 1991. SO ORDERED.5
On March 12, 1991, petitioner bought the second parcel covered by TD No. 01- Hence, this petition for review anchored on the following grounds:
00497, for P750,000. I. THE COURT OF APPEALS COMPLETELY IGNORED THE BASIC
Contending that the contract price for the two parcels of land was grossly DIFFERENCE BETWEEN A VOID AND A MERELY VOIDABLE CONTRACT
inadequate, the children of Eligio, Sr., namely, Josefina Cavestany, Eligio Herrera, THUS MISSING THE ESSENTIAL SIGNIFICANCE OF THE ESTABLISHED FACT
Jr., and respondent Pastor Herrera, tried to negotiate with petitioner to increase OF RATIFICATION BY THE RESPONDENT WHICH EXTINGUISHED
the purchase price. When petitioner refused, herein respondent then filed a WHATEVER BASIS RESPONDENT MAY HAVE HAD IN HAVING THE
complaint for annulment of sale, with the RTC of Antipolo City, docketed as Civil CONTRACT AT BENCH ANNULLED.
Case No. 92-2267. In his complaint, respondent claimed ownership over the II. THE DECISION OF THE COURT OF APPEALS ON "SENILE DEMENTIA":
second parcel, which is the lot covered by TD No. 01-00497, allegedly by virtue of A. DISREGARDED THE FACTUAL BACKGROUND OF THE CASE;
a sale in his favor since 1973. He likewise claimed that the first parcel, the lot B. WAS CONTRARY TO ESTABLISHED JURISPRUDENCE; AND
covered by TD No. 01-00495, was subject to the co-ownership of the surviving C. WAS PURELY CONJECTURAL, THE CONJECTURE BEING 5
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ERRONEOUS.
III. THE COURT OF APPEALS WAS IN GROSS ERROR AND IN FACT
VIOLATED PETITIONERS’ RIGHT TO DUE PROCESS WHEN IT RULED THAT
THE CONSIDERATION FOR THE QUESTIONED CONTRACTS WAS GROSSLY
INADEQUATE.6
The resolution of this case hinges on one pivotal issue: Are the assailed contracts
of sale void or merely voidable and hence capable of being ratified?
Petitioner contends that the Court of Appeals erred when it ignored the basic
distinction between void and voidable contracts. He argues that the contracts of
sale in the instant case, following Article 13907 of the Civil Code are merely
voidable and not void ab initio. Hence, said contracts can be ratified. Petitioner
argues that while it is true that a demented person cannot give consent to a
contract pursuant to Article 1327,8 nonetheless the dementia affecting one of the
parties will not make the contract void per se but merely voidable. Hence, when
respondent accepted the purchase price on behalf of his father who was
allegedly suffering from senile dementia, respondent effectively ratified the
contracts. The ratified contracts then become valid and enforceable as between
the parties.
Respondent counters that his act of receiving the purchase price does not imply
ratification on his part. He only received the installment payments on his senile
father’s behalf, since the latter could no longer account for the previous
payments. His act was thus meant merely as a safety measure to prevent the
money from going into the wrong hands. Respondent also maintains that the
sales of the two properties were null and void. First, with respect to the lot
covered by TD No. 01-00497, Eligio, Sr. could no longer sell the same because it
had been previously sold to respondent in 1973. As to lot covered by TD No. 01-
00495, respondent contends that it is co-owned by Eligio, Sr. and his children, as
heirs of Eligio’s wife. As such, Eligio, Sr. could not sell said lot without the consent
of his co-owners.
We note that both the trial court and the Court of Appeals found that Eligio, Sr.
was already suffering from senile dementia at the time he sold the lots in
question. In other words, he was already mentally incapacitated when he entered
into the contracts of sale. Settled is the rule that findings of fact of the trial court,
when affirmed by the appellate court, are binding and conclusive upon the
Supreme Court.9
Coming now to the pivotal issue in this controversy. A void or inexistent contract
is one which has no force and effect from the very beginning. Hence, it is as if it
has never been entered into and cannot be validated either by the passage of
time or by ratification. There are two types of void contracts: (1) those where one
of the essential requisites of a valid contract as provided for by Article 131810 of
the Civil Code is totally wanting; and (2) those declared to be so under Article
140911 of the Civil Code. By contrast, a voidable or annullable contract is one in
which the essential requisites for validity under Article 1318 are present, but
vitiated by want of capacity, error, violence, intimidation, undue influence, or
deceit.
Article 1318 of the Civil Code states that no contract exists unless there is a
concurrence of consent of the parties, object certain as subject matter, and cause
of the obligation established. Article 1327 provides that insane or demented
persons cannot give consent to a contract. But, if an insane or demented person
does enter into a contract, the legal effect is that the contract is voidable or
annullable as specifically provided in Article 1390.12
In the present case, it was established that the vendor Eligio, Sr. entered into an
agreement with petitioner, but that the former’s capacity to consent was vitiated
by senile dementia. Hence, we must rule that the assailed contracts are not void
or inexistent per se; rather, these are contracts that are valid and binding unless
annulled through a proper action filed in court seasonably.
An annullable contract may be rendered perfectly valid by ratification, which can
be express or implied. Implied ratification may take the form of accepting and
retaining the benefits of a contract.13 This is what happened in this case.
Respondent’s contention that he merely received payments on behalf of his
father merely to avoid their misuse and that he did not intend to concur with the
contracts is unconvincing. If he was not agreeable with the contracts, he could
have prevented petitioner from delivering the payments, or if this was
impossible, he could have immediately instituted the action for reconveyance
and have the payments consigned with the court. None of these happened. As
found by the trial court and the Court of Appeals, upon learning of the sale,
respondent negotiated for the increase of the purchase price while receiving the
installment payments. It was only when respondent failed to convince petitioner
to increase the price that the former instituted the complaint for reconveyance of
the properties. Clearly, respondent was agreeable to the contracts, only he
wanted to get more. Further, there is no showing that respondent returned the
payments or made an offer to do so. This bolsters the view that indeed there was
ratification. One cannot negotiate for an increase in the price in one breath and
in the same breath contend that the contract of sale is void.
Nor can we find for respondent’s argument that the contracts were void as Eligio,
Sr., could not sell the lots in question as one of the properties had already been
sold to him, while the other was the subject of a co-ownership among the heirs of
the deceased wife of Eligio, Sr. Note that it was found by both the trial court and
the Court of Appeals that Eligio, Sr., was the "declared owner" of said lots. This
finding is conclusive on us. As declared owner of said parcels of land, it follows
that Eligio, Sr., had the right to transfer the ownership thereof under the principle
of jus disponendi. 6
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In sum, the appellate court erred in sustaining the judgment of the trial court that SPS. RUDY PARAGAS and CORAZON B. PARAGAS, petitioners, vs. HRS. OF
the deeds of sale of the two lots in question were null and void. DOMINADOR BALACANO, namely: DOMINIC, RODOLFO, NANETTE and 
WHEREFORE, the instant petition is GRANTED. The decision dated August 30, CYRIC, all surnamed BALACANO, represented by NANETTE BALACANO
1999 of the Court of Appeals in CA-G.R. CV No. 47869, affirming the decision of and ALFREDO BALACANO, respondents.
the Regional Trial Court in Civil Case No. 92-2267 is REVERSED. The two contracts
This petition for review seeks to annul the Decision[1] dated 15 February 2005 of
of sale covering lots under TD No. 01-00495 and No. 01-00497 are hereby
the Court of Appeals in CA-G.R. CV No. 64048, affirming with modification the 8 March
declared VALID. Costs against respondent.
1999 Decision[2] of the Regional Trial Court (RTC), Branch 21, of Santiago City, Isabela,
SO ORDERED.
in Civil Case No. 21-2313. The petition likewise seeks to annul the Resolution[3] dated
17 May 2005 denying petitioners motion for reconsideration.
The factual antecedents were synthesized by the Court of Appeals in its decision.
Gregorio Balacano, married to Lorenza Sumigcay, was the registered owner of Lot
1175-E and Lot 1175-F of the Subd. Plan Psd-38042 [located at Baluarte, Santiago City,
Isabela] covered by TCT No. T-103297 and TCT No. T-103298 of the Registry of Deeds
of the Province of Isabela.
Gregorio and Lorenza had three children, namely: Domingo, Catalino and Alfredo, all
surnamed Balacano. Lorenza died on December 11, 1991. Gregorio, on the other
hand, died on July 28, 1996.
Prior to his death, Gregorio was admitted at the Veterans General Hospital in
Bayombong, Nueva Vizcaya on June 28, 1996 and stayed there until July 19, 1996. He
was transferred in the afternoon of July 19, 1996 to the Veterans Memorial Hospital in
Quezon City where he was confined until his death.
Gregorio purportedly sold on July 22, 1996, or barely a week prior to his death, a
portion of Lot 1175-E (specifically consisting of 15,925 square meters from its total
area of 22,341 square meters) and the whole Lot 1175-F to the Spouses Rudy (Rudy)
and Corazon Paragas (collectively, the Spouses Paragas) for the total consideration of 
P500,000.00. This sale appeared in a deed of absolute sale notarized by Atty.
Alexander V. de Guzman, Notary Public for Santiago City, on the same date July 22,
1996 and witnessed by Antonio Agcaoili (Antonio) and Julia Garabiles (Julia). Gregorios
certificates of title over Lots 1175-E and 1175-F were consequently cancelled and new
certificates of title were issued in favor of the Spouses Paragas.
The Spouses Paragas then sold on October 17, 1996 a portion of Lot 1175-E consisting
of 6,416 square meters to Catalino for the total consideration of P60,000.00.
Domingos children (Dominic, Rodolfo, Nanette and Cyric, all surnamed Balacano;) filed
on October 22, 1996 a complaint for annulment of sale and partition against Catalino
and the Spouses Paragas. They essentially alleged in asking for the nullification of the
deed of sale that: (1) their grandfather Gregorio could not have appeared before the
notary public on July 22, 1996 at Santiago City because he was then confined at the
Veterans Memorial Hospital in Quezon City; (2) at the time of the alleged execution of
the deed of sale, Gregorio was seriously ill, in fact dying at that time, which vitiated his
consent to the disposal of the property; and (3) Catalino manipulated the execution of
the deed and prevailed upon the dying Gregorio to sign his name on a paper the
contents of which he never understood because of his serious condition. Alternatively,
they alleged that assuming Gregorio was of sound and disposing mind, he could only 7
Sales
transfer a half portion of Lots 1175-E and 1175-F as the other half belongs to their
grandmother Lorenza who predeceased Gregorio they claimed that Lots 1175-E and
1175-F form part of the conjugal partnership properties of Gregorio and Lorenza.
Finally, they alleged that the sale to the Spouses Paragas covers only a 5-hectare
portion of Lots 1175-E and 1175-F leaving a portion of 6,416 square meters that
Catalino is threatening to dispose. They asked for the nullification of the deed of sale
executed by Gregorio and the partition of Lots 1175-E and 1175-F. They likewise asked
for damages.
Instead of filing their Answer, the defendants Catalino and the Spouses Paragas
moved to dismiss the complaint on the following grounds: (1) the plaintiffs have no
legal capacity - the Domingos children cannot file the case because Domingo is still
alive, although he has been absent for a long time; (2) an indispensable party is not
impleaded that Gregorios other son, Alfredo was not made a party to the suit; and (3)
the complaint states no cause of action that Domingos children failed to allege a
ground for the annulment of the deed of sale; they did not cite any mistake, violence,
intimidation, undue influence or fraud, but merely alleged that Gregorio was seriously
ill. Domingos children opposed this motion.
The lower court denied the motion to dismiss, but directed the plaintiffs-appellees to
amend the complaint to include Alfredo as a party. Alfredo was subsequently declared
as in default for his failure to file his Answer to the Complaint.
The defendants-appellees filed their Answer with Counterclaim on May 7, 1997,
denying the material allegations of the complaint. Additionally, they claimed that: (1)
the deed of sale was actually executed by Gregorio on July 19 (or 18), 1996 and not July
22, 1996; (2) the Notary Public personally went to the Hospital in Bayombong, Nueva
Vizcaya on July 18, 1996 to notarize the deed of sale already subject of a previously
concluded covenant between Gregorio and the Spouses Paragas; (3) at the time
Gregorio signed the deed, he was strong and of sound and disposing mind; (4) Lots
1175-E and 1175-F were Gregorios separate capital and the inscription of Lorenzas
name in the titles was just a description of Gregorios marital status; (5) the entire area
of Lots 1175-E and 1175-F were sold to the Spouses Paragas. They interposed a
counterclaim for damages.
At the trial, the parties proceeded to prove their respective contentions.
Plaintiff-appellant Nanette Balacano testified to prove the material allegations of their
complaint. On Gregorios medical condition, she declared that: (1) Gregorio, who was
then 81 years old, weak and sick, was brought to the hospital in Bayombong, Nueva
Vizcaya on June 28, 1996 and stayed there until the afternoon on July 19, 1996; (2)
thereafter, Gregorio, who by then was weak and could no longer talk and whose
condition had worsened, was transferred in the afternoon of July 19, 1996 to the
Veterans Memorial Hospital in Quezon City where Gregorio died. She claimed that
Gregorio could not have signed a deed of sale on July 19, 1996 because she stayed at
the hospital the whole of that day and saw no visitors. She likewise testified on their
agreement for attorneys fees with their counsel and the litigation expenses they
incurred.
Additionally, the plaintiffs-appellees presented in evidence Gregorios medical records
and his death certificate.
Defendants-appellees, on the other hand, presented as witnesses Notary Public de
Guzman and instrumental witness Antonio to prove Gregorios execution of the sale
and the circumstances under the deed was executed. They uniformly declared that: (1)
on July 18, 1996, they went to the hospital in Bayombong, Nueva Vizcaya where
Gregorio was confined with Rudy; (2) Atty. De Guzman read and explained the
contents of the deed to Gregorio; (3) Gregorio signed the deed after receiving the
money from Rudy; (4) Julia and Antonio signed the deed as witnesses. Additionally,
Atty. De Guzman explained that the execution of the deed was merely a confirmation
of a previous agreement between the Spouses Paragas and Gregorio that was
concluded at least a month prior to Gregorios death; that, in fact, Gregorio had
previously asked him to prepare a deed that Gregorio eventually signed on July 18,
1996. He also explained that the deed, which appeared to have been executed on July
22, 1996, was actually executed on July 18, 1996; he notarized the deed and entered it
in his register only on July 22, 1996. He claimed that he did not find it necessary to
state the precise date and place of execution (Bayombong, Nueva Vizcaya, instead of
Santiago City) of the deed of sale because the deed is merely a confirmation of a
previously agreed contract between Gregorio and the Spouses Paragas. He likewise
stated that of the stated P500,000.00 consideration in the deed, Rudy paid Gregorio P
450,000.00 in the hospital because Rudy had previously paid Gregorio P50,000.00. For
his part, Antonio added that he was asked by Rudy to take pictures of Gregorio signing
the deed. He also claimed that there was no entry on the date when he signed; nor did
he remember reading Santiago City as the place of execution of the deed. He
described Gregorio as still strong but sickly, who got up from the bed with Julias help.
Witness for defendants-appellants Luisa Agsalda testified to prove that Lot 1175-E was
Gregorios separate property. She claimed that Gregorios father (Leon) purchased a
two-hectare lot from them in 1972 while the other lot was purchased from her
neighbor. She also declared that Gregorio inherited these lands from his father Leon;
she does not know, however, Gregorios brothers share in the inheritance. Defendant-
appellant Catalino also testified to corroborate the testimony of witness Luisa Agsalda;
he said that Gregorio told him that he (Gregorio) inherited Lots 1175-E and 1175-F
from his father Leon. He also stated that a portion of Lot 1175-E consisting of 6,416
square meters was sold to him by the Spouses Paragas and that he will pay the
Spouses Paragas P50,000.00, not as consideration for the return of the land but for
the transfer of the title to his name.
Additionally, the defendants-appellants presented in evidence the pictures taken by
Antonio when Gregorio allegedly signed the deed.[4]
The lower court, after trial, rendered the decision declaring null and void the
deed of sale purportedly executed by Gregorio Balacano in favor of the spouses Rudy
Paragas and Corazon Paragas. In nullifying the deed of sale executed by Gregorio, the
lower court initially noted that at the time Gregorio executed the deed, Gregorio was
ill. The lower courts reasoning in declaring the deed of sale null and void and this
reasonings premises may be summarized as follows: (1) the deed of sale was
improperly notarized; thus it cannot be considered a public document that is usually 8
Sales
accorded the presumption of regularity; (2) as a private document, the deed of sales
due execution must be proved in accordance with Section 20, Rule 132 of the Revised
Rules on Evidence either: (a) by anyone who saw the document executed or written; or
(b) by evidence of the genuineness of the signature or handwriting of the maker; and
(3) it was incumbent upon the Spouses Paragas to prove the deed of sales due
execution but failed to do so the lower court said that witness Antonio Agcaoili is not
credible while Atty. Alexander De Guzman is not reliable.[5]
The lower court found the explanations of Atty. De Guzman regarding the
erroneous entries on the actual place and date of execution of the deed of sale as
justifications for a lie. The lower court said
The Court cannot imagine an attorney to undertake to travel to another province to
notarize a document when he must certainly know, being a lawyer and by all means,
not stupid, that he has no authority to notarize a document in that province. The only
logical thing that happened was that Rudy Paragas brought the deed of sale to him on
July 22, 1996 already signed and requested him to notarize the same which he did, not
knowing that at that time the vendor was already in a hospital and [sic] Quezon City.
Of course had he known, Atty. De Guzman would not have notarized the document.
But he trusted Rudy Paragas and moreover, Gregorio Balacano already informed him
previously in June that he will sell his lands to Paragas. In addition [sic, (,) was omitted]
Rudy Paragas also told him that Balacano received an advance of P50,000.00.
The intention to sell is not actual selling. From the first week of June when, according
to Atty. De Guzman, Gregorio Balacano informed him that he will sell his land to Rudy
Paragas, enough time elapsed to the time he was brought to the hospital on June 28,
1996. Had there been a meeting of the minds between Gregorio Balacano and Rudy
Paragas regarding the sale, surely Gregorio Balacano would have immediately
returned to the office of Atty. De Guzman to execute the deed of sale. He did not until
he was brought to the hospital and diagnosed to have liver cirrhosis. Because of the
seriousness of his illness, it is not expected that Gregorio Balacano would be
negotiating a contract of sale. Thus, Rudy Paragas negotiated with Catalino
Balacano, the son of Gregorio Balacano with whom the latter was staying.[6]
The lower court also did not consider Antonio Agcaoili, petitioner Rudy Paragass
driver, a convincing witness, concluding that he was telling a rehearsed story. The
lower court said
The only portion of his testimony that is true is that he signed the document. How
could the Court believe that he brought a camera with him just to take pictures of the
signing? If the purpose was to record the proceeding for posterity, why did he not take
the picture of Atty. De Guzman when the latter was reading and explaining the
document to Gregorio Balacano? Why did he not take the picture of both Gregorio
Balacano and Atty. de Guzman while the old man was signing the document instead of
taking a picture of Gregorio Balacano alone holding a ball pen without even showing
the document being signed? Verily there is a picture of a document but only a hand
with a ball pen is shown with it. Why? Clearly the driver Antonio Agcaoili must have
only been asked by Rudy Paragas to tell a concocted story which he himself would not
dare tell in Court under oath.[7]
The lower court likewise noted that petitioner Rudy Paragas did not testify about
the signing of the deed of sale. To the lower court, Rudys refusal or failure to testify
raises a lot of questions, such as: (1) was he (Rudy) afraid to divulge the circumstances
of how he obtained the signature of Gregorio Balacano, and (2) was he (Rudy) afraid to
admit that he did not actually pay the P500,000.00 indicated in the deed of sale as the
price of the land?[8]
The lower court also ruled that Lots 1175-E and 1175-F were Gregorios and
Lorenzas conjugal partnership properties. The lower court found that these lots were
acquired during the marriage because the certificates of title of these lots clearly
stated that the lots are registered in the name Gregorio, married to Lorenza Sumigcay.
Thus, the lower court concluded that the presumption of law (under Article 160 of the
Civil Code of the Philippines) that property acquired during the marriage is presumed
to belong to the conjugal partnership fully applies to Lots 1175-E and 1175-F.[9]
Thus, on 8 March 1999, the RTC, Branch 21, of Santiago City, Isabela, rendered a
Decision[10] in Civil Case No. 21-2313, the dispositive portion of which reads as follows:
WHEREFORE in the light of the foregoing considerations judgment is hereby rendered:
1. DECLARING as NULL and VOID the deed of sale purportedly
executed by Gregorio Balacano in favor of the spouses Rudy
Paragas and Corazon Paragas over lots 1175-E and 1175-F covered
by TCT Nos. T-103297 and T-103298, respectively;
2. ORDERING the cancellation of TCT Nos. T-258042 and T-258041
issued in the name of the spouses Rudy and Corazon Paragas by
virtue of the deed of sale; and
DECLARING the parcel of lands, lots 1175-E and 1175-F as part of the estate of the
deceased spouses Gregorio Balacano and Lorenza Balacano.[11]
In the assailed Decision dated 15 February 2005, the Court of Appeals affirmed
the Decision of the trial court, with the modification that Lots 1175-E and 1175-F were
adjudged as belonging to the estate of Gregorio Balacano. The appellate court
disposed as follows:
WHEREFORE, premises considered, the appeal is hereby DISMISSED. We AFFIRM the
appealed Decision for the reasons discussed above, with the MODIFICATION that Lots
1175-E and 1175-F belong to the estate of Gregorio Balacano.
Let a copy of this Decision be furnished the Office of the Bar Confidant for whatever
action her Office may take against Atty. De Guzman.[12] (Emphasis in the original.)
Herein petitioners motion for reconsideration was met with similar lack of
success when it was denied for lack of merit by the Court of Appeals in its Resolution
[13] dated 17 May 2005.
Hence, this appeal via a petition for review where petitioners assign the following
errors to the Court of Appeals, viz:
A. THE HONORABLE COURT OF APPEALS, WITH GRAVE ABUSE OF
DISCRETION, SERIOUSLY ERRED IN FINDING THAT THERE WAS NO
PERFECTED AND PARTIALLY EXECUTED CONTRACT OF SALE OVER LOTS
1175-E AND 1175-F PRIOR TO THE SIGNING OF THE DEED OF SALE.
B. THE HONORABLE COURT OF APPEALS, WITH GRAVE ABUSE OF 9
Sales
DISCRETION, SERIOUSLY FAILED TO APPRECIATE THE SIGNIFICANCE OF
THE JUDICIAL ADMISSION ON THE AUTHENTICITY AND DUE EXECUTION
OF THE DEED OF SALE MADE BY THE RESPONDENTS DURING THE PRE-
TRIAL CONFERENCE.
C. THE HONORABLE COURT OF APPEALS, WITH GRAVE ABUSE OF
DISCRETION, BASED ITS CONCLUSION THAT GREGORIOS CONSENT TO
THE SALE OF THE LOTS WAS ABSENT MERELY ON SPECULATIONS AND
SURMISES.
D. THE HONORABLE COURT OF APPEALS, WITH GRAVE ABUSE OF
DISCRETION, SERIOUSLY ERRED IN NOT RULING ON THE ISSUE OF
RESPONDENTS LACK OF LEGAL CAPACITY TO SUE FOR NOT BEING THE
PROPER PARTIES IN INTEREST.
E. THE HONORABLE COURT OF APPEALS, WITH GRAVE ABUSE OF
DISCRETION, SERIOUSLY ERRED IN DISMISSING ATTY. ALEXANDER DE
GUZMAN AND ANTONIO AGCAOILI AS NOT CREDIBLE WITNESSES.[14]
At bottom is the issue of whether or not the Court of Appeals committed
reversible error in upholding the findings and conclusions of the trial court on the
nullity of the Deed of Sale purportedly executed between petitioners and the late
Gregorio Balacano.
To start, we held in Blanco v. Quasha[15] that this Court is not a trier of facts. As such,
it is not its function to examine and determine the weight of the evidence supporting
the assailed decision. Factual findings of the Court of Appeals, which are supported by
substantial evidence, are binding, final and conclusive upon the Supreme Court,[16]
 and carry even more weight when the said court affirms the factual findings of the
trial court. Moreover, well- entrenched is the prevailing jurisprudence that only errors
of law and not of facts are reviewable by this Court in a petition for review on certiorari
 under Rule 45 of the Revised Rules of Court.
The foregoing tenets in the case at bar apply with greater force to the petition
under consideration because the factual findings by the Court of Appeals are in full
agreement with that of the trial court.
Specifically, the Court of Appeals, in affirming the trial court, found that there
was no prior and perfected contract of sale that remained to be fully consummated.
The appellate court explained -
In support of their position, the defendants-appellants argue that at least a month
prior to Gregorios signing of the deed, Gregorio and the Spouses Paragas already
agreed on the sale of Lots 1175-E and 1175-F; and that, in fact, this agreement was
partially executed by Rudys payment to Gregorio of P50,000.00 before Gregorio
signed the deed at the hospital. In line with this position, defendants-appellants posit
that Gregorios consent to the sale should be determined, not at the time Gregorio
signed the deed of sale on July 18, 1996, but at the time when he agreed to sell the
property in June 1996 or a month prior to the deeds signing; and in June 1996,
Gregorio was of sound and disposing mind and his consent to the sale was in no wise
vitiated at that time. The defendants-appellants further argue that the execution or
signing of the deed of sale, however, irregular it might have been, does not affect the
validity of the previously agreed sale of the lots, as the execution or signing of the
deed is merely a formalization of a previously agreed oral contract.
...
In the absence of any note, memorandum or any other written instrument evidencing
the alleged perfected contract of sale, we have to rely on oral testimonies, which in
this case is that of Atty. de Guzman whose testimony on the alleged oral agreement
may be summarized as follows: (1) that sometime in the first week of June 1996,
Gregorio requested him (Atty. de Guzman) to prepare a deed of sale of two lots; (2)
Gregorio came to his firms office in the morning with a certain Doming Balacano, then
returned in the afternoon with Rudy; (3) he (Atty. de Guzman) asked Gregorio whether
he really intends to sell the lots; Gregorio confirmed his intention; (4) Gregorio and
Rudy left the law office at 5:00 p.m., leaving the certificates of title; (5) he prepared the
deed a day after Rudy and Gregorio came. With regard to the alleged partial execution
of this agreement, Atty. de Guzman said that he was told by Rudy that there was
already a partial payment of P50,000.00.
We do not consider Atty. de Guzmans testimony sufficient evidence to establish the
fact that there was a prior agreement between Gregorio and the Spouses Paragas on
the sale of Lots 1175-E and 1175-F. This testimony does not conclusively establish the
meeting of the minds between Gregorio and the Spouses Paragas on the price or
consideration for the sale of Lots 1175-E and 1175-F Atty. de Guzman merely declared
that he was asked by Gregorio to prepare a deed; he did not clearly narrate the details
of this agreement. We cannot assume that Gregorio and the Spouses Paragas agreed
to a P500,000.00 consideration based on Atty. de Guzmans bare assertion that
Gregorio asked him to prepare a deed, as Atty. de Guzman was not personally aware
of the agreed consideration in the sale of the lots, not being privy to the parties
agreement. To us, Rudy could have been a competent witness to testify on the
perfection of this prior contract; unfortunately, the defendants-appellants did not
present Rudy as their witness.
We seriously doubt too the credibility of Atty. de Guzman as a witness. We cannot rely
on his testimony because of his tendency to commit falsity. He admitted in open court
that while Gregorio signed the deed on July 18, 1996 at Bayombong, Nueva Vizcaya, he
nevertheless did not reflect these matters when he notarized the deed; instead he
entered Santiago City and July 22, 1996, as place and date of execution, respectively.
To us, Atty. de Guzmans propensity to distort facts in the performance of his public
functions as a notary public, in utter disregard of the significance of the act of
notarization, seriously affects his credibility as a witness in the present case. In fact,
Atty. de Guzmans act in falsifying the entries in his acknowledgment of the deed of
sale could be the subject of administrative and disciplinary action, a matter that we
however do not here decide.
Similarly, there is no conclusive proof of the partial execution of the contract because
the only evidence the plaintiffs-appellants presented to prove this claim was Atty. de
Guzmans testimony, which is hearsay and thus, has no probative value. Atty. de
Guzman merely stated that Rudy told him that Rudy already gave P50,000.00 to
Gregorio as partial payment of the purchase price; Atty. de Guzman did not personally 10
Sales
see the payment being made.[17]
But, did Gregorio give an intelligent consent to the sale of Lots 1175-E and 1175-
F when he signed the deed of sale? The trial court as well as the appellate court found
in the negative. In the Court of Appeals rationale-
It is not disputed that when Gregorio signed the deed of sale, Gregorio was seriously
ill, as he in fact died a week after the deeds signing. Gregorio died of complications
caused by cirrhosis of the liver. Gregorios death was neither sudden nor immediate;
he fought at least a month-long battle against the disease until he succumbed to
death on July 22, 1996. Given that Gregorio purportedly executed a deed during the
last stages of his battle against his disease, we seriously doubt whether Gregorio could
have read, or fully understood, the contents of the documents he signed or of the
consequences of his act. We note in this regard that Gregorio was brought to the
Veterans Hospital at Quezon City because his condition had worsened on or about the
time the deed was allegedly signed. This transfer and fact of death not long after
speak volumes about Gregorios condition at that time. We likewise see no conclusive
evidence that the contents of the deed were sufficiently explained to Gregorio before
he affixed his signature. The evidence the defendants-appellants offered to prove
Gregorios consent to the sale consists of the testimonies of Atty. de Guzman and
Antonio. As discussed above, we do not find Atty. de Guzman a credible witness. Thus,
we fully concur with the heretofore-quoted lower courts evaluation of the testimonies
given by Atty. de Guzman and Antonio because this is an evaluation that the lower
court was in a better position to make.
Additionally, the irregular and invalid notarization of the deed is a falsity that raises
doubts on the regularity of the transaction itself. While the deed was indeed signed on
July 18, 1996 at Bayombong, Nueva Vizcaya, the deed states otherwise, as it shows
that the deed was executed on July 22, 1996 at Santiago City. Why such falsity was
committed, and the circumstances under which this falsity was committed, speaks
volume about the regularity and the validity of the sale. We cannot but consider the
commission of this falsity, with the indispensable aid of Atty. de Guzman, an
orchestrated attempt to legitimize a transaction that Gregorio did not intend to be
binding upon him nor on his bounty.
Article 24 of the Civil Code tells us that in all contractual, property or other relations,
when one of the parties is at a disadvantage on account of his moral dependence,
ignorance, indigence, mental weakness, tender age or other handicap, the courts must
be vigilant for his protection.[18]
Based on the foregoing, the Court of Appeals concluded that Gregorios consent
to the sale of the lots was absent, making the contract null and void. Consequently,
the spouses Paragas could not have made a subsequent transfer of the property to
Catalino Balacano. Indeed, nemo dat quod non habet. Nobody can dispose of that which
does not belong to him.[19]
We likewise find to be in accord with the evidence on record the ruling of the
Court of Appeals declaring the properties in controversy as paraphernal properties of
Gregorio in the absence of competent evidence on the exact date of Gregorios
acquisition of ownership of these lots.
On the credibility of witnesses, it is in rhyme with reason to believe the
testimonies of the witnesses for the complainants vis--vis those of the defendants. In
the assessment of the credibility of witnesses, we are guided by the following well-
entrenched rules: (1) that evidence to be believed must not only spring from the
mouth of a credible witness but must itself be credible, and (2) findings of facts and
assessment of credibility of witness are matters best left to the trial court who had the
front-line opportunity to personally evaluate the witnesses demeanor, conduct, and
behavior while testifying.[20]
In the case at bar, we agree in the trial courts conclusion that petitioners star
witness, Atty. De Guzman is far from being a credible witness. Unlike this Court, the
trial court had the unique opportunity of observing the demeanor of said witness.
Thus, we affirm the trial court and the Court of Appeals uniform decision based on the
whole evidence in record holding the Deed of Sale in question to be null and void.
In Domingo v. Court of Appeals,[21] the Court declared as null and void the deed of sale
therein inasmuch as the seller, at the time of the execution of the alleged contract,
was already of advanced age and senile. We held
. . . She died an octogenarian on March 20, 1966, barely over a year when the deed
was allegedly executed on January 28, 1965, but before copies of the deed were
entered in the registry allegedly on May 16 and June 10, 1966. The general rule is that
a person is not incompetent to contract merely because of advanced years or by
reason of physical infirmities. However, when such age or infirmities have impaired
the mental faculties so as to prevent the person from properly, intelligently, and firmly
protecting her property rights then she is undeniably incapacitated. The unrebutted
testimony of Zosima Domingo shows that at the time of the alleged execution of the
deed, Paulina was already incapacitated physically and mentally. She narrated that
Paulina played with her waste and urinated in bed. Given these circumstances, there
is in our view sufficient reason to seriously doubt that she consented to the sale of
and the price for her parcels of land. Moreover, there is no receipt to show that said
price was paid to and received by her. Thus, we are in agreement with the trial courts
finding and conclusion on the matter: . . .
In the case at bar, the Deed of Sale was allegedly signed by Gregorio on his death
bed in the hospital. Gregorio was an octogenarian at the time of the alleged execution
of the contract and suffering from liver cirrhosis at that circumstances which raise
grave doubts on his physical and mental capacity to freely consent to the contract.
Adding to the dubiety of the purported sale and further bolstering respondents claim
that their uncle Catalino, one of the children of the decedent, had a hand in the
execution of the deed is the fact that on 17 October 1996, petitioners sold a portion of
Lot 1175-E consisting of 6,416 square meters to Catalino for P60,000.00.[22] One need
not stretch his imagination to surmise that Catalino was in cahoots with petitioners in
maneuvering the alleged sale.
On the whole, we find no reversible error on the part of the appellate court in CA
-G.R. CV No. 64048 that would warrant the reversal thereof.
WHEREFORE, the present petition is hereby DENIED. Accordingly, the Decision[23]
 and the Resolution,[24] dated 15 February 2005 and 17 May 2005, respectively, of the11
Sales
Court of Appeals in CA-G.R. CV No. 64048 are hereby AFFIRMED. No costs. HEIRS OF IGNACIA AGUILAR-REYES, petitioners, vs. SPOUSES CIPRIANO MIJARES AND
SO ORDERED. FLORENTINA MIJARES, respondents.

Under the regime of the Civil Code, the alienation or encumbrance of a conjugal
real property requires the consent of the wife. The absence of such consent renders
the entire transaction[1] merely voidable and not void.[2] The wife may, during the
marriage and within ten years from the transaction questioned, bring an action for the
annulment of the contract entered into by her husband without her consent.[3]
Assailed in this petition for review on certiorari are the January 26, 2000 Decision[4]
 and June 19, 2000, Resolution[5] of the Court of Appeals in CA-G.R. No. 28464 which
declared respondents as purchasers in good faith and set aside the May 31, 1990 and
June 29, 1990 Orders of the Regional Trial Court of Quezon City, Branch 101, in Civil
Case No. Q-48018.
The controversy stemmed from a dispute over Lot No. 4349-B-2,[6]
 approximately 396 square meters, previously covered by Transfer Certificate of Title
(TCT) No. 205445, located in Balintawak, Quezon City and registered in the name of
Spouses Vicente Reyes and Ignacia Aguilar-Reyes.[7] Said lot and the apartments built
thereon were part of the spouses conjugal properties having been purchased using
conjugal funds from their garments business.[8]
Vicente and Ignacia were married in 1960, but had been separated de facto since
1974.[9] Sometime in 1984, Ignacia learned that on March 1, 1983, Vicente sold Lot No.
4349-B-2 to respondent spouses Cipriano and Florentina Mijares for P40,000.00.[10] As
a consequence thereof, TCT No. 205445 was cancelled and TCT No. 306087 was issued
on April 19, 1983 in the name of respondent spouses.[11] She likewise found out that
Vicente filed a petition for administration and appointment of guardian with the
Metropolitan Trial Court of Quezon City, Branch XXI. Vicente misrepresented therein
that his wife, Ignacia, died on March 22, 1982, and that he and their 5 minor children
were her only heirs.[12] On September 29, 1983, the court appointed Vicente as the
guardian of their minor children.[13] Subsequently, in its Order dated October 14, 1983,
the court authorized Vicente to sell the estate of Ignacia.[14]
On August 9, 1984, Ignacia, through her counsel, sent a letter to respondent
spouses demanding the return of her share in the lot. Failing to settle the matter
amicably, Ignacia filed on June 4, 1996 a complaint[15] for annulment of sale against
respondent spouses. The complaint was thereafter amended to include Vicente Reyes
as one of the defendants.[16]
In their answer, respondent spouses claimed that they are purchasers in good
faith and that the sale was valid because it was duly approved by the court.[17] Vicente
Reyes, on the other hand, contended that what he sold to the spouses was only his
share in Lot No. 4349-B-2, excluding the share of his wife, and that he never
represented that the latter was already dead.[18] He likewise testified that respondent
spouses, through the counsel they provided him, took advantage of his illiteracy by
filing a petition for the issuance of letters of administration and appointment of
guardian without his knowledge.[19]
On February 15, 1990, the court a quo rendered a decision declaring the sale of 12
Sales
Lot No. 4349-B-2 void with respect to the share of Ignacia. It held that the purchase
price of the lot was P110,000.00 and ordered Vicente to return thereof or P55,000.00
to respondent spouses. The dispositive portion of the said decision, reads-
WHEREFORE, premises above considered, judgment is hereby rendered declaring the
subject Deed of Absolute Sale, dated March [1,] 1983 signed by and between
defendants Vicente Reyes and defendant Cipriano Mijares NULL AND VOID WITH
RESPECT TO ONE-HALF (1/2) OF THE SAID PROPERTY;
The Register of Deeds of Quezon City is hereby ordered to cancel TCT No. 306083 (sic)
in the names of defendant spouses Cipriano Mijares and Florentina Mijares and to
issue a new TCT in the name of the plaintiff Ignacia Aguilar-Reyes as owner in fee
simple of one-half (1/2) of said property and the other half in the names of defendant
spouses Cipriano Mijares and Florentin[a] Mijares, upon payment of the required fees
therefore;
Said defendant spouses Mijares are also ordered to allow plaintiff the use and
exercise of rights, as well as obligations, pertinent to her one-half (1/2) ownership of
the subject property;
Defendant Vicente Reyes is hereby ordered to reimburse P55,000.00 with legal rate of
interest from the execution of the subject Deed of Absolute Sale on March 1, 1983, to
the defendant spouses Cipriano Mijares and Florentina Mijares which corresponds to
the one-half (1/2) of the actual purchase price by the said Mijares but is annulled in
this decision (sic);
Defendant Vicente Reyes is hereby further ordered to pay plaintiff the amount of
P50,000.00 by way of moral and exemplary damages, plus costs of this suit.
SO ORDERED.[20]
Ignacia filed a motion for modification of the decision praying that the sale be
declared void in its entirety and that the respondents be ordered to reimburse to her
the rentals they collected on the apartments built on Lot No. 4349-B-2 computed from
March 1, 1983.
On May 31, 1990, the trial court modified its decision by declaring the sale void in
its entirety and ordering Vicente Reyes to reimburse respondent spouses the
purchase price of P110,000, thus
WHEREFORE, premises considered, judgment is hereby rendered declaring the subject
Deed of Absolute Sale, dated March 1, 1983 signed by and between defendants
Vicente Reyes and defendant Cipriano Mijares as null and void ab initio, in view of the
absence of the wifes conformity to said transaction.
Consequent thereto, the Register of Deeds for Quezon City is hereby ordered to
cancel TCT No. 306083 (sic) in the name of Cipriano Mijares and Florentin[a] Mijares
and issue a new TCT in the name of the plaintiff and defendant Ignacia Aguilar-Reyes
and Vicente Reyes as owners in fee simple, upon payment of required fees therefore.
Defendant Vicente Reyes is hereby ordered to pay the amount of one hundred ten
thousand pesos (P110,000.00) with legal rate of interest at 12% per annum from the
execution of the subject Deed of Absolute Sale on March 1, 1983.
Further, defendant Vicente Reyes is ordered to pay the amount of P50,000.00 by way
of moral and exemplary damages, plus costs of this suit.
SO ORDERED.[21]
On motion[22] of Ignacia, the court issued an Order dated June 29, 1990
amending the dispositive portion of the May 31, 1990 decision by correcting the
Transfer Certificate of Title of Lot No. 4349-B-2, in the name of Cipriano Mijares and
Florentina Mijares, from TCT No. 306083 to TCT No. 306087; and directing the Register
of Deeds of Quezon City to issue a new title in the name of Ignacia Aguilar-Reyes and
Vicente Reyes. The Order likewise specified that Vicente Reyes should pay Ignacia
Aguilar-Reyes the amount of P50,000.00 as moral and exemplary damages.[23]
Both Ignacia Aguilar-Reyes and respondent spouses appealed the decision to the
Court of Appeals.[24] Pending the appeal, Ignacia died and she was substituted by her
compulsory heirs.[25]
Petitioners contended that they are entitled to reimbursement of the rentals
collected on the apartment built on Lot No. 4349-B-2, while respondent spouses
claimed that they are buyers in good faith. On January 26, 2000, the Court of Appeals
reversed and set aside the decision of the trial court. It ruled that notwithstanding the
absence of Ignacias consent to the sale, the same must be held valid in favor of
respondents because they were innocent purchasers for value.[26] The decretal potion
of the appellate courts decision states
WHEREFORE, premises considered, the Decision appealed from and the Orders dated
May 31, 1990 and June 29, 1990, are SET ASIDE and in lieu thereof a new one is
rendered
1. Declaring the Deed of Absolute Sale dated March 1, 1983 executed by Vicente Reyes
in favor of spouses Cipriano and [Florentina] Mijares valid and lawful;
2. Ordering Vicente Reyes to pay spouses Mijares the amount of P30,000.00 as
attorneys fees and legal expenses; and
3. Ordering Vicente Reyes to pay spouses Mijares P50,000.00 as moral damages.
No pronouncement as to costs.
SO ORDERED.[27]
Undaunted by the denial of their motion for reconsideration,[28] petitioners filed
the instant petition contending that the assailed sale of Lot No. 4392-B-2 should be
annulled because respondent spouses were not purchasers in good faith.
The issues for resolution are as follows: (1) What is the status of the sale of Lot
No. 4349-B-2 to respondent spouses? (2) Assuming that the sale is annullable, should
it be annulled in its entirety or only with respect to the share of Ignacia? (3) Are
respondent spouses purchasers in good faith?
Articles 166 and 173 of the Civil Code,[29] the governing laws at the time the
assailed sale was contracted, provide:
Art.166. Unless the wife has been declared a non compos mentis or a spendthrift, or is
under civil interdiction or is confined in a leprosarium, the husband cannot alienate or
encumber any real property of the conjugal partnership without the wifes consent. If
she refuses unreasonably to give her consent, the court may compel her to grant the
same
Art. 173. The wife may, during the marriage and within ten years from the transaction
questioned, ask the courts for the annulment of any contract of the husband entered 13
Sales
into without her consent, when such consent is required, or any act or contract of the
husband which tends to defraud her or impair her interest in the conjugal partnership
property. Should the wife fail to exercise this right, she or her heirs after the
dissolution of the marriage, may demand the value of property fraudulently alienated
by the husband.
Pursuant to the foregoing provisions, the husband could not alienate or
encumber any conjugal real property without the consent, express or implied, of the
wife otherwise, the contract is voidable. Indeed, in several cases[30] the Court had
ruled that such alienation or encumbrance by the husband is void. The better view,
however, is to consider the transaction as merely voidable and not void.[31] This is
consistent with Article 173 of the Civil Code pursuant to which the wife could, during
the marriage and within 10 years from the questioned transaction, seek its
annulment.[32]
In the case of Heirs of Christina Ayuste v. Court of Appeals,[33] it was categorically held that
There is no ambiguity in the wording of the law. A sale of real property of the conjugal
partnership made by the husband without the consent of his wife is voidable. The
action for annulment must be brought during the marriage and within ten years from
the questioned transaction by the wife. Where the law speaks in clear and categorical
language, there is no room for interpretation there is room only for application.[34]
Likewise, in Spouses Guiang v. Court of Appeals,[35] the Court quoted with approval the
ruling of the trial court that under the Civil Code, the encumbrance or alienation of a
conjugal real property by the husband absent the wifes consent, is voidable and not
void. Thus
Under Article 166 of the Civil Code, the husband cannot generally alienate or
encumber any real property of the conjugal partnership without the wifes
consent. The alienation or encumbrance if so made however is not null and void. It is
merely voidable. The offended wife may bring an action to annul the said alienation or
encumbrance. Thus, the provision of Article 173 of the Civil Code of the Philippines, to
wit:
Art. 173. The wife may, during the marriage and within ten years from the transaction
questioned, ask the courts for the annulment of any contract of the husband entered
into without her consent, when such consent is required, or any act or contract of the
husband which tends to defraud her or impair her interest in the conjugal partnership
property. Should the wife fail to exercise this right, she or her heirs after the
dissolution of the marriage, may demand the value of property fraudulently alienated
by the husband.
This particular provision giving the wife ten (10) years x x x during [the] marriage to
annul the alienation or encumbrance was not carried over to the Family Code. It is
thus clear that any alienation or encumbrance made after August 3, 1988 when the
Family Code took effect by the husband of the conjugal partnership property without
the consent of the wife is null and void
In the case at bar, there is no dispute that Lot No. 4349-B-2, is a conjugal
property having been purchased using the conjugal funds of the spouses during the
subsistence of their marriage. It is beyond cavil therefore that the sale of said lot to
respondent spouses without the knowledge and consent of Ignacia is voidable. Her
action to annul the March 1, 1983 sale which was filed on June 4, 1986, before her
demise is perfectly within the 10 year prescriptive period under Article 173 of the Civil
Code. Even if we reckon the period from November 25, 1978 which was the date when
Vicente and the respondent spouses entered into a contract concerning Lot No. 4349-
B-2, Ignacias action would still be within the prescribed period.
Anent the second issue, the trial court correctly annulled the voidable sale of Lot
No. 4349-B-2 in its entirety. In Bucoy v. Paulino,[36] a case involving the annulment of sale
with assumption of mortgages executed by the husband without the consent of the
wife, it was held that the alienation or encumbrance must be annulled in its entirety
and not only insofar as the share of the wife in the conjugal property is
concerned. Although the transaction in the said case was declared void and not
merely voidable, the rationale for the annulment of the whole transaction is the same
thus
The plain meaning attached to the plain language of the law is that the contract, in its
entirety, executed by the husband without the wife's consent, may be annulled by the
wife. Had Congress intended to limit such annulment in so far as the contract shall
prejudice the wife, such limitation should have been spelled out in the statute. It is not
the legitimate concern of this Court to recast the law. As Mr. Justice Jose B. L. Reyes of
this Court and Judge Ricardo C. Puno of the Court of First Instance correctly stated,
[t]he rule (in the first sentence of Article 173) revokes Baello vs. Villanueva, 54 Phil. 213
and Coque vs. Navas Sioca, 45 Phil. 430, in which cases annulment was held to refer
only to the extent of the one-half interest of the wife
The necessity to strike down the contract of July 5, 1963 as a whole, not merely as to
the share of the wife, is not without its basis in the common-sense rule. To be
underscored here is that upon the provisions of Articles 161, 162 and 163 of the Civil
Code, the conjugal partnership is liable for many obligations while the conjugal
partnership exists. Not only that. The conjugal property is even subject to the payment
of debts contracted by either spouse before the marriage, as those for the payment of
fines and indemnities imposed upon them after the responsibilities in Article 161 have
been covered (Article 163, par. 3), if it turns out that the spouse who is bound thereby,
should have no exclusive property or if it should be insufficient. These are
considerations that go beyond the mere equitable share of the wife in the property.
These are reasons enough for the husband to be stopped from disposing of the
conjugal property without the consent of the wife. Even more fundamental is the fact
that the nullity is decreed by the Code not on the basis of prejudice but lack of
consent of an indispensable party to the contract under Article 166.[37]
With respect to the third issue, the Court finds that respondent spouses are not
purchasers in good faith. A purchaser in good faith is one who buys property of
another, without notice that some other person has a right to, or interest in, such
property and pays full and fair price for the same, at the time of such purchase, or
before he has notice of the claim or interest of some other persons in the
property. He buys the property with the belief that the person from whom he receives
the thing was the owner and could convey title to the property. A purchaser cannot 14
Sales
close his eyes to facts which should put a reasonable man on his guard and still claim
he acted in good faith.[38]
In the instant case, there existed circumstances that should have placed
respondent spouses on guard. The death certificate of Ignacia, shows that she died
on March 22, 1982. The same death certificate, however, reveals that (1) it was issued
by the Office of the Civil Registrar of Lubao Pampanga on March 10, 1982; (2) the
alleged death of Ignacia was reported to the Office of the Civil Registrar on March 4,
1982; and (3) her burial or cremation would be on March 8, 1982.[39] These obvious
flaws in the death certificate should have prompted respondents to investigate
further, especially so that respondent Florentina Mijares admitted on cross
examination that she asked for the death certificate of Ignacia because she was
suspicious that Ignacia was still alive.[40] Moreover, respondent spouses had all the
opportunity to verify the claim of Vicente that he is a widower because it was their
lawyer, Atty. Rodriguito S. Saet, who represented Vicente in the special proceedings
before the Metropolitan Trial Court.
Neither can respondent spouses rely on the alleged court approval of the
sale. Note that the Order issued by the Metropolitan Trial Court of Quezon City,
Branch XXXI, appointing Vicente as guardian of his 5 minor children, as well as the
Order authorizing him to sell the estate of Ignacia were issued only on September 29,
1983 and October 14, 1983, respectively. On the other hand, the sale of the entire Lot
No. 4349-B-2 to respondent spouses appears to have been made not on March 1,
1983, but even as early as November 25, 1978. In the Agreement dated November 25,
1978, Vicente in consideration of the amount of P110,000.00, sold to Cipriano Mijares
Lot No. 4349-B-2 on installment basis, with the first installment due on or before July
31, 1979.[41] This was followed by a Memorandum of Understanding executed on July
30, 1979, by Vicente and Cipriano (1) acknowledging Ciprianos receipt of Vicentes
down payment in the amount of P50,000.00; and (2) authorizing Florentina Mijares to
collect rentals.[42] On July 14, 1981, Vicente and Cipriano executed another
Memorandum of Agreement, stating, among other, that out of the purchase price of
P110,000.00 Vicente had remaining balance of P19,000.00.[43] Clearly therefore, the
special proceedings before the Metropolitan Trial Court of Quezon City, Branch XXXI,
could not have been the basis of respondent spouses claim of good faith because the
sale of Lot No. 4349-B-2 occurred prior thereto.
Respondent spouses cannot deny knowledge that at the time of the sale in 1978,
Vicente was married to Ignacia and that the latter did not give her conformity to the
sale. This is so because the 1978 Agreement described Vicente as married but the
conformity of his wife to the sale did not appear in the deed. Obviously, the execution
of another deed of sale in 1983 over the same Lot No. 4349-B-2, after the alleged
death of Ignacia on March 22, 1982, as well as the institution of the special
proceedings were, intended to correct the absence of Ignacias consent to the
sale. Even assuming that respondent spouses believed in good faith that Ignacia really
died on March 22, 1982, after they purchased the lot, the fact remains that the sale of
Lot No. 4349-B-2 prior to Ignacias alleged demise was without her consent and
therefore subject to annulment. The October 14, 1983 order authorizing the sale of
the estate of Ignacia, could not have validated the sale of Lot No. 4349-B-2 because
said order was issued on the assumption that Ignacia was already dead and that the
sale dated March 1, 1983 was never categorically approved in the said order.
The fact that the 5 minor children[44] of Vicente represented by the latter, signed
the March 1, 1983 deed of sale of Lot No. 4349-B-2 will not estop them from assailing
the validity thereof. Not only were they too young at that time to understand the
repercussions of the sale, they likewise had no right to sell the property of their
mother who, when they signed the deed, was very much alive.
If a voidable contract is annulled, the restoration of what has been given is
proper. The relationship between parties in any contract even if subsequently
annulled must always be characterized and punctuated by good faith and fair
dealing. Hence, for the sake of justice and equity, and in consonance with the salutary
principle of non-enrichment at anothers expense, the Court sustains the trial courts
order directing Vicente to refund to respondent spouses the amount of P110,000.00
which they have paid as purchase price of Lot No. 4349-B-2.[45] The court a quo
 correctly found that the subject of the sale was the entire Lot No. 4349-B-2 and that
the consideration thereof is not P40,000.00 as stated in the March 1, 1983 deed of
sale, but P110,000.00 as evidenced by the (1) Agreement dated November 25, 1978 as
well as the July 30, 1979 Memorandum of Understanding and the July 14, 1981
Memorandum of Agreement which served as receipts of the installment payments
made by respondent Cipriano Mijares; and (2) the receipt duly signed by Vicente Reyes
acknowledging receipt of the amount of P110,000.00 from respondent spouses as
payment of the sale of the controverted lot.[46]
The trial court, however, erred in imposing 12% interest per annum on the
amount due the respondents. In Eastern Shipping Lines, Inc. v. Court of Appeals,[47] it was held
that interest on obligations not constituting a loan or forbearance of money is six
percent (6%) annually. If the purchase price could be established with certainty at the
time of the filing of the complaint, the six percent (6%) interest should be computed
from the date the complaint was filed until finality of the decision. In Lui v. Loy,[48]
 involving a suit for reconveyance and annulment of title filed by the first buyer against
the seller and the second buyer, the Court, ruling in favor of the first buyer and
annulling the second sale, ordered the seller to refund to the second buyer (who was
not a purchaser in good faith) the purchase price of the lots. It was held therein that
the 6% interest should be computed from the date of the filing of the complaint by the
first buyer. After the judgment becomes final and executory until the obligation is
satisfied, the amount due shall earn interest at 12% per year, the interim period being
deemed equivalent to a forbearance of credit.[49]
Accordingly, the amount of P110,000.00 due the respondent spouses which
could be determined with certainty at the time of the filing of the complaint shall earn
6% interest per annum from June 4, 1986 until the finality of this decision. If the
adjudged principal and the interest (or any part thereof) remain unpaid thereafter, the
interest rate shall be twelve percent (12%) per annum computed from the time the
judgment becomes final and executory until it is fully satisfied.
Petitioners prayer for payment of rentals should be denied. Other than the 15
Sales
allegation of Ignacia in her Sinumpaang Salaysay that the apartments could be rented -Reyes, the amounts of P25,000.00 as moral damages and P25,000.00 as exemplary
at P1,000.00 a month, no other evidence was presented to substantiate her claim. In damages.
awarding rentals which are in the nature of actual damages, the Court cannot rely on SO ORDERED.
mere assertions, speculations, conjectures or guesswork but must depend on
competent proof and on the best evidence obtainable regarding the actual amount of
loss.[50] None, having been presented in the case at bar, petitioners claim for rentals
must be denied.
While as a general rule, a party who has not appealed is not entitled to
affirmative relief other than the ones granted in the decision of the court below, law
and jurisprudence authorize a tribunal to consider errors, although unassigned, if they
involve (1) errors affecting the lower courts jurisdiction over the subject matter, (2)
plain errors not specified, and (3) clerical errors.[51] In this case, though defendant
Vicente Reyes did not appeal, the plain error committed by the court a quo as to the
award of moral and exemplary damages must be corrected. These awards cannot be
lumped together as was done by the trial court.[52]Moral and exemplary damages are
different in nature, and require separate determination. Moral damages are awarded
where the claimant experienced physical suffering, mental anguish, fright, serious
anxiety, besmirched reputation, wounded feelings, moral shock, social humiliation,
and similar injury as a result of the act complained of.[53] The award of exemplary
damages, on the other hand, is warranted when moral, temperate, liquidated, or
compensatory damages were likewise awarded by the court.[54]
Hence, the trial courts award of P50,000.00 by way of moral and exemplary
damages should be modified. Vicente Reyes should be ordered to pay the amounts of
P25,000.00 as moral damages and P25,000.00 as exemplary damages. Since Vicente
Reyes was among the heirs substituted to the late Ignacia Aguilar-Reyes, payment of
moral and exemplary damages must be made by Vicente to his children, petitioners in
this case.
WHEREFORE, in view of all the foregoing, the petition is PARTIALLY
GRANTED. The January 26, 2000 Decision and June 19, 2002, Resolution of the Court of
Appeals in CA-G.R. No. 28464 are REVERSED and SET ASIDE. The May 31, 1990 Order of
the Regional Trial Court of Quezon City, Branch 101, in Civil Case No. Q-48018, which
annulled the March 1, 1983 Deed of Absolute Sale over Lot No. 4349-B-2, and ordered
the Register of Deeds of Quezon City to cancel TCT No. 306087 in the name of
respondent spouses Cipriano Mijares and Florentina Mijares covering the same
property; as well as the June 29, 1990 Order correcting the typographical errors in the
order dated March 1, 1983, are REINSTATED, with the following MODIFICATIONS
(1) The Register of Deeds of Quezon City is ordered to issue a new certificate of
title over Lot No. 4349-B-2, in the name of petitioners as co-owners thereof;
(2) Vicente Reyes is ordered to reimburse the respondent spouses the amount of
P110,000.00 as purchase price of Lot No. 4349-B-2, with interest at 6% per annum
from June 4, 1986, until finality of this decision. After this decision becomes final,
interest at the rate of 12% per annum on the principal and interest (or any part
thereof) shall be imposed until full payment.
(3) Defendant Vicente Reyes is ordered to pay the heirs of the late Ignacia Aguilar 16
Sales
Spouses ANTONIO and LUZVIMINDA GUIANG, petitioners, vs. COURT OF APPEALS
and GILDA CORPUZ, respondents.
The sale of a conjugal property requires the consent of both the husband and
the wife. The absence of the consent of one renders the sale null and void, while the
vitiation thereof makes it merely voidable.Only in the latter case can ratification cure
the defect.
The Case
These were the principles that guided the Court in deciding this petition for
review of the Decision[1] dated January 30, 1996 and the Resolution[2] dated May 28,
1996, promulgated by the Court of Appeals in CA-GR CV No. 41758, affirming the
Decision of the lower court and denying reconsideration, respectively.
On May 28, 1990, Private Respondent Gilda Corpuz filed an Amended Complaint
[3] against her husband Judie Corpuz and Petitioners-Spouses Antonio and Luzviminda
Guiang. The said Complaint sought the declaration of a certain deed of sale, which
involved the conjugal property of private respondent and her husband, null and
void. The case was raffled to the Regional Trial Court of Koronadal, South Cotabato,
Branch 25. In due course, the trial court rendered a Decision[4] dated September 9,
1992, disposing as follows:[5]
ACCORDINGLY, judgment is rendered for the plaintiff and against the
defendants,
1. Declaring both the Deed of Transfer of Rights dated March 1, 1990 (Exh. A) and the
amicable settlement dated March 16, 1990 (Exh. B) as null and void and of no effect;
2. Recognizing as lawful and valid the ownership and possession of plaintiff Gilda
Corpuz over the remaining one-half portion of Lot 9, Block 8, (LRC) Psd-165409 which
has been the subject of the Deed of Transfer of Rights (Exh. A);
3. Ordering plaintiff Gilda Corpuz to reimburse defendants Luzviminda and Antonio
Guiang the amount of NINE THOUSAND (P9,000.00) PESOS corresponding to the
payment made by defendants Guiangs to Manuel Callejo for the unpaid balance of the
account of plaintiff in favor of Manuel Callejo, and another sum of P379.62
representing one-half of the amount of realty taxes paid by defendants Guiangs on
Lot 9, Block 8, (LRC) Psd-165409, both with legal interests thereon computed from the
finality of the decision.
No pronouncement as to costs in view of the factual circumstances of the case.
Dissatisfied, petitioners-spouses filed an appeal with the Court of
Appeals. Respondent Court, in its challenged Decision, ruled as follows:[6]
WHEREFORE, the appealed decision of the lower court in Civil Case No. 204
is hereby AFFIRMED by this Court. No costs considering plaintiff-appellees
failure to file her brief, despite notice.
Reconsideration was similarly denied by the same court in its assailed
Resolution:[7]
Finding that the issues raised in defendants-appellants motion for
reconsideration of Our decision in this case of January 30, 1996, to be a
mere rehash of the same issues which We have already passed upon in the
said decision, and there [being] no cogent reason to disturb the same, this
Court RESOLVES to DENY the instant motion for reconsideration for lack of
merit.
The Facts
The facts of this case are simple. Over the objection of private respondent and
while she was in Manila seeking employment, her husband sold to the petitioners-
spouses one half of their conjugal property, consisting of their residence and the lot
on which it stood. The circumstances of this sale are set forth in the Decision of
Respondent Court, which quoted from the Decision of the trial court, as follows:[8]
1. Plaintiff Gilda Corpuz and defendant Judie Corpuz are legally married
spouses. They were married on December 24, 1968 in Bacolod City, before a
judge. This is admitted by defendants-spouses Antonio and Luzviminda
Guiang in their answer, and also admitted by defendant Judie Corpuz when
he testified in court (tsn. p..3, June 9, 1992), although the latter says that
they were married in 1967. The couple have three children, namely: Junie 18
years old, Harriet 17 years of age, and Jodie or Joji, the youngest, who was
15 years of age in August, 1990 when her mother testified in court.
Sometime on February 14, 1983, the couple Gilda and Judie Corpuz, with
plaintiff-wife Gilda Corpuz as vendee, bought a 421 sq. meter lot located in
Barangay Gen. Paulino Santos (Bo. 1), Koronadal, South Cotabato, and
particularly known as Lot 9, Block 8, (LRC) Psd-165409 from Manuel Callejo
who signed as vendor through a conditional deed of sale for a total
consideration of P14,735.00. The consideration was payable in installment,
with right of cancellation in favor of vendor should vendee fail to pay three
successive installments (Exh. 2, tsn. p. 6, February 14, 1990).
2. Sometime on April 22, 1988, the couple Gilda and Judie Corpuz sold one-
half portion of their Lot No. 9, Block 8, (LRC) Psd-165409 to the defendants-
spouses Antonio and Luzviminda Guiang. The latter have since then
occupied the one-half portion [and] built their house thereon (tsn. p. 4, May
22, 1992). They are thus adjoining neighbors of the Corpuzes.
3. Plaintiff Gilda Corpuz left for Manila sometime in June 1989. She was
trying to look for work abroad, in [the] Middle East. Unfortunately, she
became a victim of an unscrupulous illegal recruiter. She was not able to go
abroad. She stayed for sometime in Manila however, coming back to
Koronadal, South Cotabato, x x x on March 11, 1990. Plaintiffs departure for
Manila to look for work in the Middle East was with the consent of her
husband Judie Corpuz (tsn. p. 16, Aug.12, 1990; p. 10, Sept. 6, 1991).
After his wifes departure for Manila, defendant Judie Corpuz seldom went
home to the conjugal dwelling. He stayed most of the time at his place of
work at Samahang Nayon Building, a hotel, restaurant, and a
cooperative. Daughter Harriet Corpuz went to school at Kings College, Bo. 1,
Koronadal, South Cotabato, but she was at the same time working as
household help of, and staying at, the house of Mr. Panes. Her brother Junie
was not working. Her younger sister Jodie (Joji) was going to school. Her
mother sometimes sent them money (tsn. p. 14, Sept. 6, 1991). 17
Sometime in January 1990, Harriet Corpuz learned that her father intended
Sales
to sell the remaining one-half portion including their house, of their homelot
to defendants Guiangs. She wrote a letter to her mother informing her. She
[Gilda Corpuz] replied that she was objecting to the sale. Harriet, however,
did not inform her father about this; but instead gave the letter to Mrs.
Luzviminda Guiang so that she [Guiang] would advise her father (tsn. pp. 16-
17, Sept. 6, 1991).
4. However, in the absence of his wife Gilda Corpuz, defendant Judie Corpuz
pushed through the sale of the remaining one-half portion of Lot 9, Block 8,
(LRC) Psd-165409. On March 1, 1990, he sold to defendant Luzviminda
Guiang thru a document known as Deed of Transfer of Rights (Exh. A) the
remaining one-half portion of their lot and the house standing thereon for a
total consideration of P30,000.00 of which P5,000.00 was to be paid in June ,
1990. Transferor Judie Corpuzs children Junie and Harriet signed the
document as witnesses.
Four (4) days after March 1, 1990 or on March 5, 1990, obviously to cure
whatever defect in defendant Judie Corpuzs title over the lot transferred,
defendant Luzviminda Guiang as vendee executed another agreement over
Lot 9, Block 8, (LRC) Psd-165408 (Exh. 3), this time with Manuela Jimenez
Callejo, a widow of the original registered owner from whom the couple
Judie and Gilda Corpuz originally bought the lot (Exh. 2), who signed as
vendor for a consideration of P9,000.00. Defendant Judie Corpuz signed as a
witness to the sale (Exh. 3-A). The new sale (Exh. 3) describes the lot sold as
Lot 8, Block 9, (LRC) Psd-165408 but it is obvious from the mass of evidence
that the correct lot is Lot 8, Block 9, (LRC) Psd-165409, the very lot earlier
sold to the couple Gilda and Judie Corpuz.
5. Sometime on March 11, 1990, plaintiff returned home. She found her
children staying with other households. Only Junie was staying in their
house. Harriet and Joji were with Mr. Panes. Gilda gathered her children
together and stayed at their house. Her husband was nowhere to be
found. She was informed by her children that their father had a wife
already.
6. For staying in their house sold by her husband, plaintiff was complained
against by defendant Luzviminda Guiang and her husband Antonio Guiang
before the Barangay authorities of Barangay General Paulino Santos (Bo. 1),
Koronadal, South Cotabato, for trespassing (tsn. p. 34, Aug. 17, 1990). The
case was docketed by the barangay authorities as Barangay Case No. 38 for
trespassing. On March 16, 1990, the parties thereat signed a document
known as amicable settlement. In full, the settlement provides for, to wit:
That respondent, Mrs. Gilda Corpuz and her three children,
namely: Junie, Hariet and Judie to leave voluntarily the house of
Mr. and Mrs. Antonio Guiang, where they are presently boarding
without any charge, on or before April 7, 1990.
FAIL NOT UNDER THE PENALTY OF THE LAW.
Believing that she had received the shorter end of the bargain, plaintiff went
to the Barangay Captain of Barangay Paulino Santos to question her
signature on the amicable settlement. She was referred however to the
Officer-In-Charge at the time, a certain Mr. de la Cruz. The latter in turn told
her that he could not do anything on the matter (tsn. p. 31, Aug. 17, 1990).
This particular point was not rebutted. The Barangay Captain who testified
did not deny that Mrs. Gilda Corpuz approached him for the annulment of
the settlement. He merely said he forgot whether Mrs. Corpuz had
approached him (tsn. p. 13, Sept. 26, 1990). We thus conclude that Mrs.
Corpuz really approached the Barangay Captain for the annulment of the
settlement. Annulment not having been made, plaintiff stayed put in her
house and lot.
7. Defendant-spouses Guiang followed thru the amicable settlement with a
motion for the execution of the amicable settlement, filing the same with
the Municipal Trial Court of Koronadal, South Cotabato.The proceedings
[are] still pending before the said court, with the filing of the instant suit.
8. As a consequence of the sale, the spouses Guiang spent P600.00 for the
preparation of the Deed of Transfer of Rights, Exh. A; P9,000.00 as the
amount they paid to Mrs. Manuela Callejo, having assumed the remaining
obligation of the Corpuzes to Mrs. Callejo (Exh. 3); P100.00 for the
preparation of Exhibit 3; a total of P759.62 basic tax and special educational
fund on the lot; P127.50 as the total documentary stamp tax on the various
documents; P535.72 for the capital gains tax; P22.50 as transfer tax; a
standard fee of P17.00; certification fee of P5.00. These expenses
particularly the taxes and other expenses towards the transfer of the title to
the spouses Guiangs were incurred for the whole Lot 9, Block 8, (LRC) Psd-
165409.
Ruling of Respondent Court
Respondent Court found no reversible error in the trial courts ruling that any
alienation or encumbrance by the husband of the conjugal property without the
consent of his wife is null and void as provided under Article 124 of the Family Code. It
also rejected petitioners contention that the amicable settlement ratified said sale,
citing Article 1409 of the Code which expressly bars ratification of the contracts
specified therein, particularly those prohibited or declared void by law.
Hence, this petition.[9]
The Issues
In their Memorandum, petitioners assign to public respondent the following
errors:[10]
I
Whether or not the assailed Deed of Transfer of Rights was validly executed.
II
Whether or not the Court of Appeals erred in not declaring as voidable
contract under Art. 1390 of the Civil Code the impugned Deed of Transfer of
Rights which was validly ratified thru the execution of the amicable
settlement by the contending parties.
18
III
Sales
Whether or not the Court of Appeals erred in not setting aside the findings
of the Court a quo which recognized as lawful and valid the ownership and
possession of private respondent over the remaining one half (1/2) portion
of the subject property.
In a nutshell, petitioners-spouses contend that (1) the contract of sale (Deed of
Transfer of Rights) was merely voidable, and (2) such contract was ratified by private
respondent when she entered into an amicable settlement with them.
This Courts Ruling
The petition is bereft of merit.
First Issue: Void or Voidable Contract?
Petitioners insist that the questioned Deed of Transfer of Rights was validly
executed by the parties-litigants in good faith and for valuable consideration. The
absence of private respondents consent merely rendered the Deed voidable under
Article 1390 of the Civil Code, which provides:
ART. 1390. The following contracts are voidable or annullable, even though
there may have been no damage to the contracting parties:
x x x x x x x x x
(2) Those where the consent is vitiated by mistake, violence, intimidation,
undue influence or fraud.
These contracts are binding, unless they are annulled by a proper action in
court. They are susceptible of ratification.(n)
The error in petitioners contention is evident. Article 1390, par. 2, refers to
contracts visited by vices of consent, i.e., contracts which were entered into by a
person whose consent was obtained and vitiated through mistake, violence,
intimidation, undue influence or fraud. In this instance, private respondents consent
to the contract of sale of their conjugal property was totally inexistent or absent. Gilda
Corpuz, on direct examination, testified thus:[11]
Q Now, on March 1, 1990, could you still recall where you were?
A I was still in Manila during that time.
x x x x x x x x x
ATTY. FUENTES:
Q When did you come back to Koronadal, South Cotabato?
A That was on March 11, 1990, Maam.
Q Now, when you arrived at Koronadal, was there any problem which arose concerning the ownership of
your residential house at Callejo Subdivision?
A When I arrived here in Koronadal, there was a problem which arose regarding my residential house and
lot because it was sold by my husband without my knowledge.
This being the case, said contract properly falls within the ambit of Article 124 of
the Family Code, which was correctly applied by the two lower courts:
ART. 124. The administration and enjoyment of the conjugal partnership
property shall belong to both spouses jointly. In case of disagreement, the
husbands decision shall prevail, subject to recourse to the court by the wife
for proper remedy, which must be availed of within five years from the date
of the contract implementing such decision.
In the event that one spouse is incapacitated or otherwise unable to
participate in the administration of the conjugal properties, the other
spouse may assume sole powers of administration. These powers do not
include the powers of disposition or encumbrance which must have the
authority of the court or the written consent of the other spouse. In the
absence of such authority or consent, the disposition or encumbrance shall be void. However,
the transaction shall be construed as a continuing offer on the part of the
consenting spouse and the third person, and may be perfected as a binding
contract upon the acceptance by the other spouse or authorization by the
court before the offer is withdrawn by either or both offerors.(165a) (Italics
supplied)
Comparing said law with its equivalent provision in the Civil Code, the trial court
adroitly explained the amendatory effect of the above provision in this wise:[12]
The legal provision is clear. The disposition or encumbrance is void. It
becomes still clearer if we compare the same with the equivalent provision
of the Civil Code of the Philippines. Under Article 166 of the Civil Code, the
husband cannot generally alienate or encumber any real property of the
conjugal partnership without the wifes consent. The alienation or
encumbrance if so made however is not null and void. It is merely
voidable. The offended wife may bring an action to annul the said alienation
or encumbrance. Thus, the provision of Article 173 of the Civil Code of the
Philippines, to wit:
Art. 173. The wife may, during the marriage and within ten years
from the transaction questioned, ask the courts for the
annulment of any contract of the husband entered into without
her consent, when such consent is required, or any act or
contract of the husband which tends to defraud her or impair
her interest in the conjugal partnership property. Should the
wife fail to exercise this right, she or her heirs after the
dissolution of the marriage, may demand the value of property
fraudulently alienated by the husband.(n)
This particular provision giving the wife ten (10) years x x x during [the]
marriage to annul the alienation or encumbrance was not carried over to
the Family Code. It is thus clear that any alienation or encumbrance made
after August 3, 1988 when the Family Code took effect by the husband of
the conjugal partnership property without the consent of the wife is null and
void.
Furthermore, it must be noted that the fraud and the intimidation referred to by
petitioners were perpetrated in the execution of the document embodying the
amicable settlement. Gilda Corpuz alleged during trial that barangay authorities made
her sign said document through misrepresentation and coercion.[13] In any event, its
execution does not alter the void character of the deed of sale between the husband
and the petitioners-spouses, as will be discussed later. The fact remains that such
contract was entered into without the wifes consent.
In sum, the nullity of the contract of sale is premised on the absence of private
respondents consent. To constitute a valid contract, the Civil Code requires the
concurrence of the following elements: (1) cause, (2) object, and (3) consent,[14] the last 19
Sales
element being indubitably absent in the case at bar.
Second Issue: Amicable Settlement
Insisting that the contract of sale was merely voidable, petitioners aver that it
was duly ratified by the contending parties through the amicable settlement they
executed on March 16, 1990 in Barangay Case No. 38.
The position is not well taken. The trial and the appellate courts have resolved
this issue in favor of the private respondent. The trial court correctly held:[15]
By the specific provision of the law [Art. 1390, Civil Code] therefore, the
Deed of Transfer of Rights (Exh. A) cannot be ratified, even by an amicable
settlement. The participation by some barangay authorities in the amicable
settlement cannot otherwise validate an invalid act. Moreover, it cannot be
denied that the amicable settlement (Exh. B) entered into by plaintiff Gilda
Corpuz and defendant spouses Guiang is a contract. It is a direct offshoot of
the Deed of Transfer of Rights (Exh. A). By express provision of law, such a
contract is also void. Thus, the legal provision, to wit:
Art. 1422. A contract which is the direct result of a previous
illegal contract, is also void and inexistent. (Civil Code of the
Philippines).
In summation therefore, both the Deed of Transfer of Rights (Exh. A) and
the amicable settlement (Exh. 3) are null and void.
Doctrinally and clearly, a void contract cannot be ratified.[16]
Neither can the amicable settlement be considered a continuing offer that was
accepted and perfected by the parties, following the last sentence of Article 124. The
order of the pertinent events is clear: afterthe sale, petitioners filed a complaint for
trespassing against private respondent, after which the barangay authorities secured
an amicable settlement and petitioners filed before the MTC a motion for its
execution.The settlement, however, does not mention a continuing offer to sell the
property or an acceptance of such a continuing offer. Its tenor was to the effect that
private respondent would vacate the property. By no stretch of the imagination, can
the Court interpret this document as the acceptance mentioned in Article 124.
WHEREFORE, the Court hereby DENIES the petition and AFFIRMS the challenged
Decision and Resolution. Costs against petitioners.
SO ORDERED.
CONCEPCION R. AINZA, substituted by her legal heirs, DR. NATIVIDAD A.
TULIAO, CORAZON A. JALECO and LILIA A. OLAYON, petitioners, vs.
SPOUSES ANTONIO PADUA and EUGENIA PADUA, respondents.
This petition for review on certiorari assails the February 24, 2004 decision of
the Court of Appeals in CA-G.R. CV No. 70239,[1] and its September 28, 2004
resolution, denying reconsideration thereof.[2]
In her complaint for partition of real property, annulment of titles with
damages,[3] Concepcion Ainza (Concepcion) alleged that respondent-spouses
Eugenia (Eugenia) and Antonio Padua (Antonio) owned a 216.40 sq. m. lot with an
unfinished residential house located at No. 85-A Durian corner Pajo Sts.,
Barangay Quirino 2-C, Project 2, Quezon City, covered by Transfer Certificate of
Title No. 271935. Sometime in April 1987, she bought one-half of an undivided
portion of the property from her daughter, Eugenia and the latters husband,
Antonio, for One Hundred Thousand Pesos (P100,000.00).
No Deed of Absolute Sale was executed to evidence the transaction, but
cash payment was received by the respondents, and ownership was transferred
to Concepcion through physical delivery to her attorney-in-fact and daughter,
Natividad Tuliao (Natividad). Concepcion authorized Natividad and the latters
husband, Ceferino Tuliao (Ceferino) to occupy the premises, and make
improvements on the unfinished building.
Thereafter, Concepcion alleged that without her consent, respondents
caused the subdivision of the property into three portions and registered it in
their names under TCT Nos. N-155122, N-155123 and N-155124 in violation of the
restrictions annotated at the back of the title.
On the other hand, Antonio averred that he bought the property in 1980
and introduced improvements thereon. Between 1989 and 1990, he and his wife,
Eugenia, allowed Natividad and Ceferino to occupy the premises temporarily. In
1994, they caused the subdivision of the property and three (3) separate titles
were issued.
Thereafter, Antonio requested Natividad to vacate the premises but the
latter refused and claimed that Concepcion owned the property. Antonio thus
filed an ejectment suit on April 1, 1999. Concepcion, represented by Natividad,
also filed on May 4, 1999 a civil case for partition of real property and annulment
of titles with damages.
Antonio claimed that his wife, Eugenia, admitted that Concepcion offered to
buy one third (1/3) of the property who gave her small amounts over several
years which totaled P100,000.00 by 1987 and for which she signed a receipt.
On January 9, 2001, the Regional Trial Court of Quezon City, Branch 85,
rendered judgment[4] in favor of Concepcion, the dispositive portion of which
states: 20
Sales
WHEREFORE, premises considered, judgment is hereby rendered in favor of the
plaintiff and against the defendants and ordering:
1. the subdivision of the subject property between the said plaintiff
and defendants in equal shares with one-half of the property,
including the portion occupied by the spouses Severino and
Natividad Tuliao to be awarded to the plaintiff;
2. the cancellation of Transfer Certificates of Title Nos. N-155122, N-
155123, N-155124 of the Registry of Deeds of Quezon City;
3. the defendants to pay to the plaintiff P50,000.00 as attorneys fees.
SO ORDERED.[5]
The trial court upheld the sale between Eugenia and Concepcion. It ruled
that the sale was consummated when both contracting parties complied with
their respective obligations. Eugenia transferred possession by delivering the
property to Concepcion who in turn paid the purchase price. It also declared that
the transfer of the property did not violate the Statute of Frauds because a fully
executed contract does not fall within its coverage.
On appeal by the respondents, the Court of Appeals reversed the decision
of the trial court, and declared the sale null and void. Applying Article 124 of the
Family Code, the Court of Appeals ruled that since the subject property is
conjugal, the written consent of Antonio must be obtained for the sale to be valid.
It also ordered the spouses Padua to return the amount of P100,000.00 to
petitioners plus interest.[6]
The sole issue for resolution in this petition for review is whether there was
a valid contract of sale between Eugenia and Concepcion.
A contract of sale is perfected by mere consent, upon a meeting of the
minds on the offer and the acceptance thereof based on subject matter, price
and terms of payment.[7]
In this case, there was a perfected contract of sale between Eugenia and
Concepcion. The records show that Eugenia offered to sell a portion of the
property to Concepcion, who accepted the offer and agreed to pay P100,000.00
as consideration. The contract of sale was consummated when both parties fully
complied with their respective obligations. Eugenia delivered the property to
Concepcion, who in turn, paid Eugenia the price of One Hundred Thousand Pesos
(P100,000.00), as evidenced by the receipt which reads:
R E C E I P T
Received the amount of ONE HUNDRED THOUSAND PESOS (P100,000.00) as
payment for the lot on 85-A Durian St., Project 2, Quezon City, from Mrs.
Concepcion R. Ainza, on April, 1987.
_______(Sgd.)______
Mrs.. Eugenia A. Padua[8]
The verbal contract of sale between Eugenia and Concepcion did not violate
the provisions of the Statute of Frauds that a contract for the sale of real property
shall be unenforceable unless the contract or some note or memorandum of the
sale is in writing and subscribed by the party charged or his agent.[9] When a
verbal contract has been completed, executed or partially consummated, as in
this case, its enforceability will not be barred by the Statute of Frauds, which
applies only to an executory agreement.[10] Thus, where one party has performed
his obligation, oral evidence will be admitted to prove the agreement.[11]
In the instant case, the oral contract of sale between Eugenia and
Concepcion was evidenced by a receipt signed by Eugenia. Antonio also stated
that his wife admitted to him that she sold the property to Concepcion.
It is undisputed that the subject property was conjugal and sold by Eugenia
in April 1987 or prior to the effectivity of the Family Code on August 3, 1988,
Article 254 of which repealed Title V, Book I of the Civil Code provisions on the
property relations between husband and wife. However, Article 256 thereof
limited its retroactive effect only to cases where it would not prejudice or impair
vested or acquired rights in accordance with the Civil Code or other laws. In the
case at bar, vested rights of Concepcion will be impaired or prejudiced by the
application of the Family Code; hence, the provisions of the Civil Code should be
applied.
In Felipe v. Heirs of Aldon, et al.,[12] the legal effect of a sale of conjugal properties
by the wife without the consent of the husband was clarified, to wit:
The legal ground which deserves attention is the legal effect of a sale of lands
belonging to the conjugal partnership made by the wife without the consent of
the husband.
It is useful at this point to re-state some elementary rules: The husband is the
administrator of the conjugal partnership. (Art. 165, Civil Code) Subject to certain
exceptions, the husband cannot alienate or encumber any real property of the
conjugal partnership without the wifes consent. (Art. 166, Idem.) And the wife
cannot bind the conjugal partnership without the husbands consent, except in
cases provided by law. (Art. 172, Idem.).
In the instant case, Gimena, the wife, sold lands belonging to the conjugal
partnership without the consent of the husband and the sale is not covered by
the phrase except in cases provided by law. The Court of Appeals described the
sale as invalid a term which is imprecise when used in relation to contracts
because the Civil Code uses specific names in designating defective contracts,
namely: rescissible (Arts. 1380 et seq.), voidable (Arts. 1390 et seq.), unenforceable (Arts.
1403, et seq.), and void or inexistent (Arts. 1409 et seq.).
The sale made by Gimena is certainly a defective contract but of what
category? The answer: it is a voidable contract.
According to Art. 1390 of the Civil Code, among the voidable contracts are [T]hose
where one of the parties is incapable of giving consent to the contract. (Par. 1.) In 21
Sales
the instant case Gimena had no capacity to give consent to the contract of sale. WHEREFORE, the petition is GRANTED. The decision dated February 24,
The capacity to give consent belonged not even to the husband alone but to both 2004 of the Court of Appeals in CA-G.R. CV No. 70239 and its resolution dated
spouses. September 28, 2004 are REVERSED and SET ASIDE. The decision dated January 9,
The view that the contract made by Gimena is a voidable contract is 2001 of the Regional Trial Court of Quezon City, Branch 85, in Civil Case No. Q-99-
supported by the legal provision that contracts entered by the husband 37529, is REINSTATED.
without the consent of the wife when such consent is required, are SO ORDERED.
annullable at her instance during the marriage and within ten years from
the transaction questioned. (Art. 173, Civil Code).
Gimenas contract is not rescissible for in such a contract all the essential
elements are untainted but Gimenas consent was tainted. Neither can the
contract be classified as unenforceable because it does not fit any of those
described in Art. 1403 of the Civil Code. And finally, the contract cannot be void or
inexistent because it is not one of those mentioned in Art. 1409 of the Civil Code.
By process of elimination, it must perforce be a voidable contract.
The voidable contract of Gimena was subject to annulment by her husband only
during the marriage because he was the victim who had an interest in the
contract. Gimena, who was the party responsible for the defect, could not ask for
its annulment. Their children could not likewise seek the annulment of the
contract while the marriage subsisted because they merely had an inchoate right
to the lands sold. (Emphasis supplied)
The consent of both Eugenia and Antonio is necessary for the sale of the
conjugal property to be valid. Antonios consent cannot be presumed.[13] Except
for the self-serving testimony of petitioner Natividad, there is no evidence that
Antonio participated or consented to the sale of the conjugal property. Eugenia
alone is incapable of giving consent to the contract. Therefore, in the absence of
Antonios consent, the disposition made by Eugenia is voidable.[14]
The contract of sale between Eugenia and Concepcion being an oral
contract, the action to annul the same must be commenced within six years from
the time the right of action accrued.[15] Eugenia sold the property in April 1987
hence Antonio should have asked the courts to annul the sale on or before April
1993. No action was commenced by Antonio to annul the sale, hence his right to
seek its annulment was extinguished by prescription.
Even assuming that the ten (10)-year prescriptive period under Art. 173
should apply, Antonio is still barred from instituting an action to annul the sale
because since April 1987, more than ten (10) years had already lapsed without
any such action being filed.
In sum, the sale of the conjugal property by Eugenia without the consent of
her husband is voidable. It is binding unless annulled. Antonio failed to exercise
his right to ask for the annulment within the prescribed period, hence, he is now
barred from questioning the validity of the sale between his wife and
Concepcion. 22
Sales
MANUEL O. FUENTES and LETICIA L. FUENTES,
Petitioners,
- versus -
CONRADO G. ROCA, ANNABELLE R. JOSON, ROSE MARIE R.
CRISTOBAL and PILAR MALCAMPO,
Respondents.
This case is about a husbands sale of conjugal real property, employing a
challenged affidavit of consent from an estranged wife. The buyers claim valid
consent, loss of right to declare nullity of sale, and prescription.
 
The Facts and the Case
 
Sabina Tarroza owned a titled 358-square meter lot in
Canelar, Zamboanga City. On October 11, 1982 she sold it to her son, Tarciano T.
Roca (Tarciano) under a deed of absolute sale.[1] But Tarciano did not for the
meantime have the registered title transferred to his name.
 
Six years later in 1988, Tarciano offered to sell the lot to petitioners Manuel and
Leticia Fuentes (the Fuentes spouses). They arranged to meet at the office of Atty.
Romulo D. Plagata whom they asked to prepare the documents of sale. They later
signed an agreement to sell that Atty. Plagata prepared[2] dated April 29, 1988,
which agreement expressly stated that it was to take effect in six months.
The agreement required the Fuentes spouses to pay Tarciano a down
payment of P60,000.00 for the transfer of the lots title to him. And, within six
months, Tarciano was to clear the lot of structures and occupants and secure the
consent of his estranged wife, Rosario Gabriel Roca (Rosario), to the sale. Upon
Tarcianos compliance with these conditions, the Fuentes spouses were to take
possession of the lot and pay him an additional P140,000.00 or P160,000.00,
depending on whether or not he succeeded in demolishing the house standing
on it. If Tarciano was unable to comply with these conditions, the Fuentes
spouses would become owners of the lot without any further formality and
payment.
 
The parties left their signed agreement with Atty. Plagata who then worked on
the other requirements of the sale. According to the lawyer, he went to
see Rosario in one of his trips to Manila and had her sign an affidavit of consent.
[3] As soon as Tarciano met the other conditions, Atty. Plagata notarized Rosarios
affidavit in Zamboanga City. On January 11, 1989 Tarciano executed a deed of
absolute sale[4] in favor of the Fuentes spouses. They then paid him the
additional P140,000.00 mentioned in their agreement. A new title was issued in
the name of the spouses[5] who immediately constructed a building on the
lot. On January 28, 1990 Tarciano passed away, followed by his wife Rosario who
died nine months afterwards.
 
Eight years later in 1997, the children of Tarciano and Rosario, namely,
respondents Conrado G. Roca, Annabelle R. Joson, and Rose Marie R. Cristobal,
together with Tarcianos sister, Pilar R. Malcampo, represented by her son, John
Paul M. Trinidad (collectively, the Rocas), filed an action for annulment of sale and
reconveyance of the land against the Fuentes spouses before the Regional Trial
Court (RTC) of Zamboanga City in Civil Case 4707. The Rocas claimed that the sale
to the spouses was void since Tarcianos wife, Rosario, did not give her consent to
it. Her signature on the affidavit of consent had been forged. They thus prayed
that the property be reconveyed to them upon reimbursement of the price that
the Fuentes spouses paid Tarciano.[6]
 
The spouses denied the Rocas allegations. They presented Atty. Plagata who
testified that he personally saw Rosario sign the affidavit at her residence in
Paco, Manila, on September 15, 1988. He admitted, however, that he notarized
the document in Zamboanga City four months later on January 11, 1989.[7] All the
same, the Fuentes spouses pointed out that the claim of forgery was personal
to Rosario and she alone could invoke it. Besides, the four-year prescriptive
period for nullifying the sale on ground of fraud had already lapsed.
Both the Rocas and the Fuentes spouses presented handwriting experts at the
trial. Comparing Rosarios standard signature on the affidavit with those on
various documents she signed, the Rocas expert testified that the signatures
were not written by the same person. Making the same comparison, the spouses
expert concluded that they were.[8]
On February 1, 2005 the RTC rendered judgment, dismissing the case. It ruled
that the action had already prescribed since the ground cited by the Rocas for
annulling the sale, forgery or fraud, already prescribed under Article 1391 of the
Civil Code four years after its discovery. In this case, the Rocas may be deemed to
have notice of the fraud from the date the deed of sale was registered with the
Registry of Deeds and the new title was issued. Here, the Rocas filed their action
in 1997, almost nine years after the title was issued to the Fuentes spouses
on January 18, 1989.[9]
Moreover, the Rocas failed to present clear and convincing evidence of the fraud.
Mere variance in the signatures of Rosario was not conclusive proof of forgery.[10]
 The RTC ruled that, although the Rocas presented a handwriting expert, the trial
court could not be bound by his opinion since the opposing expert witness 23
Sales
contradicted the same. Atty. Plagatas testimony remained technically unrebutted.
[11]
 
Finally, the RTC noted that Atty. Plagatas defective notarization of the affidavit of
consent did not invalidate the sale. The law does not require spousal consent to
be on the deed of sale to be valid. Neither does the irregularity vitiate Rosarios
consent. She personally signed the affidavit in the presence of Atty. Plagata.[12]
 
On appeal, the Court of Appeals (CA) reversed the RTC decision. The CA found
sufficient evidence of forgery and did not give credence to Atty. Plagatas
testimony that he saw Rosario sign the document in Quezon City. Its jurat said
differently. Also, upon comparing the questioned signature with the specimen
signatures, the CA noted significant variance between them. That Tarciano and
Rosario had been living separately for 30 years since 1958 also reinforced the
conclusion that her signature had been forged.
 
Since Tarciano and Rosario were married in 1950, the CA concluded that their
property relations were governed by the Civil Code under which an action for
annulment of sale on the ground of lack of spousal consent may be brought by
the wife during the marriage within 10 years from the transaction. Consequently,
the action that the Rocas, her heirs, brought in 1997 fell within 10 years of
the January 11, 1989 sale.
 
Considering, however, that the sale between the Fuentes spouses and Tarciano
was merely voidable, the CA held that its annulment entitled the spouses to
reimbursement of what they paid him plus legal interest computed from the
filing of the complaint until actual payment. Since the Fuentes spouses were also
builders in good faith, they were entitled under Article 448 of the Civil Code to
payment of the value of the improvements they introduced on the lot. The CA did
not award damages in favor of the Rocas and deleted the award of attorneys fees
to the Fuentes spouses.[13]
 
Unsatisfied with the CA decision, the Fuentes spouses came to this court by
petition for review.[14]
The Issues Presented
 
The case presents the following issues:
 
1. Whether or not Rosarios signature on the document of consent to her
husband Tarcianos sale of their conjugal land to the Fuentes spouses was forged;
 
2. Whether or not the Rocas action for the declaration of nullity of that
sale to the spouses already prescribed; and
3. Whether or not only Rosario, the wife whose consent was not had,
could bring the action to annul that sale.
 
The Courts Rulings
 
First. The key issue in this case is whether or not Rosarios signature on
the document of consent had been forged. For, if the signature were genuine, the
fact that she gave her consent to her husbands sale of the conjugal land would
render the other issues merely academic.
 
The CA found that Rosarios signature had been forged. The CA observed
a marked difference between her signature on the affidavit of consent[15] and her
specimen signatures.[16] The CA gave no weight to Atty. Plagatas testimony that
he saw Rosario sign the document in Manila on September 15, 1988 since this
clashed with his declaration in the jurat that Rosario signed the affidavit in
Zamboanga City on January 11, 1989.
 
The Court agrees with the CAs observation that Rosarios signature
strokes on the affidavit appears heavy, deliberate, and forced. Her specimen
signatures, on the other hand, are consistently of a lighter stroke and more
fluid. The way the letters R and s were written is also remarkably different. The
variance is obvious even to the untrained eye.
 
Significantly, Rosarios specimen signatures were made at about the time
that she signed the supposed affidavit of consent. They were, therefore, reliable
standards for comparison. The Fuentes spouses presented no evidence
that Rosario suffered from any illness or disease that accounted for the variance
in her signature when she signed the affidavit of consent. Notably, Rosario had
been living separately from Tarciano for 30 years since 1958. And she resided so
far away in Manila. It would have been quite tempting for Tarciano to just forge
her signature and avoid the risk that she would not give her consent to the sale
or demand a stiff price for it.
 
What is more, Atty. Plagata admittedly falsified the jurat of the affidavit
of consent. That jurat declared that Rosario swore to the document and signed it
in Zamboanga City on January 11, 1989when, as Atty. Plagata testified, she
supposedly signed it about four months earlier at her residence in
Paco, Manila on September 15, 1988. While a defective notarization will merely
strip the document of its public character and reduce it to a private instrument,24
Sales
that falsified jurat, taken together with the marks of forgery in the signature,
dooms such document as proof of Rosarios consent to the sale of the land. That
the Fuentes spouses honestly relied on the notarized affidavit as proof
of Rosarios consent does not matter. The sale is still void without an authentic
consent.
 
Second. Contrary to the ruling of the Court of Appeals, the law that
applies to this case is the Family Code, not the Civil Code. Although Tarciano and
Rosario got married in 1950, Tarciano sold the conjugal property to the Fuentes
spouses on January 11, 1989, a few months after the Family Code took effect
on August 3, 1988.
 
When Tarciano married Rosario, the Civil Code put in place the system of
conjugal partnership of gains on their property relations. While its Article 165
made Tarciano the sole administrator of the conjugal partnership, Article 166[17]
 prohibited him from selling commonly owned real property without his wifes
consent. Still, if he sold the same without his wifes consent, the sale is not void
but merely voidable. Article 173 gave Rosario the right to have the sale annulled
during the marriage within ten years from the date of the sale. Failing in that, she
or her heirs may demand, after dissolution of the marriage, only the value of the
property that Tarciano fraudulently sold. Thus:
 
Art. 173. The wife may, during the marriage, and
within ten years from the transaction questioned, ask the
courts for the annulment of any contract of the husband
entered into without her consent, when such consent is
required, or any act or contract of the husband which tends
to defraud her or impair her interest in the conjugal
partnership property. Should the wife fail to exercise this
right, she or her heirs, after the dissolution of the marriage,
may demand the value of property fraudulently alienated
by the husband.
 
But, as already stated, the Family Code took effect on August 3, 1988. Its
Chapter 4 on Conjugal Partnership of Gains expressly superseded Title VI, Book I of the
Civil Code on Property Relations Between Husband and Wife.[18] Further, the Family Code
provisions were also made to apply to already existing conjugal partnerships
without prejudice to vested rights.[19] Thus:
 
Art. 105. x x x The provisions of this Chapter shall also apply
to conjugal partnerships of gains already established
between spouses before the effectivity of this Code,
without prejudice to vested rights already acquired in
accordance with the Civil Code or other laws, as provided in
Article 256. (n)
 
Consequently, when Tarciano sold the conjugal lot to the Fuentes spouses
on January 11, 1989, the law that governed the disposal of that lot was already
the Family Code.
 
In contrast to Article 173 of the Civil Code, Article 124 of the Family Code
does not provide a period within which the wife who gave no consent may assail
her husbands sale of the real property. It simply provides that without the other
spouses written consent or a court order allowing the sale, the same would be
void. Article 124 thus provides:
Art. 124. x x x In the event that one spouse is
incapacitated or otherwise unable to participate in the
administration of the conjugal properties, the other spouse
may assume sole powers of administration. These powers
do not include the powers of disposition or encumbrance
which must have the authority of the court or the written
consent of the other spouse. In the absence of such
authority or consent, the disposition or encumbrance shall
be void. x x x
 
Under the provisions of the Civil Code governing contracts, a void or
inexistent contract has no force and effect from the very beginning. And this rule
applies to contracts that are declared void by positive provision of law,[20] as in
the case of a sale of conjugal property without the other spouses written
consent. A void contract is equivalent to nothing and is absolutely wanting in civil
effects. It cannot be validated either by ratification or prescription.[21]
 
But, although a void contract has no legal effects even if no action is
taken to set it aside, when any of its terms have been performed, an action to
declare its inexistence is necessary to allow restitution of what has been given
under it.[22] This action, according to Article 1410 of the Civil Code does not
prescribe. Thus:
 
Art. 1410. The action or defense for the declaration of the
inexistence of a contract does not prescribe.
 
Here, the Rocas filed an action against the Fuentes spouses in 1997 for25
Sales
annulment of sale and reconveyance of the real property that Tarciano sold
without their mothers (his wifes) written consent. The passage of time did not
erode the right to bring such an action.
 
Besides, even assuming that it is the Civil Code that applies to the
transaction as the CA held, Article 173 provides that the wife may bring an action
for annulment of sale on the ground of lack of spousal consent during the
marriage within 10 years from the transaction. Consequently, the action that the
Rocas, her heirs, brought in 1997 fell within 10 years of the January 11,
1989 sale. It did not yet prescribe.
 
The Fuentes spouses of course argue that the RTC nullified the sale to
them based on fraud and that, therefore, the applicable prescriptive period
should be that which applies to fraudulent transactions, namely, four years from
its discovery. Since notice of the sale may be deemed given to the Rocas when it
was registered with the Registry of Deeds in 1989, their right of action already
prescribed in 1993.
 
But, if there had been a victim of fraud in this case, it would be the
Fuentes spouses in that they appeared to have agreed to buy the property upon
an honest belief that Rosarios written consent to the sale was genuine. They had
four years then from the time they learned that her signature had been forged
within which to file an action to annul the sale and get back their money plus
damages.They never exercised the right.
 
If, on the other hand, Rosario had agreed to sign the document of
consent upon a false representation that the property would go to their children,
not to strangers, and it turned out that this was not the case, then she would
have four years from the time she discovered the fraud within which to file an
action to declare the sale void. But that is not the case here. Rosario was not a
victim of fraud or misrepresentation. Her consent was simply not obtained at
all. She lost nothing since the sale without her written consent was
void. Ultimately, the Rocas ground for annulment is not forgery but the lack of
written consent of their mother to the sale. The forgery is merely evidence of lack
of consent.
 
Third. The Fuentes spouses point out that it was to Rosario, whose
consent was not obtained, that the law gave the right to bring an action to
declare void her husbands sale of conjugal land. But here, Rosario died in 1990,
the year after the sale. Does this mean that the right to have the sale declared
void is forever lost?
 
The answer is no. As stated above, that sale was void from the
beginning. Consequently, the land remained the property of Tarciano and
Rosario despite that sale. When the two died, they passed on the ownership of
the property to their heirs, namely, the Rocas.[23] As lawful owners, the Rocas had
the right, under Article 429 of the Civil Code, to exclude any person from its
enjoyment and disposal.
 
In fairness to the Fuentes spouses, however, they should be entitled,
among other things, to recover from Tarcianos heirs, the Rocas, the P200,000.00
that they paid him, with legal interest until fully paid, chargeable against his
estate.
 
Further, the Fuentes spouses appear to have acted in good faith in
entering the land and building improvements on it. Atty. Plagata, whom the
parties mutually entrusted with closing and documenting the transaction,
represented that he got Rosarios signature on the affidavit of consent. The
Fuentes spouses had no reason to believe that the lawyer had violated his
commission and his oath. They had no way of knowing that Rosario did not come
to Zamboanga to give her consent. There is no evidence that they had a
premonition that the requirement of consent presented some difficulty. Indeed,
they willingly made a 30 percent down payment on the selling price months
earlier on the assurance that it was forthcoming.
 
Further, the notarized document appears to have comforted the Fuentes
spouses that everything was already in order when Tarciano executed a deed of
absolute sale in their favor on January 11, 1989. In fact, they paid the balance due
him. And, acting on the documents submitted to it, the Register of Deeds of
Zamboanga City issued a new title in the names of the Fuentes spouses. It was
only after all these had passed that the spouses entered the property and built
on it. He is deemed a possessor in good faith, said Article 526 of the Civil Code,
who is not aware that there exists in his title or mode of acquisition any flaw
which invalidates it.
 
As possessor in good faith, the Fuentes spouses were under no
obligation to pay for their stay on the property prior to its legal interruption by a
final judgment against them.[24] What is more, they are entitled under Article 448
to indemnity for the improvements they introduced into the property with a right
of retention until the reimbursement is made. Thus:
 
Art. 448. The owner of the land on which anything has been 26
Sales
built, sown or planted in good faith, shall have the right to introducing useful improvements on the subject land or pay the increase in value
appropriate as his own the works, sowing or planting, after which it may have acquired by reason of those improvements, with the spouses
payment of the indemnity provided for in Articles 546 and entitled to the right of retention of the land until the indemnity is made; and
548, or to oblige the one who built or planted to pay the  
price of the land, and the one who sowed, the proper 5. The RTC of Zamboanga City from which this case originated is 
rent. However, the builder or planter cannot be obliged to DIRECTED to receive evidence and determine the amount of indemnity to which
buy the land if its value is considerably more than that of petitioner spouses Manuel and Leticia Fuentes are entitled.
the building or trees. In such case, he shall pay reasonable  
rent, if the owner of the land does not choose to SO ORDERED.
appropriate the building or trees after proper
indemnity. The parties shall agree upon the terms of the
lease and in case of disagreement, the court shall fix the
terms thereof. (361a)
 
The Rocas shall of course have the option, pursuant to Article 546 of the
Civil Code,[25] of indemnifying the Fuentes spouses for the costs of the
improvements or paying the increase in value which the property may have
acquired by reason of such improvements.
 
WHEREFORE, the Court DENIES the petition and AFFIRMS WITH MODIFICATION
 the decision of the Court of Appeals in CA-G.R. CV 00531 dated February 27,
2007 as follows:
 
1. The deed of sale dated January 11, 1989 that Tarciano T. Roca
executed in favor of Manuel O. Fuentes, married to Leticia L. Fuentes, as well as
the Transfer Certificate of Title T-90,981 that the Register of Deeds of Zamboanga
City issued in the names of the latter spouses pursuant to that deed of sale are 
DECLARED void;
 
2. The Register of Deeds of Zamboanga City is DIRECTED to reinstate
Transfer Certificate of Title 3533 in the name of Tarciano T. Roca, married to
Rosario Gabriel;
 
3. Respondents Gonzalo G. Roca, Annabelle R. Joson, Rose Marie R.
Cristobal, and Pilar Malcampo are ORDERED to pay petitioner spouses Manuel
and Leticia Fuentes the P200,000.00 that the latter paid Tarciano T. Roca, with
legal interest from January 11, 1989 until fully paid, chargeable against his estate;
 
4. Respondents Gonzalo G. Roca, Annabelle R. Joson, Rose Marie R.
Cristobal, and Pilar Malcampo are further ORDERED, at their option, to indemnify
petitioner spouses Manuel and Leticia Fuentes with their expenses for 27
Sales
SPOUSES REX AND CONCEPCION AGGABAO,
Petitioners,
-versus-
DIONISIO Z. PARULAN, JR.
and MA. ELENA PARULAN,
Respondents.
On July 26, 2000, the Regional Trial Court (RTC), Branch 136,
in Makati City annulled the deed of absolute sale executed in favor of the petitioners
covering two parcels of registered land the respondents owned for want of the written
consent of respondent husband Dionisio Parulan, Jr. On July 2, 2004, in C.A.-G.R. CV
No. 69044,[1] the Court of Appeals (CA) affirmed the RTC decision.
 
Hence, the petitioners appeal by petition for review on certiorari, seeking to
reverse the decision of the CA. They present as the main issue whether the sale of
conjugal property made by respondent wife by presenting a special power of attorney
to sell (SPA) purportedly executed by respondent husband in her favor was validly
made to the vendees, who allegedly acted in good faith and paid the full purchase
price, despite the showing by the husband that his signature on the SPA had been
forged and that the SPA had been executed during his absence from the country.
 
We resolve the main issue against the vendees and sustain the CAs finding
that the vendees were not buyers in good faith, because they did not exercise the
necessary prudence to inquire into the wifes authority to sell. We hold that the sale of
conjugal property without the consent of the husband was not merely voidable but
void; hence, it could not be ratified.
 
Antecedents
 
Involved in this action are two parcels of land and their improvements (property)
located at No. 49 Miguel Cuaderno Street, Executive Village, BF Homes, Paraaque City
and registered under Transfer Certificate of Title (TCT) No. 63376[2] and TCT No. 63377
[3] in the name of respondents Spouses Maria Elena A. Parulan (Ma. Elena) and
Dionisio Z. Parulan, Jr. (Dionisio), who have been estranged from one another.
 
In January 1991, real estate broker Marta K. Atanacio (Atanacio) offered the property
to the petitioners, who initially did not show interest due to the rundown condition of
the improvements. But Atanacios persistence prevailed upon them, so that
on February 2, 1991, they and Atanacio met with Ma. Elena at the site of the property.
During their meeting, Ma. Elena showed to them the following documents, namely: (a)
the owners original copy of TCT No. 63376; (b) a certified true copy of TCT No. 63377; (c
) three tax declarations; and (d) a copy of the special power of attorney (SPA)
dated January 7, 1991 executed by Dionisio authorizing Ma. Elena to sell the property.
[4] Before the meeting ended, they paid P20,000.00 as earnest money, for which Ma.
Elena executed a handwritten Receipt of Earnest Money, whereby the parties stipulated
that: (a) they would pay an additional payment of P130,000.00 on February 4, 1991; (b)
they would pay the balance of the bank loan of the respondents amounting to P
650,000.00 on or before February 15, 1991; and (c) they would make the final payment
of P700,000.00 once Ma. Elena turned over the property on March 31, 1991.[5]
 
On February 4, 1991, the petitioners went to the Office of the Register of Deeds and
the Assessors Office of Paraaque City to verify the TCTs shown by Ma. Elena in the
company of Atanacio and her husband (also a licensed broker).[6] There, they
discovered that the lot under TCT No. 63376 had been encumbered to Banco Filipino
in 1983 or 1984, but that the encumbrance had already been cancelled due to the full
payment of the obligation.[7] They noticed that the Banco Filipino loan had been
effected through an SPA executed by Dionisio in favor of Ma. Elena.[8] They found on
TCT No. 63377 the annotation of an existing mortgage in favor of the Los Baos Rural
Bank, also effected through an SPA executed by Dionisio in favor of Ma. Elena, coupled
with a copy of a court order authorizing Ma. Elena to mortgage the lot to secure a loan
of P500,000.00.[9]
 
The petitioners and Atanacio next inquired about the mortgage and the court order
annotated on TCT No. 63377 at the Los Baos Rural Bank. There, they met with Atty.
Noel Zarate, the banks legal counsel, who related that the bank had asked for the
court order because the lot involved was conjugal property.[10]
 
Following their verification, the petitioners delivered P130,000.00 as additional down
payment on February 4, 1991; and P650,000.00 to the Los Baos Rural Bank
on February 12, 1991, which then released the owners duplicate copy of TCT No.
63377 to them.[11]
 
On March 18, 1991, the petitioners delivered the final amount of P700,000.00 to Ma.
Elena, who executed a deed of absolute sale in their favor. However, Ma. Elena did not
turn over the owners duplicate copy of TCT No. 63376, claiming that said copy was in
the possession of a relative who was then in Hongkong.[12] She assured them that the
owners duplicate copy of TCT No. 63376 would be turned over after a week.
 
On March 19, 1991, TCT No. 63377 was cancelled and a new one was issued
in the name of the petitioners.
 
Ma. Elena did not turn over the duplicate owners copy of TCT No. 63376 as
promised. In due time, the petitioners learned that the duplicate owners copy of TCT
No. 63376 had been all along in the custody of Atty. Jeremy Z. Parulan, who appeared
to hold an SPA executed by his brother Dionisio authorizing him to sell both lots.[13]
 
At Atanacios instance, the petitioners met on March 25, 1991 with Atty. Parulan at
the Manila Peninsula.[14] For that meeting, they were accompanied by one Atty. 28
Sales
Olandesca.[15] They recalled that Atty. Parulan smugly demanded P800,000.00 in
exchange for the duplicate owners copy of TCT No. 63376, because Atty. Parulan
represented the current value of the property to be P1.5 million. As a counter-offer,
however, they tendered P250,000.00, which Atty. Parulan declined,[16] giving them only
until April 5, 1991 to decide.
 
Hearing nothing more from the petitioners, Atty. Parulan decided to call
them on April 5, 1991, but they informed him that they had already fully paid to Ma.
Elena.[17]
 
Thus, on April 15, 1991, Dionisio, through Atty. Parulan, commenced an
action (Civil Case No. 91-1005 entitled Dionisio Z. Parulan, Jr., represented by Jeremy Z. Parulan, as
attorney in fact, v. Ma. Elena Parulan, Sps. Rex and Coney Aggabao), praying for the declaration of
the nullity of the deed of absolute sale executed by Ma. Elena, and the cancellation of
the title issued to the petitioners by virtue thereof.
 
In turn, the petitioners filed on July 12, 1991 their own action for specific
performance with damages against the respondents.
Both cases were consolidated for trial and judgment in the RTC.[18]
Ruling of the RTC
 
After trial, the RTC rendered judgment, as follows:
 
WHEREFORE, and in consideration of the foregoing,
judgment is hereby rendered in favor of plaintiff Dionisio A. Parulan,
Jr. and against defendants Ma. Elena Parulan and the Sps. Rex and
Concepcion Aggabao, without prejudice to any action that may be
filed by the Sps. Aggabao against co-defendant Ma. Elena Parulan
for the amounts they paid her for the purchase of the subject lots,
as follows:
 
1.      The Deed of Absolute Sale dated March 18, 1991
covering the sale of the lot located at No. 49 M. Cuaderno St.,
Executive Village, BF Homes, Paraaque, Metro Manila, and covered
by TCT Nos. 63376 and 63377 is declared null and void.
2.      Defendant Mrs. Elena Parulan is directed to pay
litigation expenses amounting to P50,000.00 and the costs of the
suit.
 
SO ORDERED.[19]
The RTC declared that the SPA in the hands of Ma. Elena was a forgery, based
on its finding that Dionisio had been out of the country at the time of the execution of
the SPA;[20] that NBI Sr. Document Examiner Rhoda B. Flores had certified that the
signature appearing on the SPA purporting to be that of Dionisio and the set of
standard sample signatures of Dionisio had not been written by one and the same
person;[21] and that Record Officer III Eliseo O. Terenco and Clerk of Court Jesus P.
Maningas of the Manila RTC had issued a certification to the effect that Atty. Alfred
Datingaling, the Notary Public who had notarized the SPA, had not been included in
the list of Notaries Public in Manila for the year 1990-1991.[22]
 
The RTC rejected the petitioners defense of being buyers in good faith because of
their failure to exercise ordinary prudence, including demanding from Ma. Elena a
court order authorizing her to sell the properties similar to the order that the Los Baos
Rural Bank had required before accepting the mortgage of the property.[23] It
observed that they had appeared to be in a hurry to consummate the transaction
despite Atanacios advice that they first consult a lawyer before buying the property;
that with ordinary prudence, they should first have obtained the owners duplicate
copies of the TCTs before paying the full amount of the consideration; and that the
sale was void pursuant to Article 124 of the Family Code.[24]
Ruling of the CA
As stated, the CA affirmed the RTC, opining that Article 124 of the Family Code
 applied because Dionisio had not consented to the sale of the conjugal property by
Ma. Elena; and that the RTC correctly found the SPA to be a forgery.
The CA denied the petitioners motion for reconsideration.[25]
 
Issues
 
The petitioners now make two arguments: (1) they were buyers in good faith;
and (2) the CA erred in affirming the RTCs finding that the sale between Mrs. Elena
and the petitioners had been a nullity under Article 124 of the Family Code.
 
The petitioners impute error to the CA for not applying the ordinary prudent
mans standard in determining their status as buyers in good faith. They contend that
the more appropriate law to apply was Article 173 of the Civil Code, not Article 124 of
the Family Code; and that even if the SPA held by Ma. Elena was a forgery, the ruling in 
Veloso v. Court of Appeals[26] warranted a judgment in their favor.
Restated, the issues for consideration and resolution are as follows:
 
1) Which between Article 173 of the Civil Code and Article 124 of the 
Family Code should apply to the sale of the conjugal property
executed without the consent of Dionisio?
  29
Sales
2) Might the petitioners be considered in good faith at the time of
their purchase of the property?
 
3) Might the ruling in Veloso v. Court of Appeals be applied in favor of the
petitioners despite the finding of forgery of the SPA?
Ruling
 
The petition has no merit. We sustain the CA.
 
 
1.
Article 124, Family Code, applies to sale of conjugal
properties made after the effectivity of the Family Code
The petitioners submit that Article 173 of the Civil Code, not Article 124 of the  Thirdly, according to Article 256[29] of the Family Code, the provisions of the
Family Code, governed the property relations of the respondents because they had been
married prior to the effectivity of the Family Code; and that the second paragraph of
Article 124 of the Family Code should not apply because the other spouse held the
administration over the conjugal property. They argue that notwithstanding his
absence from the country Dionisio still held the administration of the conjugal
property by virtue of his execution of the SPA in favor of his brother; and that even
assuming that Article 124 of the Family Code properly applied, Dionisio ratified the sale
through Atty. Parulans counter-offer during the March 25, 1991 meeting.
We do not subscribe to the petitioners submissions.
 
To start with, Article 254[27] the Family Code has expressly repealed several
titles under the Civil Code, among them the entire Title VI in which the provisions on the
property relations between husband and wife, Article 173 included, are found.
 
Secondly, the sale was made on March 18, 1991, or after August 3, 1988, the
effectivity of the Family Code. The proper law to apply is, therefore, Article 124 of the  the two powers may only be exercised by an agent by following the provisions on
Family Code, for it is settled that any alienation or encumbrance of conjugal property
made during the effectivity of the Family Code is governed by Article 124 of the Family
Code.[28]
 
Article 124 of the Family Code provides:
 
Article 124. The administration and enjoyment of the
conjugal partnership property shall belong to both spouses jointly.
In case of disagreement, the husbands decision shall prevail, subject
to recourse to the court by the wife for proper remedy, which must
be availed of within five years from the date of the contract
implementing such decision.
 
In the event that one spouse is incapacitated or
otherwise unable to participate in the administration of the
conjugal properties, the other spouse may assume sole powers
of administration. These powers do not include disposition or
encumbrance without authority of the court or the written
consent of the other spouse. In the absence of such authority
or consent, the disposition or encumbrance shall be void.
 However, the transaction shall be construed as a continuing offer
on the part of the consenting spouse and the third person, and may
be perfected as a binding contract upon the acceptance by the
other spouse or authorization by the court before the offer is
withdrawn by either or both offerors.
 
Family Code may apply retroactively provided no vested rights are impaired. In Tumlos v.
Fernandez,[30] the Court rejected the petitioners argument that the Family Code did not
apply because the acquisition of the contested property had occurred prior to the
effectivity of the Family Code, and pointed out that Article 256 provided that the Family
Code could apply retroactively if the application would not prejudice vested or acquired
rights existing before the effectivity of the Family Code. Herein, however, the petitioners
did not show any vested right in the property acquired prior to August 3, 1988 that
exempted their situation from the retroactive application of the Family Code.
Fourthly, the petitioners failed to substantiate their contention that Dionisio,
while holding the administration over the property, had delegated to his brother, Atty.
Parulan, the administration of the property, considering that they did not present in
court the SPA granting to Atty. Parulan the authority for the administration.
Nonetheless, we stress that the power of administration does not include
acts of disposition or encumbrance, which are acts of strict ownership. As such, an
authority to dispose cannot proceed from an authority to administer, and vice versa, for
agency of the Civil Code (from Article 1876 to Article 1878). Specifically, the apparent
authority of Atty. Parulan, being a special agency, was limited to the sale of the
property in question, and did not include or extend to the power to administer the
property.[31]
 
Lastly, the petitioners insistence that Atty. Parulans making of a counter-offer
during the March 25, 1991 meeting ratified the sale merits no consideration. Under
Article 124 of the Family Code,the transaction executed sans the written consent of
Dionisio or the proper court order was void; hence, ratification did not occur, for a
void contract could not be ratified.[32]
 
On the other hand, we agree with Dionisio that the void sale was a 30
Sales
continuing offer from the petitioners and Ma. Elena that Dionisio had the option of
accepting or rejecting before the offer was withdrawn by either or both Ma. Elena and
the petitioners. The last sentence of the second paragraph of Article 124 of the Family
Code makes this clear, stating that in the absence of the other spouses consent, the
transaction should be construed as a continuing offer on the part of the consenting
spouse and the third person, and may be perfected as a binding contract upon the
acceptance by the other spouse or upon authorization by the court before the offer is
withdrawn by either or both offerors.
 
 
 
2.
Due diligence required in verifying not only vendors title,
but also agents authority to sell the property
 
A purchaser in good faith is one who buys the property of another, without
notice that some other person has a right to, or interest in, such property, and pays
the full and fair price for it at the time of such purchase or before he has notice of the
claim or interest of some other persons in the property. He buys the property with the
belief that the person from whom he receives the thing was the owner and could
convey title to the property. He cannot close his eyes to facts that should put a
reasonable man on his guard and still claim he acted in good faith.[33] The status of a
buyer in good faith is never presumed but must be proven by the person invoking it.
[34]
 
Here, the petitioners disagree with the CA for not applying the ordinary
prudent mans standard in determining their status as buyers in good faith. They insist
that they exercised due diligence by verifying the status of the TCTs, as well as by
inquiring about the details surrounding the mortgage extended by the Los Baos Rural
Bank. They lament the holding of the CA that they should have been put on their
guard when they learned that the Los Baos Rural Bank had first required a court order
before granting the loan to the respondents secured by their mortgage of the
property.
 
The petitioners miss the whole point.
 
Article 124 of the Family Code categorically requires the consent of both spouses
before the conjugal property may be disposed of by sale, mortgage, or other modes of
disposition. In Bautista v. Silva,[35] the Court erected a standard to determine the good
faith of the buyers dealing with
a seller who had title to and possession of the land but whose capacity to sell was
restricted, in that the consent of the other spouse was required before the
conveyance, declaring that in order to prove good faith in such a situation, the buyers
must show that they inquired not only into the title of the seller but also into the sellers
capacity to sell.[36] Thus, the buyers of conjugal property must observe two kinds of
requisite diligence, namely: (a) the diligence in verifying the validity of the title covering
the property; and (b) the diligence in inquiring into the authority of the transacting
spouse to sell conjugal property in behalf of the other spouse.
 
It is true that a buyer of registered land needs only to show that he has relied
on the face of the certificate of title to the property, for he is not required to explore
beyond what the certificate indicates on its face.[37] In this respect, the petitioners
sufficiently proved that they had checked on the authenticity of TCT No. 63376 and
TCT No. 63377 with the Office of the Register of Deeds in Pasay City as the custodian
of the land records; and that they had also gone to the Los Baos Rural Bank to inquire
about the mortgage annotated on TCT No. 63377. Thereby, the petitioners observed
the requisite diligence in examining the validity of the TCTs concerned.
 
Yet, it ought to be plain enough to the petitioners that the issue was whether
or not they had diligently inquired into the authority of Ma. Elena to convey the
property, not whether or not the TCT had been valid and authentic, as to which there
was no doubt. Thus, we cannot side with them.
 
Firstly, the petitioners knew fully well that the law demanded the written
consent of Dionisio to the sale, but yet they did not present evidence to show that
they had made inquiries into the circumstances behind the execution of the SPA
purportedly executed by Dionisio in favor of Ma. Elena. Had they made the
appropriate inquiries, and not simply accepted the SPA for what it represented on its
face, they would have uncovered soon enough that the respondents had been
estranged from each other and were under de facto separation, and that they probably
held conflicting interests that would negate the existence of an agency between them.
To lift this doubt, they must, of necessity, further inquire into the SPA of Ma.
Elena. The omission to inquire indicated their not being buyers in good faith, for, as
fittingly observed in Domingo v. Reed:[38]
 
What was required of them by the appellate court, which we
affirm, was merely to investigate as any prudent vendee should the
authority of Lolita to sell the property and to bind the partnership.
They had knowledge of facts that should have led them to inquire
and to investigate, in order to acquaint themselves with possible
defects in her title. The law requires them to act with the diligence
of a prudent person; in this case, their only prudent course of action
was to investigate whether respondent had indeed given his
consent to the sale and authorized his wife to sell the property.[39]
Indeed, an unquestioning reliance by the petitioners on Ma. Elenas SPA
without first taking precautions to verify its authenticity was not a prudent buyers
move.[40] They should have done everything within their means and power to
ascertain whether the SPA had been genuine and authentic. If they did not investigate31
Sales
on the relations of the respondents vis--vis each other, they could have done other prior to the effectivity of the Family Code; hence, the sale was still properly covered by
things towards the same end, like attempting to locate the notary public who had Article 173 of the Civil Code, which provides that a sale effected without the consent of
notarized the SPA, or checked with the RTC in Manila to confirm the authority of one of the spouses is only voidable, not void. However, the sale herein was made
Notary Public Atty. Datingaling. It turned out that Atty. Datingaling was not authorized already during the effectivity of the Family Code, rendering the application of Article 124
to act as a Notary Public for Manila during the period 1990-1991, which was a fact that of the Family Code clear and indubitable.
they could easily discover with a modicum of zeal. The fault of the petitioner in Veloso was that he did not adduce sufficient
  evidence to prove that his signature and that of the notary public on the SPA had been
Secondly, the final payment of P700,000.00 even without the owners forged. The Court pointed out that his mere allegation that the signatures had been
duplicate copy of the TCT No. 63376 being handed to them by Ma. Elena indicated a forged could not be sustained without clear and convincing proof to substantiate the
revealing lack of precaution on the part of the petitioners. It is true that she promised allegation. Herein, however, both the RTC and the CA found from the testimonies and
to produce and deliver the owners copy within a week because her relative having evidence presented by Dionisio that his signature had been definitely forged, as borne
custody of it had gone to Hongkong, but their passivity in such an essential matter was out by the entries in his passport showing that he was out of the country at the time
puzzling light of their earlier alacrity in immediately and diligently validating the TCTs of the execution of the questioned SPA; and that the alleged notary public, Atty.
to the extent of inquiring at the Los Baos Rural Bank about the annotated mortgage. Datingaling, had no authority to act as a Notary Public for Manila during the period of
Yet, they could have rightly withheld the final payment of the balance. That they did 1990-1991.
not do so reflected their lack of due care in dealing with Ma. Elena.  
  WHEREFORE, we deny the petition for review on certiorari, and affirm the
Lastly, another reason rendered the petitioners good faith incredible. They decision dated July 2, 2004 rendered by the Court of Appeals in C.A.-G.R. CV No.
did not take immediate action against Ma. Elena upon discovering that the owners 69044 entitled Dionisio Z. Parulan, Jr. vs. Ma. Elena Parulan and Sps. Rex and Concepcion Aggabao
original copy of TCT No. 63376 was in the possession of Atty. Parulan, contrary to and Sps. Rex and Concepcion Aggabao vs. Dionisio Z. Parulan, Jr. and Ma. Elena Parulan.
Elenas representation. Human experience would have impelled them to exert every  
effort to proceed against Ma. Elena, including demanding the return of the substantial Costs of suit to be paid by the petitioners.
amounts paid to her. But they seemed not to mind her inability to produce the TCT,  
and, instead, they contented themselves with meeting with Atty. Parulan to negotiate SO ORDERED.
for the possible turnover of the TCT to them.
 
3.
Veloso v. Court of Appeals cannot help petitioners
 
The petitioners contend that the forgery of the SPA notwithstanding, the CA
could still have decided in their favor conformably with Veloso v. Court of Appeals,[41] a case
where the petitioner husband claimed that his signature and that of the notary public
who had notarized the SPA the petitioner supposedly executed to authorize his wife to
sell the property had been forged. In denying relief, the Court upheld the right of the
vendee as an innocent purchaser for value.
 
Veloso is inapplicable, however, because the contested property therein was
exclusively owned by the petitioner and did not belong to the conjugal regime. Veloso
 being upon conjugal property, Article 124 of the Family Code did not apply.
 
In contrast, the property involved herein pertained to the conjugal regime,
and, consequently, the lack of the written consent of the husband rendered the sale
void pursuant to Article 124 of the Family Code. Moreover, even assuming that the
property involved in Veloso was conjugal, its sale was made on November 2, 1987, or 32
Sales
DAVID V. PELAYO and LORENZA* B. PELAYO,
Petitioners,
- versus -
MELKI E. PEREZ,
Respondent.
 
This resolves the petition for review on certiorari seeking the reversal of the
Decision[1] of the Court of Appeals (CA) promulgated on April 20, 1999 which reversed
the Decision of the Regional Trial Court (RTC) of Panabo, Davao, Branch 34, in Civil
Case No. 91-46; and the CA Resolution dated December 17, 1999 denying petitioners
motion for reconsideration.
 
The antecedent facts as aptly narrated by the CA are as follows:
David Pelayo (Pelayo),by a Deed of Absolute Sale executed
on January 11, 1988, conveyed to Melki Perez (Perez) two parcels of
agricultural land (the lots) situated in Panabo, Davao which are
portions of Lot 4192, Cad. 276 covered by OCT P-16873.
 
Loreza Pelayo (Loreza), wife of Pelayo, and another one
whose signature is illegible witnessed the execution of the deed.
 
Loreza, however, signed only on the third page in the
space provided for witnesses on account of which Perez application
for registration of the deed with the Office of the Register of Deeds
in Tagum, Davao was denied.
Perez thereupon asked Loreza to sign on the first and
second pages of the deed but she refused, hence, he instituted on
August 8, 1991 the instant complaint for specific performance
against her and her husband Pelayo (defendants).
 
The defendants moved to dismiss the complaint on the
ground that it stated no cause of action, citing Section 6 of RA 6656
otherwise known as the Comprehensive Agrarian Reform Law which
took effect on June 10, 1988 and which provides that contracts
executed prior thereto shall be valid only when registered with the
Register of Deeds within a period of three (3) months after the
effectivity of this Act.
 
The questioned deed having been executed on January 10,
1988, the defendants claimed that Perez had at least up to
September 10, 1988 within which to register the same, but as they
failed to, it is not valid and, therefore, unenforceable.
 
The trial court thus dismissed the complaint. On appeal to
this Court, the dismissal was set aside and the case was remanded
to the lower court for further proceedings.
 
In their Answer, the defendants claimed that as the lots
were occupied illegally by some persons against whom they filed an
ejectment case, they and Perez who is their friend and known at the
time as an activist/leftist, hence feared by many, just made it appear
in the deed that the lots were sold to him in order to frighten said
illegal occupants, with the intentional omission of Lorezas signature
so that the deed could not be registered; and that the deed being
simulated and bereft of consideration is void/inexistent.
Perez countered that the lots were given to him by
defendant Pelayo in consideration of his services as his attorney-in-
fact to make the necessary representation and negotiation with the
illegal occupants-defendants in the ejectment suit; and that after his
relationship with defendant Pelayo became sour, the latter sent a
letter to the Register of Deeds of Tagum requesting him not to
entertain any transaction concerning the lots title to which was
entrusted to Perez who misplaced and could [not] locate it.
 
Defendant Pelayo claimed in any event, in his Pre-trial brief
filed on March 19, 1996, that the deed was without his wife Lorezas
consent, hence, in light of Art. 166 of the Civil Code which provides:
Article 166. Unless the wife has been
declared a non compos mentis or a spendthrift,
or is under civil interdiction or is confined in a
leprosarium, the husband cannot alienate or
encumber any real property of the conjugal
partnership without the wifes consent . . .
 
it is null and void.
 
The trial court, finding, among others, that Perez did not
possess, nor pay the taxes on the lots, that defendant Pelayo was
indebted to Perez for services rendered and, therefore, the deed
could only be considered as evidence of debt, and that in any event,
there was no marital consent to nor actual consideration for the
deed, held that the deed was null and void and accordingly
rendered judgment the dispositive portion of which reads:
  33
Sales
WHEREFORE, judgment is hereby
rendered ordering and directing the defendants
to pay plaintiff Melki Perez the sum of TEN
THOUSAND (P10,000.00) Pesos as principal with
12% interest per annum starting from the date of
filing of the complaint on August 1, 1991 until
plaintiff is fully paid.
 
The defendants shall likewise pay to
plaintiff the sum of THREE THOUSAND (P3,000.00)
as attorneys fees.
The court further orders that the Deed
of Absolute Sale, (Annex A) of the complaint and
(Annex C) of the plaintiffs Motion for Summary
Judgment is declared null and void and without
force and it is likewise removed as a cloud over
defendants title and property in suit. . . .[2]
 
 
The RTC Decision was appealed by herein respondent Perez to the CA.
Petitioners failed to file their appellees brief. The CA then promulgated its Decision on
April 20, 1999 whereby it ruled that by Lorenzas signing as witness to the execution of
the deed, she had knowledge of the transaction and is deemed to have given her
consent to the same; that herein petitioners failed to adduce sufficient proof to
overthrow the presumption that there was consideration for the deed, and that
petitioner David Pelayo, being a lawyer, is presumed to have acted with due care and
to have signed the deed with full knowledge of its contents and import. The CA
reversed and set aside the RTC Decision, declaring as valid and enforceable the
questioned deed of sale and ordering herein petitioner Lorenza Pelayo to affix her
signature on all pages of said document.
 
Petitioners moved for reconsideration of the decision but the same was
denied per Resolution dated December 17, 1999. The CA found said motion to have
been filed out of time and ruled that even putting aside technicality, petitioners failed
to present any ground bearing on the merits of the case to justify a reversal or setting
aside of the decision.
 
Hence, this petition for review on certiorari on the following grounds:
 
1. The CA erred in ignoring the specific provision of Section 6, in relation to
Section 4 of R.A. No. 6657 otherwise known as the Comprehensive Agrarian Reform
Law of 1988 which took effect on June 15, 1988 and which provides that contracts
executed prior thereto shall be valid only when registered with the Register of Deeds
within a period of three (3) months after the effectivity of this Act.
 
2. The CA erred in holding that the deed of sale was valid and considering
the P10,000.00 adjudged by the trial court as Perezs remuneration as the
consideration for the deed of sale, instead of declaring the same as null and void for
being fictitious or simulated and on the basis of Art. 491, Par. 2 of the New Civil Code
which prohibits agents from acquiring by purchase properties from his principal
under his charge.
 
3. The CA made a novel ruling that there was implied marital consent of the
wife of petitioner David Pelayo.
4. Petitioners should have been allowed to file their appellees brief to
ventilate their side, considering the existence of peculiar circumstances which
prevented petitioners from filing said brief.
 
On the other hand, respondent points out that the CA, in resolving the first
appeal docketed as CA-G.R. SP No. 38700[3] brought by respondent assailing the RTC
Order granting herein petitioners motion to dismiss, already ruled that under R.A. No.
6657, the sale or transfer of private agricultural land is allowed only when the area of
the land being conveyed constitutes or is a part of, the landowner-seller retained area
and when the total landholding of the purchaser-transferee, including the property
sold, does not exceed five (5) hectares; that in this case, the land in dispute is only 1.3
hectares and there is no proof that the transferees (herein respondent) total
landholding inclusive of the subject land will exceed 5 hectares, the landholding ceiling
prescribed by R.A. No. 6657; that the failure of respondent to register the instrument
was not due to his fault or negligence but can be attributed to Lorenzas unjustified
refusal to sign two pages of the deed despite several requests of respondent; and that
therefore, the CA ruled that the deed of sale subject of this case is valid under R.A. No.
6657.
 
Respondent further maintains that the CA correctly held in its assailed
Decision that there was consideration for the contract and that Lorenza is deemed to
have given her consent to the deed of sale.
 
Respondent likewise opines that the CA was right in denying petitioners
motion for reconsideration where they prayed that they be allowed to file their
appellees brief as their counsel failed to file the same on account of said counsels
failing health due to cancer of the liver. Respondent emphasized that in petitioners
motion for reconsideration, they did not even cite any errors made by the CA in its
Decision.
 
The issues boil down to the question of whether or not the deed of sale was
null and void on the following grounds: (a) for not complying with the provision in R.A. 34
Sales
No. 6657 that such document must be registered with the Register of Deeds within
three months after the effectivity of said law; (b) for lack of marital consent; (c) for
being prohibited under Article 1491 (2) of the Civil Code; and (d) for lack of
consideration.
We rule against petitioners.
The issue of whether or not the deed of sale is null and void under R.A. No.
6657, for respondents failure to register said document with the Register of Deeds
within three months after the effectivity of R.A. No. 6657, had been resolved with
finality by the CA in its Decision dated November 24, 1994 in CA-G.R. SP No. 38700.[4]
 Herein petitioners no longer elevated said CA Decision to this Court and the same
became final and executory on January 7, 1995.[5]
 
In said decision, the CA interpreted Section 4, in relation to Section 70 of R.A.
No. 6657, to mean thus:
 
. . . the proper interpretation of both sections is that under
R.A. No. 6657, the sale or transfer of a private agricultural land is
allowed only when said land area constitutes or is a part of the
landowner-seller retained area and only when the total
landholdings of the purchaser-transferee, including the property
sold does not exceed five (5) hectares.
 
 
Aside from declaring that the failure of respondent to register the deed was not of his
own fault or negligence, the CA ruled that respondents failure to register the deed of
sale within three months after effectivity of The Comprehensive Agrarian Reform Law
did not invalidate the deed of sale as the transaction over said property is not
proscribed by R.A. No. 6657.
 
Thus, under the principle of law of the case, said ruling of the CA is now
binding on petitioners. Such principle was elucidated in Cucueco vs. Court of Appeals,[6]  to
wit:
Law of the case has been defined as the opinion delivered
on a former appeal.  It is a term applied to an established rule that
when an appellate court passes on a question and remands the
case to the lower court for further proceedings, the question there
settled becomes the law of the case upon subsequent appeal. It
means that whatever is once irrevocably established as the
controlling legal rule or decision between the same parties in the
same case continues to be the law of the case, whether correct on general
principles or not, so long as the facts on which such decision was
predicated continue to be the facts of the case before the court.  husband or by respondent into affixing her signature on the subject document. If 35
 
 
Petitioners not having questioned the Decision of the CA dated November 24, 1994
which then attained finality, the ruling that the deed of sale subject of this case is not
among the transactions deemed as invalid under R.A. No. 6657, is now immutable.
We agree with the CA ruling that petitioner Lorenza, by affixing her signature
to the Deed of Sale on the space provided for witnesses, is deemed to have given her
implied consent to the contract of sale.
 
Sale is a consensual contract that is perfected by mere consent, which may
either be express or implied.[7] A wifes consent to the husbands disposition of
conjugal property does not always have to be explicit or set forth in any particular
document, so long as it is shown by acts of the wife that such consent or approval was
indeed given.[8] In the present case, although it appears on the face of the deed of sale
that Lorenza signed only as an instrumental witness, circumstances leading to the
execution of said document point to the fact that Lorenza was fully aware of the sale
of their conjugal property and consented to the sale.
 
In their Pre-Trial Brief,[9] petitioners admitted that even prior to 1988, they
have been having serious problems, including threats to the life of petitioner David
Pelayo, due to conflicts with the illegal occupants of the property in question, so that
respondent, whom many feared for being a leftist/activist, offered his help in driving
out said illegal occupants.
 
Human experience tells us that a wife would surely be aware of serious
problems such as threats to her husbands life and the reasons for such threats. As
they themselves stated, petitioners problems over the subject property had been
going on for quite some time, so it is highly improbable for Lorenza not to be aware of
what her husband was doing to remedy such problems. Petitioners do not deny that
Lorenza Pelayo was present during the execution of the deed of sale as her signature
appears thereon. Neither do they claim that Lorenza Pelayo had no knowledge
whatsoever about the contents of the subject document. Thus, it is quite
certain that she knew of the sale of their conjugal property between her husband and
respondent.
 
Under the rules of evidence, it is presumed that a person takes ordinary care
of his concerns.[10] Petitioners did not even attempt to overcome the aforementioned
presumption as no evidence was ever presented to show that Lorenza was in any way
lacking in her mental faculties and, hence, could not have fully understood the
ramifications of signing the deed of sale. Neither did petitioners present any evidence
that Lorenza had been defrauded, forced, intimidated or threatened either by her own
Sales
Lorenza had any objections over the conveyance of the disputed property, she could
have totally refrained from having any part in the execution of the deed of sale.
Instead, Lorenza even affixed her signature thereto.
 
Moreover, under Article 173, in relation to Article 166, both of the New Civil
Code, which was still in effect on January 11, 1988 when the deed in question was
executed, the lack of marital consent to the disposition of conjugal property does not
make the contract void ab initio but merely voidable. Said provisions of law provide:
 
Art. 166. Unless the wife has been declared a non compos
mentis or a spendthrift, or is under civil interdiction or is confined in a
leprosarium, the husband cannot alienate or encumber any real
property of the conjugal property without the wifes consent. If she
refuses unreasonably to give her consent, the court may compel her
to grant the same.
...
Art. 173. The wife may, during the marriage, and within ten
years from the transaction questioned, ask the courts for the
annulment of any contract of the husband entered into without her
consent, when such consent is required, or any act or contract of
the husband which tends to defraud her or impair her interest in
the conjugal partnership property. Should the wife fail to exercise
this right, she or her heirs, after the dissolution of the marriage,
may demand the value of property fraudulently alienated by the
husband.
 
 
Hence, it has been held that the contract is valid until the court annuls the
same and only upon an action brought by the wife whose consent was not obtained.
[11] In the present case, despite respondents repeated demands for Lorenza to affix
her signature on all the pages of the deed of sale, showing respondents insistence on
enforcing said contract, Lorenza still did not file a case for annulment of the deed of
sale. It was only when respondent filed a complaint for specific performance on
August 8, 1991 when petitioners brought up Lorenzas alleged lack of consent as an
affirmative defense. Thus, if the transaction was indeed entered into without Lorenzas
consent, we find it quite puzzling why for more than three and a half years, Lorenza
did absolutely nothing to seek the nullification of the assailed contract.
 
The foregoing circumstances lead the Court to believe that Lorenza knew of
the full import of the transaction between respondent and her
 
husband; and, by affixing her signature on the deed of sale, she, in effect, signified her
consent to the disposition of their conjugal property.
 
With regard to petitioners asseveration that the deed of sale is invalid under
Article 1491, paragraph 2 of the New Civil Code, we find such argument
unmeritorious. Article 1491 (2) provides:
 
Art. 1491. The following persons cannot acquire by purchase, even
at a public or judicial auction, either in person or through the
mediation of another:
 
...
 
(2) Agents, the property whose administration or sale may have
been entrusted to them, unless the consent of the principal has
been given;
...
 
In Distajo vs. Court of Appeals,[12] a landowner, Iluminada Abiertas, designated one
of her sons as the administrator of several parcels of her land. The landowner
subsequently executed a Deed of Certification of Sale of Unregistered Land, conveying
some of said land to her son/administrator. Therein, we held that:
 
Under paragraph (2) of the above article, the prohibition
against agents purchasing property in their hands for sale or
management is not absolute. It does not apply if the principal
consents to the sale of the property in the hands of the agent or
administrator. In this case, the deeds of sale signed by Iluminada
Abiertas shows that she gave consent to the sale of the properties
in favor of her son, Rufo, who was the administrator of the
properties. Thus, the consent of the principal Iluminada Abiertas
removes the transaction out of the prohibition contained in Article
1491(2).[13]
 
The above-quoted ruling is exactly in point with this case before us.
Petitioners, by signing the Deed of Sale in favor of respondent, are also deemed to
have given their consent to the sale of the subject property in favor of respondent,
thereby making the transaction an exception to the general rule that agents are
prohibited from purchasing the property of their principals.
 
Petitioners also argue that the CA erred in ruling that there was
consideration for the sale. We find no error in said appellate courts ruling. The
element of consideration for the sale is indeed present. Petitioners, in adopting the 36
Sales
trial courts narration of antecedent facts in their petition,[14] thereby admitted that
they authorized respondent to represent them in negotiations with the squatters
occupying the disputed property and, in consideration of respondents services, they
executed the subject deed of sale. Aside from such services rendered by respondent,
petitioners also acknowledged in the deed of sale that they received in full the amount
of Ten Thousand Pesos. Evidently, the consideration for the sale is respondents
services plus the aforementioned cash money.
 
Petitioners contend that the consideration stated in the deed of sale is
excessively inadequate, indicating that the deed of sale was merely simulated. We are
not persuaded. Our ruling in Buenaventura vs. Court of Appeals[15] is pertinent, to wit:
. . . Indeed, there is no requirement that the price be equal
to the exact value of the subject matter of sale. . . . As we stated in  counsel received a copy of the decision on May 5, 1999. He,
Vales vs. Villa:
 
Courts cannot follow one every step of
his life and extricate him from bad bargains,
protect him from unwise investments, relieve him
from one-sided contracts, or annul the effects of
foolish acts. Courts cannot constitute themselves
guardians of persons who are not legally
incompetent. Courts operate not because one
person has been defeated or overcome by
another, but because he has been defeated or
overcome illegally. Men may do foolish things,
make ridiculous contracts, use miserable
judgment, and lose money by them indeed, all
they have in the world; but not for that alone can
the law intervene and restore. There must be, in
addition, a violation of the law, the commission of
what the law knows as an actionable wrong, before
the courts are authorized to lay hold of the
situation and remedy it.[16]
 
 
Verily, in the present case, petitioners have not presented proof that there has been
fraud, mistake or undue influence exercised upon them by respondent. It is highly
unlikely and contrary to human experience that a layman like respondent would be
able to defraud, exert undue influence, or in any way vitiate the consent of a lawyer
like petitioner David Pelayo who is expected to be more knowledgeable in the ways of
drafting contracts and other legal transactions.
 
Furthermore, in their Reply to Respondents Memorandum,[17] petitioners
adopted the CAs narration of fact that petitioners stated in a letter they sent to the
Register of Deeds of Tagum that they have entrusted the titles over subject lots to
herein respondent. Such act is a clear indication that they intended to convey the
subject property to herein respondent and the deed of sale was not merely simulated
or fictitious.
 
Lastly, petitioners claim that they were not able to fully ventilate their
defense before the CA as their lawyer, who was then suffering from cancer of the liver,
failed to file their appellees brief. Thus, in their motion for reconsideration of the CA
Decision, they prayed that they be allowed to submit such appellees brief. The CA, in
its Resolution dated December 17, 1999, stated thus:
By movant-defendant-appellees own information, his
therefore, had fifteen (15) days from said date or up to May 20,
1999 to file the motion. The motion, however, was sent through a
private courier and, therefore, considered to have been filed on the
date of actual receipt on June 17, 1999 by the addressee Court of
Appeals, was filed beyond the reglementary period.
 
Technicality aside, movant has not proffered any ground
bearing on the merits of the case why the decision should be set
aside.
 
 
Petitioners never denied the CA finding that their motion for reconsideration
was filed beyond the fifteen-day reglementary period. On that point alone, the CA is
correct in denying due course to said motion. The motion having been belatedly filed,
the CA Decision had then attained finality. Thus, in Abalos vs. Philex Mining Corporation,[18] we
held that:
 
. . . Nothing is more settled in law than that once a
judgment attains finality it thereby becomes immutable and
unalterable. It may no longer be modified in any respect, even if the
modification is meant to correct what is perceived to be an
erroneous conclusion of fact or law, and regardless of whether the
modification is attempted to be made by the court rendering it or
by the highest court of the land.
 
 
Moreover, it is pointed out by the CA that said motion did not present any
defense or argument on the merits of the case that could have convinced the CA to
reverse or modify its Decision.
  37
Sales
We have consistently held that a petitioners right to due process is not
violated where he was able to move for reconsideration of the order or decision in
question.[19] In this case, petitioners had the opportunity to fully expound on their
defenses through a motion for reconsideration. Petitioners did file such motion but
they wasted such opportunity by failing to present therein whatever errors they
believed the CA had committed in its Decision. Definitely, therefore, the denial of
petitioners motion for reconsideration, praying that they be allowed to file appellees
brief, did not infringe petitioners right to due process as any issue that petitioners
wanted to raise could and should have been contained in said motion for
reconsideration.
IN VIEW OF THE FOREGOING, the petition is DENIED and the Decision of the
Court of Appeals dated April 20, 1999 and its Resolution dated December 17, 1999 are
hereby AFFIRMED.
 
SO ORDERED.
ARTURO R. ABALOS, petitioner, vs. DR. GALICANO S. MACATANGAY, JR., 
respondent.
The instant petition seeks a reversal of the Decision of the Court of Appeals in
CA-G.R. CV No. 48355 entitled Dr. Galicano S. Macatangay, Jr. v. Arturo R. Abalos and Esther
Palisoc-Abalos, promulgated on March 14, 2002. The appellate court reversed the
trial courts decision which dismissed the action for specific performance filed by
respondent, and ordered petitioner and his wife to execute in favor of herein
respondent a deed of sale over the subject property.
Spouses Arturo and Esther Abalos are the registered owners of a parcel of
land with improvements located at Azucena St., Makati City consisting of about
three hundred twenty-seven (327) square meters, covered by Transfer Certificate
of Title (TCT) No. 145316 of the Registry of Deeds of Makati.
Armed with a Special Power of Attorney dated June 2, 1988, purportedly
issued by his wife, Arturo executed a Receipt and Memorandum of Agreement (RMOA)
dated October 17, 1989, in favor of respondent, binding himself to sell to
respondent the subject property and not to offer the same to any other party
within thirty (30) days from date. Arturo acknowledged receipt of a check from
respondent in the amount of Five Thousand Pesos (P5,000.00), representing
earnest money for the subject property, the amount of which would be deducted
from the purchase price of One Million Three Hundred Three Hundred Thousand
Pesos (P1,300,000.00). Further, the RMOA stated that full payment would be
effected as soon as possession of the property shall have been turned over to
respondent.
Subsequently, Arturos wife, Esther, executed a Special Power of Attorney
dated October 25, 1989, appointing her sister, Bernadette Ramos, to act for and
in her behalf relative to the transfer of the property to respondent. Ostensibly, a
marital squabble was brewing between Arturo and Esther at the time and to
protect his interest, respondent caused the annotation of his adverse claim on
the title of the spouses to the property on November 14, 1989.
On November 16, 1989, respondent sent a letter to Arturo and Esther
informing them of his readiness and willingness to pay the full amount of the
purchase price. The letter contained a demand upon the spouses to comply with
their obligation to turn over possession of the property to him. On the same date,
Esther, through her attorney-in-fact, executed in favor of respondent, a Contract
to Sell the property to the extent of her conjugal interest therein for the sum of
six hundred fifty thousand pesos (P650,000.00) less the sum already received by
her and Arturo. Esther agreed to surrender possession of the property to
respondent within twenty (20) days from November 16, 1989, while the latter
promised to pay the balance of the purchase price in the amount of one million
two hundred ninety thousand pesos (P1,290,000.00) after being placed in 38
possession of the property. Esther also obligated herself to execute and deliver
Sales
to respondent a deed of absolute sale upon full payment.
In a letter dated December 7, 1989, respondent informed the spouses that
he had set aside the amount of One Million Two Hundred Ninety Thousand Pesos
(P1,290,000.00) as evidenced by Citibank Check No. 278107 as full payment of the
purchase price. He reiterated his demand upon them to comply with their
obligation to turn over possession of the property. Arturo and Esther failed to
deliver the property which prompted respondent to cause the annotation of
another adverse claim on TCT No. 145316. On January 12, 1990, respondent filed
a complaint for specific performance with damages against petitioners. Arturo
filed his answer to the complaint while his wife was declared in default.
The Regional Trial Court (RTC) dismissed the complaint for specific
performance. It ruled that the Special Power of Attorney (SPA) ostensibly issued by
Esther in favor of Arturo was void as it was falsified.Hence, the court concluded
that the SPA could not have authorized Arturo to sell the property to
respondent. The trial court also noted that the check issued by respondent to
cover the earnest money was dishonored due to insufficiency of funds and while
it was replaced with another check by respondent, there is no showing that the
second check was issued as payment for the earnest money on the property.
On appeal taken by respondent, the Court of Appeals reversed the decision
of the trial court. It ruled that the SPA in favor of Arturo, assuming that it was
void, cannot affect the transaction between Esther and respondent. The appellate
court ratiocinated that it was by virtue of the SPA executed by Esther, in favor of
her sister, that the sale of the property to respondent was effected. On the other
hand, the appellate court considered the RMOA executed by Arturo in favor of
respondent valid to effect the sale of Arturos conjugal share in the property.
Dissatisfied with the appellate courts disposition of the case, petitioner
seeks a reversal of its decision alleging that:
I.
The Court of Appeals committed serious and manifest error when it decided on
the appeal without affording petitioner his right to due process.
II.
The Court of Appeals committed serious and manifest error in reversing and
setting aside the findings of fact by the trial court.
III.
The Court of Appeals erred in ruling that a contract to sell is a contract of sale,
and in ordering petitioner to execute a registrable form of deed of sale over the
property in favor of respondent.[1]
Petitioner contends that he was not personally served with copies of
summons, pleadings, and processes in the appeal proceedings nor was he given
an opportunity to submit an appellees brief. He alleges that his counsel was in
the United States from 1994 to June 2000, and he never received any news or
communication from him after the proceedings in the trial court were
terminated. Petitioner submits that he was denied due process because he was
not informed of the appeal proceedings, nor given the chance to have legal
representation before the appellate court.
We are not convinced. The essence of due process is an opportunity to be
heard. Petitioners failure to participate in the appeal proceedings is not due to a
cause imputable to the appellate court but because of petitioners own neglect in
ascertaining the status of his case. Petitioners counsel is equally negligent in
failing to inform his client about the recent developments in the appeal
proceedings. Settled is the rule that a party is bound by the conduct, negligence
and mistakes of his counsel.[2] Thus, petitioners plea of denial of due process is
downright baseless.
Petitioner also blames the appellate court for setting aside the factual
findings of the trial court and argues that factual findings of the trial court are
given much weight and respect when supported by substantial evidence. He
asserts that the sale between him and respondent is void for lack of consent
because the SPA purportedly executed by his wife Esther is a forgery and
therefore, he could not have validly sold the subject property to respondent.
Next, petitioner theorizes that the RMOA he executed in favor of respondent
was not perfected because the check representing the earnest money was
dishonored. He adds that there is no evidence on record that the second check
issued by respondent was intended to replace the first check representing
payment of earnest money.
Respondent admits that the subject property is co-owned by petitioner and
his wife, but he objects to the allegations in the petition bearing a relation to the
supposed date of the marriage of the vendors. He contends that the alleged date
of marriage between petitioner and his wife is a new factual issue which was not
raised nor established in the court a quo. Respondent claims that there is no basis
to annul the sale freely and voluntarily entered into by the husband and the wife.
The focal issue in the instant petition is whether petitioner may be
compelled to convey the property to respondent under the terms of the RMOA
and the Contract to Sell. At bottom, the resolution of the issue entails the
ascertainment of the contractual nature of the two documents and the status of
the contracts contained therein.
Contracts, in general, require the presence of three essential elements: (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.[3]
Until the contract is perfected, it cannot, as an independent source of
obligation, serve as a binding juridical relation.[4] In a contract of sale, the seller
must consent to transfer ownership in exchange for the price, the subject matter
must be determinate, and the price must be certain in money or its equivalent.[5] 39
Sales
 Being essentially consensual, a contract of sale is perfected at the moment there
is a meeting of the minds upon the thing which is the object of the contract and
upon the price.[6] However, ownership of the thing sold shall not be transferred
to the vendee until actual or constructive delivery of the property.[7]
On the other hand, an accepted unilateral promise which specifies the thing
to be sold and the price to be paid, when coupled with a valuable consideration
distinct and separate from the price, is what may properly be termed a perfected
contract of option.[8] An option merely grants a privilege to buy or sell within an
agreed time and at a determined price. It is separate and distinct from that which
the parties may enter into upon the consummation of the option.[9] A perfected
contract of option does not result in the perfection or consummation of the sale;
only when the option is exercised may a sale be perfected.[10] The option must,
however, be supported by a consideration distinct from the price.[11]
Perusing the RMOA, it signifies a unilateral offer of Arturo to sell the
property to respondent for a price certain within a period of thirty days. The
RMOA does not impose upon respondent an obligation to buy petitioners
property, as in fact it does not even bear his signature thereon. It is quite clear
that after the lapse of the thirty-day period, without respondent having exercised
his option, Arturo is free to sell the property to another. This shows that the
intent of Arturo is merely to grant respondent the privilege to buy the property
within the period therein stated. There is nothing in the RMOA which indicates
that Arturo agreed therein to transfer ownership of the land which is an essential
element in a contract of sale. Unfortunately, the option is not binding upon the
promissory since it is not supported by a consideration distinct from the price.[12]
As a rule, the holder of the option, after accepting the promise and before
he exercises his option, is not bound to buy. He is free either to buy or not to buy
later. In Sanchez v. Rigos[13] we ruled that in an accepted unilateral promise to sell,
the promissor is not bound by his promise and may, accordingly, withdraw it,
since there may be no valid contract without a cause or consideration. Pending
notice of its withdrawal, his accepted promise partakes of the nature of an offer
to sell which, if acceded or consented to, results in a perfected contract of sale.
Even conceding for the nonce that respondent had accepted the offer within
the period stated and, as a consequence, a bilateral contract of purchase and
sale was perfected, the outcome would be the same.To benefit from such
situation, respondent would have to pay or at least make a valid tender of
payment of the price for only then could he exact compliance with the
undertaking of the other party.[14] This respondent failed to do. By his own
admission, he merely informed respondent spouses of his readiness and
willingness to pay. The fact that he had set aside a check in the amount of One
Million Two Hundred Ninety Thousand Pesos (P1,290,000.00) representing the
balance of the purchase price could not help his cause. Settled is the rule that
tender of payment must be made in legal tender. A check is not legal tender, and
therefore cannot constitute a valid tender of payment.[15] Not having made a
valid tender of payment, respondents action for specific performance must fail.
With regard to the payment of Five Thousand Pesos (P5,000.00), the Court is
of the view that the amount is not earnest money as the term is understood in
Article 1482 which signifies proof of the perfection of the contract of sale, but
merely a guarantee that respondent is really interested to buy the property. It is
not the giving of earnest money, but the proof of the concurrence of all the
essential elements of the contract of sale which establishes the existence of a
perfected sale.[16] No reservation of ownership on the part of Arturo is necessary
since, as previously stated, he has never agreed to transfer ownership of the
property to respondent.
Granting for the sake of argument that the RMOA is a contract of sale, the
same would still be void not only for want of consideration and absence of
respondents signature thereon, but also for lack of Esthers conformity
thereto. Quite glaring is the absence of the signature of Esther in the RMOA,
which proves that she did not give her consent to the transaction initiated by
Arturo. The husband cannot alienate any real property of the conjugal
partnership without the wifes consent.[17]
However, it was the Contract to Sell executed by Esther through her
attorney-in-fact which the Court of Appeals made full use of. Holding that the
contract is valid, the appellate court explained that while Esther did not authorize
Arturo to sell the property, her execution of the SPA authorizing her sister to sell
the land to respondent clearly shows her intention to convey her interest in favor
of respondent. In effect, the court declared that the lack of Esthers consent to the
sale made by Arturo was cured by her subsequent conveyance of her interest in
the property through her attorney-in-fact.
We do not share the ruling.
The nullity of the RMOA as a contract of sale emanates not only from lack of
Esthers consent thereto but also from want of consideration and absence of
respondents signature thereon. Such nullity cannot be obliterated by Esthers
subsequent confirmation of the putative transaction as expressed in the Contract
to Sell. Under the law, a void contract cannot be ratified[18] and the action or
defense for the declaration of the inexistence of a contract does not prescribe.[19]
 A void contract produces no effect either against or in favor of anyoneit cannot
create, modify or extinguish the juridical relation to which it refers.[20]
True, in the Contract to Sell, Esther made reference to the earlier RMOA
executed by Arturo in favor of respondent. However, the RMOA which Arturo
signed is different from the deed which Esther executed through her attorney-in-
fact. For one, the first is sought to be enforced as a contract of sale while the
second is purportedly a contract to sell only. For another, the terms and 40
Sales
conditions as to the issuance of title and delivery of possession are divergent.
The congruence of the wills of the spouses is essential for the valid
disposition of conjugal property. Where the conveyance is contained in the same
document which bears the conformity of both husband and wife, there could be
no question on the validity of the transaction. But when there are two documents
on which the signatures of the spouses separately appear, textual concordance
of the documents is indispensable. Hence, in this case where the wifes putative
consent to the sale of conjugal property appears in a separate document which
does not, however, contain the same terms and conditions as in the first
document signed by the husband, a valid transaction could not have arisen.
Quite a bit of elucidation on the conjugal partnership of gains is in order.
Arturo and Esther appear to have been married before the effectivity of the
Family Code. There being no indication that they have adopted a different
property regime, their property relations would automatically be governed by the
regime of conjugal partnership of gains.[21]
The subject land which had been admittedly acquired during the marriage
of the spouses forms part of their conjugal partnership.[22]
Under the Civil Code, the husband is the administrator of the conjugal
partnership. This right is clearly granted to him by law.[23] More, the husband is
the sole administrator. The wife is not entitled as of right to joint administration.
[24]
The husband, even if he is statutorily designated as administrator of the
conjugal partnership, cannot validly alienate or encumber any real property of
the conjugal partnership without the wifes consent.[25]Similarly, the wife cannot
dispose of any property belonging to the conjugal partnership without the
conformity of the husband. The law is explicit that the wife cannot bind the
conjugal partnership without the husbands consent, except in cases provided by
law.[26]
More significantly, it has been held that prior to the liquidation of the
conjugal partnership, the interest of each spouse in the conjugal assets is
inchoate, a mere expectancy, which constitutes neither a legal nor an equitable
estate, and does not ripen into title until it appears that there are assets in the
community as a result of the liquidation and settlement. The interest of each
spouse is limited to the net remainder or remanente liquido (haber ganancial) resulting
from the liquidation of the affairs of the partnership after its dissolution.[27] Thus,
the right of the husband or wife to one-half of the conjugal assets does not vest
until the dissolution and liquidation of the conjugal partnership, or after
dissolution of the marriage, when it is finally determined that, after settlement of
conjugal obligations, there are net assets left which can be divided between the
spouses or their respective heirs.[28]
In not a few cases, we ruled that the sale by the husband of property
belonging to the conjugal partnership without the consent of the wife when there
is no showing that the latter is incapacitated is void ab initio because it is in
contravention of the mandatory requirements of Article 166 of the Civil Code.[29]
 Since Article 166 of the Civil Code requires the consent of the wife before the
husband may alienate or encumber any real property of the conjugal
partnership, it follows that acts or transactions executed against this mandatory
provision are void except when the law itself authorizes their validity.[30]
Quite recently, in San Juan Structural and Steel Fabricators, Inc. v. Court of Appeals,[31] we
ruled that neither spouse could alienate in favor of another, his or her interest in
the partnership or in any property belonging to it, or ask for partition of the
properties before the partnership itself had been legally dissolved. Nonetheless,
alienation of the share of each spouse in the conjugal partnership could be had
after separation of property of the spouses during the marriage had been
judicially decreed, upon their petition for any of the causes specified in Article
191[32] of the Civil Code in relation to Article 214[33] thereof.
As an exception, the husband may dispose of conjugal property without the
wifes consent if such sale is necessary to answer for conjugal liabilities
mentioned in Articles 161 and 162 of the Civil Code.[34] In Tinitigan v. Tinitigan, Sr.,[35]
 the Court ruled that the husband may sell property belonging to the conjugal
partnership even without the consent of the wife if the sale is necessary to
answer for a big conjugal liability which might endanger the familys economic
standing. This is one instance where the wifes consent is not required and,
impliedly, no judicial intervention is necessary.
Significantly, the Family Code has introduced some changes particularly on
the aspect of the administration of the conjugal partnership. The new law
provides that the administration of the conjugal partnership is now a joint
undertaking of the husband and the wife. In the event that one spouse is
incapacitated or otherwise unable to participate in the administration of the
conjugal partnership, the other spouse may assume sole powers of
administration. However, the power of administration does not include the
power to dispose or encumber property belonging to the conjugal partnership.[36]
 In all instances, the present law specifically requires the written consent of the
other spouse, or authority of the court for the disposition or encumbrance of
conjugal partnership property without which, the disposition or encumbrance
shall be void.[37]
Inescapably, herein petitioners action for specific performance must fail.
Even on the supposition that the parties only disposed of their respective shares
in the property, the sale, assuming that it exists, is still void for as previously
stated, the right of the husband or the wife to one-half of the conjugal assets
does not vest until the liquidation of the conjugal partnership. Nemo dat qui non habet
. No one can give what he has not.
WHEREFORE, the appealed Decision is hereby REVERSED and SET ASIDE. The41
Sales
complaint in Civil Case No. 90-106 of the Regional Trial Court of Makati is ordered MERCEDES CALIMLIM- CANULLAS, petitioner, 
DISMISSED. No pronouncement as to costs. vs.
SO ORDERED.
HON. WILLELMO FORTUN, Judge, Court of First instance of Pangasinan,
Branch I, and CORAZON DAGUINES, respondents.

Petition for Review on certiorari assailing the Decision, dated October 6, 1980,
and the Resolution on the Motion for Reconsideration, dated November 27, 1980,
of the then Court of First Instance of Pangasinan, Branch I, in Civil Case No. 15620
entitled "Corazon DAGUINES vs. MERCEDES Calimlim-Canullas," upholding the
sale of a parcel of land in favor of DAGUINES but not of the conjugal house
thereon'
The background facts may be summarized as follows: Petitioner MERCEDES
Calimlim-Canullas and FERNANDO Canullas were married on December 19, 1962.
They begot five children. They lived in a small house on the residential land in
question with an area of approximately 891 square meters, located at Bacabac,
Bugallon, Pangasinan. After FERNANDO's father died in 1965, FERNANDO
inherited the land.
In 1978, FERNANDO abandoned his family and was living with private respondent
Corazon DAGUINES. During the pendency of this appeal, they were convicted of
concubinage in a judgment rendered on October 27, 1981 by the then Court of
First Instance of Pangasinan, Branch II, which judgment has become final.
On April 15, 1980, FERNANDO sold the subject property with the house thereon
to DAGUINES for the sum of P2,000.00. In the document of sale, FERNANDO
described the house as "also inherited by me from my deceased parents."
Unable to take possession of the lot and house, DAGUINES initiated a complaint
on June 19, 1980 for quieting of title and damages against MERCEDES. The latter
resisted and claimed that the house in dispute where she and her children were
residing, including the coconut trees on the land, were built and planted with
conjugal funds and through her industry; that the sale of the land together with
the house and improvements to DAGUINES was null and void because they are
conjugal properties and she had not given her consent to the sale,
In its original judgment, respondent Court principally declared DAGUINES "as the
lawful owner of the land in question as well as the one-half () of the house
erected on said land." Upon reconsideration prayed for by MERCEDES, however,
respondent Court resolved:
42
WHEREFORE, the dispositive portion of the Decision of this
Sales
Court, promulgated on October 6, 1980, is hereby amended to
read as follows:
(1) Declaring plaintiff as the true and lawful owner of the land in
question and the 10 coconut trees;
(2) Declaring as null and void the sale of the conjugal house to
plaintiff on April 15, 1980 (Exhibit A) including the 3 coconut
trees and other crops planted during the conjugal relation
between Fernando Canullas (vendor) and his legitimate wife,
herein defendant Mercedes Calimlim- Canullas;
xxx xxx xxx
The issues posed for resolution are (1) whether or not the construction of a
conjugal house on the exclusive property of the husband ipso facto gave the land
the character of conjugal property; and (2) whether or not the sale of the lot
together with the house and improvements thereon was valid under the
circumstances surrounding the transaction.
The determination of the first issue revolves around the interpretation to be
given to the second paragraph of Article 158 of the Civil Code, which reads:
xxx xxx xxx
Buildings constructed at the expense of the partnership during
the marriage on land belonging to one of the spouses also
pertain to the partnership, but the value of the land shall be
reimbursed to the spouse who owns the same.
We hold that pursuant to the foregoing provision both the land and the building
belong to the conjugal partnership but the conjugal partnership is indebted to
the husband for the value of the land. The spouse owning the lot becomes a
creditor of the conjugal partnership for the value of the lot, 1 which value would
be reimbursed at the liquidation of the conjugal partnership. 2
In his commentary on the corresponding provision in the Spanish Civil Code (Art.
1404), Manresa stated:
El articulo cambia la doctrine; los edificios construidos durante
el matrimonio en suelo propio de uno de los conjuges son
gananciales, abonandose el valor del suelo al conj uge a quien
pertenezca.
It is true that in the case of Maramba vs. Lozano, 3 relied upon by respondent Judge, it
was held that the land belonging to one of the spouses, upon which the spouses
have built a house, becomes conjugal property only when the conjugal
partnership is liquidated and indemnity paid to the owner of the land. We believe
that the better rule is that enunciated by Mr. Justice J.B.L. Reyes in Padilla vs. Paterno,
 3 SCRA 678, 691 (1961), where the following was explained:
As to the above properties, their conversion from paraphernal
to conjugal assets should be deemed to retroact to the time the
conjugal buildings were first constructed thereon or at the very
latest, to the time immediately before the death of Narciso A.
Padilla that ended the conjugal partnership. They can not be
considered to have become conjugal property only as of the
time their values were paid to the estate of the widow
Concepcion Paterno because by that time the conjugal
partnership no longer existed and it could not acquire the
ownership of said properties. The acquisition by the partnership
of these properties was, under the 1943 decision, subject to the
suspensive condition that their values would be reimbursed to
the widow at the liquidation of the conjugal partnership; once
paid, the effects of the fulfillment of the condition should be
deemed to retroact to the date the obligation was constituted
(Art. 1187, New Civil Code) ...
The foregoing premises considered, it follows that FERNANDO could not have
alienated the house and lot to DAGUINES since MERCEDES had not given her
consent to said sale. 4
Anent the second issue, we find that the contract of sale was null and void for
being contrary to morals and public policy. The sale was made by a husband in
favor of a concubine after he had abandoned his family and left the conjugal
home where his wife and children lived and from whence they derived their
support. That sale was subversive of the stability of the family, a basic social
institution which public policy cherishes and protects. 5
Article 1409 of the Civil Code states inter alia that: contracts whose cause, object, or
purpose is contrary to law, morals, good customs, public order, or public policy
are void and inexistent from the very beginning.
Article 1352 also provides that: "Contracts without cause, or with unlawful cause,
produce no effect whatsoever. The cause is unlawful if it is contrary to law, morals, good
customs, public order, or public policy."
Additionally, the law emphatically prohibits the spouses from selling property to43
each other subject to certain exceptions. 6 Similarly, donations between spouses
Sales
during marriage are prohibited. 7 And this is so because if transfers or con likewise attach to concubinage (Emphasis supplied),
conveyances between spouses were allowed during marriage, that would destroy WHEREFORE, the Decision of respondent Judge, dated October 6, 1980, and his
the system of conjugal partnership, a basic policy in civil law. It was also designed Resolution of November 27, 1980 on petitioner's Motion for Reconsideration, are
to prevent the exercise of undue influence by one spouse over the other, 8 as well hereby set aside and the sale of the lot, house and improvements in question, is
as to protect the institution of marriage, which is the cornerstone of family law. hereby declared null and void. No costs.
The prohibitions apply to a couple living as husband and wife without benefit of SO ORDERED.
marriage, otherwise, "the condition of those who incurred guilt would turn out to
be better than those in legal union." Those provisions are dictated by public
interest and their criterion must be imposed upon the wig of the parties. That
was the ruling in Buenaventura vs. Bautista, also penned by Justice JBL Reyes (CA) 50
O.G. 3679, and cited in Matabuena vs. Cervantes. 9 We quote hereunder the pertinent
dissertation on this point:
We reach a different conclusion. While Art. 133 of the Civil Code
considers as void a donation between the spouses during the
marriage, policy considerations of the most exigent character as
wen as the dictates of morality require that the same prohibition should
apply to a common-law relationship.
As announced in the outset of this opinion, a 1954 Court of
Appeals decision, Buenaventura vs. Bautista, 50 OG 3679,
interpreting a similar provision of the old Civil Code speaks
unequivocally. If the policy of the law is, in the language of the
opinion of the then Justice J.B.L. Reyes of that Court, 'to prohibit
donations in favor of the other consort and his descendants
because of fear of undue influence and improper pressure upon the
donor, a prejudice deeply rooted in our ancient law, ..., then there
is every reason to apply the same prohibitive policy to persons living together as
husband and wife without benefit of nuptials. For it is not to be doubted
that assent to such irregular connection for thirty years
bespeaks greater influence of one party over the other, so that
the danger that the law seeks to avoid is correspondingly
increased'. Moreover, as pointed out by Ulpian (in his lib 32 ad
Sabinum, fr. 1), "It would not be just that such donations —
should subsist, lest the conditions of those who incurred guilt
should turn out to be better." So long as marriage remains the
cornerstone of our family law, reason and morality alike
44
demand that the disabilities attached to marriage should
Sales
THE PHILIPPINE TRUST COMPANY, as Guardian of the Property of the minor,
MARIANO L. BERNARDO, Petitioner, vs. SOCORRO ROLDAN, FRANCISCO
HERMOSO, FIDEL C. RAMOS and EMILIO CRUZ, Respondents.
As guardian of the property of the minor Mariano L. Bernardo, the Philippine
Trust Company filed in the Manila court of first instance a complaint to annul two
contracts regarding 17 parcels of land:  (a) sale thereof by Socorro Roldan, as
guardian of said minor, to Fidel C. Ramos; chan roblesvirtualawlibraryand (b) sale
thereof by Fidel C. Ramos to Socorro Roldan personally. The complaint likewise
sought to annul a conveyance of four out of the said seventeen parcels by
Socorro Roldan to Emilio Cruz.
The action rests on the proposition that the first two sales were in reality a sale
by the guardian to herself — therefore, null and void under Article 1459 of the
Civil Code. As to the third conveyance, it is also ineffective, because Socorro
Roldan had acquired no valid title to convey to Cruz.
The material facts of the case are not complicated. These 17 parcels located in
Guiguinto, Bulacan, were part of the properties inherited by Mariano L. Bernardo
from his father, Marcelo Bernardo, deceased. In view of his minority,
guardianship proceedings were instituted, wherein Socorro Roldan was
appointed his guardian. She was the surviving spouse of Marcelo Bernardo, and
the stepmother of said Mariano L. Bernardo.
On July 27, 1947, Socorro Roldan filed in said guardianship proceedings (Special
Proceeding 2485, Manila), a motion asking for authority to sell as guardian the 17
parcels for the sum of P14,700 to Dr. Fidel C. Ramos, the purpose of the sale
being allegedly to invest the money in a residential house, which the minor
desired to have on Tindalo Street, Manila. The motion was granted.
On August 5, 1947 Socorro Roldan, as guardian, executed the proper deed of sale
in favor of her brother-in-law Dr. Fidel C. Ramos (Exhibit A-1), and on August 12,
1947 she asked for, and obtained, judicial confirmation of the sale. On August 13,
1947, Dr. Fidel C. Ramos executed in favor of Socorro Roldan, personally, a deed
of conveyance covering the same seventeen parcels, for the sum of P15,000
(Exhibit A-2). And on October 21, 1947 Socorro Roldan sold four parcels out of the
seventeen to Emilio Cruz for P3,000, reserving to herself the right to repurchase
(Exhibit A-3).
The Philippine Trust Company replaced Socorro Roldan as guardian, on August
10, 1948. And this litigation, started two months later, seeks to undo what the
previous guardian had done. The step-mother in effect, sold to herself, the
properties of her ward, contends the Plaintiff, and the sale should be annulled
because it violates Article 1459 of the Civil Code prohibiting the guardian from
purchasing “either in person or through the mediation of another” the property
of her ward.
The court of first instance, following our decision in Rodriguez vs. Mactal, 60 Phil.
13 held the article was not controlling, because there was no proof that Fidel C.
Ramos was a mere intermediary or that the latter had previously agreed with
Socorro Roldan to buy the parcels for her benefit.
However, taking the former guardian at her word - she swore she had
repurchased the lands from Dr. Fidel C. Ramos to preserve it and to give her
protege opportunity to redeem — the court rendered judgment upholding the
contracts but allowing the minor to repurchase all the parcels by paying P15,000,
within one year.
The Court of Appeals affirmed the judgment, adding that the minor knew the
particulars of, and approved the transaction, and that “only clear and positive
evidence of fraud or bad faith, and not mere insinuations and inferences will
overcome the presumptions that a sale was concluded in all good faith for value”.
At first glance the resolutions of both courts accomplished substantial justice:
 the minor recovers his properties. But if the conveyances are annulled as prayed
for, the minor will obtain a better deal:  he receives all the fruits of the lands from
the year 1947 (Article 1303 Civil Code) and will return P14,700, not P15,000.
To our minds the first two transactions herein described couldn’t be in a better
juridical situation than if this guardian had purchased the seventeen parcels on
the day following the sale to Dr. Ramos. Now, if she was willing to pay P15,000
why did she sell the parcels for less? In one day (or actually one week) the price
could not have risen so suddenly. Obviously when, seeking approval of the sale
she represented the price to be the best obtainable in the market, she was not
entirely truthful. This is one phase to consider.
Again, supposing she knew the parcels were actually worth P17,000; chan
roblesvirtualawlibrarythen she agreed to sell them to Dr. Ramos at P14,700; chan
roblesvirtualawlibraryand knowing the realty’s value she offered him the next day
P15,000 or P15,500, and got it. Will there be any doubt that she was recreant to
her guardianship, and that her acquisition should be nullified? Even without
proof that she had connived with Dr. Ramos. Remembering the general doctrine
that guardianship is a trust of the highest order, and the trustee cannot be
allowed to have any inducement to neglect his ward’s interest and in line with the
court’s suspicion whenever the guardian acquires the ward’s property 1 we have
no hesitation to declare that in this case, in the eyes of the law, Socorro Roldan
took by purchase her ward’s parcels thru Dr. Ramos, and that Article 1459 of the
Civil Code applies.
She acted it may be true without malice; chan roblesvirtualawlibrarythere may
have been no previous agreement between her and Dr. Ramos to the effect that
the latter would buy the lands for her. But the stubborn fact remains that she
acquired her protege’s properties, through her brother-in-law. That she planned
to get them for herself at the time of selling them to Dr. Ramos, may be deduced 45
Sales
from the very short time between the two sales (one week). The temptation of Socorro Roldan to return the 17 parcels together with their fruits and the duty
which naturally besets a guardian so circumstanced, necessitates the annulment of the minor, through his guardian to repay P14,700 with legal interest.
of the transaction, even if no actual collusion is proved (so hard to prove) Judgment is therefore rendered:
between such guardian and the intermediate purchaser. This would uphold a a.  Annulling the three contracts of sale in question; chan roblesvirtualawlibraryb.
sound principle of equity and justice. 2 declaring the minor as the owner of the seventeen parcels of land, with the
We are aware of course that in Rodriguez vs. Mactal, 60 Phil. p. 13 wherein the obligation to return to Socorro Roldan the price of P14,700 with legal interest
guardian Mactal sold in January 1926 the property of her ward to Silverio Chioco, from August 12, 1947; chan roblesvirtualawlibraryc. Ordering Socorro Roldan and
and in March 1928 she bought it from Chioco, this Court said: Emilio Cruz to deliver said parcels of land to the minor; chan
“In order to bring the sale in this case within the part of Article 1459, quoted roblesvirtualawlibraryd. Requiring Socorro Roldan to pay him beginning with
above, it is essential that the proof submitted establish some agreement between 1947 the fruits, which her attorney admits, amounted to P1,522 a year; chan
Silverio Chioco and Trinidad Mactal to the effect that Chioco should buy the roblesvirtualawlibrarye. Authorizing the minor to deliver directly to Emilio Cruz,
property for the benefit of Mactal. If there was no such agreement, either express out of the price of P14,700 above mentioned, the sum of P3,000; chan
or implied, then the sale cannot be set aside cralaw . (Page 16; chan roblesvirtualawlibraryand f. charging Appellees with the costs. SO ORDERED.
roblesvirtualawlibraryItalics supplied.)”
However, the underlined portion was not intended to establish a general
principle of law applicable to all subsequent litigations. It merely meant that the
subsequent purchase by Mactal could not be annulled in that particular case
because there was no proof of a previous agreement between Chioco and her.
The court then considered such proof necessary to establish that the two sales
were actually part of one scheme — guardian getting the ward’s property
through another person — because two years had elapsed between the sales.
Such period of time was sufficient to dispel the natural suspicion of the
guardian’s motives or actions. In the case at bar, however, only one week had
elapsed. And if we were technical, we could say, only one day had elapsed from
the judicial approval of the sale (August 12), to the purchase by the guardian
(Aug. 13).
Attempting to prove that the transaction was beneficial to the minor, Appellee’s
attorney alleges that the money (P14,700) invested in the house on Tindalo Street
produced for him rentals of P2,400 yearly; chan roblesvirtualawlibrarywhereas
the parcels of land yielded to his step-mother only an average of P1,522 per year.
3 The argument would carry some weight if that house had been built out of the
purchase price of P14,700 only.  4 One thing is certain:  the calculation does not
include the price of the lot on which the house was erected. Estimating such lot at
P14,700 only, (ordinarily the city lot is more valuable than the building) the result
is that the price paid for the seventeen parcels gave the minor an income of only
P1,200 a year, whereas the harvest from the seventeen parcels netted his step-
mother a yearly profit of P1,522.00. The minor was thus on the losing end.
Hence, from both the legal and equitable standpoints these three sales should
not be sustained:  the first two for violation of article 1459 of the Civil Code; chan
roblesvirtualawlibraryand the third because Socorro Roldan could pass no title to
Emilio Cruz. The annulment carries with is (Article 1303 Civil Code) the obligation 46
Sales
RICARDO DISTAJO, ERNESTO DISTAJO, RAUL DISTAJO, FEDERICO DISTAJO,
ZACARIAS A. DISTAJO, EDUARDO DISTAJO, and PILAR DISTAJO TAPAR,  action, laches and prescription. The counterclaim was likewise dismissed. The
petitioners, vs.COURT OF APPEALS and LAGRIMAS SORIANO DISTAJO,  parties appealed to the Court of Appeals.[11]
respondents.
The case under consideration is a petition for review on certiorari of a decision
of the Court of Appeals[1], which modified the ruling of the Regional Trial Court,
Roxas City regarding seven parcels of land located in Barangay Hipona,
Pontevedra, Capiz.[2]
During the lifetime of Iluminada Abiertas, she designated one of her sons,
Rufo Distajo, to be the administrator of her parcels of land denoted as Lot Nos.
1018, 1046, 1047, and 1057 situated in Barangay Hipona, Pontevedra, Capiz.
On May 21, 1954, Iluminada Abiertas sold a portion of Lot No. 1018 (1018-A)
to her other children, namely, Raul Distajo, Ricardo Distajo, Ernesto Distajo,
Federico Distajo, and Eduardo Distajo.[3]
On May 29, 1963, Iluminada Abiertas certified to the sale of Lot Nos. 1046
and 1047 in favor of Rufo Distajo.[4]
On June 4, 1969, Iluminada Abiertas sold Lot No. 1057 to Rhodora Distajo,
the daughter of Rufo Distajo.[5]
On July 12, 1969, Iluminada Abiertas sold Lot No. 1018 to Rufo Distajo.[6]
Meanwhile, Justo Abiertas, Jr., the brother of Iluminada Abiertas, died
leaving behind his children, Teresita, Alicia, Josefa and Luis Abiertas. Teresita paid
for the real estate taxes of the following properties, which she inherited from her
father: Lot Nos. 1001, 1048, 1049, and a portion of Lot No. 1047, all located in
Capiz. On May 26, 1954, Teresita Abiertas sold Lot No. 1001 in favor of Rufo
Distajo.[7] On June 2, 1965, Teresita Abiertas, for herself and representing her
sisters and brother, sold Lot Nos. 1048, 1049, and a portion of Lot No. 1047 to
Rufo Distajo.[8]
After purchasing the above-mentioned parcels of land, Rufo Distajo took
possession of the property and paid the corresponding real estate taxes
thereon. Rhodora Distajo likewise paid for the real estate taxes of Lot No. 1057.
When Iluminada Abiertas died in 1971, Zacarias Distajo, Pilar Distajo-Tapar,
and Rizaldo Distajo,[9] demanded possession of the seven parcels of land from
Lagrimas S. Distajo, and her husband, Rufo Distajo.The latter refused.
Consequently, on June 5, 1986, Ricardo Distajo, with the other heirs of
Iluminada Abiertas, namely, Ernesto Distajo, Raul Distajo, Federico Distajo,
Zacarias Distajo, Eduardo Distajo, and Pilar Distajo, filed with the Regional Trial
Court, Roxas City a complaint for recovery of possession and ownership of Lot
No. 1018, partition of Lot Nos. 1001, 1018-B, 1046, 1047, 1048, 1049, 1057, and
damages.
On September 4, 1986, private respondent Lagrimas Distajo[10] filed an
answer with counterclaim.
On April 9, 1990, the trial court dismissed the complaint for lack of cause of
On August 21, 1992, the Court of Appeals rendered its decision,[12] the
dispositive portion of which states as follows:
PREMISES CONSIDERED, the decision appealed from is hereby SET ASIDE and a
new judgment rendered, as follows:
WHEREFORE, the Court decides the case in favor of the defendant and dismisses
the plaintiffs complaint for lack of cause of action except with regard to the
plaintiffs claim over a 238 sq. m. portion of Lot No. 1018 (the portion adjoining
the market site and measuring seventeen meters and that adjoining the property
of E. Rodriguez measuring 14 meters). The Court hereby Orders the partition of
Lot No. 1018 to conform to the following: 238 sq. m. as above specified to belong
to the plaintiffs as prayed for by them while the rest is declared property of the
defendant.
Upon partition of Lot No. 1018 in accordance with this Courts Order, the City
Assessor of Roxas City is hereby Ordered to cancel Tax Declaration 2813 in the
name of Rufo Distajo (or any subsequent tax declaration/s issued relative to the
above-cited Tax Declaration No. 2813) and forthwith to issue the corresponding
tax declarations in the names of the respective parties herein.
SO ORDERED.
On September 10, 1992, Ricardo Distajo filed a motion for reconsideration.
[13] On December 9, 1993, the Court of Appeals denied the motion.[14]
Hence, this petition.[15]
Petitioner alleges that Iluminada Abiertas exclusively owns the seven parcels
of land delineated as Lot Nos. 1001, 1018, 1046, 1047, 1048, 1049, and 1057, all of
which should be partitioned among all her heirs. Furthermore, Rufo Distajo
cannot acquire the subject parcels of land owned by Iluminada Abiertas because
the Civil Code prohibits the administrator from acquiring properties under his
administration.[16]Rufo Distajo merely employed fraudulent machinations in
order to obtain the consent of his mother to the sale, and may have even forged
her signature on the deeds of sale of the parcels of land.
In her comment dated May 13, 1994, private respondent Lagrimas S. Distajo
contends that Rufo Distajo rightfully owns the subject parcels of land because of
various deeds of sale executed by Iluminada Abiertas selling Lot Nos. 1018-B,
1047 and 1046 in favor of Rufo Distajo and Lot No. 1057 in favor of Rhodora
Distajo. Private respondent also avers that petitioner cannot claim any right over
Lot Nos. 1001, 1048 and 1049, considering that such lands belong to the brother
of Iluminada Abiertas, namely, Justo Abiertas, Jr., whose heirs sold said parcels of
land to Rufo Distajo.
The petition lacks merit. 47
Sales
Factual findings of the trial court will not be disturbed on appeal unless the Petitioner also alleges that Rufo Distajo employed fraudulent machinations
court has overlooked or ignored some fact or circumstance of sufficient weight or to obtain the consent of Iluminada Abiertas to the sale of the parcels of
significance, which, if considered, would alter the result of the case.[17] When land. However, petitioner failed to adduce convincing evidence to substantiate
there is no conflict between the findings of the trial and appellate courts, a review his allegations.
of the facts found by the appellate court is unnecessary.[18] In the absence of any showing of lack of basis for the conclusions made by
Since the trial court and the Court of Appeals agree that Iluminada Abiertas the Court of Appeals, this Court finds no cogent reason to reverse the ruling of
owned Lot Nos. 1046, 1057 and a portion of Lot No. 1047, and that Justo Abiertas the appellate court.
Jr. owned Lot Nos. 1001, 1048, and 1049, such findings are binding on this Court, WHEREFORE, the Court DENIES the petition and AFFIRMS the decision of the
which is not a trier of facts.[19] However, the record shows that Lot No. 1018 Court of Appeals in CA-G.R. CV No. 30063.
should be divided into Lot No. 1018-A and 1018-B, the delineation of which the SO ORDERED.
Court of Appeals clarified in its decision.
The issues in this case, therefore, are limited to those properties which were
owned by Iluminada Abiertas, ascendant of petitioner, consisting of Lot Nos. 1018
-A, 1046, 1057, and a portion of 1047.
In his petition, Ricardo Distajo assails the genuineness of the signatures of
Iluminada Abiertas in the deeds of sale of the parcels of land, and claims that
Rufo Distajo forged the signature of Iluminada Abiertas.However, no handwriting
expert was presented to corroborate the claim of forgery. Petitioner even failed
to present a witness who was familiar with the signature of Iluminada Abiertas.
Forgery should be proved by clear and convincing evidence, and whoever alleges
it has the burden of proving the same.[20]
Petitioner likewise contends that the sale transactions are void for having
been entered into by the administrator of the properties. We disagree. The
pertinent Civil Code provision provides:
Art. 1491. The following persons cannot acquire by purchase, even at a public or
judicial auction, either in person or through the mediation of another:
(1) The guardian, the property of the person or persons who may be
under guardianship;
(2) Agents, the property whose administration or sale may have been
entrusted to them, unless the consent of the principal has been
given;
(3) Executors and administrators, the property of the estate under
administration; x x x
Under paragraph (2) of the above article, the prohibition against agents
purchasing property in their hands for sale or management is not absolute. It
does not apply if the principal consents to the sale of the property in the hands of
the agent or administrator. In this case, the deeds of sale signed by Iluminada
Abiertas shows that she gave consent to the sale of the properties in favor of her
son, Rufo, who was the administrator of the properties. Thus, the consent of the
principal Iluminada Abiertas removes the transaction out of the prohibition
contained in Article 1491(2). 48
Sales
JESUS MA. CUI, ET AL., plaintiffs-appellants,  placed under the administration of Don Mariano Cui; that while the latter was 84
vs.
ANTONIO MA. CUI, ET AL., defendants-appellees.
On May 25, 1948, Jesus Ma. Cui and Jorge Ma. Cui brought an action in the Court
of First Instance of Cebu against Antonio Ma. Cui and Mercedes Cui de Ramos
seeking the annulment of the sale of three parcels of land against Antonio Ma.
Cui and Mercedes Cui de Ramas of the latter and the partition of the same
among the heirs who should inherit them including the plaintiffs. The
Rehabilitation Finance Corporation was included as party defendant because the
lands above-mentioned were mortgaged to it to secure a loan of P130,000, the
object being to have the mortgage declared null and void.
On March 19, 1949, Rosario Cui, daughter of Don Mariano Cui, filed in the same
court a petition for the appointment of a guardian of the person and properties
of her father on the ground of incompetency and, accordingly, he was declared
incompetent on March 31, 1949 and one Victorino Reynes was appointed as his
guardian.
On July 13, 1949, the complaint was amended by including as party plaintiffs the
guardian as party plaintiffs the guardian Victorino Reynes and the other children
and relatives of Don Mariano, namely, Jose Ma. Cui, Serafin Ma. Cui, Rosario Cui,
her husband Irineo Encarnacion, Lourdes C. Velez, Priscilla Velez and Federico
Tamayo.
Defendants in their answer set up the defense that the sale mentioned in the
complaint is valid because it was executed when Don Mariano Cui was still in
possession of his mental faculties and that, while the sale was at first executed in
favor of the defendants and their sister Rosario Cui, the latter however resold her
share to Don Mariano for reason stated in the deed of resale executed to the
effect. They prayed that the complaint be dismissed.
On May 22, 1951, after due hearing and the presentation of voluminous evidence
on the part of both parties, the court rendered its decision dismissing the
complaint and which plaintiffs appealed in due time, and because the value of
the property involved exceeds the amount of P50,000, the case was certified to
us for decision by the Court of Appeals under section 1 of Republic Act No. 296.
Plaintiffs and defendants, with the exception of the Rehabilitation Finance
Corporation, are the legitimate children of Don Mariano Cui and Doña Antonia
Perales who died intestate in the City of Cebu on March 20, 1939. Plaintiffs in
their complaint allege that during the marriage of Don Mariano Cui and Doña
Antonia Perales, the spouses acquired certain properties in the City of Cebu,
namely, Lots Nos. 2312, 2313 and 2319, with an approximate area of 2,658
square meters, having an assessed value of P159,480, and a market value of 120
per square meter; that upon the death of Doña Antonia Perales, the conjugal
partnership did not leave any indebtedness and the conjugal properties were
years of age and under the influence of defendants, the latter, by means of
deceit, secured the transfer to themselves of the aforementioned lots without
any pecuniary consideration; that in the deed of sale executed on March 8, 1946,
Rosario Cui appeared as one of the vendees, but on learning of this fact she
subsequently renounced her rights under the sale and returned her portion to
Don Mariano Cui by executing a deed of resale in his favor on October 11, 1946;
that defendants, fraudulently and with the desire of enriching themselves
unjustly at the expense of their father, Don Mariano Cui, and of their brothers
and co-heirs, secured a loan of P130,000 from the Rehabilitation properties, and
with the loan thus obtained, defendants contructed thereon an apartment
building of strong materials consisting of 14 doors, valued at approximately
P130,000 and another building on the same parcels of land, which buildings were
leased to some Cinese commercial firms a monthly rental of P7,600, which
defendants have collected and will continue to collect to the prejudice of the
plaintiffs; and because of this fraudulent and illegal transaction, plaintiffs prayed
that the sale and mortgage executed on the properties in question, in so far as
the shares of the plaintiffs are concerned, be declared null and void and the
defendants be ordered to pay the plaintiffs their shares in the rentals of the
properties at the rate of P7,600 a month from November 1, 1947 up to the time
of their full payment, together with whatever interest may be thereon and the
expenses of litigation.
Defendants, on the other hand, aver that while the properties in question were
acquired during the marriage of Don Mariano Cui and Doña Antonia Perales,
however, they were entirely the exclusive property of Don Mariano Cui up to the
time of their transfer to defendants under the deed of Sale Exhibit A, having been
acquired by him as a donation from his uncle Don Pedro Cui and his aunt Doña
Benigna Cui; that this fact was known to the plaintiffs and to the guardian of Don
Mariano, Victorino Reynes, because in the extra-judicial partition executed
between plaintiffs and defendants on December 6, 1946 of the properties of the
deceased Antonia Perales, the three lots in question did not form part of the
conjugal properties of the spouses Don Mariano Cui and Doña Antonia Perales;
that Don Mariano Cui, for a consideration, voluntarily and without deceit,
pressure or influence on the part of defendants, executed and signed the deed of
sale Exhibit A; and that Don Cariano Cui was at that time in full enjoyment of his
mental faculties and only suffered loss of memory several years later when he
was declared by the court incompetent to manage his properties.
Defendants denied that the building constructed on the three lots in question
consisted of 14 doors and alleged that it consisted of only 12 doors. They also
denied that they received the sum of P7,600 as monthly rental of said building
because what they have been receiving was only a monthly rental of P4,800. As 49 a
Sales
special defense, they aver that they are the owners of the naked ownership of 2/3
of the three lots in question subject to the usufruct over the rents of products
thereof in favor of Don Mariano Cui during his lifetime, with the exception of the
rents from the building constructed on the 2/3 portion belonging to them; that
the 2/3 of the lots in question did not produce any rent at the time of their
acquisition by the defendants, for they produced rentals only after the
defendants had constructed the 12-door apartment now standing thereon; that
subsequently and by verbal agreement between Don Mariano Cui and the
defendants, the usufruct of the former over said 2/3 portion was fixed at P400
monthly, and this sum Don Mariano has been receiving since then up to the
present time. Defendants also aver that they are the exclusive owner of the 12-
door apartment constructed on the 2/3portion of the lots in question, having
been constructed at their expense and by virtue of the authorization given to
them in the deed of sale Exhibit A; that the loan of P130,000 obtained from the
Rehabilitation Finance Corporation was solicited personally by defendants
Antonio Ma. Cui and Mercedes Cui de Ramas for their exclusive benefit and for
the purpose of investing it in the construction of said building; that since the
property is undivided, Don Mariano Cui, as one of the co-owners, consented to
the execution of a mortgage thereon in favor of said corporation to guarantee
the payment of the loan jointly with his co-owners, the aforesaid defendants, for
the sole purpose of accommodating the latter and to enable them to obtain the
loan; that the plaintiffs are in estoppel to claim that the lots in question belong to
the conjugal partnership of their parents Don Mariano Cui and Doña Antonia
Perales, and that plaintiffs instituted the present action because they do not like
the manner in which their father had disposed of said lots, especially Jesus Ma.
Cui who was unsuccessful in his request that the ¹/3 said lots be sold to him. They
prayed that the action be dismissed.
In this appeal, appellants now contended that the lower court erred: (1) "In not
declaring the deed of sale, Exhibit A, avoid or inexistent for lack of valid consent
and consideration"; (2) "In not declaring illegal the sale, evidenced by Exhibit A, on
the ground that it was a transaction between principal and agent, which is
prohibited by paragraph (2), Article 1959 of the old Civil Code"; (3) "In not finding
that the three lots conveyed by means of the deed of sale, Exhibit A, belong to
the unliquidated conjugal partnership of Don Mariano Cui and his deceased wife
Doña Antonia Perales, and that entire property"; and (4) "In not finding that the
plaintiffs are entitled to seven-eights (7/8) of property in question and of the
rentals thereof beginning November 1, 1947." We will discuss these issues
separately.
In support of their contention that Don Mariano Cui did not and could not have
validly consented to the deed of sale in question, appellants submitted the
following proposition: (a) Don Mariano was incapacitated to give his consent by
reason of his age and ailment; (b) Don Mariano acted under a mistake, and his
signature was secured by means of deceit; and (c) the sale Exhibit A is vatiated by
undue influence.
In support of the first proposition, it is argued that Don Mariano, at the time he
signed the deed of sale Exhibit A on March 8, 1946, was already 83 years old, was
sickly and infirm, and frequently complained of ill health. It is also contended that
six days before the sale, or on March 2, 1946, he had executed a general power
of attorney in favor of defendant Antonio Cui, which act could signify that Don
Mariano himself realized that he was longer capacitated to administer his
properties and found it necessary to relieve himself of the task of dealing with
other persons in connection therewith. It is also pointed out that his children,
Jorge, Jesus and Rosario Cui testified that he was ill, he was forgetful, he could not
read nor remember well what he read, and his letters show that he was no longer
familiar with the rules of orthography. In his letter he also complained about his
illness and he realized that his affections were due to his old age. It is also
emphasized that as early as August, 1944, Jesus Cui noted that his father was
"muy debil . . . en cuestiones negocios" and that "en cuanto a su capacidad para
administar sus bienes en que tenia que producir o estudiar, el (Don Mariano) no
se acordaba." Although he was not in same when he signed the deed of sale
Exhibit A, yet he was admittedly "incompetente para manejar su dinero." (pp. 85-
86, Brief for plaintiffs and Appellants.)
As regards the second proportion, it is insinuated that if Don Mariano, by reason
of his advanced age, his weak mind and body and feeble will and reason, was not
capacitated to give his consent, it would follow as a corollary that he could not
fully understand the contents of the deed of sale. He must have therefore
labored under a mistake as to true nature of the transaction especially when it
was written in a language which he did not understand. Other insinuation leading
to the same result are: Don Mariano must have erroneously thought that the only
way to pay his debt of P3,000 to Ramon Aboitiz was by executing the sale, just as
he gave consent to the sale of his conjugal property of San Jose St., Cebu City,
because he thought it was the only available way to pay his indebtedness to the
Insular Life Assurance Co. Or he must have thought that the document he was
made to sign by Antonio Cui was not a sale but a mere authority to administer 50
the property for purpose of revenue, or he must have been induced to signing it
Sales
after he was promised a life annuity in the form of usufruct over the rents of the
properties in question. In other words the insinuation is made that Antonio Cui
employed deceit in securing the signature Don Mariano to the sale in question in
order merely to satisfy his selfish ends. There being, therefore, error and deceit,
there is no valid consent which can give validity to the sale on the sale on the part
of Don Mariano.
And with regard to the third proposition, the following circumstances are pointed
out: At the time of the sale, Don Mariano was already 83 years old, was infirm
and was living with the vendees, herein appellees. Antonio Cui was his lawyer and
attorney in fact and there was between them confidential family and spiritual
relations. Don Mariano was then in financial as shown by the fact that he was
worried about his debt to Ramon Aboitiz, and way back in 1946 he had to borrow
money from his daughter Rosario Cui which remained unpaid even after the sale
in question. The presence of undue influence is further shown, appellants
contend, in the execution by Don Mariano of the Mortgage in favor of the
Rehabilitation Finance Corporation, the extrajudicial partition Exhibit 1-a, the
partition of the property in question, the alleged oral waiver of usufrutuary rights,
and the alleged explanatory statement Exhibit 34. These acts, which were
allegedly mastermined by Antonio Cui, show, appellants contend, that Antonio
Cui could get from father whatever he wanted.
We do not believe the arguments advanced by appellants in an effort to nullify
the deed of sale Exhibit A sufficient in law to invalidate the same on the ground of
lack of valid consent on the part of Don Mariano for the simple reason that they
are merely based on surmises or conjectures or circumstances which, though
they may show inferentially that he was sickly or forgetful because of his
advanced age, do not however point unremittingly to the conclusion that at the
time he signed said deed of sale he was not full enjoyment of his mental faculties
as to disqualify him to do so or that he was not aware of the nature of the
transaction he was then undertaking. Although at the time of the sale he was
already 83 years old, he was sickly and forgetful, as contended, yet, according to
the authorities, weakness of mind alone, not caused by insanity, is not a ground
for avoiding a contract, for it is still necessary to show that the person at the time
of doing the act "is not capable of understanding with reasonable clearness the
nature and effect of the transaction in which he is engaging" (Page on Contracts,
Vol. III, p. 2810). Or, as well stated in the very case cited by counsel for appellants
only when there is "great weakness of mind in a person executing a conveyance
of land, arising from age, sickness, or any other cause", can a person ask a court
of equity to interfere in order to set aside the conveyance (Allore vs. Jewell, 24
Law Ed., 263-264). And here the evidence shows that such is not the case, for the
several letters and documents signed all executed by Don Mariano many months
after the execution of the deed of sale Exhibit A clearly indicate that, while he was
of an advanced age, he was however still physically fit and his mind was keen and
clear. This we will see in the following discussion of the evidence.
One of such evidence is the testimony of Rosario Cui, one of the appellants
herein. It should be remembered that it was she who initiated the proceedings
for the declaration of incompetency of Don Mariano Cui in order that he may be
placed under guardianship and at the hearing held for that purpose, she was the
main witness. When called upon to testify as to the state of health and mental
condition of Don Mariano, she stated that during the period she had been living
with her father in Calapan, Mindoro, which dates as for back as the Japanese
occupation, she had observed that the state of his mind was very good, he was
not yet so forgetful as he is now, and that she discovered his mental weakness
which makes him incompetent to manage his own affairs only sometime in the
month of January, 1949 (pp. 5 and 6, Exhibit 9; p. 136, t.s.n). And on the strenght
of her testimony, Don Mariano was declared incompetent on March 31, 1949.
This is an indication that, when the deed of sale was executed on March 8, 1946,
three years before his declaration of incompetency, Don Mariano was still in the
full enjoyment of his mental-faculties. It should be stated that his testimony of
Rosario Cui stands undisputed.
A circumstance which strongly corroborates this testimony of Rosario Cui is the
letter Exhibit 26 which Don Mariano wrote to Don Ramon Aboitiz on May 31,
1946, two months after the execution of the deed of sale Exhibit A, in relation to
the indebtedness he owed him by reason of his having acted as the surety of his
son Jesus Cui which the latter had not been able to settle. This letter, which
shows how lucid, keen, clear and analytical his mind was, is herein reproduced
for ready reference:
Cebu, Mayo 31, 1946
Sr. DON RAMON ABOITIZ
CEBU
ESTIMADO AMIGO —
La portadora de la presente es mi hija Mercedes, esposa del Dr. Ramas,51
Sales
a quien he dado el encargo de presentarse a Vd. con esta carta y pagarle
en mi nombre como fiador de mi hijo Jesus Cui el saldo resultante de
laliquidacion hecha por Vd. el 5 de Diciembre de 1941 de la deuda que
este contrajo, de Vd. por cierto prestamo en metalico que le dio bajo mi
garantia consistente en hipoteca.
Como Vd. trata de cobrar intereses sobre el mencionado saldo hasta la
fecha en que se pague el mismo a partir desde el 1.o de Enero de 1944,
permitame que le suplique encarecidamente apelando a su buen
corazon y reconocida generosidad, deje Vd. de cobrarme esos intereses.
En apoyo de esta suplica someto a su buen criterio lo siguiente: 1.o, mi
buenavoluntad, diligencia y prontitud en finiquitar al citado saldo; 2.o el
motivo, como Vd. lo sabe, se tuvo que contraer la citada deuda sin
ningun provecho para mi, antes bien me ha causada molestias y apuros
para pagarla completamente, y 3.o durante la ocupacion japonesa en
Cebu y estando yo ya refugiado en Manila le escribia de vez en cuando a
mi dicho hijo Jesusy siempre le recordaba que procurara hacerlo por
todos los medios, sabiendo yo que el disponia de bastante dinero; lo
cual demuestra a Vd. que la prealudida deuda me ha tenido en
constante preocupacion, realizandose porultimo mis temores de que al
fin habria yo que pagar casi a la deuda entera.
Como Vd. muy pronto se va a marchar de este nuestro pais, concedame
Vd. lo que le pido en la precedente suplica como un recuerdo,
imperecerederopara mi, de nuestra buena amistad. Le deseo un feliz
viaje, asi como una feliz estancia en el pais donde establecerse, con buen
exito ademas en susnegocios.
Disponga como gusto de affmo. amigo y servidor.
(Fdo.)
Scarcely four months before the execution of the deed of sale, Don Mariano was
residing in Calapan, Mindoro, in the house of Rosario Cui, and while there he
received several letters from his daughter-in-law, Carmen Gomez, wherein in a
very expressive and persuasive manner she asked her father-in-law, Don
Mariano, to extend a helping hand to his son Jesus Cui, who was then confined in
the stockade of the military authorities in Leyte for collaboration, so that he may
get his provisional release by putting up a bail bond for him. Because Jesus Cui,
his son, had embarked him into some commercial venture even before the war
which resulted in a disastrous failure and made him suffer a loss of nearly
P25,000, aside from the undertaking he assumed as a surety for the payment of a
loan of P3,000 which Jesus had contracted from Don Ramon Aboitiz on January
27, 1941 which Jesus failed to pay, all of which made him bitter and resentful
against his own son, Don Mariano turned a deaf ear to the plea of Carmen stating
in a language as forceful as it is clear the reasons for his attitude. These reasons
were expressed by Don Mariano in letters dated November 11, 1945 and
November 22, 1945 which are also herein reproduced for ready reference,
omitting the letters of Carmen, which are referred to therein, for being
unnecessary for our purpose. Note that the person named Chong appearing in
the letters is the nickname given to Jesus, son of Don Mariano:
Calapan, Mindoro
Nbre. 11, 1945
MI ESTIMADA MAMING —
Recibi el 9 del actual tu carta, fechada el 21 de Obre. ppdo y me entere
desu contenido.
Empiezo dandote las expressivas gracias por su interes y buen deseo
por mi salud, que ya no es tan buena como antes; tengo ya mis
achaques a causa de mi vejez que va avanzando cada dia mas; no puedo
esperar ya buena salud.
Me haces una apologia en favor de tu marido Chong, mi hijo, alabandole
comoun buen hijo; comprendo que lo hagas, porque la pasion te ciega;
pero no me lo digas a mi que conozco muy a-fondo a Chong. Nunca le
he conocido a Chong como buen hijo mio, pues me ha dado el los
mayores disgustos que he tenido en mi vida. Mes mijores amigos que
esteban al tanto de la vida de Chong y de sus fracasos en los negocios y
con quienes a veces me desahogaba, me echaban a mi la culpa porque
era yo demasiado apasionado por el. Ahora que llegado a ser pobre, lo
comprendo y lo lamento, y me recuerda de lo que me dijo a mi tia
Benigna, ya difunta (q.e.p.d) un dia, muy formalmente y en serio, que
presentia que yo a la vez me quedaria pobre y me aconsejo que tuviera
mucho cuidado en administrar mis bienes con prudencia..
Siento mucho tener que decirte que no me encuentro en condiciones
para prestar la fianza que me pides en favor de Chong; primero, porque
no dispongo de beienes inmuebles para constituir la fianza y segundo, 52
porque si bien es verdad que me quedan solares en la calle Manalili de
Sales
esa Ciudad, pero el gravamen de hipoteca sobre estos solares esta sin Tu suegro,
cancelarse aun en el registro de propiedad, lo cual tendra aun bastante
Rosario Cui not only testified that Don Mariano was still good and of sound mind
tiempo, y por otra parte, me reservo los mismos, siempre libres, para
when he lived with her for eighteen months from September, 1944 up to
poder disponer de ellos cuando fuere necesario, para atendar mis
February, 1946, and for another four months from July, 1946 to October, 1946 in
gastos. Dispensame, pues, que no pueda complacerte en lo que me
Calapan, Mindoro, but she also sustained correspondence with Don Mariano
pides. Ahora le escribo a nene para que te envie esta carta como me lo
even as late as the year 1947. Hereunder we transcribe Don Mariano's letter to
pides.
Rosario on July 14, 1947:
En retorno Yre y Nenita te envian sus recuerdos.
Termino deseando a ti y Nene siempre beuna salud y enviando a este un Cebu, Julio 14, 1947
cariñoso beso y a ti. Sra. ROSARIO C. DE ENCARNACION
En sincero afecto de tu suergo CALAPAN, MINDOROMI 
MARIANO CUI QUERIDISIMA HIJA —
Calapan, Mindoro Siento mucho que el no haber tu recibido carta mia desde que he
Nbre. 22, 1945
llegado aquios haya preocupado tanto artibuyendolo a mi falta de buena
ME APRECIABLE MAMING —
salud. Gracias a Dios no fue asi.
Recibi el 20 del actual por correo tu carta escrita ya alli en Manila y me
A la semana despues de haber llegado he recibido una carta tuya,
apresuro a contestartela.
disculpandote de no haber tu podido despedirnos abordo del barco en
Ya habras recibido y te habras enterado ya de mi carta, fecha 11 del
que ibamos con motivo de las fuertes lluvias que entonces cayeron. Te
actual. Contestando la tuya anterior portador de aquella mi nieto Liling,
conteste que habias hecho muy bien, teniendo tu una salud muy
que semarcho de aqui para alli el sabado pasado.
delicada para cogerte unas mojaduras de funestas consecuencias para
Siento mucho tener que desirte que insisto en mi negativa de ser fiador
ti.
de Chong en la forma indirecta que se me propone por los que negocian
A mediados de mayo ultimo calcule que estarias aun en Manila a
en prestar fianzas; yo que he sido juez conozco el alcance de esa fianza
consequenciaaun de la operacion de tu matriz; pero no sabiendo que
queyo otorgue a favor de Don Ramon Aboitiz para garantir el prestamo,
direccion pner en micarta a ti desisti de escribirte.
que este hizo a Chong, de TRES MIL PESOS, que creo que estan sin pagar
Cuanta bondad y generosidad en el arreglo de mi cuarto o habitacion.
aun y que yo como burro de carga tendre que pagarlos. Debes, pues
Aunqueno lo veo aun, os lo agradezco ya de todo corazon. Debe de estar
dejarme ya en pazporque tengo mala pata en ser fiador de Chong. Estoy
ya muy confortable, y sin las goteras que tanto me molestaban. Espero
pidiendo a Dios que me de medios para poder ayudarle. Temo, ademas,
poder volveraun alli en cuanto se termine estos asuntos.
que Dios me castigue haciendomal uso de los pocos bienes que me ga
Te deseo que se te desaperezca pronto la debilidad de tu corazon para
dejado para mantenerme durante los pocos anos de vida que me va
que notengas mas inveycciones de alcampor.
considiendo aun y para ni vivir pidiendo limosna, ya que de mis hijos
Envio mis mas afectuosos recuerdos a Yre y chiquillos.
poco puedo esperar.
Te da un fuerte abrazo tu padre que entranablamente te quiere.
Agradezco mucho to oferta de que cuando os establicias alli en Manila
Another interesting circumstance is the discussion which Jesus Ma. Cui had with
pararesidir permanentemente me distenares una habitacion para mi, y
his father Don Mariano on April 20, 1946 relative to the sale of the lots in
me reservotal oferta para cuando sea conveniente aceptarla.
question. It should be noted that when Jesus came to know of that sale he could53
Sin otra cosa mas, afectuoso recuerdos a Chong y a ti mi aprecio sincero.
not refrain his anger feeling that he had been ignored or the subject of
Sales
discrimination on the part of his father and give vent to his feeling he wrote to
him on March 20, 1947 a letter, copy of which was marked Exhibit M-2, wherein
he appealed to him (his father) to give him and his other children an opportunity
to buy the properties in question, to which letter Don Mariano answered with
another date April 22, 1947 wherein he apparently gave in to the demand of
Jesus subject to certain condition. As the evidence shows, Don Mariano came to
answer the letter of Jesus in this manner: Don Mariano discussed the matter with
his son Antonio showing to him the letter of Jesus on which occasion Antonio
said: "Bueno papa, si tu crees que en eso el esta empeñado y si queres darle a el
y el ha dicho a ti que el va a hacer todos los medios para conseguir dicho terreno,
puedes hacer todo lo que quiera con tal de que me devuelves mi dinero que yo
habia pagado porque era dinero de mi esposa." To this Don Mariano answered:
"Vamos a ver primero, que es lo que van a contestar a la carta que voy a
mandar."
The letter thus referred to is the one sent by Don Mariano to Jesus, Exhibit I,
wherein the former made known to Jesus that he was willing to give to all his
children equal opportunity to buy the lots in question subject to the condition
that his son or daughter who is not able to pay his debt or obligations or has no
money with which to pay them would be automatically excluded from the sale.
The evidence also shows that neither Jesus nor the other children who wanted to
participate in the sale took the trouble of answering the letter nor made known
their desire as to the proposition of their father, and such silence is undoubtedly
due to the fact that they were not in a financial condition to comply with the
condition imposed in the letter. In fact, according to Antonio Cui, such is the
predicament in which his brothers were situated as shown by the fact that Jorge
at that time was indebted to his father in the amount of P6,000, Jesus in the
amount of P18,000, Jose in the amount of P14,000, while his other brothers did
not have the necessary means to take part in the sale. The fact unfolded in
connection with this incident constitute a clear indication of the state of mind
then enjoyed by Don Mariano for he took the precaution before answering the
letter of Jesus of discussing the matter first with his son Antonio who was the one
mostly affected by the decision he was about to make considering the menacing
attitude and the incessant demand of Jesus regarding the transaction. Only a
person of sound mind could have adopted such precaution and circumspections.
The deed of sale Exhibit A was executed by Don Mariano Cui, Antonio Cui and
Mercedes Cui de Ramas on March 8, 1946 in the city of Cebu, and by Rosario Cui
and her husband Dr. Ireneo Encarnacion in the City of Manila on March 20, 1946.
The consideration of the sale was P64,000 plus the reservation of the right in
favor of Don Mariano "to enjoy the fruits and rents of the same" as long as he
lives. It appears however that, while in said deed of sale it is stated that Don
Mariano has acknowledged receipt of said consideration of P64,000, the same is
not true with regard to the share of Rosario Cui. So Don Mariano went to
Calapan, Mindoro in July, 1946 to collect from Rosario her share of the purchase
price amounting to P20,000. Rosario then excused herself from going ahead with
the sale alleging as reason that she needed what money she had to rehabilitate
her electric plant in Calapan and also because Cebu was very far from Mindoro
where they had already their permanent residence. Not being able to pay her
share in the consideration of the sale, Don Mariano demanded from her the
resale of her interest. This was done when she went to Manila on October 11,
1946 to execute the deed of resale in favor of Don Mariano. This attitude of Don
Mariano is very significant in so far as his state of mind is concerned. It shows
that he was fully conscious of what was transpiring and of the transaction he was
executing so much so that he went to the extent of demanding from Rosario the
resale of her interest when she failed to pay her share in the consideration of the
sale.
There are other letters and documents which Don Mariano had prepared and
executed in the neighborhood of the time the deed of sale in question was
executed which also depict the mental condition that he possessed at the time,
and to show this we can do no better than to quote what the lower court said on
this point:
Ademas de lo que ya dejamos expuesto, Don Mariano Cui ejecuto varios
actos que tambien impugnan la contension de que el ya estuvo
mentalmente incapacitado al otogar el Exh. A. Poco antes y tambien
despues de otogar dicha escritura, el escribo varias cartas a sus hijos y
otogo varios documentos. Entre las cartas figuran el Exh. 4, que esta
dirigida a Jorge, lleva la fecha 24 de marzo de 1945; Exh. 23, dirigida a su
hija Mercedes, fechada 9 de septiembre de 1946; Exh. 26, dirigida a Don
Ramon Aboitiz, fechada el 21 de mayo de 1946; Exhs. 36 y 40 dirigidas a
su hijo Antonio, y fechadas 3 de julio p. 13 de agosto de 1945,
respectivamente; Exhs. 41 y 42, contestaciones de las cartas de Carmen,
esposa de Jesus, fechadas el 11 y 22 de noviembre de 1945, 54
respectivamente; y exh. 57, dirigida a su hija Rosario, fechada Julio 14,
Sales
1947. Entre los documentos figuran; Exh. 1-a, escitura de reparticion
extrajudicial, otorgada el 6 de deciembre de 1946; Exh. 3-b, un affidavit
de fecha 20 de febrero de 1945; Exh. 24, recibo a favor de Gil Ramas,
otorgado el 5 de marzo de 1946; Exh. 24, constanciaque fue suscrita y
jurada ante el Escribano de este Juzgado el 23 de febrerode 1948; Exh.
34, borrador de exhibit anterior con las correcciones hechas de puno y
letra de Don Mariano Cui; Exh. 44, autorizacion a Mercedes y Antonio
para hipotecar su participacion en los lotes en cuestion, fechadael 7 de
enero de 1947; Exh. 45, convenio entre Don Mariano, por una parte, y
Mercedes y Antonio, por otra parte, referente a los terrenos en cuestion,
que lleva fecha 30 de septiembre de 1947; Exh. C escritura de hipoteca a
favor de la RFC de fecha 15 de abril de 1947; y Exh. S, un memorandum
que contiene algunas notas de sus ingresos y gastos que comprende has
ta el mes de enero de 1949, poco antes de haber perdido su memoria.
Una lectura de las cartas arribas mencionadas dos lleva a la necesaria
conviccion de que durante el periodo en que se escibieron las mismas, o
sea hasta el mes de Julio de 1947, Don Mariano Cui aun tenia el pleno
goce de sus facultades mentales, pues de otro modo, el no podia
expresarsecon tanta claridad y precision en los asuntos que trataba en
dichas cartas. Con respecto a los documentos arriba referidos, los
mismos, son de tal naturaleza e importancia, que no se podian haber
otorgardo por Don Mariano si el no estaba en su cabal juicio. El Exh. S
fue presentado por los mismos demandantes, y esta circunstancia,
naturalmente, presupone que ellos admiten que Don Mariano Cui
estuvo mentalmente sano al anotar los asientos en dicho memorandum,
muchos de los cuales tuvieron lugar ya despues de otorgarse el
documento en cuestion Exh. A.
It is obvious from the foregoing discussion that Don Mariano signed and
executed the deed of sale Exhibit A not only at a time when he was still in the full
enjoyment of his mental faculties, but also under conditions which indicate that
he knew what he was doing and, as a consequence, it cannot be said that he has
entered into the transaction without his consent or under a misapprehension
that the document he was signing was not the sale of the properties in question
but one merely pertaining to their administration.
In connection with the contention that the deed of sale Exhibit A was executed by
Don Mariano under circumstances which point out that he has done so because
of undue influence on the part of the defendants, counsel for appellants
mentions the following circumstances: (1) Don Mariano was already 83 years old,
he was the father of the vendees, and at the time of the sale or long before it was
consummated, he was living with the vendees; (2) one of the vendees, Antonio
Cui, was his attorney in fact and lawyer; (3) the vendor and the vendees had
obviously confidential family and spiritual relations; (4) the vendor was suffering
from mental weakness; and (5) the vendor was in financial distress. The presence
of undue influence, according to appellants, is further shown by the execution of
the mortgage in favor of the Rehabilitation Finance Corporation, the extra-judicial
petition Exh. 1-a, the partition of the properties in question, the alleged oral
waiver of usufructuary rights, and the explanatory statement Exhibit 34, which
acts, it is claimed, in which Don Mariano was supposed to have taken part and
which were all masterminded by Antonio Cui, show that Antonio Cui could get
from his father whatever he wanted.
There is however no concrete proof that may substantiate this claim of undue
influence. The only direct evidence on the matter is the testimony of Jesus Cui
which in the main is based on mere conjecture and not on actual facts. The
circumstance that Don Mariano Cui was then living in the house of Mercedes Cui
when the deed of sale was signed does not necessarily imply that he was made
to sign it under the insidious machinations practiced on him by his daughter. On
the contrary, the evidence shows that Don Mariano lived most of the time before
the execution of the sale with his other children and not necessarily with herein
defendants. Thus, according to the testimony of Jesus Cui himself, during the
Japanese occupation, or from 1942 to 1943, his father lived in the City of Cebu.
During the month of September, 1943, he went to Manila and lived in the house
of his daughter Lourdes Cui de Velez, where he stayed up to September, 1944.
Then he went to Calapan, Mindoro to live in the house of his daughter Rosario
where he stayed up to February, 1946 when he returned to Cebu. It was only
then that he began living in the house of Mercedes Cui. In Mercedes Cui when the
deed of sale was executed on March 8, 1946. There is therefore no basis for
concluding that said deed of sale was executed simply under the undue influence
of Antonio Cui and Mercedes Cui. The fact that about six days before the sale
Antonio Cui was made by Don Mariano Cui his attorney in fact could not mean
anything unusual for he was then getting old and he needed one who could help
him administer the properties of his deceased spouse, and the choice fell on 55
Antonio because he was the only lawyer in the family. And if to all this we add
Sales
that Don Mariano was then in full enjoyment of his mental faculties, as we have
already pointed out elsewhere, it would be presumptuous, if not unfair, on our
part to affirm, as appellants want us to do, that he allowed himself to do an act
which is not fully accord with his free and voluntary will.
We will not take up the claim that the deed of sale Exhibit A was executed without
mediating any consideration on the part of the vendees. if this were true then
said deed would be void and inexistent for it would then be afictitious or
simulated contract. This claim is merely predicated on the documents Exhibits G
and H and the declarations of Rosario Cui and Jesus Ma. Cui. We will briefly
discuss this evidence.
Exhibit G is an alleged written statement made by Don Mariano Cui on January 24,
1949 which reads as follows:
A quien corresponde:
Habiendome enterado que hoy existe un lio entre mis hijos en el
Juzgado sobre mis propiedades t los de mi difunta esposa, y sobre todo
porque el transpaso de las misma a mi hijo Antonio Ma. Cui ya hija
Mercedes Cui de Ramas no se halla aun pagado por los mismos, es mi
deseo que el pleito entre mis hijos sea inmediatamente zanjadoy todas
participen por igual dichos bienes.
Y para que asi consta firmo esta declaracion en la Ciudad de Cebu, hoy a
24 de enero de 1949.
(Fdo.) MARIANO CUI
Rosario Cui, testifying on the circumstances surrounding the preparation of said
Exhibit G, said as follows:
Sr. PIMENTEL:
P. Ayer declaro usted sobre este Exhibit G que, segun usted, esta
firmadopor su Padres?
R. Si, señor.
P. Como llego a su poder este documento?
R. Esto me dio mi papa; sabe usted cuando estaba tratando con mi
hermano,este me insulto y estaba y llorando, y despues se fueron al
cine; y entoncesdijo el; Deja Vd. y mande preparar una orden mia de que
yo quiero se termineese asunto y que se arregle entre estedes y no me
gusta que haya pleito y yo voy a firmar y se preparo eso.
P. Usted mando preparar el exhibit G en la localidad?
R. Si, señor, con el S. Jayme.
P. Donde lo firmo este exhibit G?
R. En la casa de mi hermana Mercedes. Cuando lo firmo estabamos los
dos, mi marido y yo.
P. Su hermano de usted estaba presente?
R. Estaba en casa mi hermana Mercedes, pero no estaba delante. Mi
hermano estaba ausente. Cuando se hizo este, debla haberse firmado el
24, pero era por suplica de mi papa, y habia mucha gente, y ademas en
aquel dia noquiera dar disgustos, y cuando nos marchamos, le dije:
"Papa, esta aqui el papel que me ha entregado, que voy a hacer", y dijo:
"voy a firmarlo."
P. Eso fue cuando?
R. El enero 25.
P. Sabiendo usted que su padre vivia en la casa de Mercedes por que no
llamo usted a Mercedes para ser mas legal?
No me acuerdo de eso.
P. Ni siquiera el esposo de su hermana, el Doctor, llamo usted para que
preseciara la firma de este Exhibit G?
R. No me acorde de eso. (pags. 162-B, 163 y164, transcripcion,)
If we would give credit to what document Exhibit G literally says, we would indeed
come to the conclusion that Antonio Ma. Cui and his sister Mercedes, vendees of
the property, have not as yet paid the consideration of the sale to their father
Don Mariano, but the testimony of Rosario Cui itself belies that such was the real
intention of Don Mariano when the statement was allegedly made. According to
Rosario Cui, when Don Mariano was informed that a case was brought to court to
seek the annulment of the sale of the Manalili property and she informed him of
the attitude of the other children, Don Mariano said: "Deje Vd. y mande preparar
una orden mia de que yo quieroque se termine el asunto y se arregle entre
ustedes y no me gusta que haya pleito, y yo voy a firmar y se preparo eso." Then
she caused that statementto be prepared by Atty. Jayme which was signed by
Don Mariano in the house of Mercedes, If we were to believe the testimony of
Rosario Cui, we would find that the only wish of Don Mariano was to have the
litigation terminated and amicably settled and that nothing was said about the
alleged non-payment of the consideration. And it is strange that the statement
was signed in the house of Mercedes Cui and the latter never came to know 56
about it before it was presented in court. It is apparent that the whole thing was a
Sales
concoction of some of those interested in winning the case which was already
pending in court by inserting something that might serve as basis for the
nullification of the sale; and our suspicion is strengthened when we consider that
statement was allegedly signed at a time when, according to Rosario Cui herself,
her father was already mentally infirm, so much so that about one month
thereafter he was declared incompetent and mentally incapacitated.
The document Exhibit H is an alleged letter of Don Mariano to his son-in-law, Dr.
Ireneo Encarnacion, husband of Rosario, dated January 30, 1949, wherein Don
Mariano apparently added at the foot the following statement: "PD. Quizas te
podre pagar cuando me paguen ellos Nene los solares de Manalili." If we will give
credit to the above statement, we would also conclude that the vendees have not
paid the consideration of the sale of the Manalili property. Again we can say that
such cannot represent the clear will of Don Mariano if we want to be consistent
with our finding that at that time he was no longer in possession of his mental
faculties. Apparently, this is another scheme employed by Rosario Cui and her
husband to bolster up their case seeking the annulment of the sale.
But the most serious attempt to show that the defendants did not pay any
consideration for the sale of the lots in question is the story that is now being
brought to bear on the sale of the San Jose property by Don Mariano to his
daughter-in-law, Elisa Quintos, wife of Antonio Cui, on August 31, 1944 which, it is
alleged, does not show on its face the true consideration paid by Elisa to don
Mariano regarding said property. In relating the so try relative to this transaction,
the picture which counsel for appellants wants to portray is that the true
consideration paid by Elisa to Don Mariano is the sum of P125,000, and not
simply P50,000 as it was made to appear therein, and, therefore, when the deed
of sale was executed on March 8, 1946 no actual consideration passed from
Antonio Cui to Don Mariano because the latter was not then owing any amount
either to said Antonio or to his wife Elisa Quintos.
Before discussing the details concerning the sale of the San Jose property as
narrated by counsel for appellants, let us take note of the version of Antonio Cui
as to how he came to pay the consideration of P21,333 assigned to him in the
transaction. Antonio Cui testified that of the said sum of P21,333 representing his
share in the consideration of the sale, P1,333 was advanced in his favor by his
sister Mercedes as shown by the receipt Exhibit 24 issued by Don Mariano in
favor of the latter. The balance of P20,000 represents settlement of the debt his
father then owed to his wife Elisa. This indebtedness, according to Antonio, arose
in the following manner: On June 10, 1935, the conjugal partnership of the
spouses Don Mariano Cui and Doña Antonia Perales contracted an obligation of
P80,000 with the Filipinas Life Assurance Co., Ltd. secured by a mortgaged on real
estate belonging both to the conjugal partnership and to the estate of Don
Mariano. On March 23, 1942, the company made a demand on Don Mariano for
the payment of the obligation which was then increasing in view of the
accumulation of the interests. In order that he may settle this obligation, Don
Mariano asked his son Jesus Cui to look for a buyer of the San Jose property in
Cebu City.
Apparently, Jesus made efforts to look for a buyer as shown by several letters and
telegrams he sent to his father regarding the matter so much so that Don
Mariano, acknowledging said efforts, sent to him on October 5, 1943 a letter
thanking him for the interest he was displaying and stating that he could keep for
himself whatever amount he might secure in excess of the sum of P90,000 which
at that time was the totality of the obligation (Exh. 49). But since two years had
passed and nothing concrete came from the efforts exerted by Jesus, Don
Mariano had to turn for help to his son Antonio. Antonio agree to help and said
that he would talk to his wife about it. The best way he and his wife found to raise
the money was to sell the property his wife had in Malate, City of Manila, for the
sum P300,000. Of this amount, they gave to his father the sum of P125,000 to
cover his needs and obligations. With this money, Don Mariano pay his debt to
the insurance company of P94,736.93, including interests, deducted the sum of
P5,000 representing the amount spent by him for the wedding of Antonio and
Elisa, and applied P50,000 as consideration for the sale to Elisa Quintos of the
house and lot at San Jose street in Cebu City. And in recognition of the help
extended to him by Antonio and Elisa, Don Mariano acknowledged in their favor
the sum of P70,000 as a loan. The deed of sale of the San Jose property to Elisa
Quintos was executed by Don Mariano Cui on August 31, 1944 with two of his
children, Lourdes Cui de Velez and Jorge Cui as witnesses. And when the sale of
the lots in question came, it was agreed that the loan of P70,000 be reduced to
P20,000, Philippine currency, in deference to the request of Don Mariano which
amount, in addition to the sum of P1,333 advanced by Mercedes, became the
consideration paid by Antonio Cui for his share in the transaction. This is the
explanation given by Antonio of how he came to pay the consideration of the
sale, and apparently this is supported by the same deed of sale wherein Don 57
Mariano acknowledged having received the total consideration (Exhibit A).
Sales
Appellants, however, do not seem to agree to this narration for they do not give
faith and credit to the explanation given by Antonio Cui as to how he came to pay
his share in the consideration of sale, and to show that Antonio cannot be
truthful and that the sale of the San Jose property, as well as that of the lots in
question, are but the product of his insidious scheme and manipulations to serve
his own selfish interests, they brought forth in this case certain documents and
telegrams tending to show that Don Mariano could have intended to sell the San
Jose property for less than the amount of his obligation to the insurance
company more so when he had received offers for the purchase of said property
in the amount of not less than P150,000. Thus, an attempt was made to show
that on August 25, 1944, or five days before the sale to Elisa Quintos was
consummated, Paulino Gullas offered to buy the property for P150,000. There
was also an attempt to show that at about the time the sale was being made to
Elisa Quintos of that property, Sergio Osmeña, Jr. also made an offer in the same
amount of P150,000.
While these facts are true because they are supported by unrefuted evidence, it
is however also true that those offers came when the negotiation between Don
Mariano Cui and Elisa Quintos had already been completed. It should be borne in
mind that the authority given by Don Mariano Cui to Jesus Cui to sell the property
was given even as early as 1942 and despite the lapse of two years nothing
concrete came out in spite of the efforts made by Jesus to look for a buyer, and
so Elisa Quintos had to sell her property in Manila just to please and
accommodate her father-in-law, Don Mariano. The offer, therefore, of Paulino
Gullas or of Sergio Osmeña, Jr., even for the sum of P150,000, came late, and
under the circumstances, Don Mariano had no other alternative, as any other
decent man would have done, than to reject the offers and maintain the sale he
made to Elisa even at the sacrifice of some material advantage in his favor. He
wrote to Jesus on August 7, 1944 (Exhibit 52) and told him that he had already
sold the San Jose property to Elisa assuring him at the same time that although
the price paid for it was not high, still he considered the sale to his advantage as
Elisa and Antonio spontaneously reserved in his favor the right to occupy for life
any room he may choose in the same house included in the transaction when he
should return to Cebu to live there, a privilege which Don Mariano knew no other
buyer would be in position to offer. This explains somewhat this apparent
incongruity in the transaction. This consideration may really appear low
especially when done in Japanese currency, but at the same time we cannot
overlook the fact that some moral factor has played an important part in the
transaction. At any rate, that is the consideration that appears in the document
(Exhibit R), and its genuineness and due execution is not now disputed. We are,
therefore, constrained to consider it on its face value.
The consideration paid by Mercedes Cui for her share in the sale in question is
also disputed by appellants who claim that she has not paid any amount and that
the explanation she has given as to how she came to pay said consideration is
not worthy of credence. Mercedes Cui, on this matter, testified that before her
father Mariano left for Manila in the month of July, 1943, he had been taking from
her on several occasions sum of money which reached a total of P140,000; that in
February, 1946, her father returned to Cebu and she again gave him the sum of
P2,000, making a total of P16,000, the money taken by her father; that after
receiving the sum of P2,000, her father offered to sell her ¹/3 of the interest in the
three lots in question, which she accepted; that days before she signed the deed
of sale Exhibit A, she gave her father the sum of P6,666, of which P1,333 were
given for the account of her brother Antonio Cui, and the sum of P5,333 was
applied to cover the balance of her share in the consideration to complete the
amount of P16,000 previously taken by her father; that in acknowledgement of
the receipt from her of said amounts, her father executed the receipts Exhibit 24
in his own handwriting, and days after, she was made to sign said deed of sale;
and that her father did not include in the sale her other brothers and sisters
because he knew their precarious financial situation.
The weakness which appellants find in this explanation given by Mercedes Cui
lies in that she has been able to produce any receipt showing the deliveries of
money she claimed to have made to her father. This may be true, but this was
explained by her saying that it has never been her habit to ask for receipt from
her father for any money she may have given him, unlike her sister Rosario who
has the habit of asking for receipts. On the other hand, she claims that her
payment of the consideration cannot be disputed for Don Mariano has expressly
acknowledged having received it in a document written in his own handwriting,
as evidence by Exhibit 24, the genuineness of which is not disputed. And there is
one circumstance that bolster up this claim, which also holds true with regard to
Antonio Cui, and that is the attitude shown by Don Mariano when Rosario Cui has
not paid her consideration in the sale. It should be recalled that when Don
Mariano came to know this fact, he went to Calapan, Mindoro, where Rosario was
58
residing, to demand payment from her, and when she failed, he asked her to
Sales
execute a deed of resale in his favor. If Antonio or Mercedes, as appellants now
claim, has not paid his or her share in the consideration, Don Mariano would
have also demanded from any one of them the resale of the property, in the
same way that Rosario was required. The fact that Don Mariano did not do so
shows that both paid their shares to his full satisfaction.
But appellants are not yet satisfied with this reasoning. They insist that Mercedes
has not paid any consideration because, they contend, if it were true that she has
given her father the different sums of money she claims she has given, which
amount to P16,000, the receipt of said amounts would have been noted by Don
Mariano in the diary Exhibit KK which was kept by him during the years 1942 to
1945 wherein several entries appear of different sums of money received and
disbursed by him for sundry expenses. When these alleged sums were not noted
down in said diary, they contend, it is because they are not true.
If we were to believe the testimony of Jesus Ma. Cui that his father had the habit
of writing down in said diary all the receipts and expenses he makes daily up to
the last centavo, the contention may be correct, considering that the sums of
money delivered by Mercedes do not appear in said diary. But that statement of
Jesus Cui is an exaggeration for, as affirmed by Antonio Cui, not all the entries
appearing therein are in the handwriting of Don Mariano, nor is it true that all the
receipts and expenses he makes everyday are noted down therein, for the truth
is that there are many money transactions and expenses made by Don Mariano
during the period of 1942 to 1945 that have not been recorded therein. Thus, the
expenses and receipts had by Don Mariano while he was in Manila, do not
appear therein, nor those incurred by him in his travels from Manila to Calapan,
and vice-versa. Nor do they appear therein the expenses incurred by Don
Mariano for his son Jorge and his family when they went to Calapan; neither does
it appear the loan of P3,000 made to Miguel Ortigas. It does not also appear the
sum of P18,000 borrowed from him by Jorge while they were in Manila as
testified by the latter.
In connection with this diary, we may also point out the suspicious circumstances
surrounding its presentation in court as evidence. It appears that this document
was presented by Rosario Cui who testified that she received it from her father
after Mercedes had already testified in this case, which was on September 30,
1949. According to her, Don Mariano on that occasion gave her instruction as to
where to get said document and what to do with it. She said that when she talked
with her father about the claim of Antonio that the consideration he paid was
P70,000 which were reduced to P20,000 upon his request, her father said:
"despues me dijo mi papa quebuscara en sus libros, porque el tenia un libro
diario donde apuntaba susgastos y tenia varios cuadernos todavia alli pero yo no
quise sacar todo; entonses al me dijo que yo lo llevara y lo utilizara para
comprobar dos gastos y las entradas durante esos años." (p. 112, Memorandum
for Appellees)What Rosario has attributed to her father as regards the use of the
diary Exhibit KK is hard to believe considering that by that time, September
30,1949, Don Mariano could no longer hold such a coherent conversation and
much less give instructions as to the best way could make use of the diary,
considering that Don Mariano at that time has already been declared mentally
incapacitated. The presentation of said diary can have no other meaning than
that it is an eleventh hour attempt to bolster up the claim of appellants that the
deed of sale Exhibit A lacks consideration.
As an additional arguemen to nullify the deed of sale Exhibit A, even partially, in
the supposition that all their previous arguments would prove of no avail,
appellants raise the question that said sale should be invalidated at least in so far
as the portion of the property sold to Antonio Cui is concerned, for the reason
that when that sale was effected he was then acting as the agent or administrator
of the properties of Don Mariano Cui. In advancing this argument, appellants lay
stress on the power of attorney Exhibit L which was executed by Don Mariano in
favor of Antonio Cui on March 2, 1946, wherein the former has constituted the
latter as his "true and lawful attorney" to perform in his name and that of the
intestate heirs of Doña Antonia Perales the following acts:
. . . to administer, sell, mortgage, lease, demand, claim, represent me
and the intestate heirs, in all meetings of corporations, associations, of
which my or their presence is required, sue for, collect, cash, indorse
checks drawn in my favor or of the intestate heirs against any person or
entity or bank, and sign all documents, that I and or the intestate heirs to
which I am the administrator are entitled to; giving and granting untomy
said attorney full power to perform and to make everything necessary to
be done or which he believes to be necessary or beneficial for me and
the said heirs as fully and to all intents and purposes as I might or could
do if personally present, with full power of substitution, and revocation,
hereby granting ratifying all that he or his substitutes shall lawfully do or
cause to be done by virtue of these presents. 59
While under article 1459 of the old Civil Code an agent or administrator is
Sales
disqualified from purchasing property in his hands for sale or management, and,
in this case, the property in question was sold to Antonio Cui while he was
already the agent or administrator of the properties of Don Mariano Cui, we
however believe that this question can not now be raised or invoked for the
following reasons.
(1) This contention is being raised in this appeal for the first time. It was never
raised in the trial court. An examination of the complaints, both original as well as
amended, will show that nowhere therein do they raise the invalidity of the sale
on that ground nor ask as an alternative relief for the partial revocation of the
sale in so far as Antonio's share is concerned because of the alleged relation of
principal and agent between vendor and vendee. It is undoubtedly for this reason
that the trial has not passed upon this question in its decision. And considering
that under Section 19, Rule 48, of our Rules of Court, an appellant may only
include "In his assignment of error any question of law or fact that has been
raised in the court below and which is within the issues made by the parties in
their pleadings", it follows that appellants are now prevented from raising this
question for the first time in this instance.
(2) The power of attorney in question is couched in so general a language that
one cannot tell whether it refers to the properties of Don Mariano or only to the
conjugal properties of the spouses. However, considering that the appointment
was extended to Antonio Cui by Don Mariano so that he may act as agent "for me
and for the intestate heirs of the deceased Antonia Perales", one is led to believe
that the power refers to the conjugal properties wherein he had one-half interest
in the heirs of Doña Antonia, the remaining half. Moreover, the power of attorney
was executed on March 2, 1946 while the deed of sale was executed on March 8,
1946. They were therefore executed practically at the same time, which makes it
doubtful as to whether such sale can be deemed to be within the prohibition of
the law.
(3) The prohibition of the law is contained in article 1459 of the old Civil Code, but
this prohibition has already been removed. Under the provisions of article 1491,
section 2, of the new Civil Code, an agent may now buy property placed in his
hands for sale or administration, provided that the principal gives his consent
thereto. While the new Code came into effect only on August 30, 1950, however,
since this is a right that is declared for the first time, the same may be given
retroactive effect if no vested or acquired right is impaired (Article 2253, new Civil
Code). During the lifetime Don Mariano, and particularly on March 8, 1946, the
herein appellants could not claim any vested or acquired right in these
properties, for, as heirs, the most they had was a mere expentancy. We may,
therefore, invoke now this practical and liberal provision of our new Civil Code
even if the sale had taken place before its effectivity.
The remaining question to be determined refers to the nature of the properties
in question which appellants claim belong to the conjugal partnership of Don
Mariano Cui and Doña Antonia Perales while, on the other hand, appellees
contend belong exclusively to Don Mariano.
In support of their contention, appellants rely on the legal presumption that said
properties are conjugal because they were acquired by Don Mariano and his wife
during their marriage, and on the testimony of Jesus, Jorge and Rosario Cui, three
of the children of Don Mariano, who testified that said properties are conjugal
because they have always been of the belief or impression that they belong to
the conjugal partnership of their parents. They have not presented any
documentary evidence in support of their contention.
It is true that the properties in question were acquired during the marriage of
Don Mariano Cui Doña Antonia Perales", and as much they are presumed to be
conjugal properties (Article 1407, old Civil Code), but this presumption appears
here rebutted by conclusive and strong evidence to the contrary. It should be
stated that these properties originally belonged to Don Pedro Cui and Doña
Benigna Cui, uncle and aunt, respectively, of Don Mariano, which were donated
by them to Don Mariano on April 12, 1912 on condition that the latter renounce
any further inheritance he might have been in the intestate estate of the donors.
And while appellees have been able to introduce any copy of the deed of
donation because the same has already disappeared, the fact however remains
that it has been clearly established that such donation has been actually made
exclusively to Don Mariano by clear and satisfactory evidence. The following is a
discussion of such evidence which consists in the testimony of Marta Cui and
Generoso Vda. de Jakosalem, both nieces of the donors, and in numerous
documents the genuineness of which is not disputed.
Marta Cui, a woman 81 years old, testified that since she was 10 years of age she
lived in the company of her uncle Pedro Cui and aunt Benigna Cui; that during
their lifetime these two made donations of their lands to their nephews and
nieces subject to the condition that they should renounce whatever share they
might have in their inheritance and among the donees was Don Mariano Cui; that
60
the donations were made exclusively to their nephews and nieces, or without
Sales
including their respective spouses; that the donation made in her favor is
contained in the document Exhibit 21; and that the lots in question were donated
to Don Mariano Cui to the exclusion of his spouse Antonia Perales. Examining
said donation Exhibit 21 one would find that it was really made exclusive in favor
of Marta Cui subject to the condition that she would renounce whatever
inheritance she might have from the donors.
Generoso Vda. de Jakosalem, another woman of advanced age who because of
unexpected illness was not able to continue testifying, also affirmed that the lots
in question were donated to Don Mariano by her uncle Pedro Cui and aunt
Benigna Cui exclusively, and this she knows personally because on the same date
such donation was made, she also received a donation from the same donors.
Antonia Ma. Cui, testifying on this matter, said: that while he was acting as private
secretary of his father Don Mariano before the was, he had an opportunity to see
a copy of the deed of donation of the lots in question in his favor (his father),
which copy was furnished by the clerk of court, and at the foot thereof there
appears a note to the effect that the original of said deed was on file in the
record of the cadastral case covering the property; that said document appears
signed by the donors Pedro Cui and Benigna Cui, by the donee Mariano Cui and
the instrumental witnesses Victor Cui and Dionisio Jakosalem; that said copy
having been lost, he went to see the clerk of court to inquire about the original
that was on file in the record of the cadastral case but the clerk of court told him
that the record was destroyed during the last was; that he them went to the
office of the Bureau of Achives to see if he could get a copy of the document but
in said office he only found the notarial register of the notary public Raymundo
Enrique wherein the deed of donation appears recorded; that at his request the
chief of said office issued photastic copies of the pages of the notarial register
which contained the annotation relative not only to the deed of donation in
question but also to that which pertains to the other deeds of donation executed
by the donors Pedro Cui and Benigna Cui (Exhibit 31-a and 31-b); that the entry
No. 310 that appears in the copy marked Exhibit 31-b refers to the deed of
donation of the lots in question in favor of his father because said entry refers to
a property situated in Plaza Washington, Cebu, where his father did not have any
other property except that donated to him by his relatives, which was later
divided into three lots, and that it is of common knowledge among members of
the Cui family that all the nephews of Pedro Cui and Benigna Cui received from
them by way of donation several pieces of lands subject to the condition that
they renounce their right to inherit from the donors.
Entry No. 310 which appears in photastic copy Exhibit 31-b contains under the
heading "Nature of Instrument" the following annotation: "Donacion condicional
que hacen Pedro Cui y Benigna Cui a favor de su sobrino Mariano Cui de un solar
con todas sus mejoras y edifficio en la plaza de Washington, Cebu; y la aceptacion
del donatario quien agradece a los donantes." In the same entry there also
appears that the document was executed on April 12, 1912 by Pedro Cui, Benigna
Cui, and attested by Victor Cui and Dionisio Jakosalem.
In the photastic copy Exhibit 31-a, there appear entries Nos. 301, 303, 304 and
305 which refer to the deeds of donnation executed by Pedro Cui and Benigna
Cui in favor of their nephews and nieces Mauricio Cui, Marta Cui, Victor Cui, Angel
Cui and Felicidad Cui. Note that these donations were made exclusively in favor
of the nephews and nieces without including their respective spouses and were
all executed on April 11, 1912, or one day before the execution of the donation in
favor of Don Mariano Cui. The two photostatic copies Exhibits 31-a and 31-b
corroborate the testimony of Marta Cui and Generoso Vda. de Jakosalem to the
effect that all the donations made by Don Pedro Cui and Benigna Cui in favor of
their nephews and nieces were made to them exclusively or without including
their respective spouses, and subject to the condition that they should renounce
their right to inherit from the donors.
In addition to the foregoing evidence, there are other documents which
strenghten the contention that the lots in question were donated exclusively to
Don Mariano Cui. One of them is the inventory prepared by Don Mariano of the
properties which belonged to him exclusively and those which belonged to the
conjugal partnership, as a result of the death of his wife Antonia Perales in 1939,
copies of which were furnished to all the children of Don Mariano. In this
inventory marked Exhibit 8, under the heading "Bienes del esposo superviviente
Don Mariano Cui," the following appears: "1.-Un solar compuesto de los lotes
2312, 2313 y 2319, del Catastro de Cebu, con sus mejoras consistentes en una
casa de pierda y madera con techo de teja y con una azotea tambien de pierda y
madera." In the same inventory under the heading "Bienes ganancials habidos
durante el matrimonio de Don Mariano Cui y Doña Antonia Perales," there also
appears the following statement: "1. Un edificio mixto de concreto y madera con
techo de hierro galvanizado . . . construido un una porcion de terreno, de
mildosientos cincuenta (1,250) metros cuadrados de superficie, mas o menos, la61
cual forma parte de un solar de mayor extention, situado entre las Calles Manalili
Sales
y Calderon de la ciudad de Cebu, Cebu . . . y pertenece en propiedad exclusiva al
esposa superviviente Don Mariano Cui." This property is the one known as lots
Nos. 2312, 2313, and 2319. This inventory was never objected to by the heirs and
shows clearly that while the land belongs exclusively to Don Mariano Cui the
building constructed thereon was considered as conjugal property.
Another important document is the extra-judicial partition of the properties
pertaining to the conjugal partnership of Don Mariano Cui and the deceased wife
Antonia Perales, marked Exhibit 1-a, which was signed by Don Mariano and all his
children, with the exception of Jorge Cui, who was then in Manila when the
document was signed on December 6, 1946. In said document mention is made
of the inventory which was prepared by Don Mariano of the conjugal properties
belonging to him and his wife, as well as the powers of attorney executed in favor
of Don Mariano by his children authorizing him to administer the properties
belonging to the conjugal partnership. It is interesting to note that in this deed of
partition a relation is made of the conjugal properties as well as of the debts and
obligation which were then existing against the partnership and the disposition
made of the properties to pay said debts and obligations. It is also interesting to
note that the three lots in question are not included in this deed of partition. The
fact that all the heirs, with the exception of Jorge, signed this deeds of partition
without any protest, is a clear proof that they knew right along that said lots were
exclusive property of their father and did not belong to the conjugal partnership.
It is true that appellants Jesus Ma. Cui and Rosario Cui, while admitting the
authenticity and due execution of the above deed of partition, now contend that
they signed the same without being aware of its contents, but this contention can
hardly be given credit, for we can not suppose that, referring as it does to an
important document which concern precisely a partition of inheritance, they
should sign the same without first ascertaining or satisfying themselves of the
nature of the transaction.
Other important documents that may have a bearing on this matter are
inheritance tax return Exhibit 32 and the relation Exhibit 33 of the real properties
of Don Mariano Cui for the purpose required by law relative to the issuance of
the Residence Certificate B. The inheritance tax return was filed by Don Mariano
Cui in 1939 in connection with the hereditary left by his wife Antonia Perales and
in said the lots in question were not included, while the relation Exhibit 33
includes said lots because they were deemed by Don Mariano as his exclusive
property and as such should be included in the assessment to be made in
connection with the issuance of the Residence Certificate B. These two
documents, which were prepared by Don Mariano Cui, clearly indicate that the
lots in question were always considered by him as his exclusive property.
There can therefore be no doubt, in the light of the overhelming evidence,
testimonial as well as documentary, we have discussed in the preceeding
paragraphs, that these three lots in question have always been considered not
only by Don Mariano Cui, but by his children and other relatives, him by his uncle
Pedro Cui and aunt Benigna Cui to the exclusion of his wife Antonia Perales.
Consequently, the contention that, in disposing of said property, Don Mariano
Cui has appropriated what belongs to his co-heirs, has completely no function in
the evidence.
Having reached the conclusion that the lots in question were the exclusive
property of Don Mariano Cui and that the deed of sale Exhibit A was executed by
him freely, intelligently, and with sufficient pecuniary consideration, we deem it
unnecessary to dwell on the other points discussed by both parties in their briefs
and in their respective memoranda. While these points, vehemently advocated by
appellants' counsel may throw could on the due execution of the sale, or may
cast doubt on the sufficiency of its consideration, we are however constrained to
uphold its validity if we are to be consistent with our conclusion that Don
Mariano has executed it while still in the full enjoyment of his mental faculties,
considering that he never lifted a finger to dispute it, in the same manner he did
with regard to Rosario Cui. No other conclusion is plausible and proper,
considering all the circumstances of the case.
Wherefore, we hereby affirm the decision appealed from, without
pronouncement as to costs.
62
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CONSTANCIA L. VALENCIA,
Complainant,
- versus -
ATTY. DIONISIO C. ANTINIW,
Respondent.
This is an appeal for reinstatement to the Bar of respondent Dionisio C.
Antiniw.
 
The record shows that respondent was disbarred and his name stricken off
the Roll of Attorneys on April 26, 1991 in a consolidated Decision[4] of this Court, the
dispositive portion of which reads:
 
 
WHEREFORE, judgment is hereby rendered declaring: 1.
Dionisio Antiniw DISBARRED from the practice of law, and his name
is ordered stricken off from the roll of attorneys; 2. Arsenio Fer
Cabanting SUSPENDED from the practice of law for six months from
finality of this judgment; and 3. Administrative Case No. 1391
against Atty. Eduardo Jovellanos and additional charges therein, and
Administrative Case No. 1543 DISMISSED.
 
In the aforesaid consolidated Decision, respondent was found guilty of
malpractice in falsifying a notarized deed of sale and subsequently introducing the
same as evidence for his client in court.
 
Respondents motion for reconsideration of the consolidated decision
disbarring him was denied by the Resolution of August 26, 1993.[5] In the same
Resolution, the Court also held with respect to respondents plea for mercy and
compassion that:
 
x x x the same is merely NOTED until such time as he
would have been able to satisfactorily show contrition and proof of
his being again worthy of membership in the legal profession.
 
Subsequently, in a Manifestation dated September 17, 1993,[6] respondent
proffered his apologies to the Court for his shortcomings as a legal practitioner
asserting that if there was an offense or oversight committed against the legal profession, it was due to his
sincere belief that he was doing it honestly to protect the interest of his client. He pleaded that, pending
his submission of proof showing that he is again worthy of membership in the Bar, he
be permitted to continue with his notarial work. In a Resolution dated October 19,
1993,[7] the Court denied respondents plea in the aforesaid Manifestation.
On January 4, 1994, respondent filed a Petition dated December 8, 1993[8]
 praying for leave to submit proof of his being again worthy to be re-admitted to the
legal profession. Attached to the Petition were testimonials, affidavits and sworn
certifications of known and outstanding members of his community at Urdaneta,
Pangasinan, as well as manifestos and resolutions of groups and associations
representing various sectors thereat, all attesting to his honesty, worthiness,
respectability and competency as a lawyer and as an elected Board Member in
Pangasinan. In a Resolution dated January 27, 1994,[9] the Court denied said petition. A
Letter dated February 1, 1995[10] which was sent to the Court by Bishop Jesus C.
Galang, D.D. of the Diocese of Urdaneta, Pangasinan, pleading for respondents
reinstatement, was noted in the Courts Resolution dated March 14, 1995.[11]
 
Respondent filed an Appeal for Reinstatement dated March 8, 1996,[12]
 declaring that since his disbarment, he had embarked on and actively participated in
civic and humanitarian activities in the Fifth District of Pangasinan where he was again
elected for the third time as a Provincial Board Member and for which activities he
received Plaques of Appreciation and Recognition, Resolution/Letters, Awards and
Commendations from local government officials of Pangasinan and different groups
and associations in the province, all showing that he is worthy to once again practice
the legal profession. His appeal, however, was denied by the Resolution dated April
23, 1996.[13]
 
On December 17, 1996, respondent filed a Plea for Re-Admission
dated December 8, 1996,[14] reiterating his earlier plea for the lifting of his
disbarment. The plea was also denied on January 28, 1997.[15]
 
On September 1, 1997, respondent again filed a Plea for Judicial Clemency
and Reinstatement to the Bar dated August 30, 1997,[16] submitting in support thereof
the favorable indorsements, letters and resolutions from the Pangasinan Chapter of
the Integrated Bar of the Philippines (IBP); the Executive Judges of the Regional Trial
Courts at Lingayen and Urdaneta, Pangasinan; the Provincial Prosecutors Association
of Pangasinan; Eastern Pangasinan Lawyers League; the Provincial Board of
Pangasinan; Rotary Club of Urdaneta; and the past National President of the IBP, Atty.
Numeriano G. Tanopo Jr. The foregoing plea was merely noted by the Court
on October 14, 1997.[17]
 
The following year, respondent filed an Appeal dated July 8, 1998,[18]
 reiterating therein his apologies to the Court and promising that should he be given
back his license to practice law, he will live up to the exacting standards of the legal
profession and abide by the Code of Professional Ethics and the Lawyers Oath. Among
the written proofs appended to his appeal was the Letter dated June 18, 1998[19] from
Bishop Galang, of the Diocese of Urdaneta, Pangasinan, wherein he reiterated his
earlier plea for respondents reinstatement.
 
In a Letter dated July 13, 1998[20] received by this Court on July 23, 1998,
Bishop Galang withdrew his letter dated July 10, 1998 recommending respondents 63
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reinstatement for being misled into signing the same.
 
Thereafter, respondent filed a Manifestation and Motion dated December 22,
1998,[21] wherein he pointed out that more than seven (7) years had elapsed from the
time of his disbarment and that others who were likewise disbarred but for a shorter
duration, namely Attys. Benjamin Grecia and Benjamin Dacanay,[22] had already been
reinstated to the law profession. Among the attachments to respondents
Manifestation was Resolution No. 98-7c dated 6 July 1998 issued by the IBP,
Pangasinan Chapter, strongly indorsing respondents plea for judicial clemency and
reinstatement, and the letter dated June 18, 1998 from Bishop Galang supporting his
reinstatement to the Bar.
 
In a Resolution dated February 9, 1999,[23] the Court noted (a) the letters
dated June 18, 1998 and July 13, 1998 of Bishop Galang; (b) Appeal dated July 8, 1998
and Manifestation and Motion dated December 22, 1998 both filed by
respondent. Respondent was also required to comment on Bishop Galangs letter
dated July 13, 1998 within ten days from notice.
 
In his Comments with Motion dated March 23, 1999,[24] on Bishop Galangs
letter dated July 13, 1998, respondent denied the existence of a letter dated July 10,
1998 of Bishop Galang but acknowledged the existence of the letter dated June 18,
1998. Respondent averred that if the Bishop was indeed referring to the June 18,
1998 letter, he never misled or had any intention to mislead the bishop into signing
the same. By its Resolution dated June 22, 1999,[25] the Court noted the aforesaid
Comments with Motion of respondent
An Appeal Reiterating Earlier Petition, Appeal, Pleas and Motion for
Reinstatement to the Bar dated August 28, 1999[26] was filed by the respondent
on September 21, 1999. In a Resolution dated November 16, 1999,[27] the Court noted
said appeal and denied for lack of merit respondents prayer that his Plea for Judicial
Clemency and Reinstatement dated September 1, 1997 and Manifestation and Motion
for Reinstatement dated December 22, 1998 be approved and given due course.
 
Thereafter, respondents wife, Manuela A. Antiniw, sent to the Court a Letter
of Appeal dated February 7, 2000,[28] asking for clemency in behalf of her husband and
affirming therein that her husband had for eight (8) years continuously pleaded for his
reinstatement and that he had submitted proof by way of testimonials of (a) his
character and standing prior to his disbarment, (b) his conduct subsequent to his
disbarment, and (c) his efficient government service. Attached to the letter of
respondents wife was a sworn testimonial of one of the complainants in the
consolidated administrative cases, Lydia Bernal, attesting to the respondents
character reformation. The aforesaid letter was noted by the Court in a Resolution
dated 28 February 2000.[29]
 
Respondent filed a Plea for Judicial Clemency and Reinstatement
dated March 19, 2001,[30] therein asserting that the long period of his disbarment gave
him sufficient time to soul-search and reflect on his professional conduct, redeem
himself, and prove once more that he would be able to practice law and at the same
time uphold the dignity of the legal profession. The Court, in its Resolution of June 26,
2001,[31] denied the aforesaid plea.
 
By its Indorsement dated September 10, 2001,[32] the Office of the Chief
Justice referred to the Bar Confidant the letter dated August 24, 2001[33] of Assistant
Commissioner Jesse J. Caberoy of the Civil Service Commission (CSC) requesting
comment on the contention of respondent that the disbarment of a lawyer only
prevents him from practicing his profession and does not operate to divest him of his
earned eligibility by passing the Bar examination. In a Letter dated September 20,
2001,[34] respondent cited pertinent provisions of the Omnibus Rules Implementing
Book V of Executive Order No. 292 and other pertinent Civil Service Laws in support of
his aforementioned stand. The aforesaid Letters dated August 24,
2001 and September 20, 2001, of CSC Assistant Commissioner and respondent,
respectively, were noted by the Courts Resolution dated November 20, 2001.[35]
 Likewise in said Resolution, the letters were referred to the Office of the Bar
Confidant (OBC) for evaluation, report and recommendation.
 
In its Report and Recommendation dated January 25, 2002,[36] the OBC
opined that the eligibility vested in a successful bar candidate would not be prejudiced
or forfeited by his disbarment and the matter of enjoying first- grade eligibility by
passing the Bar, in relation to the position of City Administrator, should be determined
by the CSC. Nevertheless, the OBC was of the view that the controversy between the
CSC and respondent could not be considered as already ripe for judicial
determination. Thus, the OBC recommended that the CSC, through Assistant
Commissioner Caberoy, and respondent be advised to institute the corresponding
legal remedy before the proper court.
 
In a Resolution dated February 12, 2002,[37] the Court held that it could only
resolve actual controversies brought before it and would thus, refrain from rendering
advisory opinions.Accordingly, the Letter dated August 24, 2001 of Assistant
Commissioner Caberoy and Letter dated September 20, 2001 of respondent were
merely noted.
 
Respondent then filed a Plea for Reinstatement to the Bar dated February 28,
2002,[38] stating therein that for the past ten (10) years since he was disbarred, he had
deeply regretted having violated his obligations as a lawyer; that he realized the
gravity of his mistakes; and that because of such disbarment, he even lost his chance
to be permanently appointed as City Administrator of Urdaneta City and/or as City
Legal Officer, after his stint as a Provincial Board Member in Pangasinan for three (3)
consecutive terms. In the event his disbarment is lifted, respondent then promised
never to cause dishonor again to the legal profession and to abide by the ideals and 64
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canons thereof. Attached to his Plea for Reinstatement to the Bar were certifications
from various civic and religious groups attesting to his good moral character and to
his worthiness to be a member of the legal profession. In a Resolution dated April 23,
2002,[39] the Court noted the aforesaid Plea. Subsequently, the Court required the IBP
to Comment on the aforesaid respondents Plea through its Resolution dated July 23,
2002.[40]
 
In its Comment of September 9, 2002,[41] the IBP, through its Commission on
Bar Discipline, recommended the following:
 
Considering that the respondent has shown that he has
been repentant of what he had done which was a gross violation of
his lawyers oath and of the Canon of Professional Ethics and that he
has been completely reformed and is therefore worthy to be
reinstated in the Roll of Attorneys as evidenced by Certifications of
different religious and civic groups, it is recommended that he be
allowed to again practice the legal profession.
It is, however recommended that he be placed on
probation, meaning that the reinstatement should only be
temporary and that he be placed under observation for one year.
 
If during the period of one year, he proves that he has
completely lived up to the high standards of the legal profession, by
then it will be recommended that his reinstatement as a member of
the Bar be made permanent.[42]
 
The aforesaid comment was noted and referred to the IBP Board of
Governors for comment and recommendation by the Resolution dated December 3,
2002.[43]
 
The IBP Board of Governors issued its Resolution No. XVI-2005-99,
dated March 12, 2005 [44] resolving as follows:
xxx to approve respondents Plea for Reinstatement and
recommend the reinstatement of Atty. Dionisio C. Antiniw as
member of the bar immediately.
 
On June 6, 2006, the Court issued a Resolution[45] referring the case to the
Office of the Bar Confidant (OBC) for study and recommendation.
 
On March 23, 2007, the OBC submitted its Report and Recommendation,[46]
 to wit:
 
Indeed the high standards of the Bar require an
impeccable record but our findings show that respondent has been
sufficiently punished for the last fifteen (15) years of his disbarment
and he has sufficiently reformed to be a worthy member of the
Bar. In all candor, he promises the Court that should he be
reinstated to practice the legal profession, he will faithfully abide by
the ideals, canons and ethics of the legal profession and by his oath
as a lawyer.
 
xxx
 
In the light of the foregoing, it is respectfully submitted
that the disbarment of respondent DIONISIO C. ANTINIW from the
practice of law be LIFTED and he be allowed to resume the practice
of law. [47]
We agree with the foregoing recommendations of the Office of the Bar Confidant and
the IBP Commission on Bar Discipline as affirmed by the IBP Board of Governors.
Respondent was disbarred from the practice of law pursuant to the
Decision promulgated on April 26, 1991[48] which pertinently reads, as follows:
 
There is a clear preponderant evidence that Atty. Antiniw
committed falsification of a deed of sale, and its subsequent
introduction in court prejudices his prime duty in the administration
of justice as an officer of the court.
 
A lawyer owes entire devotion to the interest of his client.
(Santos vs. Dichoso, 84 SCRA 622) but not at the expense of truth.
(Cosmos Foundry Shopworkers Union vs. La Bu, 63 SCRA 313). The
first duty of a lawyer is not to his client but to the administration of
justice. (Lubiano vs. Gordalla, 115 SCRA 459) To that end, his clients
success is wholly subordinate. His conduct ought to and must
always be scrupulously observant of law and ethics. While a lawyer
must advocate his clients cause in utmost earnestness and with the
maximum skill he can marshall, he is not at liberty to resort to illegal
means for his clients interest. It is the duty of an attorney to employ,
for the purpose of maintaining the causes confided to him, such
means as are consistent with truth and honor. (Pangan vs Ramos,
93 SCRA 87).
 
Membership in the Bar is a privilege burdened with
conditions. By far, the most important of them is mindfulness that a
lawyer is an officer of the court. (In re: Ivan T. Publico, 102 SCRA
722). This Court may suspend or disbar a lawyer whose acts show 65
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his unfitness to continue as a member of the Bar. (Halili vs. CIR, 136 but with the following reminder:
SCRA 112). Disbarment, therefore, is not meant as a punishment  
depriving him of a source of livelihood but is rather intended to [T]he practice of law is a privilege burdened with
protect the administration of justice by requiring that those who conditions. Adherence to the rigid standards of mental fitness,
exercise this function should be competent, honorable and reliable maintenance of the highest degree of morality and faithful
in order that courts and the public may rightly repose confidence in compliance with the rules of the legal profession are the conditions
them. (Noriega vs. Sison 125 SCRA 293). Atty. Antiniw failed to live required for remaining a member of good standing of the bar and
up to the high standards of the law profession.[49] for enjoying the privilege to practice law. The Supreme Court, as
  guardian of the legal profession, has ultimate disciplinary power
  over attorneys. This authority to discipline its members is not only a
However, the record shows that the long period of respondents disbarment right but a bounden duty as well x x x. That is why respect and
gave him the chance to purge himself of his misconduct, to show his remorse and fidelity to the Court is demanded of its members.[53]
repentance, and to demonstrate his willingness and capacity to live up once again to  
the exacting standards of conduct demanded of every member of the bar and officer  
of the court. During respondents disbarment for more than fifteen (15) years to date Likewise, respondent is enjoined to keep in mind that:
for his professional infraction, he has been persistent in reiterating his apologies and Of all classes and professions, the lawyer is most sacredly
pleas for reinstatement to the practice of law and unrelenting in his efforts to show bound to uphold the laws, as he is their sworn servant; and for him,
that he has regained his worthiness to practice law, by his civic and humanitarian of all men in the world, to repudiate and override the laws, to
activities and unblemished record as an elected public servant, as attested to by trample them under foot and to ignore the very bonds of society,
numerous civic and professional organizations, government institutions, public argues recreancy to his position and office and sets a pernicious
officials and members of the judiciary. example to the insubordinate and dangerous elements of the body
  politic.[54]
In Adez Realty, Inc. v. Court of Appeals,[50] the disbarment of a lawyer was lifted for  
the reasons quoted hereunder:  
The disbarment of movant Benjamin M. Dacanay for three WHEREFORE, the disbarment of DIONISIO C. ANTINIW from the practice of
(3) years has, quite apparently, given him sufficient time and law is LIFTED and he is therefore allowed to resume the practice of law upon payment
occasion to soul-search and reflect on his professional conduct, of the required legal fees. This resolution is effective immediately.
redeem himself and prove once more that he is worthy to practice  
law and be capable of upholding the dignity of the legal profession.  
His admission of guilt and repeated pleas for compassion and SO ORDERED.
reinstatement show that he is ready once more to meet the
exacting standards the legal profession demands from its
practitioners.[51]
 
Moreover, it is well-settled that the objective of a disciplinary case is not so
much to punish the individual attorney as to protect the dispensation of justice by
sheltering the judiciary and the public from the misconduct or inefficiency of officers
of the court. Restorative justice, not retribution, is our goal in disciplinary
proceedings.[52]
 
Guided by this doctrine and considering the evidence submitted by
respondent satisfactorily showing his contrition and his being again worthy of
membership in the legal profession, the Court finds that it is now time to lift herein
respondents disbarment and reinstate him to the august halls of the legal profession, 66
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THE DIRECTOR OF LANDS, petitioner,  The real Property sought to be recovered in Civil Case No. R6573 was actually the
vs.
SILVERETRA ABABA, ET AL., claimants, JUAN LARRAZABAL, MARTA C. DE
LARRAZABAL, MAXIMO ABAROQUEZ and ANASTACIA CABIGAS, petitioners-
appellants, ALBERTO FERNANDEZ, adverse claimant-appellee.
This is an appeal from the order of the Court of First Instance of Cebu dated March 19,
1966 denying the petition for the cancellation of an adverse claim registered by the
adverse claimant on the transfer certificate of title of the petitioners.
The adverse claimant, Atty. Alberto B. Fernandez was retained as counsel by
petitioner, Maximo Abarquez, in Civil Case No. R-6573 of the Court of First Instance of
Cebu, entitled "Maximo Abarquez vs. Agripina Abarquez", for the annulment of a
contract of sale with right of repurchase and for the recovery of the land which was
the subject matter thereof. The Court of First Instance of Cebu rendered a decision on
May 29, 1961 adverse to the petitioner and so he appealed to the Court of Appeals.
Litigating as a pauper in the lower court and engaging the services of his lawyer on a
contingent basis, petitioner, liable to compensate his lawyer whom he also retained
for his appeal executed a document on June 10, 1961 in the Cebuano-Visayan dialect
whereby he obliged himself to give to his lawyer one-half (1/2) of whatever he might
recover from Lots 5600 and 5602 should the appeal prosper. The contents of the
document as translated are as follows:
AGREEMENT
KNOW ALL MEN BY THESE PRESENTS:
That I, MAXIMO ABARQUEZ, Plaintiff in Case No. R-6573 of the Court
of First Instance of Cebu, make known through this agreement that
for the services rendered by Atty. Alberto B. Fernandez who is my
lawyer in this case, if the appeal is won up to the Supreme Court, I
Promise and will guarantee that I win give to said lawyer one-half
(1/2) of what I may recover from the estate of my father in Lots No.
5600 and 5602 which are located at Bulacao Pardo, City of Cebu.
That with respect to any money which may be adjudged to me from
Agripina Abarquez, except 'Attorney's Fees', the same shall pertain
to me and not to said lawyer.
IN WITNESS WHEREOF, I have caused my right thumb. mark to be
affixed hereto this 10th of June, 1961, at the City of Cebu.
THUMBMARK
MAXIMO ABARQUEZ
(p. 5, Petitioner-Appellant's Brief, p. 26, rec.)
share of the petitioner in Lots 5600 and 5602, which were part of the estate of his
deceased parents and which were partitioned the heirs which included petitioner
Maximo Abarquez and his elder sister Agripina Abarquez, the defendant in said civil
case.
This partition was made pursuant to a project of partition approved by the Court
which provided am other that Lots Nos. 5600 and 5602 were to be divided into three
equal Parts, one third of which shall be given to Maximo Abarquez. However, Agripina
Abarquez the share of her brother stating that the latter executed an instrument of
pacto de retroprior to the partition conveying to her any or all rights in the estate of their
parents. Petitioner discovered later that the claim of his sister over his share was
based on an instrument he was believe all along to be a mere acknowledgment of the
receipt of P700.00 which his sister gave to him as a consideration for g care of their
father during the latter's illness and never an instrument of pacto de retro. Hence, he
instituted an action to annul the alleged instrument of pacto de retro.
The Court of Appeals in a decision promulgated on August 27, 1963 reversed the
decision of the lower court and annulled the dead of pacto de retro. Appellee Agripina
Abarquez filed a motion for reconsideration but the same was denied in a resolution
dated January 7, 1964 (p. 66, Record on Appeal; p. 13, Rec.) and the judgment became
final and executory on January 22,1964.
Subsequently, Transfer Certificate of Title No. 31841 was issued on May 19,1965 in the
name of Maximo Abarquez, married to Anastacia Cabigas, over his adjudged share in
Lots Nos. 5600 and 5602 containing an area of 4,085 square meters (p. 110, ROA; p.
13, rec.). These parcels of land later by the subject matter of the adverse claim filed by
the claimant.
The case having been resolved and title having been issued to petitioner, adverse
claimant waited for petitioner to comply with ha obligation under the document
executed by him on June 10, 1961 by delivering the one-half (½) portion of the said
parcels of land.
Petitioner refused to comply with his obligation and instead offered to sell the whole
parcels of land covered by TCT No. 31841 to petitioner-spouses Juan Larrazabal and
Marta C. de Larrazabal. Upon being informed of the intention of the petitioner,
adverse t claimant immediately took stops to protect his interest by filing with the trial
court a motion to annotate Ins attorney's lien on TCT No. 31841 on June 10, 1965 and
by notifying the prospective buyers of his claim over the one-half portion of the
parcels of land.
Realizing later that the motion to annotate attorney's lien was a wrong remedy, as it 67
was not within the purview of Section 37, rule 138 of the Revised Rule of Court, but
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before the same was by the trial court, adverse t by an affidavit of adverse claim on
July 19, 1965 with the Register of Deeds of Cebu (p. 14, ROA; p. 13, rec.). By virtue of
the petition of mid affidavit the adverse claim for one-half (½) of the lots covered by
the June 10, 1961 document was annotated on TCT No. 31841.
Notwithstanding the annotation of the adverse claim, petitioner-spouse Maximo
Abarquez and Anastacia Cabigas conveyed by deed of absolute sale on July 29, 1965
two-thirds (2/3) of the lands covered by TCT No. 31841 to petitioner-spouses Juan
Larrazabal and Marta C. de Larrazabal. When the new transfer certificate of title No.
32996 was issued, the annotation of adverse claim on TCT No. 31841 necessarily had
to appear on the new transfer certificate of title. This adverse claim on TCT No. 32996
became the subject of cancellation proceedings filed by herein petitioner-spouses on
March 7, 1966 with the Court of First Instance of Cebu (p. 2 ROA; p. 13, rec.). The
adverse claimant, Atty. Alberto B. Fernandez, filed his opposition to the petition for
cancellation on March 18, 1966 (p. 20, ROA; p. 13 rec.). The trial court resolved the
issue on March 19, 1966, when it declared that:
...the petition to cancel the adverse claim should be denied. The
admission by the petitioners that the lawyers (Attys. Fernandez and
Batiguin) are entitled to only one-third of the lot described in
Transfer Certificate of Title No. 32966 is the best proof of the
authority to maintain said adverse claim (p. 57, ROA; p. 13, rec.).
Petitioner-spouses decided to appeal the order of dismissal to this Court and
correspondingly filed the notice of appeal on April 1, 1966 with the trial court. On April
2, 1966, petitioner-spouses filed the appeal bond and subsequently filed the record on
appeal on April 6, 1966. The records of the case were forwarded to this Court through
the Land Registration Commission of Manila and were received by this Court on May
5, 1966.
Counsel for the petitioner-spouses filed the printed record on appeal on July 12, 1966.
Required to file the appellants' brief, counsel filed one on August 29, 1966 while that
of the appellee was filed on October 1, 1966 after having been granted an extension
to file his brief.
The case was submitted for decision on December 1, 1966. Counsel for the petitioners
filed a motion to expunge appellees' brief on December 8, 1966 for having been filed
beyond the reglementary period, but the same was denied by this Court in a
resolution dated February 13, 1967.
The pivotal issue to be resolved in the instant case is the validity or nullity of the
registration of the adverse claim of Atty. Fernandez, resolution of which in turn hinges
on the question of whether or not the contract for a contingent fee, basis of the
interest of Atty. Fernandez, is prohibited by the Article 1491 of the New Civil Code and
Canon 13 of the Canons of Professional Ethics.
Petitioners contend that a contract for a contingent fee violates Article 1491 because it
involves an assignment of a property subject of litigation. That article provides:
Article 1491. The following persons cannot acquire by purchase
even at a public or judicial auction, either in person or through the
petition of another.
xxx xxx xxx
(5) Justices, judges, prosecuting attorneys, clerks of superior and
inferior and other o and employees connected with the
administration of justice, the property and rights in litigation or
levied upon an execution before the court within whose jurisdiction
or territory they exercise their respective functions;this prohibition
includes the act of acquiring by assignment and shall apply to lawyers, with respect to
the property and rights which may be the object of any litigation in which they may take
part by virtue of their profession (Emphasis supplied).
This contention is without merit. Article 1491 prohibits only the sale or assignment
between the lawyer and his client, of property which is the subject of litigation. As WE
have already stated. "The prohibition in said article a only to applies stated: " The
prohibition in said article applies only to a sale or assignment to the lawyer by his
client of the property which is the subject of litigation. In other words, for the
prohibition to operate, the sale or t of the property must take place during the pendency of
the litigation involving the property" (Rosario Vda. de Laig vs. Court of Appeals, et al., L
-26882, November 21, 1978).
Likewise, under American Law, the prohibition does not apply to "cases where after
completion of litigation the lawyer accepts on account of his fee, an interest the assets
realized by the litigation" (Drinker, Henry S., Legal Ethics, p. 100 [1953], citing App. A,
280; N.Y. Ciu 714). "There is a clear distraction between such cases and one in which
the lawyer speculates on the outcome of the matter in which he is employed"
(Drinker, supra, p. 100 citing A.B.A. Op. 279).
A contract for a contingent fee is not covered by Article 1491 because the tranfer or
assignment of the property in litigation takes effect only after the finality of a
favorable judgment. In the instant case, the attorney's fees of Atty. Fernandez,
consisting of one-half (1/2) of whatever Maximo Abarquez might recover from his
share in the lots in question, is contingent upon the success of the appeal. Hence, the
payment of the attorney's fees, that is, the transfer or assignment of one-half (1/2) of
the property in litigation will take place only if the appeal prospers. Therefore, the
tranfer actually takes effect after the finality of a favorable judgment rendered on
68
appeal and not during the pendency of the litigation involving the property in
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question. Consequently, the contract for a contingent fee is not covered by Article
1491.
While Spanish civilists differ in their views on the above issue — whether or not a
contingent fee contract (quota litis agreement) is covered by Article 1491 — with
Manresa advancing that it is covered, thus:
Se ha discutido si en la incapacidad de Ion Procumdam y Abogados
asta o el pecto de quota litis. Consiste este, como es sabido, en la
estipulacion de que el Abogado o el Procurador ban de hacer suyos
una parte alicuota de In cona que se li m la son es favorable. Con es
te concepto a la vista, es para nosortros que el articulo que comentamos no menciona
ese pacto; pero como la incapacidad de los Abogados y Procuradores
se extinede al acto de adquirir por cesion; y la efectividad del pacto
de quota litis implica necesariamente una cesion, estimamos que con
solo el num. 5 del articulo 1459 podria con exito la nulidad de ese
pacto tradicionalmente considerado como ilicito.
xxx xxx xxx
Debe tenerse tambien en cuenta, respecto del ultimo parrafo del
articulo 1459, la sentencia del Tribunal Supreme de 25 Enero de
1902, que delcara que si bien el procurador no puede adquirir para
si los bienes, en cuanto a los cuales tiene incapacidad, puede
adquirirlos para otra persona en quien no concurra incapacidad
alguna (Manresa, Comentarios al Codigo Civil Español, Tomo X, p.
110 [4a ed., 1931] emphasis supplied).
Castan, maintaining that it is not covered, opines thus;
C. Prohibiciones impuestas a las personas encargadas, mas o
menos directamente, de la administracion de justicia.—El mismo
art. 1,459 del Codigo civil prohibe a los Magistrados, Jueces,
individuos del Minesterio fiscal, Secretarios de Tribunales y
Juzgados y Oficiales de Justicia adquirir por compra (aunque sea en
subasta publica o judicial, por si ni por persona alguna intermedia).  that:
'Los bienes y derechos que estuviesen en litigio ante el Tribunal en cuya
jurisdicion on teritorio ejercieran sus respectivas funciones,
extendiendo se esta prohibicion al acto de adquirir por cesion', y
siendo tambien extensiva ' Alos Abogados y Procuradores respecto
a los bienes y derecho que fueran objeto del un litigioen que intervengan pos
su profession y oficio.'
El fundamento de esta prohibicion es clarismo. No solo se trata—
dice Manresa—de quitar la ocasion al fraude; persiguese, ademas,
el proposito de rodear a las personas que intervienen en la
administracion de justicia de todos los prestigios que necesitan
para ejercer su ministerio, librando los de toda sospecha, que,
aunque fuere infundada, redundaria en descredito de la institucion.
Por no dor lugar a recelos de ninguna clase, admite el Codigo (en el
apartado penutimo del art. 1.459) algunos casos en que, por
excepcion, no se aplica el pricipio prohibitivo de que venimos
hablando. Tales son los de que se trate de acciones hereditarias
entre coheredero, de cesion en pago de creditos, o de garantia de
los bienes que posean los funcionarios de justicia.
Algunos autores (Goyena, Manresa, Valverde)
creen que en la prohibicion del art. 1.459 esta
comprendido el pacto de quota litis (o sea el
convenio por el cual se concede al Abogado o
Procurador, para el caso de obtener sentencia
favorable una parte alicuota de la cosa o cantidad
que se litiga), porque dicho pacto supone la venta
o cesion de una parte de la cosa o drecho que es
objecto del litigio. Pero Mucius Scaevola oberva,
conrazon, que en el repetido pacto no hay
propiamente caso de compraventa ni de cesion
de derechos, y bastan para estimario nulo otros
preceptos del Codigo como los relativos a la
ilicitud de la causa (Castan, Derecho Civil Espñol,
Tomo 4, pp. 68-69, [9a ed., 1956], emphasis
supplied).
The Supreme Court of Spain, in its sentencia of 12 November 1917, has ruled that
Article 1459 of the Spanish Civil Code (Article 1491 of our Civil Code) does not apply to
a contract for a contingent fee because it is not contrary to morals or to law, holding
... que no es susceptible de aplicarse el precepto contenido en el
num. 5 del art. 1.459 a un contrato en el que se restrigen los
honorarios de un Abogado a un tanto por ciento de lo que se
obtuviera en el litigio, cosa no repudiada por la moral ni por la ley
(Tolentino, Civil Code of the Philippines, p. 35, Vol. V [1959]; Castan,
supra; Manresa, supra).
In the Philippines, among the Filipino commentators, only Justice Capistrano ventured
69
to state his view on the said issue, thus:
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The incapacity to purchase or acquire by assignment, which the law
also extends to lawyers with t to the property and rights which may
be the object of any litigation in which they may take part by virtue
of their profession, also covers contracts for professional services 
quota litis. Such contracts, however, have been declared valid by the
Supreme Court" (Capistrano, Civil Code of the Philippines, p. 44, Vol.
IV [1951]).
Dr. Tolentino merely restated the views of Castan and Manresa as well as the state of
jurisprudence in Spain, as follows:
Attorneys-at-law—Some writers, like Goyena, Manresa and Valverde
believe that this article covers quota litis agreements, under which a
lawyer is to be given an aliquot part of the property or amount in
litigation if he should win the case for his client. Scaevola and Castan,
however, believe that such a contract does not involve a sale or assignment of right but
it may be void under other articles of the Code, such as those referring to illicit cause-
On the other hand the Spanish Supreme Court has held that this article is not
applicable to a contract which limits the fees of a lawyer to a certain percentage of what
may be recovered in litigation, as this is not contrary to moral or to law. (Tolentino,
Civil Code of the Philippines, p. 35, Vol. V [1959]; Castan, supra,
Emphasis supplied).
Petitioners her contend that a contract for a contingent fee violates the Canons of
Professional Ethics. this is likewise without merit This posture of petitioners
overlooked Canon 13 of the Canons which expressly contingent fees by way of
exception to Canon 10 upon which petitioners relied. For while Canon 10 prohibits a
lawyer from purchasing ...any interest in the subject matter of the litigation which he
is conducting", Canon 13, on the other hand, allowed a reasonable contingent fee
contract, thus: "A contract for a con. tangent fee where sanctioned by law, should be
reasonable under all the circumstances of the ca including the risk and uncertainty of
the compensation, but should always be subject to the supervision of a court, as to its
reasonableness." As pointed out by an authority on Legal Ethics:
Every lawyer is intensely interested in the successful outcome of his
case, not only as affecting his reputation, but also his
compensation. Canon 13 specifically permits the lawyer to contract for a con
tangent fee which of itself, negatives the thought that the Canons preclude the lawyer's
having a stake in his litigation. As pointed out by Professor Cheatham on
page 170 n. of his Case Book, there is an inescapable conflict of
interest between lawyer and client in the matter of fees. Nor despite
some statements to the con in Committee opinions, is it believed that,
particularly in view of Canon 13, Canon 10 precludes in every case an arrangement to
make the lawyer's fee payable only out of the results of the litigation. The distinction is
between buying an interest in the litigation as a speculation which Canon 10 condemns
and agreeing, in a case which the lawyer undertakes primarily in his professional
capacity, to accept his compensation contingent on the outcome (Drinker, Henry S
Legal Ethics, p. 99, [1953], Emphasis supplied).
These Canons of Professional Ethics have already received "judicial recognition by
being cited and applied by the Supreme Court of the Philippines in its opinion"
Malcolm, Legal and Judicial Ethics, p. 9 [1949]). And they have likewise been
considered sources of Legal Ethics. More importantly, the American Bar Association,
through Chairman Howe of the Ethics Committee, opined that "The Canons of
Professional Ethics are legislative expressions of professional opinion ABA Op. 37
[1912])" [See footnote 25, Drinker, Legal Ethics, p. 27]. Therefore, the Canons have
some binding effect
Likewise, it must be noted that this Court has already recognized this type of a
contract as early as the case of Ulanday vs. Manila Railroad Co. (45 PhiL 540 [1923]), where
WE held that "contingent fees are not prohibited in the Philippines, and since impliedly
sanctioned by law 'Should be under the supervision of the court in order that clients
may be protected from unjust charges' (Canons of Profession 1 Ethics)". The same
doctrine was subsequently reiterated in Grey vs. Insular Lumber Co. (97 PhiL 833
[1955]) and Recto vs. Harden (100 PhiL 427 [1956]).
In the 1967 case of Albano vs. Ramos (20 SCRA 171 [19671), the attorney was allowed to
recover in a separate action her attomey's fee of one-third (1/3) of the lands and
damages recovered as stipulated in the contingent fee contract. And this Court in the
recent case of Rosario Vda de Laig vs. Court of Appeals, et al. (supra), which involved a
contingent fee of one-half (½) of the property in question, held than ,contingent fees
are recognized in this i jurisdiction (Canon 13 of the Canons of Professional Ethics
adopted by the Philippine Bar association in 1917 [Appendix B, Revised Rules of
Court)), which contingent fees may be a portion of the property in litigation."
Contracts of this nature are permitted because they redound to the benefit of the
poor client and the lawyer "especially in cases where the client has meritorious cause
of action, but no means with which to pay for legal services unless he can, with the
sanction of law, make a contract for a contingent fee to be paid out of the proceeds of
the litigation" (Francisco, Legal Ethics, p. 294 [1949], citing Lipscomb vs. Adams 91 S.W.
1046, 1048 [1949]). Oftentimes, contingent fees are the only means by which the poor
and helpless can redress for injuries sustained and have their rights vindicated. Thus:
The reason for allowing compensation for professional services based on contingent
fees is that if a person could not secure counsel by a promise of large fees in case of
success, to be derived from the subject matter of the suit, it would often place the poor
70
in such a condition as to amount to a practical denial of justice. It not infrequently
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happens that person are injured through the negligence or willful
misconduct of others, but by reason of poverty are unable to
employ counsel to assert their rights. In such event their only
means of redress lies in gratuitous service, which is rarely given, or
in their ability to find some one who will conduct the case for a
contingent fee. That relations of this king are often abused by speculative
attorneys or that suits of this character are turned into a sort of commercial traffic by the
lawyer, does not destroy the beneficial result to one who is so poor to employ counsel
 (id, at p. 293, citing Warvelle, Legal Ethics, p. 92, Emphasis supplied).
Justice George Malcolm, writing on contingent fees, also stated that:
... the system of contingent compensation has the merit of affording
to certain classes of persons the opportunity to procure the
prosecution of their claims which otherwise would be beyond their
means. In many cases in the United States and the Philippines, the contingent fee is
socially necessary (Malcolm, Legal and Judicial Ethics, p. 55 [1949],
emphasis supplied).
Stressing further the importance of contingent fees, Professor Max Radin of the
University of California, said that:
The contingent fee certainly increases the possibility that vexatious
and unfounded suits will be brought. On the other hand, it makes
possible the enforcement of legitimate claims which otherwise would be abandoned
because of the poverty of the claimants. Of these two possibilities, the social advantage
seems clearly on the side of the contingent fee. It may in fact be added by way
of reply to the first objection that vexations and unfounded suits
have been brought by men who could and did pay substantial
attorney's fees for that purpose (Radin, Contingent Fees in
California, 28 Cal. L. Rev. 587, 589 [1940], emphasis supplied).
Finally, a contingent fee contract is always subject to the supervision of the courts with
respect to the stipulated amount and may be reduced or nullified. So that in the event
that there is any undue influence or fraud in the execution of the contract or that the
fee is excessive, the client is not without remedy because the court will amply protect
him. As held in the case of Grey vs. Insular Lumber Co., supra, citing the case of Ulanday
vs. Manila Railroad Co., supra:
Where it is shown that the contract for a contingent fee was
obtained by any undue influence of the attorney over the client, or
by any fraud or imposition, or that the compensation is so clearly
excessive as to amount to extortion, the court win in a proper case
protect the aggrieved party.
In the present case, there is no iota of proof to show that Atty. Fernandez had exerted
any undue influence or had Perpetrated fraud on, or had in any manner taken
advantage of his client, Maximo Abarquez. And, the compensation of one-half of the
lots in question is not excessive nor unconscionable considering the contingent nature
of the attorney's fees.
With these considerations, WE find that the contract for a contingent fee in question is
not violative of the Canons of Professional Ethics. Consequently, both under the
provisions of Article 1491 and Canons 10 and 13 of the Canons of Profession Ethics, a
contract for a contingent fee is valid
In resolving now the issue of the validity or nullity for the registration of the adverse
claim, Section 110 of the Land Registration Act (Act 496) should be considered. Under
d section, an adverse claim may be registered only by..
Whoever claims any part or interest in registered land adverse to
the registered owner, arising subsequent to the date of the o
registration ... if no other provision is made in this Act for registering
the same ...
The contract for a contingent fee, being valid, vested in Atty Fernandez an interest or
right over the lots in question to the extent of one-half thereof. Said interest became
vested in Atty. Fernandez after the case was won on appeal because only then did the
assignment of the one-half (½) portion of the lots in question became effective and
binding. So that when he filed his affidavit of adverse claim his interest was already an
existing one. There was therefore a valid interest in the lots to be registered in favor of
Atty. Fernandez adverse to Mo Abarquez.
Moreover, the interest or claim of Atty. Fernandez in the lots in question arose long
after the original petition which took place many years ago. And, there is no other
provision of the Land Registration Act under which the interest or claim may be
registered except as an adverse claim under Section 110 thereof. The interest or claim
cannot be registered as an attorney's charging lien. The lower court was correct in
denying the motion to annotate the attomey's lien. A charging lien under Section 37,
Rule 138 of the Revised Rules of Court is limited only to money judgments and not to
judgments for the annulment of a contract or for delivery of real property as in the
instant case. Said Section provides that:
Section 37. An attorney shall have a lien upon the funds, documents
and papers of his client which have lawfully come into his
oppossession and may retain the same until his lawful fees and
disbursements have been paid, and may apply such funds to the
satisfaction thereof. He shall also have a lien to the same extent upon all 71
judgments, for the payment of money, and executions issued in pursuance of such
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judgments, which he has secured in a litigation of his client ... (emphasis
supplied).
Therefore, as an interest in registered land, the only adequate remedy open to Atty.
Fernandez is to register such interest as an adverse claim. Consequently, there being a
substantial compliance with Section 110 of Act 496, the registration of the adverse
claim is held to be valid. Being valid, its registration should not be cancelled because
as WE have already stated, "it is only when such claim is found unmeritorious that the
registration thereof may be cancelled" (Paz Ty Sin Tei vs. Jose Lee Dy Piao 103 Phil. 867
[1958]).
The one-half (½) interest of Atty. Fernandez in the lots in question should therefore be
respected. Indeed, he has a better right than petitioner-spouses, Juan Larrazabal and
Marta C. de Larrazabal. They purchased their two-thirds (2/3) interest in the lots in
question with the knowledge of the adverse claim of Atty. Fernandez. The adverse
claim was annotated on the old transfer certificate of title and was later annotated on
the new transfer certificate of title issued to them. As held by this Court:
The annotation of an adverse claim is a measure designed to
protect the interest of a person over a piece of real property where
the registration of such interest or right is not otherwise provided
for by the Land Registration Act, and serves as a notice and warning
to third parties dealing with said property that someone is claiming
an interest on the same or a better right than the registered owner
thereof (Sanchez, Jr. vs. Court of Appeals, 69 SCRA 332 [1976]; Paz
Ty Sin Tei vs. Jose Le Dy Piao supra).
Having purchased the property with the knowledge of the adverse claim, they are
therefore in bad faith. Consequently, they are estopped from questioning the validity
of the adverse claim.
WHEREFORE, THE DECISION OF THE LOWER COURT DENYING THE PETITION FOR THE
CANCELLATION OF THE ADVERSE CLAIM SHOULD BE, AS IT IS HEREBY AFFIRMED, WITH
COSTS AGAINST PETITIONER-APPELLANTS JUAN LARRAZABAL AND MARTA C. DE
LARRAZABAL.
SO ORDERED.
THE CONJUGAL PARTNERSHIP OF THE SPOUSES VICENTE CADAVEDO AND
BENITA ARCOY-CADAVEDO (both deceased), substituted by their heirs,
namely: HERMINA, PASTORA, Heirs of FRUCTUOSA, Heirs of RAQUEL,
EVANGELINE, VICENTE, JR., and ARMANDO, all surnamed CADAVEDO,
 Petitioners, 
vs.
VICTORINO (VIC) T. LACAYA, married to Rosa Legados, Respondents.
We solve in this Rule 45 petition for review on certiorari1 the challenge to the October
11, 2005 decision2 and the May 9, 2006 resolution3 of the Court of Appeals (CA)
inPetitioners, CA-G.R. CV No. 56948. The CA reversed and set aside the September 17,
1996 decision4 of the Regional Trial Court (RTC), Branch 10, of Dipolog City in Civil Case
No. 4038, granting in part the complaint for recovery of possession of property filed
by the petitioners, the Conjugal Partnership of the Spouses Vicente Cadavedo and
Benita Arcoy-Cadavedo against Atty. Victorino (Vic) T. Lacaya, married to Rosa Legados
(collectively, the respondents).
The Factual Antecedents
The Spouses Vicente Cadavedo and Benita Arcoy-Cadavedo (collectively, the spouses
Cadavedo) acquired a homestead grant over a 230,765-square meter parcel of land
known as Lot 5415 (subject lot) located in Gumay, Piñan, Zamboanga del Norte. They
were issued Homestead Patent No. V-15414 on March 13, 1953andOriginal Certificate
of Title No. P-376 on July 2, 1953.On April30, 1955, the spouses Cadavedo sold the
subject lot to the spouses Vicente Ames and Martha Fernandez (the spouses Ames)
Transfer Certificate of Title (TCT) No. T-4792 was subsequently issued in the name of
the spouses Ames.
The present controversy arose when the spouses Cadavedo filed an action5 before the
RTC(then Court of First Instance) of Zamboanga City against the spouses Ames for
sum of money and/or voiding of contract of sale of homestead after the latter failed to
pay the balance of the purchase price. The spouses Cadavedo initially engaged the
services of Atty. Rosendo Bandal who, for health reasons, later withdrew from the
case; he was substituted by Atty. Lacaya.
On February 24, 1969, Atty. Lacaya amended the complaint to assert the nullity of the
sale and the issuance of TCT No. T-4792 in the names of the spouses Ames as gross
violation of the public land law. The amended complaint stated that the spouses
Cadavedo hired Atty. Lacaya on a contingency fee basis. The contingency fee
stipulation specifically reads:
10. That due to the above circumstances, the plaintiffs were forced to hire a lawyer on
contingent basis and if they become the prevailing parties in the case at bar, they will
pay the sum of P2,000.00 for attorney’s fees.6
In a decision dated February 1, 1972, the RTC upheld the sale of the subject lot to the
spouses Ames. The spouses Cadavedo, thru Atty. Lacaya, appealed the case to the CA.
On September 18, 1975, and while the appeal before the CAin Civil Case No. 1721was
pending, the spouses Ames sold the subject lot to their children. The spouses Ames’ 72
TCT No. T-4792 was subsequently cancelled and TCT No. T-25984was issued in their
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children’s names. On October 11, 1976, the spouses Ames mortgaged the subject lot
with the Development Bank of the Philippines (DBP) in the names of their children.
On August 13, 1980, the CA issued itsdecision in Civil Case No. 1721,reversing the
decision of the RTC and declaring the deed of sale, transfer of rights, claims and
interest to the spouses Ames null and void ab initio. It directed the spouses Cadavedo
to return the initial payment and ordered the Register of Deeds to cancel the spouses
Ames’ TCT No. T-4792 and to reissue another title in the name of the spouses
Cadavedo. The case eventually reached this Court via the spouses Ames’ petition for
review on certiorari which this Court dismissed for lack of merit.
Meanwhile, the spouses Ames defaulted in their obligation with the DBP. Thus, the
DBP caused the publication of a notice of foreclosure sale of the subject lot as covered
by TCT No. T-25984(under the name of the spouses Ames’ children). Atty. Lacaya
immediately informed the spouses Cadavedo of the foreclosure sale and filed an
Affidavit of Third Party Claim with the Office of the Provincial Sheriff on September 14,
1981.
With the finality of the judgment in Civil Case No. 1721,Atty. Lacaya filed on September
21, 1981 a motion for the issuance of a writ of execution.
On September 23, 1981,and pending the RTC’s resolution of the motion for the
issuance of a writ of execution, the spouses Ames filed a complaint7 before the RTC
against the spouses Cadavedo for Quieting of Title or Enforcement of Civil Rights due
Planters in Good Faith with prayer for Preliminary Injunction. The spouses Cadavedo,
thru Atty. Lacaya, filed a motion to dismiss on the ground of res judicata and to cancel
TCT No. T-25984 (under the name of the spouses Ames’ children).
On October 16, 1981, the RTC granted the motion for the issuance of a writ of
execution in Civil Case No. 1721,andthe spouses Cadavedo were placed in possession
of the subject lot on October 24, 1981. Atty. Lacaya asked for one-half of the subject
lot as attorney’s fees. He caused the subdivision of the subject lot into two equal
portions, based on area, and selected the more valuable and productive half for
himself; and assigned the other half to the spouses Cadavedo.
Unsatisfied with the division, Vicente and his sons-in-law entered the portion assigned
to the respondents and ejected them. The latter responded by filing a counter-suit for
forcible entry before the Municipal Trial Court (MTC); the ejectment case was docketed
as Civil Case No. 215. This incident occurred while Civil Case No. 3352was pending.
On May 13, 1982, Vicente andAtty. Lacaya entered into an amicable settlement
(compromise agreement)8 in Civil Case No. 215 (the ejectment case), re-adjusting the
area and portion obtained by each. Atty. Lacaya acquired 10.5383 hectares pursuant
to the agreement. The MTC approved the compromise agreementin a decision dated
June 10, 1982.
Meanwhile, on May 21, 1982, the spouses Cadavedo filed before the RTC an action
against the DBP for Injunction; it was docketed as Civil Case No. 3443 (Cadavedo v.
DBP).The RTC subsequently denied the petition, prompting the spouses Cadavedo to
elevate the case to the CAvia a petition for certiorari. The CA dismissed the petition in
its decision of January 31, 1984.
The records do not clearly disclose the proceedings subsequent to the CA decision in
Civil Case No. 3443. However, on August 18, 1988, TCT No. 41051was issued in the
name of the spouses Cadavedo concerning the subject lot.
On August 9, 1988, the spouses Cadavedo filed before the RTC an action9 against the
respondents, assailing the MTC-approved compromise agreement. The case was
docketed as Civil Case No. 4038 and is the root of the present case. The spouses
Cadavedo prayed, among others, that the respondents be ejected from their one-half
portion of the subject lot; that they be ordered to render an accounting of the produce
of this one-half portion from 1981;and that the RTC fix the attorney’s fees on a
quantum meruit basis, with due consideration of the expenses that Atty. Lacaya
incurred while handling the civil cases.
During the pendency of Civil Case No. 4038, the spouses Cadavedo executed a Deed
of Partition of Estate in favor of their eight children. Consequently, TCT No. 41051 was
cancelled and TCT No. 41690 was issued in the names of the latter. The records are
not clear on the proceedings and status of Civil Case No. 3352.
The Ruling of the RTC
In the September 17, 1996 decision10 in Civil Case No. 4038, the RTC declared the
contingent fee of 10.5383 hectares as excessive and unconscionable. The RTC reduced
the land area to 5.2691 hectares and ordered the respondents to vacate and restore
the remaining 5.2692hectares to the spouses Cadavedo.
The RTC noted that, as stated in the amended complaint filed by Atty. Lacaya, the
agreed attorney’s fee on contingent basis was P2,000.00. Nevertheless, the RTC also
pointed out that the parties novated this agreement when they executed the
compromise agreement in Civil Case No. 215 (ejectment case), thereby giving Atty.
Lacaya one-half of the subject lot. The RTC added that Vicente’s decision to give Atty.
Lacaya one-half of the subject lot, sans approval of Benita, was a valid act of
administration and binds the conjugal partnership. The RTC reasoned out that the
disposition redounded to the benefit of the conjugal partnership as it was done
precisely to remunerate Atty. Lacaya for his services to recover the property itself.
These considerations notwithstanding, the RTC considered the one-half portion of the
subject lot, as Atty. Lacaya’s contingent fee,excessive, unreasonable and
unconscionable. The RTC was convinced that the issues involved in Civil Case No.
1721were not sufficiently difficult and complicated to command such an excessive
award; neither did it require Atty. Lacaya to devote much of his time or skill, or to
perform extensive research.
Finally, the RTC deemed the respondents’ possession, prior to the judgment, of the
excess portion of their share in the subject lot to be in good faith. The respondents
were thus entitled to receive its fruits.
On the spouses Cadavedo’s motion for reconsideration, the RTC modified the decision
in its resolution11 dated December 27, 1996. The RTC ordered the respondents to
account for and deliver the produce and income, valued at ₱7,500.00 per annum, of
the 5.2692hectares that the RTC ordered the spouses Amesto restore to the spouses
Cadavedo, from October 10, 1988 until final restoration of the premises.
The respondents appealed the case before the CA.
The Ruling of the CA 73
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In its decision12 dated October 11, 2005, the CA reversed and set aside the RTC’s
September 17, 1996 decision and maintained the partition and distribution of the
subject lot under the compromise agreement. In so ruling, the CA noted the following
facts: (1) Atty. Lacaya served as the spouses Cadavedo’s counsel from 1969 until
1988,when the latter filed the present case against Atty. Lacaya; (2) during the
nineteen (19) years of their attorney-client relationship, Atty. Lacaya represented the
spouses Cadavedo in three civil cases –Civil Case No. 1721, Civil Case No. 3352, and
Civil Case No. 3443; (3) the first civil case lasted for twelve years and even reached this
Court, the second civil case lasted for seven years, while the third civil case lasted for
six years and went all the way to the CA;(4) the spouses Cadavedo and Atty. Lacaya
entered into a compromise agreement concerning the division of the subject lot
where Atty. Lacaya ultimately agreed to acquire a smaller portion; (5) the MTC
approved the compromise agreement; (6) Atty. Lacaya defrayed all of the litigation
expenses in Civil Case No. 1721; and (7) the spouses Cadavedo expressly recognized
that Atty. Lacaya served them in several cases.
Considering these established facts and consistent with Canon 20.01 of the Code of
Professional Responsibility (enumerating the factors that should guide the
determination of the lawyer’s fees), the CA ruled that the time spent and the extent of
the services Atty. Lacaya rendered for the spouses Cadavedo in the three cases, the
probability of him losing other employment resulting from his engagement, the
benefits resulting to the spouses Cadavedo, and the contingency of his fees justified
the compromise agreement and rendered the agreed fee under the compromise
agreement reasonable.
The Petition
In the present petition, the petitioners essentially argue that the CA erred in: (1)
granting the attorney’s fee consisting of one-half or 10.5383 hectares of the subject lot
to Atty. Lacaya, instead of confirming the agreed contingent attorney’s fees of ₱
2,000.00; (2) not holding the respondents accountable for the produce, harvests and
income of the 10.5383-hectare portion (that they obtained from the spouses
Cadavedo) from 1988 up to the present; and (3) upholding the validity of the
purported oral contract between the spouses Cadavedo and Atty. Lacaya when it was
champertous and dealt with property then still subject of Civil Case No. 1721.13
The petitioners argue that stipulations on a lawyer’s compensation for professional
services, especially those contained in the pleadings filed in courts, control the
amount of the attorney’s fees to which the lawyer shall be entitled and should prevail
over oral agreements. In this case, the spouses Cadavedo and Atty. Lacaya agreed that
the latter’s contingent attorney’s fee was P2,000.00 in cash, not one-half of the subject
lot. This agreement was clearly stipulated in the amended complaint filed in Civil Case
No. 1721. Thus, Atty. Lacaya is bound by the expressly stipulated fee and cannot insist
on unilaterally changing its terms without violating their contract.
The petitioners add that the one-half portion of the subject lot as Atty. Lacaya’s
contingent attorney’s fee is excessive and unreasonable. They highlight the RTC’s
observations and argue that the issues involved in Civil Case No. 1721, pursuant to
which the alleged contingent fee of one-half of the subject lot was agreed by the
parties, were not novel and did not involve difficult questions of law; neither did the
case require much of Atty. Lacaya’s time, skill and effort in research. They point out
that the two subsequent civil cases should not be considered in determining the
reasonable contingent fee to which Atty. Lacaya should be entitled for his services in
Civil Case No. 1721,as those cases had not yet been instituted at that time. Thus, these
cases should not be considered in fixing the attorney’s fees. The petitioners also claim
that the spouses Cadavedo concluded separate agreements on the expenses and
costs for each of these subsequent cases, and that Atty. Lacaya did not even record
any attorney’s lien in the spouses Cadavedo’s TCT covering the subject lot.
The petitioners further direct the Court’s attention to the fact that Atty. Lacaya,in
taking over the case from Atty. Bandal, agreed to defray all of the litigation expenses
in exchange for one-half of the subject lot should they win the case. They insist that
this agreement is a champertous contract that is contrary to public policy, prohibited
by law for violation of the fiduciary relationship between a lawyer and a client.
Finally, the petitioners maintain that the compromise agreement in Civil Case No. 215
(ejectment case) did not novate their original stipulated agreement on the attorney’s
fees. They reason that Civil Case No. 215 did not decide the issue of attorney’s fees
between the spouses Cadavedo and Atty. Lacaya for the latter’s services in Civil Case
No. 1721.
The Case for the Respondents
In their defense,14 the respondents counter that the attorney’s fee stipulated in the
amended complaint was not the agreed fee of Atty. Lacaya for his legal services. They
argue that the questioned stipulation for attorney’s fees was in the nature of a penalty
that, if granted, would inure to the spouses Cadavedo and not to Atty. Lacaya.
The respondents point out that: (1) both Vicente and Atty. Lacaya caused the survey
and subdivision of the subject lot immediately after the spouses Cadavedo reacquired
its possession with the RTC’s approval of their motion for execution of judgment in
Civil Case No. 1721; (2) Vicente expressly ratified and confirmed the agreement on the
contingent attorney’s fee consisting of one-half of the subject lot; (3) the MTC in Civil
Case No. 215 (ejectment case) approved the compromise agreement; (4) Vicente is the
legally designated administrator of the conjugal partnership, hence the compromise
agreement ratifying the transfer bound the partnership and could not have been
invalidated by the absence of Benita’s acquiescence; and (5) the compromise
agreement merely inscribed and ratified the earlier oral agreement between the
spouses Cadavedo and Atty. Lacaya which is not contrary to law, morals, good
customs, public order and public policy.
While the case is pending before this Court, Atty. Lacaya died.15 He was substituted by
his wife -Rosa -and their children –Victoriano D.L. Lacaya, Jr., Rosevic Lacaya-Ocampo,
Reymar L. Lacaya, Marcelito L. Lacaya, Raymundito L. Lacaya, Laila Lacaya-Matabalan,
Marivic Lacaya-Barba, Rosalie L. Lacaya and Ma. Vic-Vic Lacaya-Camaongay.16
The Court’s Ruling
We resolve to GRANT the petition.
The subject lot was the core of four successive and overlapping cases prior to the
present controversy. In three of these cases, Atty. Lacaya stood as the spouses 74
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Cadavedo’s counsel. For ease of discussion, we summarize these cases (including the
dates and proceedings pertinent to each) as follows:
Civil Case No. 1721 – Cadavedo v. Ames (Sum of money and/or voiding of contract of
sale of homestead), filed on January 10, 1967. The writ of execution was granted on
October 16, 1981.
Civil Case No. 3352 – Ames v. Cadavedo (Quieting of Title and/or Enforcement of Civil
Rights due Planters in Good Faith with Application for Preliminary injunction), filed on
September 23, 1981.
Civil Case No. 3443 – Cadavedo v. DBP (Action for Injunction with Preliminary
Injunction), filed on May 21, 1982.
Civil Case No. 215 –Atty. Lacaya v. Vicente Cadavedo, et. al. (Ejectment Case), filed
between the latter part of 1981 and early part of 1982. The parties executed the
compromise agreement on May 13, 1982.
Civil Case No. 4038 –petitioners v. respondents (the present case).
The agreement on attorney’s fee
consisting of one-half of the subject
lot is void; the petitioners are entitled
to recover possession
The core issue for our resolution is whether the attorney’s fee consisting of one-half of
the subject lot is valid and reasonable, and binds the petitioners. We rule in the
NEGATIVE for the reasons discussed below.
A. The written agreement providing for
a contingent fee of P2,000.00 should prevail
over the oral agreement providing for one-
half of the subject lot
The spouses Cadavedo and Atty. Lacaya agreed on a contingent fee of P2,000.00 and
not, as asserted by the latter, one-half of the subject lot. The stipulation contained in
the amended complaint filed by Atty. Lacaya clearly stated that the spouses Cadavedo
hired the former on a contingency basis; the Spouses Cadavedo undertook to pay
their lawyer P2,000.00 as attorney’s fees should the case be decided in their favor.
Contrary to the respondents’ contention, this stipulation is not in the nature of a
penalty that the court would award the winning party, to be paid by the losing party.
The stipulation is a representation to the court concerning the agreement between
the spouses Cadavedo and Atty. Lacaya, on the latter’s compensation for his services
in the case; it is not the attorney’s fees in the nature of damages which the former
prays from the court as an incident to the main action.
At this point, we highlight that as observed by both the RTC and the CA and agreed as
well by both parties, the alleged contingent fee agreement consisting of one-half of
the subject lot was not reduced to writing prior to or, at most, at the start of Atty.
Lacaya’s engagement as the spouses Cadavedo’s counsel in Civil Case No. 1721.An
agreement between the lawyer and his client, providing for the former’s
compensation, is subject to the ordinary rules governing contracts in general. As the
rules stand, controversies involving written and oral agreements on attorney’s fees
shall be resolved in favor of the former.17 Hence, the contingency fee of P2,000.00
stipulated in the amended complaint prevails over the alleged oral contingency fee
agreement of one-half of the subject lot.
B. The contingent fee agreement between
the spouses Cadavedo and Atty. Lacaya,
awarding the latter one-half of the subject
lot, is champertous
Granting arguendo that the spouses Cadavedo and Atty. Lacaya indeed entered into
an oral contingent fee agreement securing to the latter one-half of the subject lot, the
agreement is nevertheless void.
In their account, the respondents insist that Atty. Lacaya agreed to represent the
spouses Cadavedo in Civil Case No. 1721 and assumed the litigation expenses, without
providing for reimbursement, in exchange for a contingency fee consisting of one-half
of the subject lot. This agreement is champertous and is contrary to public policy.18
Champerty, along with maintenance (of which champerty is an aggravated form), is a
common law doctrine that traces its origin to the medieval period.19 The doctrine of
maintenance was directed "against wanton and in officious intermeddling in the
disputes of others in which the intermeddler has no interest whatever, and where the
assistance rendered is without justification or excuse."20 Champerty, on the other
hand, is characterized by "the receipt of a share of the proceeds of the litigation by the
intermeddler."21 Some common law court decisions, however, add a second factor in
determining champertous contracts, namely, that the lawyer must also, "at his own
expense maintain, and take all the risks of, the litigation."22
The doctrines of champerty and maintenance were created in response "to medieval
practice of assigning doubtful or fraudulent claims to persons of wealth and influence
in the expectation that such individuals would enjoy greater success in prosecuting
those claims in court, in exchange for which they would receive an entitlement to the
spoils of the litigation."23 "In order to safeguard the administration of justice, instances
of champerty and maintenance were made subject to criminal and tortuous liability
and a common law rule was developed, striking down champertous agreements and
contracts of maintenance as being unenforceable on the grounds of public policy."24
In this jurisdiction, we maintain the rules on champerty, as adopted from American
decisions, for public policy considerations.25 As matters currently stand, any
agreement by a lawyer to "conduct the litigation in his own account, to pay the
expenses thereof or to save his client therefrom and to receive as his fee a portion of
the proceeds of the judgment is obnoxious to the law."26 The rule of the profession
that forbids a lawyer from contracting with his client for part of the thing in litigation in
exchange for conducting the case at the lawyer’s expense is designed to prevent the
lawyer from acquiring an interest between him and his client. To permit these
arrangements is to enable the lawyer to "acquire additional stake in the outcome of
the action which might lead him to consider his own recovery rather than that of his
client or to accept a settlement which might take care of his interest in the verdict to
the sacrifice of that of his client in violation of his duty of undivided fidelity to his
client’s cause."27
In Bautista v. Atty. Gonzales,28 the Court struck down the contingent fee agreement
between therein respondent Atty. Ramon A. Gonzales and his client for being contrary
to public policy. There, the Court held that an reimbursement of litigation expenses
75
paid by the former is against public policy, especially if the lawyer has agreed to carry
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on the action at his expense in consideration of some bargain to have a part of the
thing in dispute. It violates the fiduciary relationship between the lawyer and his client.
29
In addition to its champertous character, the contingent fee arrangement in this case
expressly transgresses the Canons of Professional Ethics and, impliedly, the Code of
Professional Responsibility.30 Under Rule 42 of the Canons of Professional Ethics, a
lawyer may not properly agree with a client that the lawyer shall pay or beat the
expense of litigation.31 The same reasons discussed above underlie this rule.
C. The attorney’s fee consisting of
one-half of the subject lot is excessive
and unconscionable
We likewise strike down the questioned attorney’s fee and declare it void for being
excessive and unconscionable.1âwphi1The contingent fee of one-half of the subject lot
was allegedly agreed to secure the services of Atty. Lacaya in Civil Case No.
1721.Plainly, it was intended for only one action as the two other civil cases had not
yet been instituted at that time. While Civil Case No. 1721 took twelve years to be
finally resolved, that period of time, as matters then stood, was not a sufficient reason
to justify a large fee in the absence of any showing that special skills and additional
work had been involved. The issue involved in that case, as observed by the RTC(and
with which we agree), was simple and did not require of Atty. Lacaya extensive skill,
effort and research. The issue simply dealt with the prohibition against the sale of a
homestead lot within five years from its acquisition.
That Atty. Lacaya also served as the spouses Cadavedo’s counsel in the two
subsequent cases did not and could not otherwise justify an attorney’s fee of one-half
of the subject lot. As assertedby the petitioners, the spouses Cadavedo and Atty.
Lacaya made separate arrangements for the costs and expenses foreach of these two
cases. Thus, the expenses for the two subsequent cases had been considered and
taken cared of Based on these considerations, we therefore find one-half of the
subject lot as attorney’s fee excessive and unreasonable.
D. Atty. Lacaya’s acquisition of
the one-half portion contravenes
Article 1491 (5) of the Civil Code
Article 1491 (5) of the Civil Code forbids lawyers from acquiring, by purchase or
assignment, the property that has been the subject of litigation in which they have
taken part by virtue of their profession.32 The same proscription is provided under
Rule 10 of the Canons of Professional Ethics.33
A thing is in litigation if there is a contest or litigation over it in court or when it is
subject of the judicial action.34Following this definition, we find that the subject lot was
still in litigation when Atty. Lacaya acquired the disputed one-half portion. We note in
this regard the following established facts:(1)on September 21, 1981, Atty. Lacaya filed
a motion for the issuance of a writ of execution in Civil Case No. 1721; (2) on
September 23, 1981, the spouses Ames filed Civil Case No. 3352 against the spouses
Cadavedo; (3)on October 16, 1981, the RTC granted the motion filed for the issuance
of a writ of execution in Civil Case No. 1721 and the spouses Cadavedo took
possession of the subject lot on October 24, 1981; (4) soon after, the subject lot was
surveyed and subdivided into two equal portions, and Atty. Lacaya took possession of
one of the subdivided portions; and (5) on May 13, 1982, Vicente and Atty. Lacaya
executed the compromise agreement.
From these timelines, whether by virtue of the alleged oral contingent fee agreement
or an agreement subsequently entered into, Atty. Lacaya acquired the disputed one-
half portion (which was after October 24, 1981) while Civil Case No. 3352 and the
motion for the issuance of a writ of execution in Civil Case No. 1721were already
pending before the lower courts. Similarly, the compromise agreement, including the
subsequent judicial approval, was effected during the pendency of Civil Case No. 3352.
In all of these, the relationship of a lawyer and a client still existed between Atty.
Lacaya and the spouses Cadavedo.
Thus, whether we consider these transactions –the transfer of the disputed one-half
portion and the compromise agreement –independently of each other or resulting
from one another, we find them to be prohibited and void35 by reason of public policy.
36 Under Article 1409 of the Civil Code, contracts which are contrary to public policy
and those expressly prohibited or declared void by law are considered in existent and
void from the beginning.37
What did not escape this Court’s attention is the CA’s failure to note that the transfer
violated the provisions of Article 1491(5) of the Civil Code, although it recognized the
concurrence of the transfer and the execution of the compromise agreement with the
pendency of the two civil cases subsequent to Civil Case No. 1721.38 In reversing the
RTC ruling, the CA gave weight to the compromise agreement and in so doing, found
justification in the unproved oral contingent fee agreement.
While contingent fee agreements are indeed recognized in this jurisdiction as a valid
exception to the prohibitions under Article 1491(5) of the Civil Code,39 contrary to the
CA’s position, however, this recognition does not apply to the present case. A
contingent fee contract is an agreement in writing where the fee, often a fixed
percentage of what may be recovered in the action, is made to depend upon the
success of the litigation.40 The payment of the contingent fee is not made during the
pendency of the litigation involving the client’s property but only after the judgment
has been rendered in the case handled by the lawyer.41
In the present case, we reiterate that the transfer or assignment of the disputed one-
half portion to Atty. Lacaya took place while the subject lot was still under litigation
and the lawyer-client relationship still existed between him and the spouses
Cadavedo. Thus, the general prohibition provided under Article 1491 of the Civil Code,
rather than the exception provided in jurisprudence, applies. The CA seriously erred in
upholding the compromise agreement on the basis of the unproved oral contingent
fee agreement.
Notably, Atty. Lacaya, in undertaking the spouses Cadavedo’s cause pursuant to the
terms of the alleged oral contingent fee agreement, in effect, became a co-proprietor
having an equal, if not more, stake as the spouses Cadavedo. Again, this is void by
reason of public policy; it undermines the fiduciary relationship between him and his
clients.42
E.The compromise agreement could not
validate the void oral contingent fee 76
agreement; neither did it supersede the
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written contingent fee agreement
The compromise agreement entered into between Vicente and Atty. Lacaya in Civil
Case No. 215 (ejectment case) was intended to ratify and confirm Atty. Lacaya’s
acquisition and possession of the disputed one-half portion which were made in
violation of Article 1491 (5) of the Civil Code. As earlier discussed, such acquisition is
void; the compromise agreement, which had for its object a void transaction, should
be void.
A contract whose cause, object or purpose is contrary to law, morals, good customs,
public order or public policy is in existent and void from the beginning.43 It can never
be ratified44 nor the action or defense for the declaration of the in existence of the
contract prescribe;45 and any contract directly resulting from such illegal contract is
likewise void and in existent.46
Consequently, the compromise agreement did not supersede the written contingent
fee agreement providing for attorney’s fee of P2,000.00; neither did it preclude the
petitioners from questioning its validity even though Vicente might have knowingly
and voluntarily acquiesced thereto and although the MTC approved it in its June 10,
1982 decision in the ejectment case. The MTC could not have acquired jurisdiction
over the subject matter of the void compromise agreement; its judgment in the
ejectment case could not have attained finality and can thus be attacked at any time.
Moreover, an ejectment case concerns itself only with the issue of possession de
facto; it will not preclude the filing of a separate action for recovery of possession
founded on ownership. Hence, contrary to the CA’s position, the petitioners–in filing
the present action and praying for, among others, the recovery of possession of the
disputed one-half portion and for judicial determination of the reasonable fees due
Atty. Lacaya for his services –were not barred by the compromise agreement.
Atty. Lacaya is entitled to receive attorney’s fees on a quantum meruit basis
In view of their respective assertions and defenses, the parties, in effect, impliedly set
aside any express stipulation on the attorney’s fees, and the petitioners, by express
contention, submit the reasonableness of such fees to the court’s discretion. We thus
have to fix the attorney’s fees on a quantum meruit basis.
"Quantum meruit—meaning ‘as much as he deserves’—is used as basis for
determining a lawyer’s professional fees in the absence of a contract x x x taking into
account certain factors in fixing the amount of legal fees."47 "Its essential requisite is
the acceptance of the benefits by one sought to be charged for the services rendered
under circumstances as reasonably to notify him that the lawyer performing the task
was expecting to be paid compensation"48 for it. The doctrine of quantum meruit is a
device to prevent undue enrichment based on the equitable postulate that it is unjust
for a person to retain benefit without paying for it.49
Under Section 24, Rule 138 of the Rules of Court50 and Canon 20 of the Code of
Professional Responsibility,51factors such as the importance of the subject matter of
the controversy, the time spent and the extent of the services rendered, the
customary charges for similar services, the amount involved in the controversy and
the benefits resulting to the client from the service, to name a few, are considered in
determining the reasonableness of the fees to which a lawyer is entitled.
In the present case, the following considerations guide this Court in considering and
setting Atty. Lacaya’s fees based on quantum meruit: (1) the questions involved in
these civil cases were not novel and did not require of Atty. Lacaya considerable effort
in terms of time, skill or the performance of extensive research; (2) Atty. Lacaya
rendered legal services for the Spouses Cadavedo in three civil cases beginning in
1969 until 1988 when the petitioners filed the instant case; (3) the first of these civil
cases (Cadavedo v. Ames) lasted for twelve years and reaching up to this Court; the
second (Ames v. Cadavedo) lasted for seven years; and the third (Cadavedo and
Lacaya v. DBP) lasted for six years, reaching up to the CA; and (4) the property subject
of these civil cases is of a considerable size of 230,765 square meters or 23.0765
hectares.
All things considered, we hold as fair and equitable the RTC’s considerations in
appreciating the character of the services that Atty. Lacaya rendered in the three
cases, subject to modification on valuation. We believe and so hold that the
respondents are entitled to two (2) hectares (or approximately one-tenth [1/10] of the
subject lot), with the fruits previously received from the disputed one-half portion, as
attorney’s fees. They shall return to the petitioners the remainder of the disputed one-
half portion.
The allotted portion of the subject lot properly recognizes that litigation should be for
the benefit of the client, not the lawyer, particularly in a legal situation when the law
itself holds clear and express protection to the rights of the client to the disputed
property (a homestead lot). Premium consideration, in other words, is on the rights of
the owner, not on the lawyer who only helped the owner protect his rights. Matters
cannot be the other way around; otherwise, the lawyer does indeed effectively acquire
a property right over the disputed property. If at all, due recognition of parity between
a lawyer and a client should be on the fruits of the disputed property, which in this
case, the Court properly accords.
WHEREFORE, in view of these considerations, we hereby GRANT the petition. We
AFFIRM the decision dated September 17, 1996 and the resolution dated December
27, 1996of the Regional Trial Court of Dipolog City, Branch 10,in Civil Case No. 4038,
with the MODIFICATION that the respondents, the spouses Victorino (Vic) T. Lacaya
and Rosa Legados, are entitled to two (2) hectares (or approximately one-tenth [1/10]
of the subject lot) as attorney’s fees. The fruits that the respondents previously
received from the disputed one-half portion shall also form part of the attorney’s fees.
We hereby ORDER the respondents to return to the petitioners the remainder of the
10.5383-hectare portion of the subject lot that Atty. Vicente Lacaya acquired pursuant
to the compromise agreement.
SO ORDERED.
77
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REGALADO DAROY, complainant, vs. ATTY. ESTEBAN ABECIA, respondent.
This refers to the complaint for malpractice filed by Regalado Daroy (now
deceased) against Esteban Abecia, a member of the Bar. Complainant Daroy accused
respondent Abecia of having forged his signature in a deed of absolute sale by means
of which the latter was able to transfer a parcel of land in Opol, Misamis Oriental, first
to Jose Gangay and eventually to his (respondents) wife Nena Abecia.
The facts of the instant case are as follows:
Respondent Abecia was counsel of complainant Daroy in a case for forcible entry
before the Municipal Trial Court of Opol, Misamis Oriental.[1] Judgment was rendered
in favor of complainant as plaintiff in the ejectment case, ordering the defendants to
pay damages, attorneys fees, and the costs of the suit. To satisfy the judgment, the
sheriff sold at public auction on March 25, 1971 a parcel of land belonging to one of
the defendants to complainant Daroy as highest bidder for P1,250.00. Upon failure of
the defendants to redeem the land, its ownership was consolidated in complainant
Daroy.
Complainant Daroy claimed that respondent Abecia forged his signature in a
deed of absolute sale, dated March 31, 1971, transferring the subject parcel of land to
Jose Gangay purportedly for the sum of P1,250.00 and that in a fictitious deed of
absolute sale, dated April 17, 1971, it was made to appear that Gangay in turn
conveyed the land to Nena Abecia, wife of respondent Abecia, for the sum of P
1,350.00.[2] Complainant alleged that he entrusted the title to the land (TCT No. T-315)
to Abecia as his counsel and allowed him to take possession of the land upon the
latters request. By means of the forged deed of sale, Abecia was able to obtain new
transfer certificates of title, first in the name of Gangay and then in that of Mrs. Abecia,
from the Registry of Deeds of Misamis Oriental.[3] Daroy claimed he discovered the
fraud only in 1984.
Daroy submitted in evidence a report of the National Bureau of Investigation,
which had examined the deed of sale in favor of Jose Gangay, showing that Daroys
signature in the deed of sale had been written by a different hand. In addition, Daroy
presented the affidavit, executed on August 10, 1988, of Anita Gangay, wife of Jose
Gangay, in which she retracted an earlier affidavit executed on June 5, 1985. In the
first affidavit, she stated that she had bought the land in question from Regalado
Daroy and then sold it to her sister Nena Abecia, wife of respondent Esteban. Now, in
her present affidavit, it is stated that she did not buy the land from Daroy nor later sell
it to Nena Abecia and that she really did not know anything about the controversy
between Regalado Daroy and Esteban Abecia, both of whom are her brothers-in-
law. (It appears that Mrs. Conchita Daroy, Mrs. Anita Gangay, and Mrs. Nena Abecia
are sisters, although Conchita Daroy and Regalado Daroy are not married but lived
together in a common-law relationship.)
A complaint for falsification of public document was also filed against
respondent Abecia in the Office of the City Prosecutor of Cagayan de Oro which,
however, dismissed the same.[4] On appeal, then Undersecretary of Justice Silvestre H.
Bello III reversed on May 6, 1988 the findings of the City Prosecutor of Cagayan de Oro
and consequently ordered the filing of the corresponding information in court.[5]
 Accordingly, City Prosecutor Rodolfo R. Waga filed an information for falsification of
public document, dated June 30, 1988, with the Regional Trial Court of Misamis
Oriental.[6]
Respondent Abecia was unable to attend the hearings. He asked for their
transfer to Cagayan de Oro on the ground that he did not have the means to travel,
but his request was apparently denied sub silencio as the Commission continued the
hearings in Pasig, Metro Manila. As a result only his counsel was present at the
hearings.[7]
As respondent reiterated his request for the transfer of venue, it was agreed at
the hearing of January 30, 1989 that respondents answer, dated August 3, 1987, and
the affidavits of his witnesses as well as his own would be considered as their direct
testimonies.[8]
In his answer, respondent Esteban Abecia maintained that on March 31, 1971,
Regalado Daroy sold the land in question to Jose Gangay, and the latter in turn sold
the land to Nena Abecia on April 17, 1971. He cited the sheriffs return, dated August 6,
1973, in which it was stated that on August 4, 1993 Regalado Daroy and his assignee
Nena Abecia were . . . placed in actual possession of the parcel of land subject matter
of the Deed of Conveyance and Possession.[9] He also referred to the resolution of the
Assistant Provincial Fiscal of Misamis Oriental, who dismissed the complaint for grave
coercion and malicious mischief filed by Gertrudes De Bajuyo, one of the defendants
in the ejectment case, against Regalado Daroy and Nena Abecia for the demolition of
her house, precisely on the basis of the right of Mrs. Nena Abecia . . . as assignee to do
whatever she wants to do of the things she owns.[10]
On July 15, 1993, Commissioner Plaridel C. Jose rendered a report finding
respondent Abecia guilty of malpractice and recommending his disbarment. In his
report, Commissioner Jose stated:[11]
. . . In the course of his law practice, the respondent handled several cases in behalf of
the complainant Regalado Daroy, among which is Civil Case No. 3288, wherein a
parcel of land located at Opol, Misamis Oriental covered by TCT No. T-15924 (TCT No.
T-315) was the subject of litigation. In the course of handling the same, the
complainant entrusted to the respondent the pertinent documents necessary in the
said case which included his said TCT No. T-15924.
In the year 1971, without the knowledge of the complainant, a document entitled
Deed of Sale dated March 31, 1971 was executed and notarized by Notary Public
Erasmo G. Damasing as Doc. No. 68, Page No. 16, Book No. VIII, Series of 1971, which
appears to have been signed by complainant Regalado Daroy, thereby conveying the
said property in favor of a certain Jose Gangay, married to Anita Basmayor, by virtue
of which TCT No. T-15925 was issued in the name of Jose Gangay.
Two weeks thereafter, under date of April 17, 1971, the said Jose Gangay executed a
Deed of Sale of the same property in favor of Mrs. Nena Abecia, the wife of the
respondent, by virtue of which TCT No. T-15926 was issued in the name of Nena
Abecia, married to Atty. Esteban Abecia, the respondent.
Sometime in the year 1984, the complainant discovered that his said property was 78
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already in the name of Mrs. Nena Abecia and Atty. Esteban Abecia.
....
The foregoing evidence sufficiently proved respondents acts complained of in the
present case . . . . The significant fact is that the herein respondent was instrumental
and responsible for falsifying the signature of his client, complainant Daroy, in the
deed of conveyance in favor of Jose Gangay, for which he is at present criminally
charged in Criminal Case No. 88-443 before the Regional Trial Court of Misamis
Oriental.
In an unclear manner, respondent tried to justify his act by alleging that the transfer of
his clients property to his wife was proper because he allegedly was not paid for his
professional services. Such allegation, even if true, would not exculpate him from
liability. A lawyer who executed with his client a deed transferring ownership over a
parcel of land involved in a pending litigation as his attorneys fees violates the rule
prohibiting the purchase of property in litigation by a lawyer from his client.
. . . What is saddening is the fact that he is presently an incumbent labor arbiter of the
National Labor Relations Commission with the delicate responsibility of administering
justice to the parties before him. . . . The Commission has no alternative but to
recommend his disbarment. It is likewise recommended that the National Labor
Relations Commission be furnished with these findings for its guidance and
appropriate action.
The Board of Governors of the Integrated Bar of the Philippines in Resolution
No. XI-94-072, dated March 26 1994,[12] approved the report but reduced the penalty
to indefinite suspension.
Respondent Abecia filed a Motion for Reconsideration and/or Appeal. Among
other things, he contends that:[13]
....
1. The Commission on Bar Discipline erred when it held that complainant had no
knowledge of the execution of the Deed of Absolute Sale on March 31, 1971 before
Notary Public Erasmo G. Damasing.
Complainant very well knew of the execution of the deed of sale as shown in the
Sheriffs Return of Service (Respondents Annex 9) dated August 6, 1973, where he
declared that he was accompanied by the complainant and his assignee, Nena Abecia,
in implementing the Deed of Conveyance and Possession on August 4, 1973. The
Deputy Sheriff even went as far as declaring that the land was already in the name of
complainants assignee. Paragraph 2 of the said Sheriffs Return of Service is herein
quoted verbatim:
2. The undersigned then proceeded to the parcel of land which is the subject matter
of the Deed of Conveyance and Possession together with purchaser Regalado Daroy,
his assignee Nena Abecia, Atty. Esteban Abecia, Ex-LTC Registrar Clemente Quiblat,
P.M. Salazar, and the Police Sgt. of Opol, Misamis Oriental, Felix Abejuela. Regalado
Daroy and his assignee, Nena Abecia, were then formally placed in actual and physical
possession of the parcel of land subject matter of the Deed of Conveyance and
Possession. Regalado Daroy and his assignee, Nena Abecia, then asserted their
ownership of the parcel of land by making use of the improvements found on the land
such as the young coconuts and bananas. As a matter of fact the parcel of land is
already in the name of Nena Abecia per Transfer Certificate of Title No. T-15926
entered in the Register of Deeds of Cagayan de Oro City on June 18, 1973 at 1:00
P.M.(Underscoring Ours).
Likewise, in Office File No. 419-74 of the Office of the Provincial Fiscal (Respondents
Annex 10) dated April 18, 1974, wherein complainant Regalado Daroy was the
accused, then 4th Asst. Fiscal Alejo G. Rola referred to Nena Abecia as the owner of
the subject property by virtue of her being the assignee and/or transferee of the rights
of Regalado Daroy.
Furthermore, in Criminal Case No. 88-443 before Branch 25 of the RTC of Misamis
Oriental, complainant testified in open court that he came to know of the Deed of
Absolute Sale (Exhibit A) when the sheriff awarded the land to him (TSN, p. 3. Oct. 4,
1989). The Sheriffs Deed of Conveyance and Possession, however, was executed by
the Provincial Sheriffs way back in April 11, 1972.
How indeed can complainant now have the temerity to claim that he discovered that
the subject property was transferred only in 1984? And how could the Commission on
Bar Discipline have overlooked the above evidence and believed the complainant
hook, line and sinker?
2. The Commission on Bar Discipline erred in not giving credence and weight to the
testimony/sworn statement of the Notary Public (Respondents Annex 4) and the
instrumental witnesses to the execution of the questioned Deed of Absolute Sale
(Respondents Annexes 5 and 6). Between the Notary Public and the complainant, the
Notary Public, who is known for his unquestioned integrity, honesty and probity, is
more believable. In fact, Notary Public Erasmo G. Damasing, then the incumbent vice-
mayor, went on to become the congressman of Cagayan de Oro City. And between the
positive identification of the complainant as the person who executed the instrument
by the Notary Public (and the instrumental witnesses) and the assertion of the alleged
handwriting expert, the positive identification must prevail especially since the
questioned signature of complainant has as many strokes as the sample signatures in
the documents submitted for comparison.
Respondents motion is well taken. As already stated, the land in question was
purchased by complainant at the sheriffs sale held on March 25, 1971. The land was
owned by Gertrudes de Bajuyo, wife of one of the defendants in the action for forcible
entry. Upon the lapse of one year and the failure of the owner to redeem the land, its
ownership was consolidated in the name of complainant Regalado Daroy. In his
sheriffs Return of Service issued on August 6, 1973 - long before the complaint in this
case was filed on May 25, 1987 Deputy Sheriff Eufrosino P. Castillo stated that when
he finally transferred the land to the buyer, he placed in possession of the land not
only the buyer, Regalado Daroy, but also the latters assignee, Nena Abecia, in whose
name the title to the land had in fact been transferred. The Deputy Sheriff said in his
report:[14]
2. The undersigned then proceeded to the parcel of land which is the
subject matter of the Deed of Conveyance and Possession together
with purchaser Regalado Daroy, his assignee Nena Abecia, Atty. 79
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Esteban Abecia, Ex-LTC Registrar Clemente Quiblat, P.M. Salazar, and
the Police Sgt. of Opol, Misamis Oriental, Felix Abejuela. Regalado
Daroy and his assignee, Nena Abecia, were then formally place in actual
and physical possession of the parcel of land subject of the Deed of
Conveyance and Possession. Regalado Daroy and his assignee, Nena
Abecia, then asserted their ownership of the parcel of land by making
use of the improvements found in the land such as the young coconuts
and bananas. As a matter of fact the parcel of land is already in the
name of Nena Abecia per Transfer Certificate of Title No. T-15926
entered in the Register of Deeds at Cagayan de Oro City on June 18,
1973 at 1:00 P.M.
3. At about 2:00 P.M. of the same day, August 4, 1973, the undersigned
accompanied with police Sgt. Felex Abejuela of Opol Police Department
and P.M. Salazar went to the house of Restituto Bajuyo at Mulugan,
Opol, Mis. Or. The undersigned explained to Restituto Bajuyo that  that because the land had been acquired by complainant at a public sale held in order
Regalado Daroy and his assignee Nena Abecia were already placed in
actual and physical possession of the parcel of land subject matter of
the Deed of Conveyance and Possession and admonished him not to
molest Regalado Daroy and his assignee or anybody appointed by
them to take care of the aforecited parcel of land. He was warned that
any violation will be contrary to law and will subject him to court
punishment.
It would appear, therefore, that as early as August 4, 1973 Daroy already knew
that title to the land had already been transferred in the name of respondents
wife. Complainants claim that he came to know of such transfer only in 1984 is thus
belied. Nor does it appear that the transfer was made without his knowledge and
consent. To the contrary, the sheriffs return suggests that Daroy had agreed to such
transfer. Hence, the references to Mrs. Abecia as Daroys assignee.
It appears further that as a consequence of the demolition of the former owners
house, complainant and Mrs. Abecia were charged, together with Deputy Sheriff
Eufrosino P. Castillo, with grave coercion/malicious mischief in the Office of the
Provincial Fiscal of Misamis Oriental. In his resolution, dated April 18, 1974, dismissing
the charges, Assistant Provincial Fiscal Alejo G. Rola stated, among other things:[15]
The undersigned despite the declaration of complainant Gertrudes de Bajuyo
corroborated by the testimony of Josefina Jaraula that she was intimidated by a PC
soldier, is of the opinion that such evidence is insufficient to warrant a belief that such
an act was in fact done by Sgt. Abalos, because the other witnesses for the
complainant namely, Lito Ejina and Jose Jaime never mentioned that there was such
intimidation employed by Sgt. Abalos at the time despite the fact that these two (2)
aforenamed witnesses, were present at the time and on the date Josefina Jaraula was
around. The undersigned is however of the considered opinion that the house
occupied by complainant Gertrudes de Bajuyo was demolished by respondents, but
such an act is a right of Mrs. Nena Abecia in her capacity as an assignee to do
whatever she wants to do of the thing she owns. Furthermore, the allegation of
complainant regarding the intimidation made against her by the PC Sgt. corroborated
by the other witness Josefina Jaraula is insufficient to offset the presumption of
regularity of performance of an official duty by a public officer, apart from the fact that
the testimony of Gertrudes Bajuyo and Josefina Jaraula are of dubious credibility.
Like the sheriffs return made in 1973, this resolution of the Assistant Provincial
Fiscal rendered the following year (1974) belies complainants allegation that the land
in question was transferred to Mrs. Abecia without his knowledge and consent and
that he came to know about it only in 1984.
The aforementioned documents were attached to the answer of respondent
Esteban Abecia. However, despite the parties agreement made at the hearing held on
January 30, 1989, that the said documents would be considered the evidence of
respondent Abecia, they were not even mentioned in the report of the Commissioner
who investigated the case.
Indeed, what appears to have happened in this case is that the parties thought
to satisfy a judgment in his favor in a case in which respondent was complainants
counsel, the latter could not acquire the land. The parties apparently had in mind Art.
1491 of the Civil Code which provides, in pertinent parts, as follows:
ART. 1491. The following persons cannot acquire by purchase, even at a public or
judicial auction, either in person or through the mediation of another:
....
(5) Justices, judges, prosecuting attorneys, clerks of superior and inferior courts, and
other officers and employees connected with the administration of justice, the
property and rights in litigation or levied upon an execution before the court within
whose jurisdiction or territory they exercise their respective functions; this prohibition
includes the act of acquiring by assignment and shall apply to lawyers, with respect to
the property and rights which may be the object of any litigation in which they may
take part by virtue of their profession.[16]
Of course, the parties were mistaken in thinking that respondent could not
validly acquire the land. In Guevara v. Calalang,[17] on facts similar to those in this case, we
held that the prohibition in Art. 1491 does not apply to the sale of a parcel of land,
acquired by a client to satisfy a judgment in his favor, to his attorney as long as the
property was not the subject of the litigation. For indeed, while judges, prosecuting
attorneys, and others connected with the administration of justice are prohibited from
acquiring property or rights in litigation or levied upon in execution, the prohibition
with respect to attorneys in the case extends only to property and rights which may be
the object of any litigation in which they may take part by virtue of their profession.
The point is, the parties in this case thought the transfer of the land to
respondent Abecia was prohibited and so they contrived a way whereby the land
would be sold to Jose Gangay, whose wife Anita is the sister of Mrs. Nena Abecia, and
then Gangay would sell the land to Mrs. Abecia. As Jose Gangay stated in his affidavit
of March 6, 1985:[18]
4. T - Ano ba ang iyong masasabi tungkol sa nangyari?
S - Sinabihan ako ni Atty. Esteban Abecia, sapagkat siya raw ang abogado sa 80
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lupang pinagkaguluhan, hindi maari na siya ang nakalagay na nagbili ng upa act.
sa kanyang cliente na si Regalado Daroy, dahil laban raw sa kanilang batas WHEREFORE, the resolution dated March 26, 1994, of the IBP Board of
sa mga abogado, kaya sinabihan ako ni Atty. Esteban Abecia na maari bang Governors is RECONSIDERED and the complaint against respondent Esteban Abecia is
gamitin niya ang pangalan ko na ako raw ang nakabili sa lupa ni Regalado DISMISSED.
Daroy at paglipas raw ng isang taon, ay kanya ng ilipat sa pangalan sa SO ORDERED.
documento at tituto hanggang sa pangalan ng kanyang asawa na si Nena
Abecia.
5.T - Sumagot ka ba sa hiling ni Atty. Esteban Abecia?
S - Opo, pumayag ako dahil silang dalawa, si Regalado Daroy at si Atty. Esteban
Abecia ay aking mga bilas, sapagkat ang isat-isa naming mga asawa ay
magkakapatid.
6. T - Ano man ang nangyari pagkatapos noon?
S - Isang araw, ay pumunta si Atty. Esteban Abecia sa amin at sinama niya ako
doon kay Atty. Wilfredo Linaac upang ipa tunayan ang aking pangalan doon
sa documento sa pagbili, at dahil doon, iyong documento sa pabili ay na
notariohan ni Atty. Wilfredo Linaac.
7. T - Binayaran ba kayo ni Nena Abecia at ni Atty. Esteban Abecia sa pera na
naghaga ng isang libo tatlong daan at limang[pung] pesos (P1,350.00) na
iyong ang halaga sa lupa.
S - Wala.
8. T - Ipakita ko sa iyo itong documento ng pagbili at may takda ng petsa na Abril
17, 1971 notariadad ni Atty. Wilfredo Linaac Signes sa Doc. No. 333, Pahina
48, Aklat No. VI; taon series sa 1971; ano mang ang kaugnayan nito sa
documento ng pagbili?
S - Ang lahat na mga papiles sa sinasabi ninyo ay wala akong nalalaman, ang
nalaman ko lang noon akoy dinala ni Atty. Esteban Abecia sa oficina ni Atty.
Wilfredo Linaac tinanong ako kong aking pirma iyong sa sa documento.
The sale of the land to Gangay may be fictitious and, therefore, void, but that
complainant Regalado Daroy intended to convey the land ultimately to respondent
Esteban Abecia appears to be the case.
It is true that the NBI found the signature of Regalado Daroy on the deed of sale
made in favor of Jose Gangay to have been forged. But Erasmo Damasing, the notary
public who notarized the deed, affirmed that Daroy and his wife appeared before him
on March 31, 1971 and, in his presence, signed the document in question.[19] Daisy
Felicilda likewise stated in an affidavit executed on February 17, 1986 that she was a
witness to the execution of the deed of sale and that she saw Daroy signing the deed
of sale.[20]
Daroy never denied these claims of the notary public and a witness to the
execution of the deed of sale. Nor was the NBI writing expert ever called to testify on
his finding that the signature of Daroy in the deed of sale appeared to have been
signed by a different hand. The finding that the deed of sale was forged was simply
implied from the report of the NBI writing expert. As complainant, Daroy had the
burden of proving that contrary to the recital in the jurat he and his wife never
appeared before the notary public and acknowledged the deed to be their voluntary 81
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FEDERICO N. RAMOS, complainant, vs. ATTY. PATRICIO A. NGASEO, respondent.
This is a complaint for suspension of respondent Atty. Patricio A. Ngaseo for
violation of the Code of Professional Responsibility and Article 1491 of the Civil
Code by demanding from his client, complainant Federico N. Ramos, the delivery
of 1,000 square meters of land, a litigated property, as payment for his
appearance fees.
The facts as narrated by the complainant are as follows:
Sometime in 1998, complainant Federico Ramos went to respondent Atty.
Patricio Ngaseos Makati office to engage his services as counsel in a case[1]
 involving a piece of land in San Carlos, Pangasinan. Respondent agreed to handle
the case for an acceptance fee of P20,000.00, appearance fee of P1,000.00 per
hearing and the cost of meals, transportation and other incidental expenses.
Complainant alleges that he did not promise to pay the respondent 1,000 sq. m.
of land as appearance fees.[2]
On September 16, 1999, complainant went to the respondents office to
inquire about the status of the case. Respondent informed him that the decision
was adverse to them because a congressman exerted pressure upon the trial
judge. Respondent however assured him that they could still appeal the adverse
judgment and asked for the additional amount of P3,850.00 and another
P2,000.00 on September 26, 2000 as allowance for research made.[3]
Although an appeal was filed, complainant however charges the respondent
of purposely failing to submit a copy of the summons and copy of the assailed
decision. Subsequently, complainant learned that the respondent filed the notice
of appeal 3 days after the lapse of the reglementary period.
On January 29, 2003, complainant received a demand-letter from the
respondent asking for the delivery of the 1,000 sq. m. piece of land which he
allegedly promised as payment for respondents appearance fee. In the same
letter, respondent also threatened to file a case in court if the complainant would
not confer with him and settle the matter within 30 days.
Respondent alleged that sometime in the late 1997, a former client, Federico
Ramos and his brother, Dionisio, went to his Makati office to engage his
professional services in connection with a 2-hectare parcel of land situated in San
Carlos, Pangasinan which the complainants family lost 7 years earlier through an
execution sale in favor of one Alfredo T. Castro. Complainant, who was deaf and
could only speak conversational Tagalog haltingly, was assisted by his brother
Dionisio. They came all the way from Pangasinan because no lawyer in San Carlos
City was willing to handle the case. Complainant, through Dionisio, avers that he
has consulted 2 local lawyers but did not engage their services because they were
demanding exorbitant fees. One local lawyer was willing to handle the case for at
least one-half of the land involved as his attorneys fee, plus cash expenses, while
the other asked for of the land in addition to a large sum of money. Respondent
agreed to handle the case for an acceptance fee of P60,000.00 plus an
appearance fee of P3,000.00 per hearing. Complainant told him that he would
consult his siblings on the matter.
Six months later, i.e., in April 1998, complainant, assisted by one Jose Castillo,
went to respondents office to discuss the legal fees. Complainant, through
Castillo, told respondent that he was willing to pay an acceptance fee of
P40,000.00, P20,000.00 of which shall be paid upon engagement and the
remaining P20,000.00 to be paid after their treasure hunt operations in Nueva
Viscaya were terminated. Further, complainant offered, in lieu of P3,000.00 per
appearance, 1,000 sq. m. of land from the land subject matter of the case, if they
win, or from another piece of property, if they lose. In addition, complainant also
offered to defray the expenses for transportation, meals and other incidental
expenses. Respondent accepted the complainants offer.
Respondent claims that after the trial court dismissed Civil Case No. SCC
2128, he filed a timely notice of appeal and thereafter moved to be discharged as
counsel because he had colon cancer. Complainant, now assisted by one Johnny
Ramos, implored respondent to continue handling the case, with an offer to
double the 1,000 sq. m. piece of land earlier promised and the remaining balance
of P20,000.00 acceptance fee. Johnny Ramos made a written commitment and
gave respondents secretary P2,000.00 of the P3,850.00 expenses for the
preparation of the appellants brief.
On July 18, 2001, the Court of Appeals rendered a favorable decision
ordering the return of the disputed 2-hectare land to the complainant and his
siblings. The said decision became final and executory on January 18, 2002. Since
then complainant allegedly failed to contact respondent, which compelled him to
send a demand letter on January 29, 2003.
On February 14, 2003, complainant filed a complaint before the IBP charging
his former counsel, respondent Atty. Ngaseo, of violation of the Code of
Professional Responsibility for demanding the delivery of 1,000 sq. m. parcel of
land which was the subject of litigation.
In a report dated July 18, 2003, IBP Commissioner Rebecca Villanueva-Maala
found the respondent guilty of grave misconduct and conduct unbecoming of a
lawyer in violation of the Code of Professional Responsibility and recommended
that he be suspended from the practice of law for 1 year.[4]
On August 30, 2003, the IBP Board of Governors passed Resolution No. XVI-
2003-47 the full text of which reads:[5]
RESOLVED to ADOPT and APPROVE, as it is hereby ADOPTED and APPROVED, the
Report and Recommendation of the Investigating Commissioner of the above-
entitled case, herein made part of this Resolution/Decision as Annex A; and,
finding the recommendation fully supported by the evidence on record and the82
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applicable laws and rules, with modification, and considering that respondent
have violated the Code of Professional Responsibility for grave misconduct and
conduct unbecoming of a lawyer Atty. Patricio A. Ngaseo is hereby SUSPENDED
from the practice of law for six (6) months.
On December 11, 2003, respondent filed a petition for review assailing IBP
Resolution No. XVI-2003-47 for having been issued without or in excess of
jurisdiction.[6]
Respondent argues that he did not violate Article 1491 of the Civil Code
because when he demanded the delivery of the 1,000 sq. m. of land which was
offered and promised to him in lieu of the appearance fees, the case has been
terminated, when the appellate court ordered the return of the 2-hectare parcel
of land to the family of the complainant.
Respondent further contends that he can collect the unpaid appearance fee
even without a written contract on the basis of the principle of quantum meruit. He
claims that his acceptance and appearance fees are reasonable because a Makati
based legal practitioner, would not handle a case for an acceptance fee of only
P20,000.00 and P1,000.00 per court appearance.
Under Article 1491(5) of the Civil Code, lawyers are prohibited from
acquiring either by purchase or assignment the property or rights involved which
are the object of the litigation in which they intervene by virtue of their
profession.[7] The prohibition on purchase is all embracing to include not only
sales to private individuals but also public or judicial sales. The rationale
advanced for the prohibition is that public policy disallows the transactions in
view of the fiduciary relationship involved, i.e., the relation of trust and confidence
and the peculiar control exercised by these persons.[8] It is founded on public
policy because, by virtue of his office, an attorney may easily take advantage of
the credulity and ignorance of his client and unduly enrich himself at the expense
of his client.[9] However, the said prohibition applies only if the sale or assignment
of the property takes place during the pendency of the litigation involving the
clients property. Consequently, where the property is acquired after the
termination of the case, no violation of paragraph 5, Article 1491 of the Civil Code
attaches.
Invariably, in all cases where Article 1491 was violated, the illegal transaction
was consummated with the actual transfer of the litigated property either by
purchase or assignment in favor of the prohibited individual. In Biascan v. Lopez,
 respondent was found guilty of serious misconduct and suspended for 6 months
from the practice of law when he registered a deed of assignment in his favor
and caused the transfer of title over the part of the estate despite pendency of
Special Proceedings No. 98037 involving the subject property.[10] In the
consolidated administrative cases of Valencia v. Cabanting,[11] the Court suspended
respondent Atty. Arsenio Fer Cabanting for six (6) months from the practice of
law when he purchased his client's property which was still the subject of a
pending certiorari proceeding.
In the instant case, there was no actual acquisition of the property in
litigation since the respondent only made a written demand for its delivery which
the complainant refused to comply. Mere demand for delivery of the litigated
property does not cause the transfer of ownership, hence, not a prohibited
transaction within the contemplation of Article 1491. Even assuming arguendo
that such demand for delivery is unethical, respondents act does not fall within
the purview of Article 1491. The letter of demand dated January 29, 2003 was
made long after the judgment in Civil Case No. SCC-2128 became final and
executory on January 18, 2002.
We note that the report of the IBP Commissioner, as adopted by the IBP
Board of Governors in its Resolution No. XVI-2003-47, does not clearly specify
which acts of the respondent constitute gross misconduct or what provisions of
the Code of Professional Responsibility have been violated. We find the
recommended penalty of suspension for 6 months too harsh and not
proportionate to the offense committed by the respondent. The power to disbar
or suspend must be exercised with great caution. Only in a clear case of
misconduct that seriously affects the standing and character of the lawyer as an
officer of the Court and member of the bar will disbarment or suspension be
imposed as a penalty.[12] All considered, a reprimand is deemed sufficient and
reasonable.
WHEREFORE, in view of the foregoing, respondent Atty. Patricio A. Ngaseo is
found guilty of conduct unbecoming a member of the legal profession in violation
of Rule 20.04 of Canon 20 of the Code of Professional Responsibility. He is 
REPRIMANDED with a warning that repetition of the same act will be dealt with
more severely.
SO ORDERED.
83
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JOEY R. PEÑA, Petitioner, v. JESUS DELOS SANTOS AND THE HEIRS OF ROSITA
DELOS SANTOS FLORES., Respondents.
This resolves the Motion for Reconsideration1 of petitioner Joey R. Perm (Peña) of
the Court's Resolution2 dated September 9, 2013 which denied his Petition for
Review3 on the ground of lack of reversible error in the assailed Decision4 dated
February 20, 2012 of the Court of Appeals (CA) in CA-G.R. CEB SP No. 03886.
The Facts
Jesus Delos Santos (Jesus) and Rosita Delos Santos Flores (Rosita) were the
judgment awardees of the two-thirds portion or 9,915 square meters of four
adjoining lots designated as Lots 393-A, 393-B, 394-D and 394-E, measuring
14,771 sq m, located in Boracay Island, Malay, Aldan.5 The award was embodied
in the Decision dated April 29, 1996 of the Regional Trial Court (RTC) of Kalibo,
Aklan in the herein Civil Case No. 3683, the fallo of which reads:
WHEREFORE, in view of the foregoing considerations, judgment is hereby
rendered as follows:
(1.) Dismissing the complaint filed by the plaintiffs [Vicente Delos Santos, et al.] as
well [as] the complaint in intervention filed by the second set of intervenors
Casimeros, et al. for lack of merit;
(2.) Declaring the two deeds of sale (Exhibits 29 and 30) as null and void insofar as
they affect the two-thirds (2/3) share of intervenors Jesus and [Rosita];
(3.) Declaring intervenors Jesus and [Rosita] as the lawful owners of the two-
thirds portion of the land in question or 9,915 square meters on the
northwest portion, representing as their shares in the intestate estate of
Leonardo delos Santos;
(4.) Declaring defendant Fred Elizalde as the rightful owner of one-third of the
land in question or 4,957 square meters on the southeast portion, segregated by
a boundary line running from the seashore to the inland or from the southwest
to northeast;
(5.) Ordering the cancellation or revision of Tax Declaration No. 4422 in the name
of Fred Elizalde (Exhibit 26) and all tax declarations issued subsequent thereto to
conform to paragraphs 3 and 4 hereof as well as the issuance of a new tax
declaration to intervenors Jesus and [Rosita] covering their two-thirds (2/3) share;
(6.) Ordering the plaintiffs or any persons claiming interest therein to deliver
complete possession of the land to [Fred and Joan Elizalde] and Jesus and
[Rosita].
No pronouncement as to costs.
SO ORDERED.6 (Citation omitted and emphasis ours)
The losing parties in the case, Vicente Delos Santos, et al. (plaintiffs) and Spouses
Fred and Joan Elizalde (appellants), appealed the foregoing judgment to the CA
thru petitions separately docketed as CA-G.R. CV No. 54136 and CA-G.R. SP No.
48475, respectively. Both appeals were dismissed and considered withdrawn in
the CA Resolution dated May 11, 1999 upon the appellants' motion to withdraw
appeal. In the subsequent CA Resolution dated January 31, 2000, the motion for
reconsideration and motion to reinstate appeal filed by the plaintiffs were denied
for being time-barred as it was filed nine days late.7
The plaintiffs sought recourse with the Court via a petition for review on certiorari
 docketed as G.R. Nos. 141810 and 141812.8 In a Decision dated February 2, 2007,
the Court denied the petition on the ground that the plaintiffs already lost their
right of appeal to the CA when they failed to file an appellant's brief during the
more than 180-day extension.9 The Court reiterated its ruling in a Resolution
dated April 23, 2007, which denied reconsideration. An Entry of Judgment in the
case was forthwith issued.10
The case was then remanded to the RTC of Kalibo, Aklan for the execution
proceedings during which a Motion for Substitution with a Motion for a Writ of
Execution and Demolition11 dated March 14, 2008 was filed by Peña.
Peña averred that he is the transferee of Jesus and Rosita's adjudged allotments
over the subject lots. He claimed that he bought the same from Atty. Romeo
Robiso (Atty. Robiso) who in turn, acquired the properties from Jesus and Rosita
through assignment and sale as evidenced by the following documents, viz:
a. Deed of Transfer or Conveyance dated May 4, 2005 transferring 2,000 sq m of
Lots No. 394-PT and 393-A to Atty. Robiso;12
b. Deed of Absolute Sale dated May 4, 2005 over the 2,000 sq m of Lots No. 394-
PT and 393-A in favor of Atty. Robiso;13
c. Confirmation of Sale and Transfer dated December 5, 2006 affirming the two
foregoing instruments executed by Jesus and Rosita in favor of Atty. Robiso.14 84
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ChanRoblesVirtualawlibrary
Atty. Robiso later on sold Lots No. 393-A and 394-D to Peña on December 15,
2006 thru a Deed of Absolute Sale.15 The tax declarations over the said portions
were subsequently registered in Peña's name.16
The plaintiffs opposed Peña's motion claiming that the conveyance made by
Jesus and Rosita in favor of Atty. Robiso was null and void for being a prohibited
transaction because the latter was their counsel in the case.
Apparently, Atty. Robiso was engaged by Jesus and Rosita to be their counsel in
Civil Case No. 3683 by virtue of an Attorney's Agreement and Undertaking dated July 11,
1998.17 Under the agreement, Atty. Robiso bound himself to render his legal
services in connection with Jesus and Rosita's involvement as party-litigants in
Civil Case No. 3683 and to any proceedings that may arise in connection
therewith before the CA and this Court. Atty. Robiso undertook to advance his
own funds for all expenses and costs he may incur in relation to the case. In
consideration thereof, Jesus and Rosita obliged themselves to give or pay to him
as contingent professional fees, 2,000 sq m of any and all lands that the courts
will award to them in the case.
Ruling of the RTC
In an Order18 dated June 11, 2008, the RTC partially granted Peña's motion and
ruled that Jesus and Rosita lost their standing in the case upon the conveyance of
their adjudged 2,000 sq m portion in favor of Atty. Robiso whose ownership
rights were afterwards acquired by Peña.
The RTC upheld that the conveyance made by Jesus and Rosita in favor of Atty.
Robiso is valid since it was not made during the pendency of litigation but after
judgment has been rendered. The RTC disposed as follows:
WHEREFORE, premises considered, the instant Motion for Substitution and the
Motion for a Writ of Execution and Demolition is partially granted.
Accordingly, it is hereby directed that:
1. Movant Joey Peña is joined with the original party in the First Set of Intervenors
(Jesus and Rosita) in accordance with Section 19, Rule 3 of the Rules of Court; and
2. A Writ of Execution be issued to implement the Decision dated April 29, 1996.
SO ORDERED.19 (Emphasis in the original)
The writ of execution was issued on July 10, 2008.20 The RTC denied
reconsideration in an Order dated September 8, 2008.21
Ruling of the CA
Jesus, together with the heirs of Rosita, elevated the matter to the CA thru a
special civil action for certiorari docketed as CA-G.R. CEB SP No. 03886.
In its Decision22 dated February 20, 2012, the CA reversed the RTC and ruled that
the conveyance made by Jesus and Rosita in favor of Atty. Robiso was null and
void because it is a prohibited transaction under Article 1491(5) of the Civil Code.
When the two Deeds of Sale in favor of Atty. Robiso were executed on May 4,
2005 and December 5, 2005 and the Confirmation of Sale on December 15, 2006,
the case was still pending with the Supreme Court, before which Jesus and Rosita
were still represented by Atty. Robiso. Accordingly, the CA decision disposed as
follows:
WHEREFORE, the Order dated June 11, 2008, Order dated September 8, 2008,
and the Alias Writ of Execution dated July 10, 2008 in Civil Case No. 3683 are
hereby ANNULLED and SET ASIDE. The trial court is directed to cause the
execution of the final judgment in favor of [Jesus and the heirs of Rosita] in this
case with dispatch.
SO ORDERED.23ChanRoblesVirtualawlibrary
The CA reiterated the foregoing ruling when it denied Peña's motion for
reconsideration in a Resolution24dated May 24, 2012. Aggrieved, Peña filed a
petition for review on certiorari before the Court. In a Minute Resolution25 dated
September 9, 2013, the Court denied the petition for lack of reversible error in
the assailed CA judgment.
On December 23, 2013, Peña filed a Motion for Reconsideration26 insisting that
the deeds of conveyance between Atty. Robiso and Jesus and Rosita were
executed long after the decision in Civil Case No. 3683 became final and
executory. Even assuming arguendo that the deeds were void, a separate action for
declaration of their inexistence is necessary because their terms have already
been fulfilled.
Ruling of the Court
The Court denies reconsideration.
The basis of Peña's motion for substitution is infirm because the lots were
transferred to his predecessor-in-interest, Atty. Robiso, through a prohibited sale
transaction. Article 1491(5) of the Civil Code expressly prohibits lawyers from 85
Sales
acquiring property or rights that may be the object of any litigation in which they
may take part by virtue of their profession, thus:
Art. 1491. The following persons cannot acquire by purchase, even at a public or
judicial auction, either in person or through the mediation of another:
xxxx
(5) Justices, judges, prosecuting attorneys, clerks of superior and inferior courts,
and other officers and employees connected with the administration of justice,
the property and rights in litigation or levied upon an execution before the court
within whose jurisdiction or territory they exercise their respective functions; this
prohibition includes the act of acquiring by assignment and shall apply to
lawyers, with respect to the property and rights which may be the object of any
litigation in which they may take part by virtue of their profession.
xxxx
A complementary prohibition is also provided in Rule 10 of the Canons of
Professional Ethics which states:
10. Acquiring interest in litigation.
The lawyer should not purchase any interest in the subject matter of the litigation
which he is conducting.
A property is in litigation if there is a contest or litigation over it in court or when
it is subject of a judicial action.27 Records show that the judicial action over the
subject lots was still in the appellate proceedings stage when they were conveyed
to Jesus and Rosita's counsel, Atty. Robiso. The Deed of Transfer or Conveyance
and the Deed of Absolute Sale both dated May 4, 2005 as well as the
Confirmation of Sale and Transfer dated December 5, 2006 were all executed
long before the termination of the appellate proceedings before this Court in G.R.
Nos. 141810 and 141812 on February 2, 2007.
Clearly then, since the property conveyed to Atty. Robiso by Jesus and Rosita was
still the object of litigation, the deeds of conveyance executed by the latter are
deemed inexistent. Under Article 1409 of the Code, contracts which are expressly
prohibited or declared void by law are considered inexistent and void from the
beginning.28 This being so, Atty. Robiso could not have transferred a valid title in
favor of Peña over the lots awarded to Jesus and Rosita in Civil Case No. 3683.
Consequently, Peña has no legal standing to be substituted in the stead of or
joined with Jesus and Rosita as the first set of intervenors and to move for
issuance of a writ of execution in Civil Case No. 3683.
There is no need to bring a separate action for the declaration of the subject
deeds of conveyance as void. A void or inexistent contract is one which has no
force and effect from the very beginning. Hence, it is as if it has never been
entered into and cannot be validated either by the passage of time or by
ratification.29
The need to bring a separate action for declaration of nullity applies only if the
void contract is no longer fully executory. Contrary to Peña's stance, the deeds of
conveyance made in favor of Atty. Robiso in 2005 cannot be considered as
executory because at that time the judgment award ceding the subject lots to
Jesus and Rosita was not yet implemented. A writ of execution30 was issued only
on July 10, 2008. "If the void contract is still fully executory, no party need bring
an action to declare its nullity; but if any party should bring an action to enforce
it, the other party can simply set up the nullity as a defense."31
This is notwithstanding the fact that the sale to Atty. Robiso was made pursuant
to a contingency fee contract. It is true that contingent fee agreements are
recognized in this jurisdiction as a valid exception to the prohibitions under
Article 1491(5) of the Civil Code.32 The Court cannot extend a similar recognition
to the present case, however, since the payment to Atty. Robiso of his
contingency fees was made during the pendency of litigation. "A contingent fee
contract is an agreement in writing where the fee, often a fixed percentage of
what may be recovered in the action, is made to depend upon the success of the
litigation. The payment of the contingent fee is not made during the pendency of
the litigation involving the client's property but only after the judgment has been
rendered in the case handled by the lawyer."33
Peña cannot rely on Article 143734 by claiming that Jesus and Rosita are already
estopped from questioning the validity of their deeds of conveyance with Atty.
Robiso. Estoppel is a principle in equity and pursuant to Article 1432 it is adopted
insofar as it is not in conflict with the provisions of the Civil Code and other laws.
Otherwise speaking, estoppel cannot supplant and contravene the provision of
law clearly applicable to a case.35 Conversely, it cannot give validity to an act that
is prohibited by law or one that is against public policy.36
The rationale advanced for the prohibition in Article 1491(5) is that public policy
disallows the transactions in view of the fiduciary relationship involved, i.e., the
relation of trust and confidence and the peculiar control exercised by these
persons. It is founded on public policy because, by virtue of his office, an attorney86
Sales
may easily take advantage of the credulity and ignorance of his client and unduly
enrich himself at the expense of his client.37 The principle of estoppel runs
counter to this policy and to apply it in this case will be tantamount to sanctioning
a prohibited and void transaction.
The other issues raised by Peña are merely procedural in nature and are too
inconsequential to override the fundamental considerations of public policy
underlying the prohibition set forth in Article 1491(5) of the Civil
Code.chanrobleslaw
WHEREFORE, foregoing considered, the Motion for Reconsideration is hereby  Associate Justice Cecilia Muñoz Palma of the Court of Appeals now retired Associate
DENIED for lack of merit.
SO ORDERED.cralawlawlibrary
BERNARDITA R. MACARIOLA, complainant, 
vs.
HONORABLE ELIAS B. ASUNCION, Judge of the Court of First Instance of Leyte, 
respondent.
In a verified complaint dated August 6, 1968 Bernardita R. Macariola charged
respondent Judge Elias B. Asuncion of the Court of First Instance of Leyte, now
Associate Justice of the Court of Appeals, with "acts unbecoming a judge."
The factual setting of the case is stated in the report dated May 27, 1971 of then
Justice of the Supreme Court, to whom this case was referred on October 28, 1968 for
investigation, thus:
Civil Case No. 3010 of the Court of First Instance of Leyte was a
complaint for partition filed by Sinforosa R. Bales, Luz R. Bakunawa,
Anacorita Reyes, Ruperto Reyes, Adela Reyes, and Priscilla Reyes,
plaintiffs, against Bernardita R. Macariola, defendant, concerning
the properties left by the deceased Francisco Reyes, the common
father of the plaintiff and defendant.
In her defenses to the complaint for partition, Mrs. Macariola
alleged among other things that; a) plaintiff Sinforosa R. Bales was
not a daughter of the deceased Francisco Reyes; b) the only legal
heirs of the deceased were defendant Macariola, she being the only
offspring of the first marriage of Francisco Reyes with Felisa Espiras,
and the remaining plaintiffs who were the children of the deceased
by his second marriage with Irene Ondez; c) the properties left by
the deceased were all the conjugal properties of the latter and his
first wife, Felisa Espiras, and no properties were acquired by the
deceased during his second marriage; d) if there was any partition
to be made, those conjugal properties should first be partitioned
into two parts, and one part is to be adjudicated solely to defendant
it being the share of the latter's deceased mother, Felisa Espiras,
and the other half which is the share of the deceased Francisco
Reyes was to be divided equally among his children by his two
marriages.
On June 8, 1963, a decision was rendered by respondent Judge
Asuncion in Civil Case 3010, the dispositive portion of which reads:
IN VIEW OF THE FOREGOING CONSIDERATIONS,87
the Court, upon a preponderance of evidence,
Sales
finds and so holds, and hereby renders judgment
(1) Declaring the plaintiffs Luz R. Bakunawa,
Anacorita Reyes, Ruperto Reyes, Adela Reyes and
Priscilla Reyes as the only children legitimated by
the subsequent marriage of Francisco Reyes Diaz
to Irene Ondez; (2) Declaring the plaintiff
Sinforosa R. Bales to have been an illegitimate
child of Francisco Reyes Diaz; (3) Declaring Lots
Nos. 4474, 4475, 4892, 5265, 4803, 4581, 4506
and 1/4 of Lot 1145 as belonging to the conjugal
partnership of the spouses Francisco Reyes Diaz
and Felisa Espiras; (4) Declaring Lot No. 2304 and
1/4 of Lot No. 3416 as belonging to the spouses
Francisco Reyes Diaz and Irene Ondez in common
partnership; (5) Declaring that 1/2 of Lot No. 1184
as belonging exclusively to the deceased
Francisco Reyes Diaz; (6) Declaring the defendant
Bernardita R. Macariola, being the only legal and
forced heir of her mother Felisa Espiras, as the
exclusive owner of one-half of each of Lots Nos.
4474, 4475, 4892, 5265, 4803, 4581, 4506; and the
remaining one-half (1/2) of each of said Lots Nos.
4474, 4475, 4892, 5265, 4803, 4581, 4506 and one
-half (1/2) of one-fourth (1/4) of Lot No. 1154 as
belonging to the estate of Francisco Reyes Diaz;
(7) Declaring Irene Ondez to be the exclusive
owner of one-half (1/2) of Lot No. 2304 and one-
half (1/2) of one-fourth (1/4) of Lot No. 3416; the
remaining one-half (1/2) of Lot 2304 and the
remaining one-half (1/2) of one-fourth (1/4) of Lot
No. 3416 as belonging to the estate of Francisco
Reyes Diaz; (8) Directing the division or partition
of the estate of Francisco Reyes Diaz in such a
manner as to give or grant to Irene Ondez, as
surviving widow of Francisco Reyes Diaz, a
hereditary share of. one-twelfth (1/12) of the
whole estate of Francisco Reyes Diaz (Art. 996 in
relation to Art. 892, par 2, New Civil Code), and
the remaining portion of the estate to be divided
among the plaintiffs Sinforosa R. Bales, Luz R.
Bakunawa, Anacorita Reyes, Ruperto Reyes, Adela
Reyes, Priscilla Reyes and defendant Bernardita R.
Macariola, in such a way that the extent of the
total share of plaintiff Sinforosa R. Bales in the
hereditary estate shall not exceed the equivalent
of two-fifth (2/5) of the total share of any or each
of the other plaintiffs and the defendant (Art. 983,
New Civil Code), each of the latter to receive
equal shares from the hereditary estate, (Ramirez
vs. Bautista, 14 Phil. 528; Diancin vs. Bishop of
Jaro, O.G. [3rd Ed.] p. 33); (9) Directing the parties,
within thirty days after this judgment shall have
become final to submit to this court, for approval
a project of partition of the hereditary estate in
the proportion above indicated, and in such
manner as the parties may, by agreement,
deemed convenient and equitable to them taking
into consideration the location, kind, quality,
nature and value of the properties involved; (10)
Directing the plaintiff Sinforosa R. Bales and
defendant Bernardita R. Macariola to pay the
costs of this suit, in the proportion of one-third
(1/3) by the first named and two-thirds (2/3) by
the second named; and (I 1) Dismissing all other
claims of the parties [pp 27-29 of Exh. C].
The decision in civil case 3010 became final for lack of an appeal,
and on October 16, 1963, a project of partition was submitted to
Judge Asuncion which is marked Exh. A. Notwithstanding the fact
that the project of partition was not signed by the parties
themselves but only by the respective counsel of plaintiffs and
defendant, Judge Asuncion approved it in his Order dated October
23, 1963, which for convenience is quoted hereunder in full:
The parties, through their respective counsels,
presented to this Court for approval the following
project of partition: 88
COMES NOW, the plaintiffs and the defendant in
Sales
the above-entitled case, to this Honorable Court
respectfully submit the following Project of
Partition:
l. The whole of Lots Nos. 1154, 2304 and 4506
shall belong exclusively to Bernardita Reyes
Macariola;
2. A portion of Lot No. 3416 consisting of 2,373.49
square meters along the eastern part of the lot
shall be awarded likewise to Bernardita R.
Macariola;
3. Lots Nos. 4803, 4892 and 5265 shall be
awarded to Sinforosa Reyes Bales;
4. A portion of Lot No. 3416 consisting of 1,834.55
square meters along the western part of the lot
shall likewise be awarded to Sinforosa Reyes-
Bales;
5. Lots Nos. 4474 and 4475 shall be divided
equally among Luz Reyes Bakunawa, Anacorita
Reyes, Ruperto Reyes, Adela Reyes and Priscilla
Reyes in equal shares;
6. Lot No. 1184 and the remaining portion of Lot
No. 3416 after taking the portions awarded under
item (2) and (4) above shall be awarded to Luz
Reyes Bakunawa, Anacorita Reyes, Ruperto Reyes,
Adela Reyes and Priscilla Reyes in equal shares,
provided, however that the remaining portion of
Lot No. 3416 shall belong exclusively to Priscilla
Reyes.
WHEREFORE, it is respectfully prayed that the
Project of Partition indicated above which is made
in accordance with the decision of the Honorable
Court be approved.
Tacloban City, October 16, 1963.
(SGD) BONIFACIO RAMO Atty. for the Defendant
Tacloban City
(SGD) ZOTICO A. TOLETE Atty. for the Plaintiff
Tacloban City
While the Court thought it more desirable for all
the parties to have signed this Project of Partition,
nevertheless, upon assurance of both counsels of
the respective parties to this Court that the
Project of Partition, as above- quoted, had been
made after a conference and agreement of the
plaintiffs and the defendant approving the above
Project of Partition, and that both lawyers had
represented to the Court that they are given full
authority to sign by themselves the Project of
Partition, the Court, therefore, finding the above-
quoted Project of Partition to be in accordance
with law, hereby approves the same. The parties,
therefore, are directed to execute such papers,
documents or instrument sufficient in form and
substance for the vesting of the rights, interests
and participations which were adjudicated to the
respective parties, as outlined in the Project of
Partition and the delivery of the respective
properties adjudicated to each one in view of said
Project of Partition, and to perform such other
acts as are legal and necessary to effectuate the
said Project of Partition.
SO ORDERED.
Given in Tacloban City, this 23rd day of October,
1963.
(SGD) ELIAS B. ASUNCION Judge
EXH. B.
The above Order of October 23, 1963, was amended on November
11, 1963, only for the purpose of giving authority to the Register of
Deeds of the Province of Leyte to issue the corresponding transfer
certificates of title to the respective adjudicatees in conformity with
the project of partition (see Exh. U).
One of the properties mentioned in the project of partition was Lot
1184 or rather one-half thereof with an area of 15,162.5 sq. meters.
This lot, which according to the decision was the exclusive property
of the deceased Francisco Reyes, was adjudicated in said project of
partition to the plaintiffs Luz, Anacorita Ruperto, Adela, and Priscilla
89
all surnamed Reyes in equal shares, and when the project of
Sales
partition was approved by the trial court the adjudicatees caused
Lot 1184 to be subdivided into five lots denominated as Lot 1184-A
to 1184-E inclusive (Exh. V).
Lot 1184-D was conveyed to Enriqueta D. Anota, a stenographer in
Judge Asuncion's court (Exhs. F, F-1 and V-1), while Lot 1184-E which
had an area of 2,172.5556 sq. meters was sold on July 31, 1964 to
Dr. Arcadio Galapon (Exh. 2) who was issued transfer certificate of
title No. 2338 of the Register of Deeds of the city of Tacloban (Exh.
12).
On March 6, 1965, Dr. Arcadio Galapon and his wife Sold a portion
of Lot 1184-E with an area of around 1,306 sq. meters to Judge
Asuncion and his wife, Victoria S. Asuncion (Exh. 11), which
particular portion was declared by the latter for taxation purposes
(Exh. F).
On August 31, 1966, spouses Asuncion and spouses Galapon
conveyed their respective shares and interest in Lot 1184-E to "The
Traders Manufacturing and Fishing Industries Inc." (Exit 15 & 16). At
the time of said sale the stockholders of the corporation were
Dominador Arigpa Tan, Humilia Jalandoni Tan, Jaime Arigpa Tan,
Judge Asuncion, and the latter's wife, Victoria S. Asuncion, with
Judge Asuncion as the President and Mrs. Asuncion as the secretary
(Exhs. E-4 to E-7). The Articles of Incorporation of "The Traders
Manufacturing and Fishing Industries, Inc." which we shall
henceforth refer to as "TRADERS" were registered with the
Securities and Exchange Commission only on January 9, 1967 (Exh.
E) [pp. 378-385, rec.].
Complainant Bernardita R. Macariola filed on August 9, 1968 the instant complaint
dated August 6, 1968 alleging four causes of action, to wit: [1] that respondent Judge
Asuncion violated Article 1491, paragraph 5, of the New Civil Code in acquiring by
purchase a portion of Lot No. 1184-E which was one of those properties involved in
Civil Case No. 3010 decided by him; [2] that he likewise violated Article 14, paragraphs
I and 5 of the Code of Commerce, Section 3, paragraph H, of R.A. 3019, otherwise
known as the Anti-Graft and Corrupt Practices Act, Section 12, Rule XVIII of the Civil
Service Rules, and Canon 25 of the Canons of Judicial Ethics, by associating himself
with the Traders Manufacturing and Fishing Industries, Inc., as a stockholder and a
ranking officer while he was a judge of the Court of First Instance of Leyte; [3] that
respondent was guilty of coddling an impostor and acted in disregard of judicial
decorum by closely fraternizing with a certain Dominador Arigpa Tan who openly and
publicly advertised himself as a practising attorney when in truth and in fact his name
does not appear in the Rolls of Attorneys and is not a member of the Philippine Bar;
and [4] that there was a culpable defiance of the law and utter disregard for ethics by
respondent Judge (pp. 1-7, rec.).
Respondent Judge Asuncion filed on September 24, 1968 his answer to which a reply
was filed on October 16, 1968 by herein complainant. In Our resolution of October 28,
1968, We referred this case to then Justice Cecilia Muñoz Palma of the Court of
Appeals, for investigation, report and recommendation. After hearing, the said
Investigating Justice submitted her report dated May 27, 1971 recommending that
respondent Judge should be reprimanded or warned in connection with the first cause
of action alleged in the complaint, and for the second cause of action, respondent
should be warned in case of a finding that he is prohibited under the law to engage in
business. On the third and fourth causes of action, Justice Palma recommended that
respondent Judge be exonerated.
The records also reveal that on or about November 9 or 11, 1968 (pp. 481, 477, rec.),
complainant herein instituted an action before the Court of First Instance of Leyte,
entitled "Bernardita R. Macariola, plaintiff, versus Sinforosa R. Bales, et al., defendants," which was
docketed as Civil Case No. 4235, seeking the annulment of the project of partition
made pursuant to the decision in Civil Case No. 3010 and the two orders issued by
respondent Judge approving the same, as well as the partition of the estate and the
subsequent conveyances with damages. It appears, however, that some defendants
were dropped from the civil case. For one, the case against Dr. Arcadio Galapon was
dismissed because he was no longer a real party in interest when Civil Case No. 4234
was filed, having already conveyed on March 6, 1965 a portion of lot 1184-E to
respondent Judge and on August 31, 1966 the remainder was sold to the Traders
Manufacturing and Fishing Industries, Inc. Similarly, the case against defendant
Victoria Asuncion was dismissed on the ground that she was no longer a real party in
interest at the time the aforesaid Civil Case No. 4234 was filed as the portion of Lot
1184 acquired by her and respondent Judge from Dr. Arcadio Galapon was already
sold on August 31, 1966 to the Traders Manufacturing and Fishing industries, Inc.
Likewise, the cases against defendants Serafin P. Ramento, Catalina Cabus, Ben
Barraza Go, Jesus Perez, Traders Manufacturing and Fishing Industries, Inc., Alfredo R.
Celestial and Pilar P. Celestial, Leopoldo Petilla and Remedios Petilla, Salvador Anota
and Enriqueta Anota and Atty. Zotico A. Tolete were dismissed with the conformity of
complainant herein, plaintiff therein, and her counsel.
On November 2, 1970, Judge Jose D. Nepomuceno of the Court of First Instance of
Leyte, who was directed and authorized on June 2, 1969 by the then Secretary (now 90
Minister) of Justice and now Minister of National Defense Juan Ponce Enrile to hear
Sales
and decide Civil Case No. 4234, rendered a decision, the dispositive portion of which
reads as follows:
A. IN THE CASE AGAINST JUDGE ELIAS B. ASUNCION
(1) declaring that only Branch IV of the Court of First Instance of
Leyte has jurisdiction to take cognizance of the issue of the legality
and validity of the Project of Partition [Exhibit "B"] and the two
Orders [Exhibits "C" and "C- 3"] approving the partition;
(2) dismissing the complaint against Judge Elias B. Asuncion;
(3) adjudging the plaintiff, Mrs. Bernardita R. Macariola to pay
defendant Judge Elias B. Asuncion,
(a) the sum of FOUR HUNDRED THOUSAND
PESOS [P400,000.00] for moral damages;
(b) the sum of TWO HUNDRED THOUSAND PESOS
[P200,000.001 for exemplary damages;
(c) the sum of FIFTY THOUSAND PESOS
[P50,000.00] for nominal damages; and
(d) he sum of TEN THOUSAND PESOS [PI0,000.00]
for Attorney's Fees.
B. IN THE CASE AGAINST THE DEFENDANT
MARIQUITA VILLASIN, FOR HERSELF AND FOR THE
HEIRS OF THE DECEASED GERARDO VILLASIN —
(1) Dismissing the complaint against the defendants Mariquita
Villasin and the heirs of the deceased Gerardo Villasin;
(2) Directing the plaintiff to pay the defendants Mariquita Villasin
and the heirs of Gerardo Villasin the cost of the suit.
C. IN THE CASE AGAINST THE DEFENDANT
SINFOROSA R. BALES, ET AL., WHO WERE
PLAINTIFFS IN CIVIL CASE NO. 3010 —
(1) Dismissing the complaint against defendants Sinforosa R. Bales,
Adela R. Herrer, Priscilla R. Solis, Luz R. Bakunawa, Anacorita R. Eng
and Ruperto O. Reyes.
D. IN THE CASE AGAINST DEFENDANT BONIFACIO
RAMO —
(1) Dismissing the complaint against Bonifacio Ramo;
(2) Directing the plaintiff to pay the defendant Bonifacio Ramo the
cost of the suit.
SO ORDERED [pp. 531-533, rec.]
It is further disclosed by the record that the aforesaid decision was elevated to the
Court of Appeals upon perfection of the appeal on February 22, 1971.
I
WE find that there is no merit in the contention of complainant Bernardita R.
Macariola, under her first cause of action, that respondent Judge Elias B. Asuncion
violated Article 1491, paragraph 5, of the New Civil Code in acquiring by purchase a
portion of Lot No. 1184-E which was one of those properties involved in Civil Case No.
3010. 'That Article provides:
Article 1491. The following persons cannot acquire by purchase,
even at a public or judicial action, either in person or through the
mediation of another:
xxx xxx xxx
(5) Justices, judges, prosecuting attorneys, clerks of superior and
inferior courts, and other officers and employees connected with
the administration of justice, the property and rights in litigation or
levied upon an execution before the court within whose jurisdiction
or territory they exercise their respective functions; this prohibition
includes the act of acquiring by assignment and shall apply to
lawyers, with respect to the property and rights which may be the
object of any litigation in which they may take part by virtue of their
profession [emphasis supplied].
The prohibition in the aforesaid Article applies only to the sale or assignment of the
property which is the subject of litigation to the persons disqualified therein. WE have
already ruled that "... for the prohibition to operate, the sale or assignment of the
property must take place during the pendency of the litigation involving the property" (The
Director of Lands vs. Ababa et al., 88 SCRA 513, 519 [1979], Rosario vda. de Laig vs.
Court of Appeals, 86 SCRA 641, 646 [1978]).
In the case at bar, when the respondent Judge purchased on March 6, 1965 a portion of
Lot 1184-E, the decision in Civil Case No. 3010 which he rendered on June 8, 1963 was
already final because none of the parties therein filed an appeal within the
reglementary period; hence, the lot in question was no longer subject of the litigation.
Moreover, at the time of the sale on March 6, 1965, respondent's order dated October
23, 1963 and the amended order dated November 11, 1963 approving the October 16, 1963
project of partition made pursuant to the June 8, 1963 decision, had long become final
for there was no appeal from said orders.
Furthermore, respondent Judge did not buy the lot in question on March 6, 1965
directly from the plaintiffs in Civil Case No. 3010 but from Dr. Arcadio Galapon who
earlier purchased on July 31, 1964 Lot 1184-E from three of the plaintiffs, namely, 91
Priscilla Reyes, Adela Reyes, and Luz R. Bakunawa after the finality of the decision in
Sales
Civil Case No. 3010. It may be recalled that Lot 1184 or more specifically one-half
thereof was adjudicated in equal shares to Priscilla Reyes, Adela Reyes, Luz Bakunawa,
Ruperto Reyes and Anacorita Reyes in the project of partition, and the same was
subdivided into five lots denominated as Lot 1184-A to 1184-E. As aforestated, Lot
1184-E was sold on July 31, 1964 to Dr. Galapon for which he was issued TCT No. 2338
by the Register of Deeds of Tacloban City, and on March 6, 1965 he sold a portion of
said lot to respondent Judge and his wife who declared the same for taxation
purposes only. The subsequent sale on August 31, 1966 by spouses Asuncion and
spouses Galapon of their respective shares and interest in said Lot 1184-E to the
Traders Manufacturing and Fishing Industries, Inc., in which respondent was the
president and his wife was the secretary, took place long after the finality of the
decision in Civil Case No. 3010 and of the subsequent two aforesaid orders therein
approving the project of partition.
While it appears that complainant herein filed on or about November 9 or 11, 1968 an
action before the Court of First Instance of Leyte docketed as Civil Case No. 4234,
seeking to annul the project of partition and the two orders approving the same, as
well as the partition of the estate and the subsequent conveyances, the same,
however, is of no moment.
The fact remains that respondent Judge purchased on March 6, 1965 a portion of Lot
1184-E from Dr. Arcadio Galapon; hence, after the finality of the decision which he
rendered on June 8, 1963 in Civil Case No. 3010 and his two questioned orders dated
October 23, 1963 and November 11, 1963. Therefore, the property was no longer
subject of litigation.
The subsequent filing on November 9, or 11, 1968 of Civil Case No. 4234 can no longer
alter, change or affect the aforesaid facts — that the questioned sale to respondent
Judge, now Court of Appeals Justice, was effected and consummated long after the
finality of the aforesaid decision or orders.
Consequently, the sale of a portion of Lot 1184-E to respondent Judge having taken
place over one year after the finality of the decision in Civil Case No. 3010 as well as
the two orders approving the project of partition, and not during the pendency of the
litigation, there was no violation of paragraph 5, Article 1491 of the New Civil Code.
It is also argued by complainant herein that the sale on July 31, 1964 of Lot 1184-E to
Dr. Arcadio Galapon by Priscilla Reyes, Adela Reyes and Luz R. Bakunawa was only a
mere scheme to conceal the illegal and unethical transfer of said lot to respondent
Judge as a consideration for the approval of the project of partition. In this connection,
We agree with the findings of the Investigating Justice thus:
And so we are now confronted with this all-important question
whether or not the acquisition by respondent of a portion of Lot
1184-E and the subsequent transfer of the whole lot to "TRADERS"
of which respondent was the President and his wife the Secretary,
was intimately related to the Order of respondent approving the
project of partition, Exh. A.
Respondent vehemently denies any interest or participation in the
transactions between the Reyeses and the Galapons concerning Lot
1184-E, and he insists that there is no evidence whatsoever to show
that Dr. Galapon had acted, in the purchase of Lot 1184-E, in
mediation for him and his wife. (See p. 14 of Respondent's
Memorandum).
xxx xxx xxx
On this point, I agree with respondent that there is no evidence in
the record showing that Dr. Arcadio Galapon acted as a mere
"dummy" of respondent in acquiring Lot 1184-E from the Reyeses.
Dr. Galapon appeared to this investigator as a respectable citizen,
credible and sincere, and I believe him when he testified that he
bought Lot 1184-E in good faith and for valuable consideration from
the Reyeses without any intervention of, or previous understanding
with Judge Asuncion (pp. 391- 394, rec.).
On the contention of complainant herein that respondent Judge acted illegally in
approving the project of partition although it was not signed by the parties, We quote
with approval the findings of the Investigating Justice, as follows:
1. I agree with complainant that respondent should have required
the signature of the parties more particularly that of Mrs. Macariola
on the project of partition submitted to him for approval; however,
whatever error was committed by respondent in that respect was
done in good faith as according to Judge Asuncion he was assured
by Atty. Bonifacio Ramo, the counsel of record of Mrs. Macariola,
That he was authorized by his client to submit said project of
partition, (See Exh. B and tsn p. 24, January 20, 1969). While it is true
that such written authority if there was any, was not presented by
respondent in evidence, nor did Atty. Ramo appear to corroborate
the statement of respondent, his affidavit being the only one that
was presented as respondent's Exh. 10, certain actuations of Mrs.
Macariola lead this investigator to believe that she knew the
contents of the project of partition, Exh. A, and that she gave her
conformity thereto. I refer to the following documents: 92
1) Exh. 9 — Certified true copy of OCT No. 19520 covering Lot 1154
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of the Tacloban Cadastral Survey in which the deceased Francisco
Reyes holds a "1/4 share" (Exh. 9-a). On tills certificate of title the
Order dated November 11, 1963, (Exh. U) approving the project of
partition was duly entered and registered on November 26, 1963
(Exh. 9-D);
2) Exh. 7 — Certified copy of a deed of absolute sale executed by
Bernardita Reyes Macariola on October 22, 1963, conveying to Dr.
Hector Decena the one-fourth share of the late Francisco Reyes-
Diaz in Lot 1154. In this deed of sale the vendee stated that she was
the absolute owner of said one-fourth share, the same having been
adjudicated to her as her share in the estate of her father Francisco
Reyes Diaz as per decision of the Court of First Instance of Leyte
under case No. 3010 (Exh. 7-A). The deed of sale was duly registered
and annotated at the back of OCT 19520 on December 3, 1963 (see
Exh. 9-e).
In connection with the abovementioned documents it is to be noted
that in the project of partition dated October 16, 1963, which was
approved by respondent on October 23, 1963, followed by an
amending Order on November 11, 1963, Lot 1154 or rather 1/4
thereof was adjudicated to Mrs. Macariola. It is this 1/4 share in Lot
1154 which complainant sold to Dr. Decena on October 22, 1963,
several days after the preparation of the project of partition.
Counsel for complainant stresses the view, however, that the latter
sold her one-fourth share in Lot 1154 by virtue of the decision in
Civil Case 3010 and not because of the project of partition, Exh. A.
Such contention is absurd because from the decision, Exh. C, it is
clear that one-half of one- fourth of Lot 1154 belonged to the estate
of Francisco Reyes Diaz while the other half of said one-fourth was
the share of complainant's mother, Felisa Espiras; in other words,
the decision did not adjudicate the whole of the one-fourth of Lot
1154 to the herein complainant (see Exhs. C-3 & C-4). Complainant
became the owner of the entire one-fourth of Lot 1154 only by
means of the project of partition, Exh. A. Therefore, if Mrs.
Macariola sold Lot 1154 on October 22, 1963, it was for no other
reason than that she was wen aware of the distribution of the
properties of her deceased father as per Exhs. A and B. It is also
significant at this point to state that Mrs. Macariola admitted during
the cross-examination that she went to Tacloban City in connection
with the sale of Lot 1154 to Dr. Decena (tsn p. 92, November 28,
1968) from which we can deduce that she could not have been kept
ignorant of the proceedings in civil case 3010 relative to the project
of partition.
Complainant also assails the project of partition because according
to her the properties adjudicated to her were insignificant lots and
the least valuable. Complainant, however, did not present any direct
and positive evidence to prove the alleged gross inequalities in the
choice and distribution of the real properties when she could have
easily done so by presenting evidence on the area, location, kind,
the assessed and market value of said properties. Without such
evidence there is nothing in the record to show that there were
inequalities in the distribution of the properties of complainant's
father (pp. 386389, rec.).
Finally, while it is. true that respondent Judge did not violate paragraph 5, Article 1491
of the New Civil Code in acquiring by purchase a portion of Lot 1184-E which was in
litigation in his court, it was, however, improper for him to have acquired the same. He
should be reminded of Canon 3 of the Canons of Judicial Ethics which requires that: "A
judge's official conduct should be free from the appearance of impropriety, and his
personal behavior, not only upon the bench and in the performance of judicial duties,
but also in his everyday life, should be beyond reproach." And as aptly observed by
the Investigating Justice: "... it was unwise and indiscreet on the part of respondent to
have purchased or acquired a portion of a piece of property that was or had been in
litigation in his court and caused it to be transferred to a corporation of which he and
his wife were ranking officers at the time of such transfer. One who occupies an
exalted position in the judiciary has the duty and responsibility of maintaining the
faith and trust of the citizenry in the courts of justice, so that not only must he be truly
honest and just, but his actuations must be such as not give cause for doubt and
mistrust in the uprightness of his administration of justice. In this particular case of
respondent, he cannot deny that the transactions over Lot 1184-E are damaging and
render his actuations open to suspicion and distrust. Even if respondent honestly
believed that Lot 1184-E was no longer in litigation in his court and that he was
purchasing it from a third person and not from the parties to the litigation, he should
nonetheless have refrained from buying it for himself and transferring it to a
corporation in which he and his wife were financially involved, to avoid possible
suspicion that his acquisition was related in one way or another to his official
actuations in civil case 3010. The conduct of respondent gave cause for the litigants in
93
civil case 3010, the lawyers practising in his court, and the public in general to doubt
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the honesty and fairness of his actuations and the integrity of our courts of justice"
(pp. 395396, rec.).
II
With respect to the second cause of action, the complainant alleged that respondent
Judge violated paragraphs 1 and 5, Article 14 of the Code of Commerce when he
associated himself with the Traders Manufacturing and Fishing Industries, Inc. as a
stockholder and a ranking officer, said corporation having been organized to engage
in business. Said Article provides that:
Article 14 — The following cannot engage in commerce, either in
person or by proxy, nor can they hold any office or have any direct,
administrative, or financial intervention in commercial or industrial
companies within the limits of the districts, provinces, or towns in
which they discharge their duties:
1. Justices of the Supreme Court, judges and officials of the
department of public prosecution in active service. This provision
shall not be applicable to mayors, municipal judges, and municipal
prosecuting attorneys nor to those who by chance are temporarily
discharging the functions of judge or prosecuting attorney.
xxx xxx xxx
5. Those who by virtue of laws or special provisions may not engage
in commerce in a determinate territory.
It is Our considered view that although the aforestated provision is incorporated in
the Code of Commerce which is part of the commercial laws of the Philippines, it,
however, partakes of the nature of a political law as it regulates the relationship
between the government and certain public officers and employees, like justices and
judges.
Political Law has been defined as that branch of public law which deals with the
organization and operation of the governmental organs of the State and define the
relations of the state with the inhabitants of its territory (People vs. Perfecto, 43 Phil.
887, 897 [1922]). It may be recalled that political law embraces constitutional law, law
of public corporations, administrative law including the law on public officers and
elections. Specifically, Article 14 of the Code of Commerce partakes more of the nature
of an administrative law because it regulates the conduct of certain public officers and
employees with respect to engaging in business: hence, political in essence.
It is significant to note that the present Code of Commerce is the Spanish Code of
Commerce of 1885, with some modifications made by the "Commission de
Codificacion de las Provincias de Ultramar," which was extended to the Philippines by
the Royal Decree of August 6, 1888, and took effect as law in this jurisdiction on
December 1, 1888.
Upon the transfer of sovereignty from Spain to the United States and later on from
the United States to the Republic of the Philippines, Article 14 of this Code of
Commerce must be deemed to have been abrogated because where there is change
of sovereignty, the political laws of the former sovereign, whether compatible or not
with those of the new sovereign, are automatically abrogated, unless they are
expressly re-enacted by affirmative act of the new sovereign.
Thus, We held in Roa vs. Collector of Customs (23 Phil. 315, 330, 311 [1912]) that:
By well-settled public law, upon the cession of territory by one
nation to another, either following a conquest or otherwise, ... those
laws which are political in their nature and pertain to the
prerogatives of the former government immediately cease upon the
transfer of sovereignty. (Opinion, Atty. Gen., July 10, 1899).
While municipal laws of the newly acquired territory not in conflict
with the, laws of the new sovereign continue in force without the
express assent or affirmative act of the conqueror, the political laws
do not. (Halleck's Int. Law, chap. 34, par. 14). However, such political
laws of the prior sovereignty as are not in conflict with the
constitution or institutions of the new sovereign, may be continued
in force if the conqueror shall so declare by affirmative act of the
commander-in-chief during the war, or by Congress in time of
peace. (Ely's Administrator vs. United States, 171 U.S. 220, 43 L. Ed.
142). In the case of American and Ocean Ins. Cos. vs. 356 Bales of
Cotton (1 Pet. [26 U.S.] 511, 542, 7 L. Ed. 242), Chief Justice Marshall
said:
On such transfer (by cession) of territory, it has
never been held that the relations of the
inhabitants with each other undergo any change.
Their relations with their former sovereign are
dissolved, and new relations are created between
them and the government which has acquired
their territory. The same act which transfers their
country, transfers the allegiance of those who
remain in it; and the law which may be
denominated political, is necessarily changed,
although that which regulates the intercourse
and general conduct of individuals, remains in 94
force, until altered by the newly- created power of
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the State.
Likewise, in People vs. Perfecto (43 Phil. 887, 897 [1922]), this Court stated that: "It is a
general principle of the public law that on acquisition of territory the previous political
relations of the ceded region are totally abrogated. "
There appears no enabling or affirmative act that continued the effectivity of the
aforestated provision of the Code of Commerce after the change of sovereignty from
Spain to the United States and then to the Republic of the Philippines. Consequently,
Article 14 of the Code of Commerce has no legal and binding effect and cannot apply
to the respondent, then Judge of the Court of First Instance, now Associate Justice of
the Court of Appeals.
It is also argued by complainant herein that respondent Judge violated paragraph H,
Section 3 of Republic Act No. 3019, otherwise known as the Anti-Graft and Corrupt
Practices Act, which provides that:
Sec. 3. Corrupt practices of public officers. — In addition to acts or
omissions of public officers already penalized by existing law, the
following shall constitute corrupt practices of any public officer and
are hereby declared to be unlawful:
xxx xxx xxx
(h) Directly or indirectly having financial or
pecuniary interest in any business, contract or
transaction in connection with which he
intervenes or takes part in his official capacity, or
in which he is prohibited by the Constitution or by
any Iaw from having any interest.
Respondent Judge cannot be held liable under the aforestated paragraph because
there is no showing that respondent participated or intervened in his official capacity in
the business or transactions of the Traders Manufacturing and Fishing Industries, Inc.
In the case at bar, the business of the corporation in which respondent participated
has obviously no relation or connection with his judicial office. The business of said
corporation is not that kind where respondent intervenes or takes part in his capacity
as Judge of the Court of First Instance. As was held in one case involving the
application of Article 216 of the Revised Penal Code which has a similar prohibition on
public officers against directly or indirectly becoming interested in any contract or
business in which it is his official duty to intervene, "(I)t is not enough to be a public
official to be subject to this crime; it is necessary that by reason of his office, he has to
intervene in said contracts or transactions; and, hence, the official who intervenes in
contracts or transactions which have no relation to his office cannot commit this
crime.' (People vs. Meneses, C.A. 40 O.G. 11th Supp. 134, cited by Justice Ramon C.
Aquino; Revised Penal Code, p. 1174, Vol. 11 [1976]).
It does not appear also from the records that the aforesaid corporation gained any
undue advantage in its business operations by reason of respondent's financial
involvement in it, or that the corporation benefited in one way or another in any case
filed by or against it in court. It is undisputed that there was no case filed in the
different branches of the Court of First Instance of Leyte in which the corporation was
either party plaintiff or defendant except Civil Case No. 4234 entitled "Bernardita R.
Macariola, plaintiff, versus Sinforosa O. Bales, et al.," wherein the complainant herein sought to
recover Lot 1184-E from the aforesaid corporation. It must be noted, however, that
Civil Case No. 4234 was filed only on November 9 or 11, 1968 and decided on
November 2, 1970 by CFI Judge Jose D. Nepomuceno when respondent Judge was no
longer connected with the corporation, having disposed of his interest therein on
January 31, 1967.
Furthermore, respondent is not liable under the same paragraph because there is no
provision in both the 1935 and 1973 Constitutions of the Philippines, nor is there an
existing law expressly prohibiting members of the Judiciary from engaging or having
interest in any lawful business.
It may be pointed out that Republic Act No. 296, as amended, also known as the
Judiciary Act of 1948, does not contain any prohibition to that effect. As a matter of
fact, under Section 77 of said law, municipal judges may engage in teaching or other
vocation not involving the practice of law after office hours but with the permission of
the district judge concerned.
Likewise, Article 14 of the Code of Commerce which prohibits judges from engaging in
commerce is, as heretofore stated, deemed abrogated automatically upon the
transfer of sovereignty from Spain to America, because it is political in nature.
Moreover, the prohibition in paragraph 5, Article 1491 of the New Civil Code against
the purchase by judges of a property in litigation before the court within whose
jurisdiction they perform their duties, cannot apply to respondent Judge because the
sale of the lot in question to him took place after the finality of his decision in Civil
Case No. 3010 as well as his two orders approving the project of partition; hence, the
property was no longer subject of litigation.
In addition, although Section 12, Rule XVIII of the Civil Service Rules made pursuant to
the Civil Service Act of 1959 prohibits an officer or employee in the civil service from
engaging in any private business, vocation, or profession or be connected with any
commercial, credit, agricultural or industrial undertaking without a written permission
from the head of department, the same, however, may not fall within the purview of
paragraph h, Section 3 of the Anti-Graft and Corrupt Practices Act because the last 95
portion of said paragraph speaks of a prohibition by the Constitution or law on any public
Sales
officer from having any interest in any business and not by a mere administrative rule
or regulation. Thus, a violation of the aforesaid rule by any officer or employee in the
civil service, that is, engaging in private business without a written permission from
the Department Head may not constitute graft and corrupt practice as defined by law.
On the contention of complainant that respondent Judge violated Section 12, Rule
XVIII of the Civil Service Rules, We hold that the Civil Service Act of 1959 (R.A. No. 2260)
and the Civil Service Rules promulgated thereunder, particularly Section 12 of Rule
XVIII, do not apply to the members of the Judiciary. Under said Section 12: "No officer
or employee shall engage directly in any private business, vocation, or profession or
be connected with any commercial, credit, agricultural or industrial undertaking
without a written permission from the Head of Department ..."
It must be emphasized at the outset that respondent, being a member of the Judiciary,
is covered by Republic Act No. 296, as amended, otherwise known as the Judiciary Act
of 1948 and by Section 7, Article X, 1973 Constitution.
Under Section 67 of said law, the power to remove or dismiss judges was then vested
in the President of the Philippines, not in the Commissioner of Civil Service, and only
on two grounds, namely, serious misconduct and inefficiency, and upon the
recommendation of the Supreme Court, which alone is authorized, upon its own
motion, or upon information of the Secretary (now Minister) of Justice to conduct the
corresponding investigation. Clearly, the aforesaid section defines the grounds and
prescribes the special procedure for the discipline of judges.
And under Sections 5, 6 and 7, Article X of the 1973 Constitution, only the Supreme
Court can discipline judges of inferior courts as well as other personnel of the
Judiciary.
It is true that under Section 33 of the Civil Service Act of 1959: "The Commissioner
may, for ... violation of the existing Civil Service Law and rules or of reasonable office
regulations, or in the interest of the service, remove any subordinate officer or
employee from the service, demote him in rank, suspend him for not more than one
year without pay or fine him in an amount not exceeding six months' salary." Thus, a
violation of Section 12 of Rule XVIII is a ground for disciplinary action against civil
service officers and employees.
However, judges cannot be considered as subordinate civil service officers or
employees subject to the disciplinary authority of the Commissioner of Civil Service;
for, certainly, the Commissioner is not the head of the Judicial Department to which
they belong. The Revised Administrative Code (Section 89) and the Civil Service Law
itself state that the Chief Justice is the department head of the Supreme Court (Sec.
20, R.A. No. 2260) [1959]); and under the 1973 Constitution, the Judiciary is the only
other or second branch of the government (Sec. 1, Art. X, 1973 Constitution). Besides,
a violation of Section 12, Rule XVIII cannot be considered as a ground for disciplinary
action against judges because to recognize the same as applicable to them, would be
adding another ground for the discipline of judges and, as aforestated, Section 67 of
the Judiciary Act recognizes only two grounds for their removal, namely, serious
misconduct and inefficiency.
Moreover, under Section 16(i) of the Civil Service Act of 1959, it is the Commissioner of
Civil Service who has original and exclusive jurisdiction "(T)o decide, within one
hundred twenty days, after submission to it, all administrative cases against permanent
officers and employees in the competitive service, and, except as provided by law, to have final
authority to pass upon their removal, separation, and suspension and upon all
matters relating to the conduct, discipline, and efficiency of such officers and
employees; and prescribe standards, guidelines and regulations governing the
administration of discipline" (emphasis supplied). There is no question that a judge
belong to the non-competitive or unclassified service of the government as a
Presidential appointee and is therefore not covered by the aforesaid provision. WE
have already ruled that "... in interpreting Section 16(i) of Republic Act No. 2260, we
emphasized that only permanent officers and employees who belong to the classified
service come under the exclusive jurisdiction of the Commissioner of Civil Service"
(Villaluz vs. Zaldivar, 15 SCRA 710,713 [1965], Ang-Angco vs. Castillo, 9 SCRA 619
[1963]).
Although the actuation of respondent Judge in engaging in private business by joining
the Traders Manufacturing and Fishing Industries, Inc. as a stockholder and a ranking
officer, is not violative of the provissions of Article 14 of the Code of Commerce and
Section 3(h) of the Anti-Graft and Corrupt Practices Act as well as Section 12, Rule XVIII
of the Civil Service Rules promulgated pursuant to the Civil Service Act of 1959, the
impropriety of the same is clearly unquestionable because Canon 25 of the Canons of
Judicial Ethics expressly declares that:
A judge should abstain from making personal investments in
enterprises which are apt to be involved in litigation in his court;
and, after his accession to the bench, he should not retain such
investments previously made, longer than a period sufficient to
enable him to dispose of them without serious loss. It is desirable
that he should, so far as reasonably possible, refrain from all
relations which would normally tend to arouse the suspicion that
such relations warp or bias his judgment, or prevent his impartial
attitude of mind in the administration of his judicial duties. ...
WE are not, however, unmindful of the fact that respondent Judge and his wife had 96
withdrawn on January 31, 1967 from the aforesaid corporation and sold their
Sales
respective shares to third parties, and it appears also that the aforesaid corporation
did not in anyway benefit in any case filed by or against it in court as there was no
case filed in the different branches of the Court of First Instance of Leyte from the
time of the drafting of the Articles of Incorporation of the corporation on March 12,
1966, up to its incorporation on January 9, 1967, and the eventual withdrawal of
respondent on January 31, 1967 from said corporation. Such disposal or sale by
respondent and his wife of their shares in the corporation only 22 days after the
incorporation of the corporation, indicates that respondent realized that early that
their interest in the corporation contravenes the aforesaid Canon 25. Respondent
Judge and his wife therefore deserve the commendation for their immediate
withdrawal from the firm after its incorporation and before it became involved in any
court litigation
III
With respect to the third and fourth causes of action, complainant alleged that
respondent was guilty of coddling an impostor and acted in disregard of judicial
decorum, and that there was culpable defiance of the law and utter disregard for
ethics. WE agree, however, with the recommendation of the Investigating Justice that
respondent Judge be exonerated because the aforesaid causes of action are
groundless, and WE quote the pertinent portion of her report which reads as follows:
The basis for complainant's third cause of action is the claim that
respondent associated and closely fraternized with Dominador
Arigpa Tan who openly and publicly advertised himself as a
practising attorney (see Exhs. I, I-1 and J) when in truth and in fact
said Dominador Arigpa Tan does not appear in the Roll of Attorneys
and is not a member of the Philippine Bar as certified to in Exh. K.
The "respondent denies knowing that Dominador Arigpa Tan was
an "impostor" and claims that all the time he believed that the latter
was a bona fide member of the bar. I see no reason for disbelieving
this assertion of respondent. It has been shown by complainant that
Dominador Arigpa Tan represented himself publicly as an attorney-
at-law to the extent of putting up a signboard with his name and the
words "Attorney-at Law" (Exh. I and 1- 1) to indicate his office, and it
was but natural for respondent and any person for that matter to
have accepted that statement on its face value. "Now with respect
to the allegation of complainant that respondent is guilty of
fraternizing with Dominador Arigpa Tan to the extent of permitting
his wife to be a godmother of Mr. Tan's child at baptism (Exh. M & M
-1), that fact even if true did not render respondent guilty of
violating any canon of judicial ethics as long as his friendly relations
with Dominador A. Tan and family did not influence his official
actuations as a judge where said persons were concerned. There is
no tangible convincing proof that herein respondent gave any
undue privileges in his court to Dominador Arigpa Tan or that the
latter benefitted in his practice of law from his personal relations
with respondent, or that he used his influence, if he had any, on the
Judges of the other branches of the Court to favor said Dominador
Tan.
Of course it is highly desirable for a member of the judiciary to
refrain as much as possible from maintaining close friendly
relations with practising attorneys and litigants in his court so as to
avoid suspicion 'that his social or business relations or friendship
constitute an element in determining his judicial course" (par. 30,
Canons of Judicial Ethics), but if a Judge does have social relations,
that in itself would not constitute a ground for disciplinary action
unless it be clearly shown that his social relations be clouded his
official actuations with bias and partiality in favor of his friends (pp.
403-405, rec.).
In conclusion, while respondent Judge Asuncion, now Associate Justice of the Court of
Appeals, did not violate any law in acquiring by purchase a parcel of land which was in
litigation in his court and in engaging in business by joining a private corporation
during his incumbency as judge of the Court of First Instance of Leyte, he should be
reminded to be more discreet in his private and business activities, because his
conduct as a member of the Judiciary must not only be characterized with propriety
but must always be above suspicion.
WHEREFORE, THE RESPONDENT ASSOCIATE JUSTICE OF THE COURT OF APPEALS IS
HEREBY REMINDED TO BE MORE DISCREET IN HIS PRIVATE AND BUSINESS ACTIVITIES.
SO ORDERED.
97
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GAN TIANGCO, plaintiff-appellee,  then and there paid over; and, finally, that the same justice of the peace, Gardner, the
vs.
SILVINO PABINGUIT, defendant-ppellant.
It is not disputed in these proceedings that Candida Acabo was the owner of six
parcels of land, all situated in the municipality of Jimalalud, Oriental Negros, of the
following dimensions: The first, 8 hectares; the second, 40 ares; the third and fourth,
each 20 ares; the fifth, 40 ares; and the sixth parcel, 20 ares.
According to the notarial instrument, Exhibit A, admitted in evidence without
objection, these lands were sold on June 12, 1911, by their owner Candida Acabo, to
one Gan Tingco, for P500. .
But the purchaser Gan Tingcowas unable to take possession of the six parcels of land
sold him by Acabo, for they were in the possession of Silvino Pabinguit, who alleges
certain rights therein. He claims to have purchased them for P375 from Faustino
Abad; that Abad yhad become their owner through purchase from Henry Gardner;
that the latter, in turn, had owned tyhem by reason of having purchased them for
P555 at a public auctiona held in the barrio of Martelo, municipality of Tayasan, on
MArch 20, 1907. An effort was made to prove these facts by documents Exhibits 1, 2,
and 3. Exhibit 1 is a notarial instrument, dated April 29, 1907, which purports to show
that on this date Henry Gardner sold to Faustino Abad seven parcels of land for P275.
Exhibit 2 is a notarial instrument which sets forth that Faustino Abad, on June 19,
1907, for the sum of P375 sold to Silvino Pabinguit six parcels of land, the area,
situation and bounds of which are described in the document. Exhibit 3 is a copy
which the deputy sheriff said he kept of the proceedings had by virtue of a writ of
execution issued by the justice of the peace of Guijulngan, in whcih the latter directed
him to make a demand upon Candida Acabo to comply with the judgment rendered
against her as a result of the complaint, filed by Silvestre Basaltos, and further
ordering him, in case of her failure to comply tehrewith, to levy upon "fixtures and
other chattels and to collect the amounts ordered, that is, P157.50, plus P300 for
losses damages, the proper costs and those of this execution." The date of the writ
appears to be (for it has been corrected in an illegible manner) that of January 2, 1907,
and the fist execution proceedings bear the date of March 14, 1907. In the return the
deputy sheriff begins by saying that he made demand upon Candida Acabo and that
the latter stated that she had neither corn nor money; that he levied upon three plow
carabaos, one brood caraballa and the six parcles of land in question, for their identity
was expressly admitted; that their sale was announced for the 20th of March, 1907
(but the return does not show the signature of the woman upon whom the demand
was made, nor does it disclose any evidence whatever to show that the owner of this
property had any knowledge of this attachment or levy); that on March 20, 1907, he
proceeded to sell at public auction all the property levied upon; that the jsutice of the
peace who ordered the execution, Henry Gardner, himself appeared as the highest
bidder and offered P280 for the four carabaos and P275 for all the coconut groves,
that, is the six parcels of land measuring nine hectares and a fraction in area,
containing bearing fruit trees, or a total sum of P555, which the said successful bidder
highest bidder, himself received the sum of P157.50, the remainder of the proceeds
from the execution sale after deduction of the costs, as the person authrized so to do
by the plaintiff Silvestre Basaltos; and that Gardner alone, not Basaltos nor the
judgment debtor Candida Acabo, signed the record of the proceedings. Afterwards the
deputy sheriff certified that the costs of the execution amounted to P52.50, and that
there was a surplus of P45 to Candida Acabo's credit, which was to be delivered to her
after settlement of the matter of the certificates of ownership and the arrangment of
the trabsfer of the carabaos. These proceedings were signed only by the deputy
sheriff and recite that "by authorization of Candida Acabo I have delivered the sum of
P29 as the true balance in favor of the Said Candida Acabo, of the P45 mentione in the
precedeing statement, from which latter sum there has been deducted the amount of
P16 which was paid to the treasusrer of this municipality on the following accounts:
Fine, P8; certificate of ownership, P4; and certificate of transfer, P4." In that manner
was the record closed and it was not signed by any other person than the deputy
sheriff, ALejandro Sanchez.
The jusrice of the peace, Gardner, and the deputy sheriff, Sanchez, were summoned
to appear in the trial court on March 18, 1914. Sanchez did not put in an appearance,
and on being required by telegraph to explain the reason and show why he should not
be punished for contempt of court, he wired back, saying: "From 12th to 18th instant
was making investigations attempted rape and theft. Will arrive there Monday, 23d.
Will have enough time to finish investigation," and on the day for the hearing he
presented the document Exhibit 3, referred to in the preceding paragragh.
Henry Gardner, in testifying for the defense, stated that the deputy sheriff had
executed in Gardner's favor a certificate of his purchase at auction sale, but witness
did not know where the document was and did not need it because he, in turn, has
sold everything he had purchased at that sale; that he was formerly justice of the
peace of the municipality of Guijulngan, of Tayasan, and knew of a complaint by
Silvestre Basaltos against Candida Acabo; that afterwards when the auction was held,
he took part therein, but that as he subsequently learned that he was forbidden to do
so, he sold what he had purchased to Faustino Abad, Candida Acabo's son, who was
but a boy at the time; that the writ of execution was returnmed to him and he made a
record of that matter; that he had it in the justice of the peace court and left it there
when he ceased to hold office, in 1909.
Faustino Abad testified that Henry Gardner did actually sell to him for P275 the
coconut groves which Gardner had purchased at auction; that it was true that on April
29, 1907, witness was only 19 years old; that he knew that the coconut groves were
those that had belonged to his mother Candida Acabo; and that he, in turn, sold the
said coconut groves to Silvino Pabinguit for P375, on June 19 of the same year. Both
Gardner's deed of sale to Abad and the latter's to Pabinguit were certified by the same
deputy sheriff ALejandro Sanchez as notary public of the municipality of Tayasan.
This same Alejandro Sanchez, being then the justice of the peace of Tayasan, testified
as a witness for the defense. He began by recognizing the aforesaid deeds as having
been certified by him in his capacity of notary public of Tayasan, and afterwards 98
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stated that he had something to do with a writ of execution issued by the justice of the
peace of Guijulngan, Henry Gardner, upon certain real estate belonging to Candida
Acabo (it odes not so appear in the writ, wherein only fixtures and other chattels are
referred to); that, in consideration of the P555 which Gardner paid at the time of the
auction, witness, without any reservation whatsoever, delivered to Gardner the
carabaos and lands knocked down to him at the sale; and that after he had received
from Gardner the purchase price he returned it to him, just as he would have
delivered it to the plaintiff Silvestre Basaltos, of whom Gardner claimed to be the
representative duly authorized as such by this plaintiff.
Candida Acabo testified that Alejandro Sanchez, while sheriff of Tayasan, did not take
possession of her lands by reason of the levy; that the only property which he levied
upon was four carabaos, and she did not know whether they had been sold at auction;
and that Sanchez had not told her that he lands had been levied upon, or that they
had been sold at auction.
Silvino Pabinguit testified that in the month of February he was in Guijilngan searching
for the record of the auction sale of Candida Acabo's property; that four persons
made the search; and . . . the record was not found. This last statement was made by
Alejandro Sanchez.
The Court of First Instance of Oriental NEgros rendered judgment in behalf of the
plaintiff, Gan Tingco, declaring him the owner of the lands described in the complaint,
and ordered the defendant, Silvino Pabinguit, to restore the plaintiff to their
possession. No express finfding was made as to the costs.
The defendant appealed, with the right to a review of the evidence. The appeal was
heard by this court, it having been brought it by bill of exceptions.
The appellant alleges that the trial court erred in holding that, notwithstanding the
sale of the lands in question at public auction, Candida Acabo did not cease to be the
owner of these properties, because there were certain irregularities and defects in the
said auction.
In the judgment appealed from several of these defects are specified and it is
unnecessary to treat of them in detail. With respect to the legality of the proceedings
had up to the time of the sale of the lands, there is certainly room for doubt. No
evidence is found that Silvestre Basaltos filed any complaint against Candida Acabo
before the justice of the peace court of Guijulngan and that any judgment was
rendered on January 2, 1907, enabling the plaintiff to recover from the defendant 150  determined and defined subject to the general list of obligations and their
cavanes of corn, or in default thereof the sum of P157.50, and in addition P300 for
losses and damages and court costs. Only the writ of execution appears in the record.
The original copy of the return to the wirt of execution was not presented, because it
was not found; there was offered in evidence only what the sheriff said was a copy of
the return, and he delayed as long in presenting it as he did in obeting the summons
of the court to appear as a witness. No copy of that judgment was delivered to the
judgment debtor, in violation of the provisions of section 446 of Act No. 190. The
sheriff sold lands belonging to the judgment debtor, and it does not appear that the
provisions of section 445 of the same Act were complied with, to wit, that if real estate
be levied upon and sold by virtue of the execution, the clerk must record the
execution and the officer's return thereon and certify the same under his hand, as
true copies, in a book to be called the "Execution Book." The justice of peace, in his
writ, certainly did not order the levy upon ior sale of real estate, but only fixtures and
other chattles; but the sheriff's return includes real estate levied upon and solt at
public auction. The purchaser at public auction, the same justice of the peace, could
not exhibit the instrument which he said the sheriff executed in his behalf, because, as
he said, he did not know where it was and that he did not need it. We are not sure that
Candida Acabo, a simple country woman, was not despoiled of her lands under the
pretexts of debt, judgment, and execution.
Leaving out of account that things which should have been proven at trial were not
proven, it is a positive fact that Henry Gardner, justice of peace of Guijulngan, was the
purchaser at public auction of Candida Acabo's lands and carabaos levied upon as a
result of the judgment, and that he delivered the price of the sale, P555, to the sheriff;
but hte latter returned this sum to the justice of the peace, who said that he wea
authorized by Silvestre Basaltos, the supposed creditor, to receive the same. At the
finish the sheriff delivered nothing to the owner Acabo, all the proceeds of the auction
sale having been expended in one way or another without the consent of the
judgment debtor appearing of record.
Aside from everything else, the trial court was impressed by the circumstance that in
the public auction the purchaser was the justice of the peace himself. This, in the
judge's opinion, was unauthorized, because article 1459, No. 5, of the Civil Code,
prohibits judges from acquring by purchase, even at pub;ic or judicial sale, either in
person or by an agent, any property or rights litigated in the court in the jurisdiction or
territory within which they exercise their respective duties; this prohibition includes
taking of property by assignment.
The appellant alleges that the property purchased by justice of the peace Gardner was
not the subject of litigation in the justice court; that the action was to recover a certain
sum of money, and that he had ordered the property sold on execution.
This raises, therefore, a question as to the true meaning of paragraph 5 of article 1459
of the Civil Code. lawphil.net
The Ley de Bases, in accordance with which the Civil Code was enacted, provides as
follows, in Base No. 26:
The forms, requirements and conditions of each particular contract shall be
effects, with the understanding that the legislation in force and the legal
principles evolved therefrom by judicial decisions, etc., etc., shall serve as
basis.
One of the bodies of law which conastitute the legislation now in force in the Novisima
Recopilacion. In Law 4, Title 14, Book 5 of the same is found the following provision: "We
order that in public auctions held by direction of our alcaldes, neither the latter nor
any person whomsoever in their name shall bid in anything sold at such public
auctions." The word alcaldes means judges. The caption of Title 14 is "Alcaldes or Provincial
Judges," and the entire title deals with the exercise of judicial jurisdiction. Prior to the
enactment of the Civil Code, the Penal Code was also in force. Article 400 of the latter99
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prohinits, under penalty, any judge from taking part, either directly, or indirectly, in
any operation of exchange, trade or porfit with respect to things not the product of his
own property, within the territory over which he exercises jurisdiction. Judging from
the legal oprecedents on which the Civil Code is based, it would not seem too much to
conclude that the said article of the Civil Code does not make any distinction between
property in litigation. In effect, it appears to be as delicate a matter for a judge to take
part in the sale of property that had been the subject of ligitgation in his court, as to
intervene in auction of property which, though not directly litigated in his court, is
nevertheless levied upon and sold as the result of a writ of execution issued by him.
What the law intends to avoid is the improper interference with an interest of a judge
in a thing levied upon and sold by his order.
If under the law Gardner was prohibited from acquiring the ownership of Acabo's
lands, then he could not have transmitted to Faustino Abad the right of ownership
that he did not possess; nor could Abad, to whom this alleged ownership had not
been transmitte, have conveyed the same to Pabinguit. What Gardner should have
done in view of the fact that the sale, as he finally acknowledged, was void, was to
claim the price that had been deposited in court, and the justice of the peace of
Guijulngan should have declared the auction void and have ordered a new sale to be
held, besides correcting the errors that had been committed in the proceedings. To
the reasons already stated, there is to be added the additional one, with respect to the
sale made by Faustino Abad to Silvino Pabinguit, that Abad was a minor at the time —
a circumstance that deprived him of capacity to sell (Civil Code, art. 1263). Abad had
no ownership to transmit to anyone and, besides, he had no personality to enable him
to contract by himself, on account of his lack of legal age.
Sanchez, the sheriff, the sole notary who certified all these deeds of conveyance in
order that Pabinguit might become owner of those coconut lands with which his own
lands adjoined, was in such a hurry that, as he testified at the trial, on the very same
day of the auction he had already executed in behalf of Henry Gardner the final deed
of sale of the said lands, without allowing time for their possible redemption. Section
466 of Act No. 190 prescribes that if redemption has not been requested, this deed is
to be executed within the twelve months subsequent to the sale.
This court finds no reason whatever why it should not affirm the judgment appealed
from. It is therefore hereby affirmed with the costs of this instance against the
appellant. So ordered..
LEON SIBAL , plaintiff-appellant, 
vs.
EMILIANO J. VALDEZ ET AL., defendants. 
EMILIANO J. VALDEZ, appellee.
The action was commenced in the Court of First Instance of the Province of Tarlac
on the 14th day of December 1924. The facts are about as conflicting as it is
possible for facts to be, in the trial causes.
As a first cause of action the plaintiff alleged that the defendant Vitaliano
Mamawal, deputy sheriff of the Province of Tarlac, by virtue of a writ of execution
issued by the Court of First Instance of Pampanga, attached and sold to the
defendant Emiliano J. Valdez the sugar cane planted by the plaintiff and his
tenants on seven parcels of land described in the complaint in the third
paragraph of the first cause of action; that within one year from the date of the
attachment and sale the plaintiff offered to redeem said sugar cane and
tendered to the defendant Valdez the amount sufficient to cover the price paid
by the latter, the interest thereon and any assessments or taxes which he may
have paid thereon after the purchase, and the interest corresponding thereto
and that Valdez refused to accept the money and to return the sugar cane to the
plaintiff.
As a second cause of action, the plaintiff alleged that the defendant Emiliano J.
Valdez was attempting to harvest the palay planted in four of the seven parcels
mentioned in the first cause of action; that he had harvested and taken
possession of the palay in one of said seven parcels and in another parcel
described in the second cause of action, amounting to 300 cavans; and that all of
said palay belonged to the plaintiff.
Plaintiff prayed that a writ of preliminary injunction be issued against the
defendant Emiliano J. Valdez his attorneys and agents, restraining them (1) from
distributing him in the possession of the parcels of land described in the
complaint; (2) from taking possession of, or harvesting the sugar cane in
question; and (3) from taking possession, or harvesting the palay in said parcels
of land. Plaintiff also prayed that a judgment be rendered in his favor and against
the defendants ordering them to consent to the redemption of the sugar cane in
question, and that the defendant Valdez be condemned to pay to the plaintiff the
sum of P1,056 the value of palay harvested by him in the two parcels above-
mentioned ,with interest and costs.
On December 27, 1924, the court, after hearing both parties and upon approval
of the bond for P6,000 filed by the plaintiff, issued the writ of preliminary
injunction prayed for in the complaint.
The defendant Emiliano J. Valdez, in his amended answer, denied generally and
specifically each and every allegation of the complaint and step up the following100
defenses:
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(a) That the sugar cane in question had the nature of personal property time, the defendant was unable to raise palay on the land, which would
and was not, therefore, subject to redemption; have netted him the sum of P600; and.
(b) That he was the owner of parcels 1, 2 and 7 described in the first (5) In condemning the plaintiff and his sureties to pay to the defendant
cause of action of the complaint; the sum of P9,439.08.
(c) That he was the owner of the palay in parcels 1, 2 and 7; and It appears from the record:
(d) That he never attempted to harvest the palay in parcels 4 and 5. (1) That on May 11, 1923, the deputy sheriff of the Province of Tarlac, by
The defendant Emiliano J. Valdez by way of counterclaim, alleged that by reason virtue of writ of execution in civil case No. 20203 of the Court of First
of the preliminary injunction he was unable to gather the sugar cane, sugar-cane Instance of Manila (Macondray & Co., Inc. vs. Leon Sibal),levied an
shoots (puntas de cana dulce) palay in said parcels of land, representing a loss to him attachment on eight parcels of land belonging to said Leon Sibal,
of P8,375.20 and that, in addition thereto, he suffered damages amounting to situated in the Province of Tarlac, designated in the second of
P3,458.56. He prayed, for a judgment (1) absolving him from all liability under the attachment as parcels 1, 2, 3, 4, 5, 6, 7 and 8 (Exhibit B, Exhibit 2-A).
complaint; (2) declaring him to be the absolute owner of the sugar cane in (2) That on July 30, 1923, Macondray & Co., Inc., bought said eight parcels
question and of the palay in parcels 1, 2 and 7; and (3) ordering the plaintiff to of land, at the auction held by the sheriff of the Province of Tarlac, for
pay to him the sum of P11,833.76, representing the value of the sugar cane and the sum to P4,273.93, having paid for the said parcels separately as
palay in question, including damages. follows (Exhibit C, and 2-A):
Upon the issues thus presented by the pleadings the cause was brought on for
trial. After hearing the evidence, and on April 28, 1926, the Honorable Cayetano
Parcel
Lukban, judge, rendered a judgment against the plaintiff and in favor of the
defendants — 1
(1) Holding that the sugar cane in question was personal property and, .............................................................. P1.00
as such, was not subject to redemption; .......
(2) Absolving the defendants from all liability under the complaint; and
(3) Condemning the plaintiff and his sureties Cenon de la Cruz, Juan 2
Sangalang and Marcos Sibal to jointly and severally pay to the defendant .............................................................. 2,000.00
Emiliano J. Valdez the sum of P9,439.08 as follows: .......
(a) P6,757.40, the value of the sugar cane;
3
(b) 1,435.68, the value of the sugar-cane shoots;
.............................................................. 120.93
(c) 646.00, the value of palay harvested by plaintiff;
.......
(d) 600.00, the value of 150 cavans of palay which the defendant
was not able to raise by reason of the injunction, at P4 cavan. 4
9,439.08 From that judgment the plaintiff appealed and in his .............................................................. 1,000.00
assignments of error contends that the lower court erred: (1) In .......
holding that the sugar cane in question was personal property
and, therefore, not subject to redemption; 5
(2) In holding that parcels 1 and 2 of the complaint belonged to Valdez, .............................................................. 1.00
as well as parcels 7 and 8, and that the palay therein was planted by .......
Valdez;
(3) In holding that Valdez, by reason of the preliminary injunction failed 6
to realized P6,757.40 from the sugar cane and P1,435.68 from sugar- .............................................................. 1.00
cane shoots (puntas de cana dulce); .......
(4) In holding that, for failure of plaintiff to gather the sugar cane on 101
7 with the house thereon 150.00
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conveyed to Emilio J. Valdez for P2,579.97 all of its rights and interest in
.......................... 150.00
the eight parcels of land acquired by it at public auction held by the
8 1,000.00 deputy sheriff of Tarlac in connection with civil case No. 20203 of the
.............................................................. ======== Court of First Instance of Manila, as stated above. Said amount
....... == represented the unpaid balance of the redemption price of said eight
parcels, after payment by Leon Sibal of P2,000 on September 24, 1923,
4,273.93 fro the account of the redemption price, as stated above. (Exhibit C and
2).
(3) That within one year from the sale of said parcel of land, and on the
The foregoing statement of facts shows:
24th day of September, 1923, the judgment debtor, Leon Sibal, paid
(1) The Emilio J. Valdez bought the sugar cane in question, located in the
P2,000 to Macondray & Co., Inc., for the account of the redemption price
seven parcels of land described in the first cause of action of the
of said parcels of land, without specifying the particular parcels to which
complaint at public auction on May 9 and 10, 1924, for P600.
said amount was to applied. The redemption price said eight parcels was
(2) That on July 30, 1923, Macondray & Co. became the owner of eight
reduced, by virtue of said transaction, to P2,579.97 including interest
parcels of land situated in the Province of Tarlac belonging to Leon Sibal
(Exhibit C and 2).
and that on September 24, 1923, Leon Sibal paid to Macondray & Co.
The record further shows:
P2,000 for the account of the redemption price of said parcels.
(1) That on April 29, 1924, the defendant Vitaliano Mamawal, deputy
(3) That on June 25, 1924, Emilio J. Valdez acquired from Macondray &
sheriff of the Province of Tarlac, by virtue of a writ of execution in civil
Co. all of its rights and interest in the said eight parcels of land.
case No. 1301 of the Province of Pampanga (Emiliano J. Valdez vs. Leon
(4) That on June 25, 1924, Emilio J. Valdez also acquired all of the rights
Sibal 1.º — the same parties in the present case), attached the personal
and interest which Leon Sibal had or might have had on said eight
property of said Leon Sibal located in Tarlac, among which was included
parcels by virtue of the P2,000 paid by the latter to Macondray.
the sugar cane now in question in the seven parcels of land described in
(5) That Emilio J. Valdez became the absolute owner of said eight parcels
the complaint (Exhibit A).
of land.
(2) That on May 9 and 10, 1924, said deputy sheriff sold at public auction
The first question raised by the appeal is, whether the sugar cane in question is
said personal properties of Leon Sibal, including the sugar cane in
personal or real property. It is contended that sugar cane comes under the
question to Emilio J. Valdez, who paid therefor the sum of P1,550, of
classification of real property as "ungathered products" in paragraph 2 of article
which P600 was for the sugar cane (Exhibit A).
334 of the Civil Code. Said paragraph 2 of article 334 enumerates as real property
(3) That on April 29,1924, said deputy sheriff, by virtue of said writ of
the following: Trees, plants, and ungathered products, while they are annexed to
execution, also attached the real property of said Leon Sibal in Tarlac,
the land or form an integral part of any immovable property." That article,
including all of his rights, interest and participation therein, which real
however, has received in recent years an interpretation by the Tribunal Supremo de
property consisted of eleven parcels of land and a house and camarin
situated in one of said parcels (Exhibit A).
España, which holds that, under certain conditions, growing crops may be
considered as personal property. (Decision of March 18, 1904, vol. 97, Civil
(4) That on June 25, 1924, eight of said eleven parcels, including the
Jurisprudence of Spain.)
house and the camarin, were bought by Emilio J. Valdez at the auction
Manresa, the eminent commentator of the Spanish Civil Code, in discussing
held by the sheriff for the sum of P12,200. Said eight parcels were
section 334 of the Civil Code, in view of the recent decisions of the supreme Court
designated in the certificate of sale as parcels 1, 3, 4, 5, 6, 7, 10 and 11.
of Spain, admits that growing crops are sometimes considered and treated as
The house and camarin were situated on parcel 7 (Exhibit A).
personal property. He says:
(5) That the remaining three parcels, indicated in the certificate of the
No creemos, sin embargo, que esto excluya la excepcionque muchos
sheriff as parcels 2, 12, and 13, were released from the attachment by
autores hacen tocante a la venta de toda cosecha o de parte de ella
virtue of claims presented by Agustin Cuyugan and Domiciano Tizon
cuando aun no esta cogida (cosa frecuente con la uvay y la naranja), y a
(Exhibit A).
la de lenas, considerando ambas como muebles. El Tribunal Supremo, en 102
(6) That on the same date, June 25, 1924, Macondray & Co. sold and
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sentencia de 18 de marzo de 1904, al entender sobre un contrato de
arrendamiento de un predio rustico, resuelve que su terminacion por
desahucio no extingue los derechos del arrendario, para recolectar o
percibir los frutos correspondientes al año agricola, dentro del que
nacieron aquellos derechos, cuando el arrendor ha percibido a su vez el
importe de la renta integra correspondiente, aun cuando lo haya sido
por precepto legal durante el curso del juicio, fundandose para ello, no
solo en que de otra suerte se daria al desahucio un alcance que no tiene,
sino en que, y esto es lo interesante a nuestro proposito, la consideracion de
inmuebles que el articulo 334 del Codigo Civil atribuge a los frutos pendientes, no les priva
del caracter de productos pertenecientes, como tales, a quienes a ellos tenga derecho,
Ilegado el momento de su recoleccion.
xxx     xxx     xxx
Mas actualmente y por virtud de la nueva edicion de la Ley Hipotecaria,
publicada en 16 de diciembre de 1909, con las reformas introducidas
por la de 21 de abril anterior, la hipoteca, salvo pacto expreso que
disponga lo contrario, y cualquiera que sea la naturaleza y forma de la
obligacion que garantice, no comprende los frutos cualquiera que sea la
situacion en que se encuentre. (3 Manresa, 5. edicion, pags. 22, 23.)
From the foregoing it appears (1) that, under Spanish authorities, pending fruits
and ungathered products may be sold and transferred as personal property; (2)
that the Supreme Court of Spain, in a case of ejectment of a lessee of an
agricultural land, held that the lessee was entitled to gather the products
corresponding to the agricultural year, because said fruits did not go with the
land but belonged separately to the lessee; and (3) that under the Spanish
Mortgage Law of 1909, as amended, the mortgage of a piece of land does not
include the fruits and products existing thereon, unless the contract expressly
provides otherwise.
An examination of the decisions of the Supreme Court of Louisiana may give us
some light on the question which we are discussing. Article 465 of the Civil Code
of Louisiana, which corresponds to paragraph 2 of article 334 of our Civil Code,
provides: "Standing crops and the fruits of trees not gathered, and trees before
they are cut down, are likewise immovable, and are considered as part of the
land to which they are attached."
The Supreme Court of Louisiana having occasion to interpret that provision, held
that in some cases "standing crops" may be considered and dealt with as
personal property. In the case of Lumber Co. vs. Sheriff and Tax Collector (106 La., 418)
the Supreme Court said: "True, by article 465 of the Civil Code it is provided that
'standing crops and the fruits of trees not gathered and trees before they are cut
down . . . are considered as part of the land to which they are attached, but the
immovability provided for is only one in abstracto and without reference to rights
on or to the crop acquired by others than the owners of the property to which
the crop is attached. . . . The existence of a right on the growing crop is a
mobilization by anticipation, a gathering as it were in advance, rendering the crop
movable quoad the right acquired therein. Our jurisprudence recognizes the
possible mobilization of the growing crop." (Citizens' Bank vs. Wiltz, 31 La. Ann.,
244; Porche vs. Bodin, 28 La., Ann., 761; Sandel vs. Douglass, 27 La. Ann., 629;
Lewis vs. Klotz, 39 La. Ann., 267.)
"It is true," as the Supreme Court of Louisiana said in the case of Porche vs. Bodin (28
La. An., 761) that "article 465 of the Revised Code says that standing crops are
considered as immovable and as part of the land to which they are attached, and
article 466 declares that the fruits of an immovable gathered or produced while it
is under seizure are considered as making part thereof, and incurred to the
benefit of the person making the seizure. But the evident meaning of these
articles, is where the crops belong to the owner of the plantation they form part
of the immovable, and where it is seized, the fruits gathered or produced inure to
the benefit of the seizing creditor.
A crop raised on leased premises in no sense forms part of the
immovable. It belongs to the lessee, and may be sold by him, whether it
be gathered or not, and it may be sold by his judgment creditors. If it
necessarily forms part of the leased premises the result would be that it
could not be sold under execution separate and apart from the land. If a
lessee obtain supplies to make his crop, the factor's lien would not
attach to the crop as a separate thing belonging to his debtor, but the
land belonging to the lessor would be affected with the recorded
privilege. The law cannot be construed so as to result in such absurd
consequences.
In the case of Citizen's Bank vs. Wiltz (31 La. Ann., 244)the court said:
If the crop quoad the pledge thereof under the act of 1874 was an
immovable, it would be destructive of the very objects of the act, it would
render the pledge of the crop objects of the act, it would render the
pledge of the crop impossible, for if the crop was an inseparable part of
the realty possession of the latter would be necessary to that of the
former; but such is not the case. True, by article 465 C. C. it is provided
that "standing crops and the fruits of trees not gathered and trees
before they are cut down are likewise immovable and are considered as
part of the land to which they are attached;" but the immovability
provided for is only one in abstracto and without reference to rights on or
to the crop acquired by other than the owners of the property to which
the crop was attached. The immovability of a growing crop is in the order
of things temporary, for the crop passes from the state of a growing to
that of a gathered one, from an immovable to a movable. The existence
of a right on the growing crop is a mobilization by anticipation, a 103
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gathering as it were in advance, rendering the crop movable quoad the
right acquired thereon. The provision of our Code is identical with the
Napoleon Code 520, and we may therefore obtain light by an
examination of the jurisprudence of France.
The rule above announced, not only by the Tribunal Supremo de España but by the
Supreme Court of Louisiana, is followed in practically every state of the Union.
From an examination of the reports and codes of the State of California and
other states we find that the settle doctrine followed in said states in connection
with the attachment of property and execution of judgment is, that growing crops
raised by yearly labor and cultivation are considered personal property. (6
Corpuz Juris, p. 197; 17 Corpus Juris, p. 379; 23 Corpus Juris, p. 329: Raventas vs.
 Green, 57 Cal., 254; Norris vs. Watson, 55 Am. Dec., 161; Whipple vs. Foot, 3 Am.
Dec., 442; 1 Benjamin on Sales, sec. 126; McKenzie vs. Lampley, 31 Ala., 526;
Crine vs. Tifts and Co., 65 Ga., 644; Gillitt vs. Truax, 27 Minn., 528; Preston vs. Ryan,
45 Mich., 174; Freeman on Execution, vol. 1, p. 438; Drake on Attachment, sec.
249; Mechem on Sales, sec. 200 and 763.)
Mr. Mechem says that a valid sale may be made of a thing, which though not yet
actually in existence, is reasonably certain to come into existence as the natural
increment or usual incident of something already in existence, and then
belonging to the vendor, and then title will vest in the buyer the moment the
thing comes into existence. (Emerson vs. European Railway Co., 67 Me., 387;
Cutting vs. Packers Exchange, 21 Am. St. Rep., 63.) Things of this nature are said to
have a potential existence. A man may sell property of which he is potentially and
not actually possessed. He may make a valid sale of the wine that a vineyard is
expected to produce; or the gain a field may grow in a given time; or the milk a
cow may yield during the coming year; or the wool that shall thereafter grow
upon sheep; or what may be taken at the next cast of a fisherman's net; or fruits
to grow; or young animals not yet in existence; or the good will of a trade and the
like. The thing sold, however, must be specific and identified. They must be also
owned at the time by the vendor. (Hull vs. Hull, 48 Conn., 250 [40 Am. Rep., 165].)
It is contended on the part of the appellee that paragraph 2 of article 334 of the
Civil Code has been modified by section 450 of the Code of Civil Procedure as well
as by Act No. 1508, the Chattel Mortgage Law. Said section 450 enumerates the
property of a judgment debtor which may be subjected to execution. The
pertinent portion of said section reads as follows: "All goods, chattels, moneys,
and other property, both real and personal, * * * shall be liable to execution. Said
section 450 and most of the other sections of the Code of Civil Procedure relating
to the execution of judgment were taken from the Code of Civil Procedure of
California. The Supreme Court of California, under section 688 of the Code of Civil
Procedure of that state (Pomeroy, p. 424) has held, without variation, that
growing crops were personal property and subject to execution.
Act No. 1508, the Chattel Mortgage Law, fully recognized that growing crops are
personal property. Section 2 of said Act provides: "All personal property shall be
subject to mortgage, agreeably to the provisions of this Act, and a mortgage
executed in pursuance thereof shall be termed a chattel mortgage." Section 7 in
part provides: "If growing crops be mortgaged the mortgage may contain an
agreement stipulating that the mortgagor binds himself properly to tend, care for
and protect the crop while growing.
It is clear from the foregoing provisions that Act No. 1508 was enacted on the
assumption that "growing crops" are personal property. This consideration tends
to support the conclusion hereinbefore stated, that paragraph 2 of article 334 of
the Civil Code has been modified by section 450 of Act No. 190 and by Act No.
1508 in the sense that "ungathered products" as mentioned in said article of the
Civil Code have the nature of personal property. In other words, the phrase
"personal property" should be understood to include "ungathered products."
At common law, and generally in the United States, all annual crops
which are raised by yearly manurance and labor, and essentially owe
their annual existence to cultivation by man, . may be levied on as
personal property." (23 C. J., p. 329.) On this question Freeman, in his
treatise on the Law of Executions, says: "Crops, whether growing or
standing in the field ready to be harvested, are, when produced by
annual cultivation, no part of the realty. They are, therefore, liable to
voluntary transfer as chattels. It is equally well settled that they may be
seized and sold under execution. (Freeman on Executions, vol. p. 438.)
We may, therefore, conclude that paragraph 2 of article 334 of the Civil Code has
been modified by section 450 of the Code of Civil Procedure and by Act No. 1508,
in the sense that, for the purpose of attachment and execution, and for the
purposes of the Chattel Mortgage Law, "ungathered products" have the nature of
personal property. The lower court, therefore, committed no error in holding that
the sugar cane in question was personal property and, as such, was not subject
to redemption.
All the other assignments of error made by the appellant, as above stated, relate
to questions of fact only. Before entering upon a discussion of said assignments
of error, we deem it opportune to take special notice of the failure of the plaintiff
to appear at the trial during the presentation of evidence by the defendant. His
absence from the trial and his failure to cross-examine the defendant have lent
considerable weight to the evidence then presented for the defense.
Coming not to the ownership of parcels 1 and 2 described in the first cause of
action of the complaint, the plaintiff made a futile attempt to show that said two
parcels belonged to Agustin Cuyugan and were the identical parcel 2 which was
excluded from the attachment and sale of real property of Sibal to Valdez on June
25, 1924, as stated above. A comparison of the description of parcel 2 in the 104
Sales
certificate of sale by the sheriff (Exhibit A) and the description of parcels 1 and 2
of the complaint will readily show that they are not the same.
The description of the parcels in the complaint is as follows:
1. La caña dulce sembrada por los inquilinos del ejecutado Leon Sibal 1.º
en una parcela de terreno de la pertenencia del citado ejecutado,
situada en Libutad, Culubasa, Bamban, Tarlac, de unas dos hectareas
poco mas o menos de superficie.
2. La caña dulce sembrada por el inquilino del ejecutado Leon Sibal 1.º,
Ilamado Alejandro Policarpio, en una parcela de terreno de la
pertenencia del ejecutado, situada en Dalayap, Culubasa, Bamban,
Tarlac de unas dos hectareas de superficie poco mas o menos." The
description of parcel 2 given in the certificate of sale (Exhibit A) is as
follows:
2a. Terreno palayero situado en Culubasa, Bamban, Tarlac, de 177,090
metros cuadrados de superficie, linda al N. con Canuto Sibal, Esteban
Lazatin and Alejandro Dayrit; al E. con Francisco Dizon, Felipe Mañu and
others; al S. con Alejandro Dayrit, Isidro Santos and Melecio Mañu; y al
O. con Alejandro Dayrit and Paulino Vergara. Tax No. 2854, vador
amillarado P4,200 pesos.
On the other hand the evidence for the defendant purported to show that
parcels 1 and 2 of the complaint were included among the parcels bought by
Valdez from Macondray on June 25, 1924, and corresponded to parcel 4 in the
deed of sale (Exhibit B and 2), and were also included among the parcels bought
by Valdez at the auction of the real property of Leon Sibal on June 25, 1924, and
corresponded to parcel 3 in the certificate of sale made by the sheriff (Exhibit A).
The description of parcel 4 (Exhibit 2) and parcel 3 (Exhibit A) is as follows:
Parcels No. 4. — Terreno palayero, ubicado en el barrio de
Culubasa,Bamban, Tarlac, I. F. de 145,000 metros cuadrados de
superficie, lindante al Norte con Road of the barrio of Culubasa that goes
to Concepcion; al Este con Juan Dizon; al Sur con Lucio Maño y Canuto
Sibal y al Oeste con Esteban Lazatin, su valor amillarado asciende a la
suma de P2,990. Tax No. 2856.
As will be noticed, there is hardly any relation between parcels 1 and 2 of the
complaint and parcel 4 (Exhibit 2 and B) and parcel 3 (Exhibit A). But, inasmuch as
the plaintiff did not care to appear at the trial when the defendant offered his
evidence, we are inclined to give more weight to the evidence adduced by him
that to the evidence adduced by the plaintiff, with respect to the ownership of
parcels 1 and 2 of the compliant. We, therefore, conclude that parcels 1 and 2 of
the complaint belong to the defendant, having acquired the same from
Macondray & Co. on June 25, 1924, and from the plaintiff Leon Sibal on the same
date.
It appears, however, that the plaintiff planted the palay in said parcels and
harvested therefrom 190 cavans. There being no evidence of bad faith on his
part, he is therefore entitled to one-half of the crop, or 95 cavans. He should
therefore be condemned to pay to the defendant for 95 cavans only, at P3.40 a
cavan, or the sum of P323, and not for the total of 190 cavans as held by the
lower court.
As to the ownership of parcel 7 of the complaint, the evidence shows that said
parcel corresponds to parcel 1 of the deed of sale of Macondray & Co, to Valdez
(Exhibit B and 2), and to parcel 4 in the certificate of sale to Valdez of real
property belonging to Sibal, executed by the sheriff as above stated (Exhibit A).
Valdez is therefore the absolute owner of said parcel, having acquired the
interest of both Macondray and Sibal in said parcel.
With reference to the parcel of land in Pacalcal, Tarlac, described in paragraph 3
of the second cause of action, it appears from the testimony of the plaintiff
himself that said parcel corresponds to parcel 8 of the deed of sale of Macondray
to Valdez (Exhibit B and 2) and to parcel 10 in the deed of sale executed by the
sheriff in favor of Valdez (Exhibit A). Valdez is therefore the absolute owner of
said parcel, having acquired the interest of both Macondray and Sibal therein.
In this connection the following facts are worthy of mention:
Execution in favor of Macondray & Co., May 11, 1923. Eight parcels of land were
attached under said execution. Said parcels of land were sold to Macondray & Co.
on the 30th day of July, 1923. Rice paid P4,273.93. On September 24, 1923, Leon
Sibal paid to Macondray & Co. P2,000 on the redemption of said parcels of land.
(See Exhibits B and C ).
Attachment, April 29, 1924, in favor of Valdez. Personal property of Sibal was
attached, including the sugar cane in question. (Exhibit A) The said personal
property so attached, sold at public auction May 9 and 10, 1924. April 29, 1924,
the real property was attached under the execution in favor of Valdez (Exhibit A).
June 25, 1924, said real property was sold and purchased by Valdez (Exhibit A).
June 25, 1924, Macondray & Co. sold all of the land which they had purchased at
public auction on the 30th day of July, 1923, to Valdez.
As to the loss of the defendant in sugar cane by reason of the injunction, the
evidence shows that the sugar cane in question covered an area of 22 hectares
and 60 ares (Exhibits 8, 8-b and 8-c); that said area would have yielded an average
crop of 1039 picos and 60 cates; that one-half of the quantity, or 519 picos and 80
cates would have corresponded to the defendant, as owner; that during the
season the sugar was selling at P13 a pico (Exhibit 5 and 5-A). Therefore, the
defendant, as owner, would have netted P 6,757.40 from the sugar cane in
question. The evidence also shows that the defendant could have taken from the
sugar cane 1,017,000 sugar-cane shoots (puntas de cana) and not 1,170,000 as
computed by the lower court. During the season the shoots were selling at P1.20 105
Sales
a thousand (Exhibits 6 and 7). The defendant therefore would have netted LUIS PICHEL, petitioner, 
P1,220.40 from sugar-cane shoots and not P1,435.68 as allowed by the lower vs.
court.
PRUDENCIO ALONZO, respondent.
As to the palay harvested by the plaintiff in parcels 1 and 2 of the complaint,
amounting to 190 cavans, one-half of said quantity should belong to the plaintiff,
as stated above, and the other half to the defendant. The court erred in awarding This is a petition to review on certiorari the decision of the Court of First Instance
the whole crop to the defendant. The plaintiff should therefore pay the of Basilan City dated January 5, 1973 in Civil Case No. 820 entitled "Prudencio
defendant for 95 cavans only, at P3.40 a cavan, or P323 instead of P646 as Alonzo, plaintiff, vs. Luis Pichel, defendant."
allowed by the lower court. This case originated in the lower Court as an action for the annulment of a "Deed
The evidence also shows that the defendant was prevented by the acts of the
of Sale" dated August 14, 1968 and executed by Prudencio Alonzo, as vendor, in
plaintiff from cultivating about 10 hectares of the land involved in the litigation.
favor of Luis Pichel, as vendee, involving property awarded to the former by the
He expected to have raised about 600 cavans of palay, 300 cavans of which
would have corresponded to him as owner. The lower court has wisely reduced Philippine Government under Republic Act No. 477. Pertinent portions of the
his share to 150 cavans only. At P4 a cavan, the palay would have netted him document sued upon read as follows:
P600. That the VENDOR for and in consideration of the sum of FOUR
In view of the foregoing, the judgment appealed from is hereby modified. The THOUSAND TWO HUNDRED PESOS (P4,200.00), Philippine
plaintiff and his sureties Cenon de la Cruz, Juan Sangalang and Marcos Sibal are Currency, in hand paid by the VENDEE to the entire satisfaction
hereby ordered to pay to the defendant jointly and severally the sum of
of the VENDOR, the VENDOR hereby sells transfers, and
P8,900.80, instead of P9,439.08 allowed by the lower court, as follows:
conveys, by way of absolute sale, all the coconut fruits of his
P6,757.40 for the sugar cane;
coconut land, designated as Lot No. 21 - Subdivision Plan No.
1,220.40 for the sugar cane shoots; Psd- 32465, situated at Balactasan Plantation, Lamitan, Basilan
City, Philippines;
for the palay harvested by plaintiff in
323.00 That for the herein sale of the coconut fruits are for all the fruits
parcels 1 and 2;
on the aforementioned parcel of land presently found therein
for the palay which defendant could have as well as for future fruits to be produced on the said parcel of
600.00
raised. land during the years period; which shag commence to run as of
SEPTEMBER 15,1968; up to JANUARY 1, 1976 (sic);
8,900.80
========== That the delivery of the subject matter of the Deed of Sale shall
== be from time to time and at the expense of the VENDEE who
shall do the harvesting and gathering of the fruits;
In all other respects, the judgment appealed from is hereby affirmed, with costs.
So ordered. That the Vendor's right, title, interest and participation herein
conveyed is of his own exclusive and absolute property, free
from any liens and encumbrances and he warrants to the
Vendee good title thereto and to defend the same against any
and all claims of all persons whomsoever. 1
After the pre-trial conference, the Court a quo issued an Order dated November
9, 1972 which in part read thus: 106
The following facts are admitted by the parties:
Sales
Plaintiff Prudencio Alonzo was awarded by the Government that
parcel of land designated as Lot No. 21 of Subdivision Plan Psd
32465 of Balactasan, Lamitan, Basilan City in accordance with
Republic Act No. 477. The award was cancelled by the Board of
Liquidators on January 27, 1965 on the ground that, previous
thereto, plaintiff was proved to have alienated the land to
another, in violation of law. In 197 2, plaintiff's rights to the land
were reinstated.
On August 14, 1968, plaintiff and his wife sold to defendant an
the fruits of the coconut trees which may be harvested in the
land in question for the period, September 15, 1968 to January
1, 1976, in consideration of P4,200.00. Even as of the date of
sale, however, the land was still under lease to one, Ramon Sua,
and it was the agreement that part of the consideration of the
sale, in the sum of P3,650.00, was to be paid by defendant
directly to Ramon Sua so as to release the land from the
clutches of the latter. Pending said payment plaintiff refused to
snow the defendant to make any harvest.
In July 1972, defendant for the first time since the execution of
the deed of sale in his favor, caused the harvest of the fruit of
the coconut trees in the land.
xxx xxx xxx
Considering the foregoing, two issues appear posed by the
complaint and the answer which must needs be tested in the
crucible of a trial on the merits, and they are:
First.— Whether or nor defendant actually paid to plaintiff the
full sum of P4,200.00 upon execution of the deed of sale.
Second.— Is the deed of sale, Exhibit 'A', the prohibited
encumbrance contemplated in Section 8 of Republic Act No.
477? 2
Anent the first issue, counsel for plaintiff Alonzo subsequently 'stipulated and
agreed that his client ... admits fun payment thereof by defendant. 3 The
remaining issue being one of law, the Court below considered the case submitted
for summary judgment on the basis of the pleadings of the parties, and the
admission of facts and documentary evidence presented at the pre-trial
conference.
The lower court rendered its decision now under review, holding that although
the agreement in question is denominated by the parties as a deed of sale of
fruits of the coconut trees found in the vendor's land, it actually is, for all legal
intents and purposes, a contract of lease of the land itself. According to the
Court:
... the sale aforestated has given defendant complete control
and enjoyment of the improvements of the land. That the
contract is consensual; that its purpose is to allow the
enjoyment or use of a thing; that it is onerous because rent or
price certain is stipulated; and that the enjoyment or use of the
thing certain is stipulated to be for a certain and definite period
of time, are characteristics which admit of no other conclusion.
... The provisions of the contract itself and its characteristics
govern its nature. 4
The Court, therefore, concluded that the deed of sale in question is an
encumbrance prohibited by Republic Act No. 477 which provides thus:
Sec. 8. Except in favor of the Government or any of its branches,
units, or institutions, land acquired under the provisions of this
Act or any permanent improvements thereon shall not be
thereon and for a term of ten years from and after the date of
issuance of the certificate of title, nor shall they become liable to
the satisfaction of any debt contracted prior to the expiration of
such period.
Any occupant or applicant of lands under this Act who transfers
whatever rights he has acquired on said lands and/or on the
improvements thereon before the date of the award or
signature of the contract of sale, shall not be entitled to apply
for another piece of agricultural land or urban, homesite or
residential lot, as the case may be, from the National Abaca and
Other Fibers Corporation; and such transfer shall be considered
null and void. 5
The dispositive portion of the lower Court's decision states:
WHEREFORE, it is the judgment of this Court that the deed of
sale, Exhibit 'A', should be, as it is, hereby declared nun and
void; that plaintiff be, as he is, ordered to pay back to defendant
107
the consideration of the sale in the sum of P4,200.00 the same
Sales
to bear legal interest from the date of the filing of the complaint
until paid; that defendant shall pay to the plaintiff the sum of
P500.00 as attorney's fees.
Costs against the defendant. 6
Before going into the issues raised by the instant Petition, the matter of whether,
under the admitted facts of this case, the respondent had the right or authority
to execute the "Deed of Sale" in 1968, his award over Lot No. 21 having been
cancelled previously by the Board of Liquidators on January 27, 1965, must be
clarified. The case in point is Ras vs. Sua 7 wherein it was categorically stated by this
Court that a cancellation of an award granted pursuant to the provisions of
Republic Act No. 477 does not automatically divest the awardee of his rights to
the land. Such cancellation does not result in the immediate reversion of the
property subject of the award, to the State. Speaking through Mr. Justice J.B.L.
Reyes, this Court ruled that "until and unless an appropriate proceeding for
reversion is instituted by the State, and its reacquisition of the ownership and
possession of the land decreed by a competent court, the grantee cannot be said
to have been divested of whatever right that he may have over the same
property." 8
There is nothing in the record to show that at any time after the supposed
cancellation of herein respondent's award on January 27, 1965, reversion
proceedings against Lot No. 21 were instituted by the State. Instead, the admitted
fact is that the award was reinstated in 1972. Applying the doctrine announced in
the above-cited Ras case, therefore, herein respondent is not deemed to have
lost any of his rights as grantee of Lot No. 21 under Republic Act No. 477 during
the period material to the case at bar, i.e., from the cancellation of the award in
1965 to its reinstatement in 1972. Within said period, respondent could exercise
all the rights pertaining to a grantee with respect to Lot No. 21.
This brings Us to the issues raised by the instant Petition. In his Brief, petitioner
contends that the lower Court erred:
1. In resorting to construction and interpretation of the deed of
sale in question where the terms thereof are clear and
unambiguous and leave no doubt as to the intention of the
parties;
2. In declaring — granting without admitting that an
interpretation is necessary — the deed of sale in question to be
a contract of lease over the land itself where the respondent
himself waived and abandoned his claim that said deed did not
express the true agreement of the parties, and on the contrary,
respondent admitted at the pre-trial that his agreement with
petitioner was one of sale of the fruits of the coconut trees on
the land;
3. In deciding a question which was not in issue when it
declared the deed of sale in question to be a contract of lease
over Lot 21;
4. In declaring furthermore the deed of sale in question to be a
contract of lease over the land itself on the basis of facts which
were not proved in evidence;
5. In not holding that the deed of sale, Exhibit "A" and "2",
expresses a valid contract of sale;
6. In not deciding squarely and to the point the issue as to
whether or not the deed of sale in question is an encumbrance
on the land and its improvements prohibited by Section 8 of
Republic Act 477; and
7. In awarding respondent attorney's fees even granting,
without admitting, that the deed of sale in question is violative
of Section 8 of Republic Act 477.
The first five assigned errors are interrelated, hence, We shall consider them
together. To begin with, We agree with petitioner that construction or
interpretation of the document in question is not called for. A perusal of the deed
fails to disclose any ambiguity or obscurity in its provisions, nor is there doubt as
to the real intention of the contracting parties. The terms of the agreement are
clear and unequivocal, hence the literal and plain meaning thereof should be
observed. Such is the mandate of the Civil Code of the Philippines which provides
that:
Art. 1370. If the terms of a contract are clear and leave no doubt
upon the intention of the contracting parties, the literal meaning
of its stipulation shall control ... .
Pursuant to the afore-quoted legal provision, the first and fundamental duty of
the courts is the application of the contract according to its express terms,
interpretation being resorted to only when such literal application is impossible. 9
Simply and directly stated, the "Deed of Sale dated August 14, 1968 is precisely108
what it purports to be. It is a document evidencing the agreement of herein
Sales
parties for the sale of coconut fruits of Lot No. 21, and not for the lease of the land
itself as found by the lower Court. In clear and express terms, the document
defines the object of the contract thus: "the herein sale of the coconut fruits are
for an the fruits on the aforementioned parcel of land during the years ...(from)
SEPTEMBER 15, 1968; up to JANUARY 1, 1976." Moreover, as petitioner correctly
asserts, the document in question expresses a valid contract of sale. It has the
essential elements of a contract of sale as defined under Article 1485 of the New
Civil Code which provides thus:
Art. 1458. By the contract of sale one of the contracting parties
obligates himself to transfer the ownership of and to deliver a
determinate thing, and the other to pay therefor a price certain
in money or its equivalent.
A contract of sale may be absolute or conditional.
The subject matter of the contract of sale in question are the fruits of the coconut
trees on the land during the years from September 15, 1968 up to January 1,
1976, which subject matter is a determinate thing. Under Article 1461 of the New
Civil Code, things having a potential existence may be the object of the contract
of sale. And in Sibal vs. Valdez, 50 Phil. 512, pending crops which have potential
existence may be the subject matter of the sale. Here, the Supreme Court, citing
Mechem on Sales and American cases said which have potential existence may
be the subject matter of sale. Here, the Supreme Court, citing Mechem on Sales
and American cases said:
Mr. Mechem says that a valid sale may be made of a thing,
which though not yet actually in existence, is reasonably certain
to come into existence as the natural increment or usual
incident of something already in existence, and then belonging
to the vendor, and the title will vest in the buyer the moment
the thing comes into existence. (Emerson vs. European Railway
Co., 67 Me., 387; Cutting vs. Packers Exchange, 21 Am. St. Rep.
63) Things of this nature are said to have a potential existence. A
man may sell property of which he is potentially and not actually
possess. He may make a valid sale of the wine that a vineyard is
expected to produce; or the grain a field may grow in a given
time; or the milk a cow may yield during the coming year; or the
wool that shall thereafter grow upon sheep; or what may be
taken at the next case of a fisherman's net; or fruits to grow; or
young animals not yet in existence; or the goodwill of a trade
and the like. The thing sold, however, must be specific and
Identified. They must be also owned at the time by the vendor.
(Hull vs. Hull 48 Conn. 250 (40 Am. Rep., 165) (pp. 522-523).
We do not agree with the trial court that the contract executed by and between
the parties is "actually a contract of lease of the land and the coconut trees
there." (CFI Decision, p. 62, Records). The Court's holding that the contract in
question fits the definition of a lease of things wherein one of the parties binds
himself to give to another the enjoyment or use of a thing for a price certain and
for a period which may be definite or indefinite (Art. 1643, Civil Code of the
Philippines) is erroneous. The essential difference between a contract of sale and
a lease of things is that the delivery of the thing sold transfers ownership, while in
lease no such transfer of ownership results as the rights of the lessee are limited
to the use and enjoyment of the thing leased.
In Rodriguez vs. Borromeo, 43 Phil. 479, 490, the Supreme Court held:
Since according to article 1543 of the same Code the contract of
lease is defined as the giving or the concession of the enjoyment
or use of a thing for a specified time and fixed price, and since
such contract is a form of enjoyment of the property, it is
evident that it must be regarded as one of the means of
enjoyment referred to in said article 398, inasmuch as the terms
enjoyment, use, and benefit involve the same and analogous
meaning relative to the general utility of which a given thing is
capable. (104 Jurisprudencia Civil, 443)
In concluding that the possession and enjoyment of the coconut trees can
therefore be said to be the possession and enjoyment of the land itself because
the defendant-lessee in order to enjoy his right under the contract, he actually
takes possession of the land, at least during harvest time, gather all of the fruits
of the coconut trees in the land, and gain exclusive use thereof without the
interference or intervention of the plaintiff-lessor such that said plaintiff-lessor is
excluded in fact from the land during the period aforesaid, the trial court erred.
The contract was clearly a "sale of the coconut fruits." The vendor sold,
transferred and conveyed "by way of absolute sale, all the coconut fruits of his
land," thereby divesting himself of all ownership or dominion over the fruits
during the seven-year period. The possession and enjoyment of the coconut 109
trees cannot be said to be the possession and enjoyment of the land itself
Sales
because these rights are distinct and separate from each other, the first
pertaining to the accessory or improvements (coconut trees) while the second, to
the principal (the land). A transfer of the accessory or improvement is not a
transfer of the principal. It is the other way around, the accessory follows the
principal. Hence, the sale of the nuts cannot be interpreted nor construed to be a
lease of the trees, much less extended further to include the lease of the land
itself.
The real and pivotal issue of this case which is taken up in petitioner's sixth
assignment of error and as already stated above, refers to the validity of the
"Deed of Sale", as such contract of sale, vis-a-vis the provisions of Sec. 8, R.A. No.
477. The lower Court did not rule on this question, having reached the conclusion
that the contract at bar was one of lease. It was from the context of a lease
contract that the Court below determined the applicability of Sec. 8, R.A. No. 477,
to the instant case.
Resolving now this principal issue, We find after a close and careful examination
of the terms of the first paragraph of Section 8 hereinabove quoted, that the
grantee of a parcel of land under R.A. No. 477 is not prohibited from alienating or
disposing of the natural and/or industrial fruits of the land awarded to him. What
the law expressly disallows is the encumbrance or alienation of the land itself or
any of the permanent improvements thereon. Permanent improvements on a
parcel of land are things incorporated or attached to the property in a fixed
manner, naturally or artificially. They include whatever is built, planted or sown
on the land which is characterized by fixity, immutability or immovability. Houses,
buildings, machinery, animal houses, trees and plants would fall under the
category of permanent improvements, the alienation or encumbrance of which is
prohibited by R.A. No. 477. While coconut trees are permanent improvements of
a land, their nuts are natural or industrial fruits which are meant to be gathered
or severed from the trees, to be used, enjoyed, sold or otherwise disposed of by
the owner of the land. Herein respondents, as the grantee of Lot No. 21 from the
Government, had the right and prerogative to sell the coconut fruits of the trees
growing on the property.
By virtue of R.A. No. 477, bona fide occupants, veterans, members of guerilla
organizations and other qualified persons were given the opportunity to acquire
government lands by purchase, taking into account their limited means. It was
intended for these persons to make good and productive use of the lands
awarded to them, not only to enable them to improve their standard of living, but
likewise to help provide for the annual payments to the Government of the
purchase price of the lots awarded to them. Section 8 was included, as stated by
the Court a quo, to protect the grantees from themselves and the incursions of
opportunists who prey on their misery and poverty." It is there to insure that the
grantees themselves benefit from their respective lots, to the exclusion of other
persons.
The purpose of the law is not violated when a grantee sells the produce or fruits
of his land. On the contrary, the aim of the law is thereby achieved, for the
grantee is encouraged and induced to be more industrious and productive, thus
making it possible for him and his family to be economically self-sufficient and to
lead a respectable life. At the same time, the Government is assured of payment
on the annual installments on the land. We agree with herein petitioner that it
could not have been the intention of the legislature to prohibit the grantee from
selling the natural and industrial fruits of his land, for otherwise, it would lead to
an absurd situation wherein the grantee would not be able to receive and enjoy
the fruits of the property in the real and complete sense.
Respondent through counsel, in his Answer to the Petition contends that even
granting arguendo that he executed a deed of sale of the coconut fruits, he has the
"privilege to change his mind and claim it as (an) implied lease," and he has the
"legitimate right" to file an action for annulment "which no law can stop." He
claims it is his "sole construction of the meaning of the transaction that should
prevail and not petitioner. (sic). 10 Respondent's counsel either misapplies the law
or is trying too hard and going too far to defend his client's hopeless cause.
Suffice it to say that respondent-grantee, after having received the consideration
for the sale of his coconut fruits, cannot be allowed to impugn the validity of the
contracts he entered into, to the prejudice of petitioner who contracted in good
faith and for a consideration.
The issue raised by the seventh assignment of error as to the propriety of the
award of attorney's fees made by the lower Court need not be passed upon, such
award having been apparently based on the erroneous finding and conclusion
that the contract at bar is one of lease. We shall limit Ourselves to the question of
whether or not in accordance with Our ruling in this case, respondent is entitled
to an award of attorney's fees. The Civil Code provides that:
Art. 2208. In the absence of stipulation, attorney's fees and
expenses of litigation, other than judicial costs, cannot be 110
recovered, except:
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(1) When exemplary damages are awarded;
(2) When the defendant's act or omission has compelled the
plaintiff to litigate with third persons or to incur expenses to
protect his interest;
(3) In criminal cases of malicious prosecution against the
plaintiff;
(4) In case of a clearly unfounded civil action or proceeding
against the plaintiff;
(5) Where the defendant acted in gross and evident bad faith in
refusing to satisfy the plaintiff's plainly valid, just and
demandable claim;
(6) In actions for legal support;
(7) In actions for the recovery of wages of household helpers,
laborers and skilled workers;
(8) In actions for indemnity under workmen's compensation and
employer's liability laws;
(9) In a separate civil action to recover civil liability arising from a
crime;
(10) When at least double judicial costs are awarded;
(11) In any other case where the court deems it just and
equitable that attorney's fees and expenses of litigation should
be recovered.
In all cases, the attorney's fees and expenses of litigation must
be reasonable.
We find that none of the legal grounds enumerated above exists to justify or
warrant the grant of attorney's fees to herein respondent.
IN VIEW OF THE FOREGOING, the judgment of the lower Court is hereby set aside
and another one is entered dismissing the Complaint. Without costs.
SO ORDERED.
BELINDA TAÑEDO, for herself and in representation of her brothers and
sisters, and TEOFILA CORPUZ TAÑEDO, representing her minor daughter
VERNA TAÑEDO, petitioners, 
vs.
THE COURT OF APPEALS, SPOUSES RICARDO M. TAÑEDO AND TERESITA
BARERA TAÑEDO,respondents.
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 Tañedo executed a notarized deed of absolute sale
in favor of his eldest brother, Ricardo Tañedo, 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. 111
Petitioners claimed that their father, Lazaro, executed an "Absolute Deed of Sale"
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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
Sale (Exh. 6) and the Deed of Sale (Exh. 4) in favor of private respondents.
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  to validate or ratify the 1962 sale, is also useless and, in the words of the
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
respondent Court, "suffers from the same infirmity." Even private respondents in
their memorandum4 concede this.
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 112
documents were executed after the death of Matias (and his spouse) and after a
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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 Tañedo to the effect that defendant Ricardo Tañedo
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 Tañedo
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 Tañedo'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 Tañedo . . ." and that respondent Ricardo Tañedo
"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' 113
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evidence, especially Lazaro Tañedo's Sinumpaang Salaysay dated July 27, Appeals is AFFIRMED. No Costs.
1982 stating that Ricardo Tañedo deceived the former in executing the SO ORDERED.
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 114
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HEIRS OF ARTURO REYES, represented by Evelyn R. San Buenaventura,
Petitioners,
- versus –
ELENA SOCCO-BELTRAN,
Respondent.
 
This is a Petition for Review on Certiorari under Rule 45 of the Rules of Court,
assailing the Decision[1] dated 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:
 
x x x x
 
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 115
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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 116 of
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the decision sought 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  WHETHER OR NOT THE COURT OF APPEALS ERRED WHEN IT
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  GROSSLY MISREPRESENTED IN HER INFORMATION SHEET OF
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 Miguel Socco and Arturo Reyes on 5 September 1954. Petitioners additionally
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
DENIED PETITIONERS MOTION FOR NEW TRIAL THEREBY
BRUSHING ASIDE THE FACT THAT MYRNA V. SOCCO-ARIZO
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
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. 117
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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]
 
In Sandoval, petitioners therein sought the enforcement of Section 54,
paragraph 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 letter[30] 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 the DAR, Arturo Reyes had already died and was already
represented by his heirs, petitioners herein.
 
Moreover, the certification given by Barangay Captain Gapero that Arturo
Reyes 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 118
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occupying the subject property. Such findings disprove petitioners claims that Moreover, the Court notes that the records have not clearly established
their predecessor-in-interest, Arturo Reyes, had been in open, exclusive, and the right of respondents representative, Myrna Socco-Arizo, over the subject
continuous possession of the property since 1954. The adverted findings were property. Thus, it is not clear to this Court why the DAR issued on 8 July 2005 a
the result of Legal Officer Pinlacs investigation in the course of her official duties, CLOA[36] over the subject property in favor of Myrna Socco-Arizo. Respondents
of matters within her expertise which were later affirmed by the DAR Secretary, death does not automatically transmit her rights to the property to Myrna Socco-
the Office of the President, and the Court of Appeals. The factual findings of such Beltran. Respondent only authorized Myrna Socco-Arizo, through a Special Power
administrative officer, if supported by evidence, are entitled to great respect.[32] of Attorney[37] dated 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
In contrast, respondents claim over the subject property is backed by Power of Attorney to the effect that Myrna Socco-Arizo can take over the subject
sufficient evidence. Her predecessors-in-interest, the spouses Laquian, have been property as owner thereof upon respondents death. That Miguel V. Socco,
identified as the original allocatees who have fully paid for the subject respondents only nephew, the son of the late Miguel R. Socco, and Myrna Socco-
property. The subject property was allocated to respondent in the extrajudicial Arizos brother, executed a waiver of his right to inherit from
settlement by the heirs of Constancias estate. The document entitled Extra- respondent, does not automatically mean that the subject property will go to
judicial Settlement of the Estate of the Deceased Constancia Socco was not Myrna Socco-Arizo, absent any proof that there is no other qualified heir to
notarized and, as a private document, can only bind the parties respondents estate. Thus, this Decision does not in any way confirm the issuance
thereto. However, its authenticity was never put into question, nor was its legality of the CLOA in favor of Myrna Socco-Arizo, which may be assailed in appropriate
impugned. Moreover, executed in 1965 by the heirs of Constancia Socco, or more proceedings.
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 IN VIEW OF THE FOREGOING, the instant Petition is DENIED. The
continuously paid for the realty tax due on the subject property, a fact which, assailed Decision of the Court of Appeals in CA-G.R. SP No. 87066, promulgated
though not conclusive, served to strengthen her claim over the property.[34] 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
From the foregoing, it is only proper that respondents claim over the Myrna Socco-Arizo pending determination of respondents legal heirs in
subject property be upheld. This Court must, however, note that the Order of the appropriate proceedings. No costs.
DAR Secretary, dated 9 November 2001, which granted the petitioners right to  
purchase the property, is flawed and may be assailed in the proper SO ORDERED.
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 ConstanciaSoccos 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.
  119
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ROMEO MARTINEZ and LEONOR SUAREZ, spouses, petitioners-appellants,  Because Potenciano Garcia was prevented by the then
vs.
HON. COURT OF APPEALS, SECRETARY and UNDERSECRETARY OF PUBLIC
WORKS & COMMUNICATIONS, respondents-appellees.
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.
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 120
Communications, respectively, as members. This committee
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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 121
Works and Communications to investigate the said
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administrative case;
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. 122
Section 38 of the Land Registration Act cited by appellants expressly makes a
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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
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 123
petitioners is a river which is not capable of private appropriation or acquisition
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by prescription. (Palanca v. Com. of the Philippines, 69 Phil. 449; Meneses v. Com. government in connection with their project of converting Lot No. 2 in question
of the Philippines, 69 Phil. 647). Consequently, appellants' title does not include into a fishpond. Nevertheless, they willfully and voluntarily assumed the risks
said river. attendant to the sale of said lot. One who buys something with knowledge of
II defect or lack of title in his vendor cannot claim that he acquired it in good faith
As regards the 3rd assignment of error, there is no weight in the appellants' (Leung Lee v. Strong Machinery Co., et al., 37 Phil. 664).
argument that, being a purchaser for value and in good faith of Lot No. 2, the The ruling that a purchaser of a registered property cannot go beyond the record
nullification of its registration would be contrary to the law and to the applicable to make inquiries as to the legality of the title of the registered owner, but may
decisions of the Supreme Court as it would destroy the stability of the title which rely on the registry to determine if there is no lien or encumbrances over the
is the core of the system of registration. Appellants cannot be deemed same, cannot be availed of as against the law and the accepted principle that
purchasers for value and in good faith as in the deed of absolute conveyance rivers are parts of the public domain for public use and not capable of private
executed in their favor, the following appears: appropriation or acquisition by prescription.
6. Que la segunda parcela arriba descrita y mencionada esta FOR ALL THE FOREGOING, the judgment of the Court of Appeals appealed from is
actualmente abierta, sin malecones y excluida de la primera in accordance with law, and the same is hereby affirmed with costs against the
parcela en virtud de la Orden Administrative No. 103, tal como petitioners-appellants.
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
124
were buying and the obstacles or restrictions thereon that may be put up by the
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ALFRED FRITZ FRENZEL, petitioner,  parlor business. She stated in the said deed that she was married to Klaus Muller.
vs.
EDERLINA P. CATITO, respondent.
Before us is a petition for review of the Decision1 of the Court of Appeals in CA-G.R. CV
No. 53485 which affirmed the Decision2 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
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 future125
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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 Peña 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 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 complaint35 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 126
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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  the trial court;
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
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:
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; 127
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(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 Appeals45 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 subject of his complaint with his
own funds. The transactions were not illegal per 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, 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 128
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properties, to enable him to sell the same at public auction. Applying by analogy
Republic Act No. 13349 as amended by Rep. Act No. 4381 and Rep. Act No. 4882, the
proceeds of the sale 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 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 New Civil Code.
The petition is bereft of merit.
Section 14, Article XIV of the 1973 Constitution provides, as follows:
Save in cases of hereditary succession, no private land shall be transferred or
conveyed except to individuals, corporations, or associations qualified to
acquire or hold lands in the public domain.50
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 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 been
disqualified from acquiring private lands.51
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
The petitioner cannot feign ignorance of the constitutional proscription, nor claim that
he acted in good faith, let alone assert that he is less guilty than the respondent. 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 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 prohibition, the
petitioner had the deed of sale placed under the respondent's name as the sole
vendee thereof:
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:
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.         In 14 Fernandez St., San Francisco, del Monte, Manila.
Q.         In whose name was the house placed?
A.         Ederlina Catito because I was informed being not a Filipino, I cannot
own the property. (tsn, p. 11, August 27, 1986).
xxx             xxx             xxx
COURT:
Q.         So you understand that you are a foreigner that you cannot buy land
in the Philippines?
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)
xxx             xxx             xxx
Q.         What happened after that?
A.         She said you foreigner you are using Filipinos to buy property.
Q.         And what did you answer?
A:         I said thank you very much for the property I bought because I gave
you a lot of money (tsn., p. 14, ibid).
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. 129
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Q         To whom are you married?
A         To a Filipina, since 1976.
Q         Would you tell us who is that particular person you are married since
1976?
A         Teresita Santos Frenzel.
Q         Where is she now?
A         In Australia.
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?
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 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.
130
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HEIRS OF JUAN SAN ANDRES (VICTOR S. ZIGA) and SALVACION S. TRIA, Received from Vicente Rodriguez the sum of Five Hundred
 petitioners, (P500.00) Pesos representing an advance payment for a
vs. residential lot adjoining his previously paid lot on three sides
VICENTE RODRIGUEZ, respondent. excepting on the frontage with the agreed price of Fifteen
(15.00) Pesos per square meter and the payment of the full
This is a petition for review on certiorari of the decision of the Court of Appeals 1 consideration based on a survey shall be due and payable in five
 reversing the decision of the Regional Trial Court, Naga City, Branch 19, in Civil (5) years period from the execution of the formal deed of sale;
Case No. 87-1335, as well as the appellate court's resolution denying and it is agreed that the expenses of survey and its approval by
reconsideration. the Bureau of Lands shall be borne by Mr. Rodriguez.
The antecedent facts are as follows: Naga City, September 29, 1964.
Juan San Andres was the registered owner of Lot No. 1914-B-2 situated in (Sgd.)
Liboton, Naga City. On September 28, 1964, he sold a portion thereof, consisting JUAN R. SAN ANDRES
of 345 square meters, to respondent Vicente S. Rodriguez for P2,415.00. The sale Vendor
is evidenced by a Deed of Sale. 2 Noted:
Upon the death of Juan San Andres on May 5, 1965, Ramon San Andres was (Sgd.)
appointed judicial administrator of the decedent's estate in Special Proceedings VICENTE RODRIGUEZ
No. R-21, RTC, Branch 19, Naga City. Ramon San Andres engaged the services of a Vendee
geodetic engineer, Jose Peñero, to prepare a consolidated plan (Exh. A) of the Respondent also attached to his answer a letter of judicial administrator
estate. Engineer Peñero also prepared a sketch plan of the 345-square meter lot Ramon San Andres (Exh. 3), 6asking payment of the balance of the
sold to respondent. From the result of the survey, it was found that respondent purchase price. The letter reads:
had enlarged the area which he purchased from the late Juan San Andres by 509 Dear Inting,
square meters. 3 Please accommodate my request for Three Hundred (P300.00)
Accordingly, the judicial administrator sent a letter, 4 dated July 27, 1987, to Pesos as I am in need of funds as I intimated to you the other
respondent demanding that the latter vacate the portion allegedly encroached by day.
him. However, respondent refused to do so, claiming he had purchased the same We will just adjust it with whatever balance you have payable to
from the late Juan San Andres. Thereafter, on November 24, 1987, the judicial the subdivision.
administrator brought an action, in behalf of the estate of Juan San Andres, for Thanks.
recovery of possession of the 509-square meter lot. Sincerely,(Sgd.)
In his Re-amended Answer filed on February 6, 1989, respondent alleged that RAMON SAN ANDRES
apart from the 345-square meter lot which had been sold to him by Juan San Vicente Rodriguez
Andres on September 28, 1964, the latter likewise sold to him the following day Penafrancia Subdivision, Naga City
the remaining portion of the lot consisting of 509 square meters, with both P.S.
parties treating the two lots as one whole parcel with a total area of 854 square You can let bearer Enrique del Castillo sign for the amount.
meters. Respondent alleged that the full payment of the 509-square meter lot Received One Hundred Only
would be effected within five (5) years from the execution of a formal deed of (Sgd.)
sale after a survey is conducted over said property. He further alleged that with RAMON SAN ANDRES
the consent of the former owner, Juan San Andres, he took possession of the 3/30/66
same and introduced improvements thereon as early as 1964. Respondent deposited in court the balance of the purchase price amounting to
As proof of the sale to him of 509 square meters, respondent attached to his P7,035.00 for the aforesaid 509-square meter lot.
answer a receipt (Exh. 2) 5 signed by the late Juan San Andres, which reads in full While the proceedings were pending, judicial administrator Ramon San Andres
as follows: died and was substituted by his son Ricardo San Andres. On the other band, 131
Sales
respondent Vicente Rodriguez died on August 15, 1989 and was substituted by plaintiff-appellee:
his heirs. 7 1. to accept the P7,035.00 representing the balance of the
Petitioner, as plaintiff, presented two witnesses. The first witness, Engr. Jose purchase price of the portion and which is deposited in court
Peñero, 8 testified that based on his survey conducted sometime between 1982 under Official Receipt No. 105754 (page 122, Records);
and 1985, respondent had enlarged the area which he purchased from the late 2. to execute the formal deed of sale over the said 509 square
Juan San Andres by 509 square meters belonging to the latter's estate. According meter portion of Lot 1914-B-2 in favor of appellant Vicente
to Peñero, the titled property (Exh. A-5) of respondent was enclosed with a fence Rodriguez;
with metal holes and barbed wire, while the expanded area was fenced with 3. to pay the defendant-appellant the amount of P50,000.00 as
barbed wire and bamboo and light materials. damages and P10,000.00 attorney's fees as stipulated by them
The second witness, Ricardo San Andres, 9 administrator of the estate, testified during the trial of this case; and
that respondent had not filed any claim before Special Proceedings No. R-21 and 4. to pay the costs of the suit.
denied knowledge of Exhibits 2 and 3. However, he recognized the signature in SO ORDERED.
Exhibit 3 as similar to that of the former administrator, Ramon San Andres. Hence, this petition. Petitioner assigns the following errors as having been
Finally, he declared that the expanded portion occupied by the family of allegedly committed by the trial court:
respondent is now enclosed with barbed wire fence unlike before where it was I. THE HON. COURT OF APPEALS ERRED IN
found without fence. HOLDING THAT THE DOCUMENT (EXHIBIT "2")
On the other hand, Bibiana B. Rodriguez, 10 widow of respondent Vicente IS A CONTRACT TO SELL DESPITE ITS LACKING
Rodriguez, testified that they had purchased the subject lot from Juan San ONE OF THE ESSENTIAL ELEMENTS OF A
Andres, who was their compadre, on September 29, 1964, at P15.00 per square CONTRACT, NAMELY, OBJECT CERTAIN AND
meter. According to her, they gave P500.00 to the late Juan San Andres who later SUFFICIENTLY DESCRIBED.
affixed his signature to Exhibit 2. She added that on March 30, 1966; Ramon San II. THE HON. COURT OF APPEALS ERRED IN
Andres wrote them a letter asking for P300.00 as partial payment for the subject HOLDING THAT PETITIONER IS OBLIGED TO
lot, but they were able to give him only P100.00. She added that they had paid HONOR THE PURPORTED CONTRACT TO SELL
the total purchase price of P7,035.00 on November 21, 1988 by depositing it in DESPITE NON-FULFILLMENT BY RESPONDENT
court. Bibiana B. Rodriquez stated that they had been in possession of the 509- OF THE CONDITION THEREIN OF PAYMENT OF
square meter lot since 1964 when the late Juan San Andres signed the receipt. THE BALANCE OF THE PURCHASE PRICE.
(Exh. 2) Lastly, she testified that they did not know at that time the exact area III. THE HON. COURT OF APPEALS ERRED IN
sold to them because they were told that the same would be known after the HOLDING THAT CONSIGNATION WAS VALID
survey of the subject lot. DESPITE NON-COMPLIANCE WITH THE
On September 20, 1994, the trial court 11 rendered judgment in favor of MANDATORY REQUIREMENTS THEREOF.
petitioner. It ruled that there was no contract of sale to speak of for lack of a valid IV. THE HON. COURT OF APPEALS ERRED IN
object because there was no sufficient indication in Exhibit 2 to identify the HOLDING THAT LACHES AND PRESCRIPTION
property subject of the sale, hence, the need to execute a new contract. DO NOT APPLY TO RESPONDENT WHO
Respondent appealed to the Court of Appeals, which on April 21, 1998 rendered SOUGHT INDIRECTLY TO ENFORCE THE
a decision reversing the decision of the trial court. The appellate court held that PURPORTED CONTRACT AFTER THE LAPSE OF
the object of the contract was determinable, and that there was a conditional sale 24 YEARS.
with the balance of the purchase price payable within five years from the The petition has no merit.
execution of the deed of sale. The dispositive portion of its decision's reads: First. Art. 1458 of the Civil Code provides:
IN VIEW OF ALL THE FOREGOING, the judgment appealed from By the contract of sale one of the contracting parties obligates
is hereby REVERSED and SET ASIDE and a new one entered himself to transfer the ownership of and to deliver a
DISMISSING the complaint and rendering judgment against the 132
determinate thing, and the other to pay therefor a price certain
Sales
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 133
Sales
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.
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).
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, 19 it 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. 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 134
Sales
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.
PIO SIAN MELLIZA, petitioner, 
vs.
CITY OF ILOILO, UNIVERSITY OF THE PHILIPPINES and THE COURT APPEALS,
 respondents.
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 135
Remedios Sian Villanueva who thereafter obtained her own registered title
Sales
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 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 136
merely to further describe the lots already specifically mentioned, or whether it
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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.
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 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.
137
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ASUNCION ATILANO, CRISTINA ATILANO, ROSARIO ATILANO, assisted by
their respective husbands, HILARIO ROMANO, FELIPE BERNARDO, and
MAXIMO LACANDALO, ISABEL ATILANO and GREGORIO ATILANO, plaintiffs-
appellees,  a portion of an adjoining lot, No. 536, from its owner Fruto del Carpio. On the
vs.
LADISLAO ATILANO and GREGORIO M. ATILANO, defendants-appellants.
In 1916 Eulogio Atilano I acquired, by purchase from one Gerardo Villanueva, lot
No. 535 of the then municipality of Zamboanga cadastre. The vendee thereafter
obtained transfer certificate of title No. 1134 in his name. In 1920 he had the land
subdivided into five parts, identified as lots Nos. 535-A, 535-B, 535-C, 535-D and
535-E, respectively. On May 18 of the same year, after the subdivision had been
effected, Eulogio Atilano I, for the sum of P150.00, executed a deed of sale
covering lot No. 535-E in favor of his brother Eulogio Atilano II, who thereupon
obtained transfer certificate of title No. 3129 in his name. Three other portions,
namely lots Nos. 535-B, 535-C and 535-D, were likewise sold to other persons, the
original owner, Eulogio Atilano I, retaining for himself only the remaining portion
of the land, presumably covered by the title to lot No. 535-A. Upon his death the
title to this lot passed to Ladislao Atilano, defendant in this case, in whose name
the corresponding certificate (No. T-5056) was issued.
On December 6, 1952, Eulogio Atilano II having become a widower upon the
death of his wife Luisa Bautista, he and his children obtained transfer certificate
of title No. 4889 over lot No. 535-E in their names as co-owners. Then, on July 16,
1959, desiring to put an end to the co-ownership, they had the land resurveyed
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
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.ñet
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 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 II, who had constructed his residence therein, even before the sale in his
favor even before the subdivision of the entire lot No. 535 at the instance of its
owner, Eulogio Atillano I. In like manner the latter had his house on the portion
correctly identified, after the subdivision, as lot No. 535-E, even adding to the
area thereof by purchasing a portion of an adjoining property belonging to a
different owner. The two brothers continued in possession of the respective
portions the rest of their 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.
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 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 of the war, and where his heirs, the plaintiffs herein, continued
to reside thereafter: namely, lot No. 535-A; and that its designation as lot No. 535-
E in the deed of sale was simple mistake in the drafting of the document.
1âwphi1.ñet The mistake did not vitiate the consent of the parties, or affect the
validity and binding effect of the contract between them. The new Civil Code
provides a remedy for such a situation by means of reformation of the
instrument. This remedy is available when, there having been a meeting of the138
Sales
funds of the parties to a contract, their true intention is not expressed in the
instrument purporting to embody the agreement by reason of mistake, fraud,
inequitable conduct on accident (Art. 1359, et seq.) In this case, the deed of sale
executed in 1920 need no longer reformed. The parties have retained possession
of their respective properties conformably to the real intention of the parties to
that sale, and all they should do is to execute mutual deeds of conveyance.
WHEREFORE, the judgment appealed from is reversed. The plaintiffs are ordered
to execute a deed of conveyance of lot No. 535-E in favor of the defendants, and
the latter in turn, are ordered to execute a similar document, covering lot No. 595
-A, in favor of the plaintiffs. Costs against the latter.
NATIONAL GRAINS AUTHORITY and WILLLAM CABAL, petitioners 
vs.
THE INTERMEDIATE APPELLATE COURT and LEON SORIANO, respondents.
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
139
withdraw from the NFA warehouse the 630 cavans Soriano delivered stating that
Sales
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 wherein140
the palay is transferred from a private sack of a farmer to the NFA sack; secondly,
Sales
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 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. 141
Sales
JOHANNES SCHUBACK & SONS PHILIPPINE TRADING CORPORATION,  quantities he wanted to Mr. Dieter Reichert, General Manager of
petitioner,  plaintiff, at the latter's residence (t.s.n., 13 December, 1984, p.
vs.
THE HON. COURT OF APPEALS, RAMON SAN JOSE, JR., doing business under
the name and style "PHILIPPINE SJ INDUSTRIAL TRADING," respondents.
In this petition for review on certiorari, petitioner questions the reversal by the
Court of Appeals 1 of the trial court's ruling that a contract of sale had been
perfected between petitioner and private respondent over bus spare parts.
The facts as quoted from the decision of the Court of Appeals are as follows:
Sometime in 1981, defendant 2 established contact with
plaintiff 3 through the Philippine Consulate General in Hamburg,
West Germany, because he wanted to purchase MAN bus spare
parts from Germany. Plaintiff communicated with its trading
partner. Johannes Schuback and Sohne Handelsgesellschaft
m.b.n. & Co. (Schuback Hamburg) regarding the spare parts
defendant wanted to order.
On October 16, 1981, defendant submitted to plaintiff a list of
the parts (Exhibit B) he wanted to purchase with specific part
numbers and description. Plaintiff referred the list to Schuback
Hamburg for quotations. Upon receipt of the quotations,
plaintiff sent to defendant a letter dated 25 November, 1981
(Exh. C) enclosing its offer on the items listed by defendant.
On December 4, 1981, defendant informed plaintiff that he
preferred genuine to replacement parts, and requested that he
be given 15% on all items (Exh. D).
On December 17, 1981, plaintiff submitted its formal offer (Exh.
E) containing the item number, quantity, part number,
description, unit price and total to defendant. On December, 24,
1981, defendant informed plaintiff of his desire to avail of the
prices of the parts at that time and enclosed Purchase Order
No. 0101 dated 14 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
he wanted to order on December 28 or 29 (Exh. F).
On December 29, 1981, defendant personally submitted the
36). The quantities were written in ink by defendant in the same
Purchase Order previously submitted. At the bottom of said
Purchase Order, defendant wrote in ink above his signature:
"NOTE: Above P.O. will include a 3% discount. The above will
serve as our initial P.O." (Exhs. G to G-3-a).
Plaintiff immediately ordered the items needed by defendant
from Schuback Hamburg to enable defendant to avail of the old
prices. Schuback Hamburg in turn ordered (Order No. 12204)
the items from NDK, a supplier of MAN spare parts in West
Germany. On January 4, 1982, Schuback Hamburg sent plaintiff
a proforma invoice (Exhs. N-1 to N-3) to be used by defendant in
applying for a letter of credit. 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 1984, p. 40).
An order confirmation (Exhs. I, I-1) was later sent by Schuback
Hamburg to plaintiff which was forwarded to and received by
defendant on February 3, 1981 (t.s.n., 13 Dec. 1984, p. 42).
On February 16, 1982, plaintiff reminded defendant to open the
letter of credit to avoid delay in shipment and payment of
interest (Exh. J). Defendant replied, mentioning, among others,
the difficulty he was encountering in securing: the required
dollar allocations and applying for the letter of credit, procuring
a loan and looking for a partner-financier, and of finding ways
'to proceed with our orders" (Exh. K).
In the meantime, Schuback Hamburg received invoices from,
NDK for partial deliveries on Order No.12204 (Direct
Interrogatories., 07 Oct, 1985, p. 3). Schuback Hamburg paid
NDK. The latter confirmed receipt of payments made on
February 16, 1984 (Exh.C-Deposition).
On October 18, 1982, Plaintiff again reminded defendant of his
order and advised that the case may be endorsed to its lawyers
(Exh. L). Defendant replied that he did not make any valid 142
Purchase Order and that there was no definite contract
Sales
between him and plaintiff (Exh. M). Plaintiff sent a rejoinder
explaining that there 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 30%
of F.O.B. value, or plaintiff will endorse the case to its lawyers
(Exh. N).
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 October, 1985).
Demand letters sent to defendant by plaintiff's counsel dated
March 22, 1983 and June 9, 1983 were to no avail (Exhs R and S).
Consequently, petitioner filed a complaint for recovery of actual or compensatory
damages, unearned profits, interest, attorney's fees and costs against private
respondent.
In its decision dated June 13, 1988, the trial court 4 ruled in favor of petitioner by
ordering private respondent to pay petitioner, among others, actual
compensatory damages in the amount of DM 51,917.81, unearned profits in the
amount of DM 14,061.07, or their peso equivalent.
Thereafter, private respondent elevated his case before the Court of Appeals. On
February 18, 1992, the appellate court reversed the decision of the trial court and
dismissed the complaint of petitioner. It ruled that there was no perfection of
contract since there was no meeting of the minds as to the price between the last
week of December 1981 and the first week of January 1982.
The issue posed for resolution is whether or not a contract of sale has been
perfected between the parties.
We reverse the decision of the Court of Appeals and reinstate the decision of the
trial court. It bears emphasizing that a "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. . . . " 5
Article 1319 of the Civil Code states: "Consent is manifested by the meeting of 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
acceptance constitutes a counter offer." The facts presented to us indicate that
consent on both sides has been manifested.
The offer by petitioner was manifested on December 17, 1981 when petitioner
submitted its proposal containing the item number, quantity, part number,
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 parts at that time and simultaneously enclosed its Purchase Order No. 0l01
dated December 14, 1981. At this stage, a meeting of the minds between vendor
and vendee has occurred, the object of the contract: being the spare parts and
the consideration, the price stated in petitioner's offer dated December 17, 1981
and accepted by the respondent on December 24,1981.
Although said purchase order did not contain the quantity he wanted to order,
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 already in the process of executing the agreement previously
reached between the parties.
Below Exh. G-3, marked as Exhibit G-3-A, there appears this statement made by
private respondent: "Note. above P.O. will include a 3% discount. The above will
serve as our initial P.O." This notation on the purchase order was another
indication of acceptance on the part of the vendee, for by requesting a 3%
discount, he implicitly accepted the price as first offered by the vendor. The
immediate acceptance by the vendee of the offer was impelled by the fact that on
January 1, 1982, prices would go up, as in fact, the petitioner informed him that
there would be a 7% increase, effective January 1982. On the other hand,
concurrence by the vendor with the said discount requested by the vendee was
manifested when 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, 143
quantity is immaterial in the perfection of a sales contract. What is of importance
Sales
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.
AURORA ALCANTARA-DAUS, petitioner, vs. Spouses HERMOSO and SOCORRO
DE LEON, respondents.
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 Review[1] 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 Appeals[2](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 P5,000.00 each to be paid to defendants-
appellees.[3]
The assailed Resolution[4] 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 144
Sales
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.
x x x x x x x x x
[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, Pangasinan[6]
 rendered its Decision[7] 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. 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.
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 minds[11] 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.[17] Therefore, 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
Petitioner contends that the Extrajudicial Partition and Quitclaim is
authentic, 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 145
Sales
Partition and Quitclaim was forged. However, this factual finding is in conflict with claims.[34] Since laches is an equitable doctrine, its application is controlled by
that of the RTC. While normally this Court does not review factual issues,[21] this equitable considerations.[35] It cannot be used to defeat justice or to perpetuate
rule does not apply when there is a conflict between the holdings of the CA and fraud and injustice.[36] Thus, the assertion of laches to thwart the claim of
those of the trial court,[22] as in the present case. respondents is foreclosed, because the Deed upon which petitioner bases her
After poring over the records, we find no reason to reverse the factual claim is a forgery.
finding of the appellate court. A comparison of the genuine signatures of WHEREFORE, the Petition is DENIED and the assailed Decision AFFIRMED.
Hermoso de Leon[23] with his purported signature on the Deed of Extrajudicial  Costs against petitioner.
Partition with Quitclaim[24] will readily reveal that the latter is a forgery. As aptly SO ORDERED.
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 registration[29] 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 146
CA. Laches is based upon equity and the public policy of discouraging stale
Sales
CONCHITA NOOL and GAUDENCIO ALMOJERA, petitioner,  The Antecedent Facts
vs.
COURT OF APPEALS, ANACLETO NOOL and EMILIA NEBRE, respondents.
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  of Title No. T-100945. Both parcel's are situated in San Manuel,
certiorari assailing the January 20, 1993 Decision 1 of Respondent Court of Appeals 2
 in CA-G.R. CV No. 36473, affirming the decision 3 of the trial court 4which
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 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
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
147
pay, and the same day the said arrangement 6 was made;
Sales
another covenant 7 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
148
The Court's Ruling
Sales
The petition is bereft of merit.
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
149
acquired the same from DBP. 22 We cannot accede to this, for it clearly
Sales
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.
In Vda. De Cruzo, et al. vs. Carriaga, et al. this Court found another
occasion to apply the foregoing principle.
Hence, the Option to Repurchase executed by private respondent in the present
case, was merely a promise to sell, which must be governed by Article 1479 of the
Civil Code which reads as follows:
Art. 1479. A promise to buy and sell a determinate thing for a
price certain is reciprocally demandable.
An accepted unilateral promise to buy or to sell a determinate
thing for a price certain is binding upon the promissor if the
promise is supported by a consideration distinct from the price.
Right to Repurchase Based on 150
Homestead or Trust Non-Existent
Sales
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
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
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
We are not persuaded. Based on the previous discussion, the balance of
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 by reason of the invalid contract of sale. Since they cannot legally give
title to what they "sold," they cannot keep the money paid for the object of the
sale. It is basic that "(e)very person who through an act of performance by
another, or any other means, acquires or comes into possession of something at
the expense of the latter without just or legal ground, shall return the same." 32
 Thus, if a void contract has already "been performed, the restoration of what has
been given is in order." 33 Corollarily and as aptly ordered by respondent
appellate court, interest thereon will run only from the time of private
respondents' demand for the return of this amount in their counterclaim. 34 In
the same vein, petitioners' possession and cultivation of the two hectares are
anchored on private respondents' tolerance. Clearly, the latter's tolerance ceased
upon their counterclaim and demand on the former to vacate. Hence, their right
to possess and cultivate the land ipso facto ceased.
WHEREFORE, the petition is DENIED and the assailed Decision of the Court of
Appeals affirming that of the trial court is hereby AFFIRMED.
SO ORDERED.
151
Sales
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,  "WHEREFORE, as prayed for, let the writ of possession previously issued
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.
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
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 lots10 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 heirs152
Sales
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
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 153
Dominador, et al. have been complied with is a question of fact.32
Sales
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"
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.
154
Sales
MIGUEL MAPALO, ET AL., petitioners,  western half of the land, on the grounds that their (Mapalo spouses) signatures
vs.
MAXIMO MAPALO, ET AL., respondents.
The spouses Miguel Mapalo and Candida Quiba, simple illiterate farmers, were
registered owners, with Torrens title certificate O.C.T. No. 46503, of a 1,635-
square-meter residential land in Manaoag, Pangasinan. Said spouses-owners, out
of love and affection for Maximo Mapalo — a brother of Miguel who was about to
get married — decided to donate the eastern half of the land to him. O.C.T. No.
46503 was delivered. As a result, however, they were deceived into signing, on
October 15, 1936, a deed of absolute sale over the entire land in his favor. Their
signatures thereto were procured by fraud, that is, they were made to believe by
Maximo Mapalo and by the attorney who acted as notary public who "translated"
the document, that the same was a deed of donation in Maximo's favor covering
one-half (the eastern half) of their land. Although the document of sale stated a
consideration of Five Hundred (P500.00) Pesos, the aforesaid spouses did not
receive anything of value for the land. The attorney's misbehaviour was the
subject of an investigation but its result does not appear on record. However we
took note of the fact that during the hearing of these cases said notary public was
present but did not take the witness stand to rebut the plaintiffs' testimony
supporting the allegation of fraud in the preparation of the document.
Following the execution of the afore-stated document, the spouses Miguel
Mapalo and Candida Quiba immediately built a fence of permanent structure in
the middle of their land segregating the eastern portion from its western portion.
Said fence still exists. The spouses have always been in continued possession
over the western half of the land up to the present.
Not known to them, meanwhile, Maximo Mapalo, on March 15, 1938, registered
the deed of sale in his favor and obtained in his name Transfer Certificate of Title
No. 12829 over the entire land. Thirteen years later on October 20, 1951, he sold
for P2,500.00 said entire land in favor of Evaristo, Petronila Pacifico and Miguel all
surnamed Narciso. The sale to the Narcisos was in turn registered on November
5, 1951 and Transfer Certificate of Title No. 11350 was issued for the whole land
in their names.
The Narcisos took possession only of the eastern portion of the land in 1951,
after the sale in their favor was made. On February 7, 1952 they filed suit in the
Court of First Instance of Pangasinan (Civil Case No. 1191) to be declared owners
of the entire land, for possession of its western portion; for damages; and for
rentals. It was brought against the Mapalo spouses as well as against Floro Guieb
and Rosalia Mapalo Guieb who had a house on the western part of the land with
the consent of the spouses Mapalo and Quiba.
The Mapalo spouses filed their answer with a counterclaim on March 17, 1965,
seeking cancellation of the Transfer Certificate of Title of the Narcisos as to the
to the deed of sale of 1936 was procured by fraud and that the Narcisos were
buyers in bad faith. They asked for reconveyance to them of the western portion
of the land and issuance of a Transfer Certificate of Title in their names as to said
portion.
In addition, the Mapalo spouses filed on December 16, 1957 their own complaint
in the Court of First Instance of Pangasinan (Civil Case No. U-133) against the
aforestated Narcisos and Maximo Mapalo. They asked that the deeds of sale of
1936 and of 1951 over the land in question be declared null and void as to the
western half of said land.
Judge Amado Santiago of the Court of First Instance of Pangasinan located in the
municipality of Urdaneta tried the two cases jointly. Said court rendered
judgment on January 18, 1961, as follows:
WHEREFORE, judgment is hereby rendered as follows, to wit:
(a) dismissing the complaint in Civil Case No. 11991;
(b) declaring Exhibit A, plaintiffs in Case No. 11991 and Exhibit 1,
defendants in Case No. U-133 as a donation only over the eastern half
portion of the above-described land, and as null and void with respect to
the western half portion thereof;
(c) declaring as null and void and without legal force and effect Transfer
Certificate of Title No. 12829 issued in favor of Maximo Mapalo as
regards the western half portion of the land covered therein;
(d) declaring as null and void Transfer Certificate of Title No. 11350 in the
names of the Narcisos insofar as the western half portion of the land
covered therein is concerned;
(e) ordering the spouses Mapalo and Quiba and the Narcisos to have the
above-described land be subdivided by a competent land surveyor and
that the expenses incident thereto be borne out by said partiespro rata;
(f) ordering the Register of Deeds of Pangasinan to issue in lieu of
Transfer Certificate of Title No. 11350 two new titles upon completion of
the subdivision plan, one in favor of the spouses Miguel Mapalo and
Candida Quiba covering the western half portion and another for the
Narcisos covering the eastern half portion of the said land, upon
payment of the legal fees; meanwhile the right of the spouses Mapalo
and Quiba is hereby ordered to be annotated on the back of Transfer
Certificate of Title No. 11350; and
(g) sentencing Maximo Mapalo and the Narcisos to pay the costs.
IT IS SO ORDERED.
The Narcisos appealed to the Court of Appeals. In its decision on May 28, 1963,
the Court of Appeals reversed the judgment of the Court of First Instance, solely
on the ground that the consent of the Mapalo spouses to the deed of sale of 155
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1936 having been obtained by fraud, the same was voidable, not void ab initio, and,
therefore, the action to annul the same, within four years from notice of the
fraud, had long prescribed. It reckoned said notice of the fraud from the date of
registration of the sale on March 15, 1938. The Court of First Instance and the
Court of Appeals are therefore unanimous that the spouses Mapalo and Quiba
were definitely the victims of fraud. It was only on prescription that they lost in
the Court of Appeals.
From said decision of the Court of Appeals, the Mapalo spouses appealed to this
Court.
And here appellants press the contention that the document dated October 15,
1936, purporting to sell the entire land in favor of Maximo Mapalo, is void, not
merely voidable, as to the western portion of the land for being absolutely
simulated or fictitious.
Starting with fundamentals, under the Civil Code, either the old or the new, for a
contract to exist at all, three essential requisites must concur: (1) consent, (2)
object, and (3) cause or consideration.1 The Court of Appeals is right in that the
element of consent is present as to the deed of sale of October 15, 1936. For
consent was admittedly given, albeit obtained by fraud. Accordingly, said consent,
although defective, did exist. In such case, the defect in the consent would
provide a ground for annulment of a voidable contract, not a reason for nullity ab
initio.
The parties are agreed that the second element of object is likewise present in
the deed of October 15, 1936, namely, the parcel of land subject matter of the
same.
Not so, however, as to the third element of cause or consideration. And on this
point the decision of the Court of Appeals is silent.
As regards the eastern portion of the land, the Mapalo spouses are not claiming
the same, it being their stand that they have donated and freely given said half of
their land to Maximo Mapalo. And since they did not appeal from the decision of
the trial court finding that there was a valid and effective donation of the eastern
portion of their land in favor of Maximo Mapalo, the same pronouncement has
become final as to them, rendering it no longer proper herein to examine the
existence, validity efficacy of said donation as to said eastern portion.1äwphï1.ñët
Now, as to the western portion, however, the fact not disputed herein is that no
donation by the Mapalo spouses obtained as to said portion. Accordingly, we
start with the fact that liberality as a cause or consideration does not exist as
regards the western portion of the land in relation to the deed of 1936; that there
was no donation with respect to the same.
It is reduced, then, to the question whether there was an onerous conveyance of
ownership, that is, a sale, by virtue of said deed of October 15, 1936, with respect
to said western portion. Specifically, was there a cause or consideration to
support the existence of a contrary of sale?
The rule under the Civil Code, again be it the old or the new, is that contracts 
without a cause or consideration produce no effect whatsoever.2 Nonetheless,
under the Old Civil Code, the statement of a false consideration renders the
contract voidable, unless it is proven that it is supported by another real and licit
 consideration.3 And it is further provided by the Old Civil Code that the action for
annulment of a contract on the ground of falsity of consideration shall last four
years, the term to run from the date of the consummation of the contract.4
Accordingly, since the deed of sale of 1936 is governed by the Old Civil Code, it
should be asked whether its case is one wherein there is no consideration, or one
with a statement of a false consideration. If the former, it is void and inexistent; if the
latter, only voidable, under the Old Civil Code. As observed earlier, the deed of
sale of 1936 stated that it had for its consideration Five Hundred (P500.00) Pesos.
In fact, however, said consideration was totally absent. The problem, therefore, is
whether a deed which states a consideration that in fact did not exist, is a
contract without consideration, and therefore void ab initio, or a contract with a
false consideration, and therefore, at least under the Old Civil Code, voidable.
According to Manresa, what is meant by a contract that states a false
consideration is one that has in fact a real consideration but the same is not the
one stated in the document. Thus he says:
En primer lugar, nor interesa recordar la diferencia entre simulacion y el
contrato con proposito fraudulento. Este aunque ilicito es real; mas el
primero es falso en realidad, aunque se le presente como verdadero. (Manresa,
Codigo Civil, Tomo VIII, Vol. II, p. 354.)
And citing a decision of the Supreme Court of Spain on the matter, Manresa
further clarifies the difference of false cause and no cause, thus:
Insiste en el distingo con mas detenida descripcion la sentencia de 25 de
mayo de 1944, en la que se argumenta:
Si bien es elemento fundamental de todo negocio, la declaracion de
voluntad substracto de una voluntad efectiva, y la existencia de una
causa que leconfiera significado juridico señalando la finalidad que con
este se persigue, no ha de deducirse de esta doctrina,
fundamentalmente recogida en el articulo 1.261 y concordantes del
Codigo civil, que cualquier falta de adecuacion entre cualquier
incongruencia entre la causa expresada y la verdadera, y, en general,
entre la estructuracion y la finalidad economica; hayan de producir la
ineficacia del negocio, pues por el contrario, puede este ser valido y
producir sus efectos tanto en el caso de la mera disonancia entre el
medio juridico adoptado y el fin practico perseguido, por utilizacion de
una via oblicua o combinacion de formas juridicas entrelazadas que
permita la obtencion de un resultado no previsto en los cuadros de la156 ley
Sales
— negocios indirectos y negocios fiduciarlos, validos cuando no
envuelven fraude de ley, como en el caso de la verdadera
disconformidad entre la apariencia del acto y su real contenido,
preparada deliberadamente por las partes — negocio simulado — , ya
que, cuando esta divergencia implica no una ausencia total de voluntad y de acto
real, sino mera ocultacion de un negocio verdadero bajo la falsa apariencia de un negocio
fingido "sirulacion relativa", la ineficacia de la forma externa simulada, no
es obstaculo para la posible validez del negocio disimulado que
contiene, en tanto este ultimo sea licito y reuna no solo los requisitos
generales, sino tambien los que corresponden a su naturaleza especial,
doctrina, en obligada aplicacion de los preceptos de nuestra Ley civil,
especialmente en su art. 1.276, que, al establecer el principio de nulidad
de los contratos en los que se hace expresion de una causa falsa, deja a salvo el caso de
que esten fundados en otra verdadera y licita. (Manresa, Codigo Civil, Tomo VIII,
Vol. II pp. 357-358)
Sanchez Roman says:
Ya hemos dicho que la intervencion de causa en los contratos es
necesaria, y que sin ellos son nulos; solo se concibe que un hombre
perturbado en su razon pueda contratar sin causa. ...
Por la misma razon de la necesidad de la intervencion de causa en el
contrato, es preciso que esta sea verdadera y no supuesta, aparente o
figurada. Que la falsedad de la causa vicia el consentimiento y anula el
contrato, es, no solo doctrina indudable de Derecho Cientifico sino
tambien de antiguo Derecho de Castilla, que en multitud de leyes asi lo
declararon. (Sanchez Roman, Derecho Civil, Tomo IV, p. 206.).
In a clearer exposition of the above distinction, Castan states:
2.º. La causa ha de ser verdadera. La causa falsa puede ser erronea o
simulada. Es erronea como dice Giorgi, la causa que tiene por base la
credulidad en un hecho no existente; y simulada la que tiene lugar
cuando se hace aparecer artificiosamente una distinta de la verdadera.
La erronea produce siempre la inexistencia del contrato; la simulada no
siempre produce este efecto, porque puede suceder que la causa oculta,
pero verdadera, baste para sostener el contrato. De acuerdo con esta
doctrina, dice el art. 1.276 de nuestro Codigo que "la expresion de una
causa falsa en los contratos dara lugar a la nulidad, si no se probase que
estaban fundados en otra verdadera y licita". (Castan Derecho Civil
Español, Tomo II, pp. 618-619)
From the foregoing it can be seen that where, as in this case, there was in fact no
consideration, the statement of one in the deed will not suffice to bring it under
the rule of Article 1276 of the Old Civil Code as stating a false consideration.
Returning to Manresa:
Figurando en nuestro Derecho positivo la causa, como un elemento
esential del contrato, es consecuencia ineludible, se reputar simulada la
entrega del precio en la compraventa de autos, el que haya que
declararla nula por inexistente haciendose aplicacion indebida de art.
1.276 por el Tribunal sentenciador al cohonestar la falta de precio
admitiendo se pueda tratar de una donacion, ya que la recta aplicacion
del citado precepto exige que los negocios simulados, o sea con causa
falsa, se justifique la verdadera y licita en que se funda el acto que las
partes han querido ocultar y el cumplimiento de las formalidades
impuestas por la Ley y, cual dice la sentencia de 3 de marzo de 1932,
esta rigurosa doctrina ha de ser especialmente impuesta en la
donaciones puras y simples; de los que deduce que la sentencia
recurrida al no decretar la nulidad instada por falta de causa, incide en la
infraccion de los articulos 1.261, 1.274, 1.275 y 1.276 del Codigo Civil.
(Sentencia de 22 de febrero de 1940). (Manresa, Codigo Civil, Tomo VIII,
Vol. II, p. 356)
In our view, therefore, the ruling of this Court in Ocejo, Perez & Co. vs. Flores, 40 Phil.
921, is squarely applicable herein. In that case we ruled that a contract of
purchase and sale is null and void and produces no effect whatsoever where the
same is without cause or consideration in that the purchase price which appears
thereon as paid has in fact never been paid by the purchaser to the vendor.
Needless to add, the inexistence of a contract is permanent and incurable and
cannot be the subject of prescription. In the words of Castan: "La inexistencia es
perpetua e insubsanable no pudiendo ser objecto de confirmacion ni
prescripcion (Op. cit., p. 644.) In Eugenio v. Perdido, 97 Phil. 41, 42-43, involving a sale
dated 1932, this Court, speaking through Justice Cesar Bengzon, now Chief
Justice, stated:
Under the existing classification, such contract would be "inexisting" and
"the action or defense for declaration" of such inexistence "does not
prescribe". (Art. 1410, New Civil Code). While it is true that this is a new
provision of the New Civil Code, it is nevertheless a principle recognized
since Tipton vs. Velasco, 6 Phil. 67 that "mere lapse of time cannot give
efficacy to contracts that are null and void".
Anent the matter of whether the Narcisos were purchasers in good faith, the trial
court in its decision resolved this issue, thus:
With regard to the second issue, the Narcisos contend that they are the
owners of the above-described property by virtue of the deed of sale
(Exh. B, plaintiffs in 11991 and Exh. 2, defendants in U-133) executed in
their favor by Maximo Mapalo, and further claim that they are
purchasers for value and in good faith. This court, however, cannot also
give weight and credit on this theory of the Narcisos on the following
reasons: Firstly, it has been positively shown by the undisputed 157
Sales
testimony of Candida Quiba that Pacifico Narciso and Evaristo Narciso the Narcisos in purchasing the land in question. We therefore see no need to
stayed for some days on the western side (the portion in question) of the further remand this case to the Court of Appeals for a ruling on this point, as
above-described land until their house was removed in 1940 by the appellees request in their brief in the event we hold the contract of 1936 to be
spouses Mapalo and Quiba; secondly, Pacifica Narciso admitted in his inexistent as regards the western portion of the land.
testimony in chief that when they bought the property, Miguel Mapalo In view of defendants' bad faith under the circumstances we deem it just and
was still in the premises in question (western part) which he is occupying equitable to award, in plaintiffs' favor, attorneys' fees on appeal, in the amount of
and his house is still standing thereon; and thirdly, said Pacifico Narciso P1,000.00 as prayed for in the counterclaim.
when presented as a rebuttal and sub-rebuttal witness categorically Wherefore, the decision of the Court of Appeals is hereby reversed and set aside,
declared that before buying the land in question he went to the house of and another one is hereby rendered affirming in toto the judgment of the Court of
Miguel Mapalo and Candida Quiba and asked them if they will permit First Instance a quo, with attorney's fees on appeal in favor of appellants in the
their elder brother Maximo to sell the property. amount of P1,000.00, plus the costs, both against the private appellees. So
Aside from the fact that all the parties in these cases are neighbors, ordered.
except Maximo Mapalo the foregoing facts are explicit enough and
sufficiently reveal that the Narcisos were aware of the nature and extent
of the interest of Maximo Mapalo their vendor, over the above-described
land before and at the time the deed of sale in their favor was executed.
Upon the aforestated declaration of Pacifico Narciso the following
question arises: What was the necessity, purpose and reason of Pacifico
Narciso in still going to the spouses Mapalo and asked them to permit
their brother Maximo to dispose of the above-described land? To this
question it is safe to state that this act of Pacifico Narciso is a conclusive
manifestation that they (the Narcisos) did not only have prior knowledge
of the ownership of said spouses over the western half portion in
question but that they also have recognized said ownership. It also
conclusively shows their prior knowledge of the want of dominion on the
part of their vendor Maximo Mapalo over the whole land and also of the
flaw of his title thereto. Under this situation, the Narcisos may be
considered purchasers in value but certainly not as purchasers in good
faith. ... (pp. 97-98, Record on Appeal.)
And said finding — which is one of fact — is found by us not a bit disturbed by
the Court of Appeals. Said the Court of Appeals:
In view of the conclusion thus reached, it becomes unnecessary to pass
on the other errors assigned. Suffice it to say that, on the merits the appealed
decision could have been upheld under Article 1332 of the new Civil Code and
the following authorities: Ayola vs. Valderrama Lumber Manufacturers Co., Inc., 49
O.G. 980, 982; Trasporte vs. Beltran, 51 O.G. 1434, 1435; Cortez vs. Cortez, CA-
G.R. No. 18451-R, August 8, 1961; Castillo vs. Laberinto, CA-G.R. No. 18118-R,
December 20, 1961; and 13 C.J. 372-373, as well as the several facts and
circumstances appreciated by the trial court as supporting appellees' case.
thereby in effect sustaining — barring only its ruling on prescription — the
judgment and findings of the trial court, including that of bad faith on the part of 158
Sales
SERAFIN MODINA, petitioner vs. COURT OF APPEALS AND ERNESTO HONTARCIEGO,
PAUL FIGUEROA, TEODORO HIPALLA AND RAMON CHIANG,
MERLINDACHIANG, respondents.
At bar is a Petition for Review on Certiorari assailing the decision of the Court of
Appeals in CA - G.R. CV No. 26051 affirming the decision of the trial court in the case,
entitled Serafin Modina vs Ernesto Hontarciego, Paulino Figueroa and Ramon Chiang
vs Merlinda Plana Chiang, intervenors, which declared as void and inexistent the deed
of definite sale dated December 17, 1975 as well as the Certificates of Title Nos. T-
86912, T-86913, T-86914 in the name of Ramon Chiang.
The facts that matter are as follows:
The parcels of land in question are those under the name of Ramon Chiang
(hereinafter referred to as CHIANG ) covered by TCT Nos. T-86912, T-86913, and T-
86914. He theorized that subject properties were sold to him by his wife, Merlinda
Plana Chiang (hereinafter referred to as MERLINDA), as evidenced by a Deed of
Absolute Sale dated December 17, 1975,[1] and were subsequently sold by CHIANG to
the petitioner Serafin Modina (MODINA), as shown by the Deeds of Sale, dated August
3, 1979 and August 24, 1979, respectively.
MODINA brought a Complaint for Recovery of Possession with Damages against
the private respondents, Ernesto Hontarciego, Paul Figueroa and Teodoro Hipalla,
docketed as Civil Case No. 13935 before the Regional Trial Court of Iloilo City.
Upon learning the institution of the said case, MERLINDA presented a Complaint-
in-intervention, seeking the declaration of nullity of the Deed of Sale between her
husband and MODINA on the ground that the titles of the parcels of land in dispute
were never legally transferred to her husband. Fraudulent acts were allegedly
employed by him to obtain a Torrens Title in his favor. However, she confirmed the
validity of the lease contracts with the other private respondents.
MERLINDA also admitted that the said parcels of land were those ordered sold
by Branch 2 of the then Court of First Instance of Iloilo in Special Proceeding No. 2469
in Intestate Estate of Nelson Plana where she was appointed as the administratix,
being the widow of the deceased, her first husband. An Authority to Sell was issued by
the said Probate Court for the sale of the same properties.[2]
After due hearing, the Trial Court decided in favor of MERLINDA, disposing thus:
WHEREFORE, judgment is hereby rendered (1) declaring as void and inexistent the sale
of Lots 10063, 10088, 10085 and 10089 of the Cadastral Survey of Sta. Barbara by
Merlinda Plana in favor of Ramon Chiang as evidenced by the deed of definite sale
dated December 17, 1975 (Exhibits H; 3-Chiang; 9 Intervenor) as well as the
Certificates of Title Nos. T-86912, T-86913, T-86914 and T-86915 in the name of Ramon
Chiang; (2) declaring as void and inexistent the sale of the same properties by Ramon
Chiang in favor of Serafin Modina as evidenced by the deeds of sale (Exhibits A, B, 6
Chiang and 7 Chiang) dated August 3, and 24, 1979, as well as. Certificates of Title Nos.
T-102631, 102630, 102632 and 102890 in the name of Serafin Modina; (3) ordering the
Register of Deeds of Iloilo to cancel said certificates of title in the names of Ramon
Chiang and Serafin Modina and to reinstate the Certificates of Title Nos. T-57960, T-
57962, T-57963 and T-57864 in the name of Nelson Plana; (4) ordering Serafin Modina
to vacate and restore possession of the lots in question to Merlinda Plana Chiang; (5)
ordering Ramon Chiang to restitute and pay to Serafin Modina the sum of P145,800.00
and; (6) ordering Serafin Modina to pay Ernesto Hontarciego the sum of P44,500.00 as
actual and compensatory damages plus the sum of P5,000.00, for and as attorneys
fees, with costs in favor of said defendants against the plaintiff.
On appeal, the Court of Appeals affirmed the aforesaid decision in toto.
Dissatisfied therewith, petitioner found his way to this Court via the present
Petition for Review under Rule 45 seeking to set aside the assailed decision of the
Court of Appeals.
Raised for resolution here are: (1) whether the sale of subject lots should be
nullified, (2) whether petitioner was not a purchaser in good faith, (3) whether the
decision of the trial court was tainted with excess of jurisdiction; and (4) whether or
not only three-fourths of subject lots should be returned to the private respondent.
Anent the first issue, petitioner theorizes that the sale in question is null and void
for being violative of Article 1490[3] of the New Civil Code prohibiting sales between
spouses. Consequently, what is applicable is Article 1412[4]supra on the principle of in
pari delicto, which leaves both guilty parties where they are, and keeps undisturbed the
rights of third persons to whom the lots involved were sold; petitioner stressed.
Petitioner anchors his submission on the following statements of the Trial Court
which the Court of Appeals upheld, to wit:
Furthermore, under Art. 1490, husband and wife are prohibited to sell
properties to each other. And where, as in this case, the sale is inexistent for
lack of consideration, the principle of in pari delicto non oritur actio does not
apply. (Vasquez vs Porta, 98 Phil 490). (Emphasis ours) Thus, Art. 1490 provides:
Art. 1490. The husband and the wife cannot sell property to each other, except:
(1) when a separation of property was agreed upon in the marriage settlements; or
(2) when there has been a judicial separation of property under Art. 191.
The exception to the rule laid down in Art. 1490 of the New Civil Code not having
existed with respect to the property relations of Ramon Chiang and Merlinda Plana
Chiang, the sale by the latter in favor of the former of the properties in question is
invalid for being prohibited by law. Not being the owner of subject properties, Ramon
Chiang could not have validly sold the same to plaintiff Serafin Modina. The sale by
Ramon Chiang in favor of Serafin Modina is, likewise, void and inexistent.
xxx xxx xxx[5]
The Court of Appeals, on the other hand, adopted the following findings a quo
: that there is no sufficient evidence establishing fault on the part of MERLINDA, and
therefore, the principle of in pari delicto is inapplicable and the sale was void for want of
consideration. In effect, MERLINDA can recover the lots sold by her husband to
petitioner MODINA. However, the Court of Appeals ruled that the sale was void for
violating Article 1490 of the Civil Code, which prohibits sales between spouses.
The principle of in pari delicto non oritur actio[6] denies all recovery to the guilty parties 
inter se. It applies to cases where the nullity arises from the illegality of the
consideration or the purpose of the contract.[7] When two persons are equally at fault, 159
Sales
the law does not relieve them. The exception to this general rule is when the principle
is invoked with respect to inexistent contracts.[8]
In the petition under consideration, the Trial Court found that subject Deed of
Sale was a nullity for lack of any consideration.[9] This finding duly supported by
evidence was affirmed by the Court of Appeals. Well-settled is the rule that this Court
will not disturb such finding absent any evidence to the contrary.[10]
Under Article 1409[11] of the New Civil Code, enumerating void contracts, a
contract without consideration is one such void contract. One of the characteristics of
a void or inexistent contract is that it produces no effect. So also, inexistent contracts
can be invoked by any person whenever juridical effects founded thereon are
asserted against him. A transferor can recover the object of such contract by accion
reivindicatoria and any possessor may refuse to deliver it to the transferee, who cannot
enforce the transfer.[12]
Thus, petitioners insistence that MERLINDA cannot attack subject contract of sale
as she was a guilty party thereto is equally unavailing.
But the pivot of inquiry here is whether MERLINDA is barred by the principle of in
pari delicto from questioning subject Deed of Sale.
It bears emphasizing that as the contracts under controversy are inexistent
contracts within legal contemplation, Articles 1411 and 1412 of the New Civil Code are
inapplicable. In pari delicto doctrine applies only to contracts with illegal consideration or
subject matter, whether the attendant facts constitute an offense or misdemeanor or
whether the consideration involved is merely rendered illegal.[13]
The statement below that it is likewise null and void for being violative of Article
1490 should just be treated as a surplusage or an obiter dictum on the part of the Trial
Court as the issue of whether the parcels of land in dispute are conjugal in nature or
they fall under the exceptions provided for by law, was neither raised nor litigated
upon before the lower Court. Whether the said lots were ganancial properties was
never brought to the fore by the parties and it is too late to do so now.
Futhermore, if this line of argument be followed, the Trial Court could not have
declared subject contract as null and void because only the heirs and the creditors can
question its nullity and not the spouses themselves who executed the contract with
full knowledge of the prohibition.[14]
Records show that in the complaint-in-intervention of MERLINDA, she did not
aver the same as a ground to nullify subject Deed of Sale. In fact, she denied the
existence of the Deed of Sale in favor of her husband. In the said Complaint, her
allegations referred to the want of consideration of such Deed of Sale. She did not put
up the defense under Article 1490, to nullify her sale to her husband CHIANG because
such a defense would be inconsistent with her claim that the same sale was inexistent.
The Trial Court debunked petitioners theory that MERLINDA intentionally gave
away the bulk of her and her late husbands estate to defendant CHIANG as his
exclusive property, for want of evidentiary anchor. They insist on the Deed of Sale
wherein MERLINDA made the misrepresentation that she was a widow and CHIANG
was single, when at the time of execution thereof, they were in fact already
married. Petitioner insists that this document conclusively established bad faith on the
part of MERLINDA and therefore, the principle of in pari delicto should have been applied.
These issues are factual in nature and it is not for this Court to appreciate and
evaluate the pieces of evidence introduced below. An appellate court defers to the
factual findings of the Trial Court, unless petitioner can show a glaring mistake in the
appreciation of relevant evidence.
Since one of the characteristics of a void or inexistent contract is that it does not
produce any effect, MERLINDA can recover the property from petitioner who never
acquired title thereover.
As to the second issue, petitioner stresses that his title should have been
respected since he is a purchaser in good faith and for value. The Court of Appeals,
however, opined that he (petitioner) is not a purchaser in good faith. It found that
there were circumstances known to MODINA which rendered their transaction
fraudulent under the attendant circumstances.
As a general rule, in a sale under the Torrens system, a void title cannot give rise
to a valid title. The exception is when the sale of a person with a void title is to a third
person who purchased it for value and in good faith.
A purchaser in good faith is one who buys the property of another without
notice that some other person has a right to or interest in such property and pays a
full and fair price at the time of the purchase or before he has notice of the claim or
interest of some other person in the property.
In the case under scrutiny, petitioner cannot claim that he was a purchaser in
good faith. There are circumstances which are indicia of bad faith on his part, to
wit: (1) He asked his nephew, Placido Matta, to investigate the origin of the property
and the latter learned that the same formed part of the properties of MERLINDAs first
husband; (2) that the said sale was between the spouses; (3) that when the property
was inspected, MODINA met all the lessees who informed that subject lands belong to
MERLINDA and they had no knowledge that the same lots were sold to the husband.
It is a well-settled rule that a purchaser cannot close his eyes to facts which
would put a reasonable man upon his guard to make the necessary inquiries, and
then claim that he acted in good faith. His mere refusal to believe that such defect
exists, or his wilful closing of his eyes to the possibility of the existence of a defect in
his vendors title, will not make him an innocent purchaser for value, if it afterwards
develops that the title was in fact defective, and it appears that he had such notice of
the defect as would have led to its discovery had he acted with that measure of
precaution which may reasonably be required of a prudent man in a like situation.[15]
Thus, petitioner cannot claim that the sale between him and MODINA falls under
the exception provided for by law.
With regard to the third issue posed by petitioner - whether the Trial Courts
decision allowing recovery on the part of Merlinda Chiang of subject properties was
void - petitioners contention is untennable. It is theorized that as the sale by
MERLINDA was by virtue of an Order to Sell issued in the Intestate Estate Proceedings
of her late husband, Nelson Plana - to allow recovery will defeat the said order of the
Probate Court. Petitioner equated the aforesaid Order to Sell as a judgment, which
another court in a regular proceeding has no jurisdiction to reverse. 160
Sales
Petitioner is under the mistaken impression that as the Order to Sell had
become a judgment in itself as to the validity of the sale of the properties involved,
any question as to its nullity should have been brought before the Court of Appeals on
appeal when the said Order was issued.
It is a well-settled rule that a Court of First Instance (now Regional Trial Court)
has jurisdiction over a case brought to rescind a sale made upon prior authority of a
Probate Court. This does not constitute an interference or review of the order of a co-
equal Court since the Probate Court has no jurisdiction over the question of title to
subject properties. Consequently, a separate action may be brought to determine the
question of ownership.[16]
Lastly, on the issue of whether only three-fourths of the property in question
should have been returned to MERLINDA, petitioners stance is equally
unsustainable. It is a settled doctrine that an issue which was neither averred in the
Complaint nor raised during the trial before the lower court cannot be raised for the
first time on appeal, as such a recourse would be offensive to the basic rules of fair
play, justice, and due process.[17]
The issue of whether only three-fourths of subject property will be returned was
never an issue before the lower court and therefore, the petitioner cannot do it now. A
final word. In a Petition for Review, only questions of law may be raised. It is perceived
by the Court that what petitioner is trying to, albeit subtly, is for the Court to examine
the probative value or evidentiary weight of the evidence presented below[18] The
Court cannot do that unless the appreciation of the pieces of evidence on hand is
glaringly erroneous. But this is where petitioner utterly failed.
WHEREFORE, the Petition is DENIED and the decision of the Court of Appeals,
dated September 30, 1992, in CA-G.R. CV No. 26051 AFFIRMED. No pronouncement as
to costs.
SO ORDERED.
ASUNCION MENESES VDA. DE CATINDIG, petitioner-appellant, 
vs.
The Heirs of CATALINA ROQUE, respondents-appellees.
Asuncion Meneses Vda. de Catindig seeks the review of the decision of the Court
of Appeals dated December 31, 1965 which affirmed the judgment of the Court
of First Instance Bulacan. The lower court declared void certain documents of
sale regarding portions of the fishpond in litigation, ordered Mrs. Catindig to
deliver to the respondents (except German Ramirez) the possession of the said
fishpond, to pay to them, as the reasonable compensation for the use and
enjoyment of the fishpond, the sum of P6,000 per annum from October 1, 1951
until the possession of the fishpond is restored to the respondents, plus P1,000
as attorney's fees, and allowed the respondents to redeem from Mrs. Catindig
the 2/16 portion of the fishpond which German Ramirez had sold to her.
The facts are as follows:
The said fishpond, known as Lot No. 4626 of the Malolos Cadastre, has an area of
more than thirteen hectares. As shown in Original Certificate of Title No. 7937, it
is registered in the names of the following persons:
1. Catalina Roque, married to Anastacio Katipunan 6/16
2. Roberto Roque, married to Gregoria Borlongan 2/16
3. Ines Roque, married to Lucio Adriano 1/16
4. Barbara Roque, married to Eusebio Villanueva 1/16
5. Apolonio Roque, married to Isabel Borlongan 1/16
6. Concordia Roque, single 2/16
7. German Ramirez 1/16
8. Irene Boloran, married to Faustino Panganiban 1/16
9. Leonila de Guzman, 12 years old, single 1/16
The co-owners of the fishpond leased it to Mrs. Catindig for a term of ten years
counted from October 1, 1941 for a total rental of six thousand pesos (Exh. C-1;
Amendment to Decision, per Resolution of February 22, 1966).
After the termination of the lease on September 30, 1951, Mrs. Catindig remained
in possession of the fishpond because she was negotiating with the co-owners
for the purchase thereof. She wanted to buy it for P52,000.
On October 18, 1960 German Ramirez, one of the co-owners, executed a deed
wherein he sold his 2/16 share to Mrs. Catindig for P6,500 (Exh. E). The sale was
161
annotated on the title on October 19, 1960. Two weeks later, Pedro Villanueva,
Sales
one of the co-owners, learned of the sale executed by German Ramirez. That sale
retroacted to April 13, 1950.
On November 18, 1960 the respondents filed this action against Mrs. Catindig to
compel her to allow them to redeem the portion sold by German Ramirez. In
April, 1962 the respondents amended their complaint by including, inter alia, a
prayer for the recovery of the possession of the fishpond.
The Court of Appeals found that:
1. The consideration of P52,000 was not paid by Mrs. Catindig to the co-owners
because she was not able to obtain a loan, the proceeds of which would have
been used to pay the co-owners who had executed simulated sales of their
shares, as shown in the private documents, Exhibits 6 to 26. (The originals of
those documents were allegedly lost. Only photostatic copies thereof were
presented in evidence).
2. Because Mrs. Catindig did not pay the price of P52,000, the projected sale,
"which was in truth a simulated one so as to enable her just to mortgage the
property in order to secure the necessary amount with which to pay the
consideration" was void ab initio. There was no notarized deed of sale because Mrs.
Catindig did not pay the price to the co-owners except German Ramirez.
3. Ines Roque and the heirs of Roberto Roque did not barter their shares for the
two parcels of land owned by Mrs. Catindig. What the said co-owners did was to
possess the lands of Mrs. Catindig in exchange for the latter's possession of their
shares in the fishpond.
4. Considering the area of the fishpond and the upward trend in values, the
amount of P6,000 a year is the reasonable compensation for its use and
enjoyment (Resolution amending the decision).
The fourteen assignments of error of Mrs. Catindig in this appeal are overlapping
and repetitious She argues that the Court of Appeals erred in holding (1) that the
sale of the fishpond to her is void for nonpayment of the price; (2) that the price
was not paid because she did not obtain any loan; (3) that the annual rental value
is P6,000; (4) that the transaction between Mrs. Catindig, on one hand, and Ines
Roque and the heirs of Roberto Roque, on the other, was an exchange of
possession and not "land for land", and (5) that German Ramirez sold his share
on October 18, 1960 and not on April 13, 1950
Those assignments of error involve factual issues which cannot be ventilated in a
review of the decision of the Court of Appeals. Only legal questions may be raised
(Sec. 29, Judiciary Law; Sec. 2, Rule 45, Rules of Court). As a rule, the factual
findings of the Court of Appeals are conclusive on this Court.
The conclusive factual finding of the Appellate Court that the alleged sales on
April 13 or 14, 1950 of respondents' shares are simulated and void ab initio (See
Onglengco vs. Ozaeta, 70 Phil. 43) renders untenable appellant Catindig's
contentions that the remedies available to the respondents, such as an action for
annulment, rescission or reformation, are barred by prescription or laches.
The alleged sales were absolutely simulated, fictitious or inexistent contracts
(Arts. 1346 and 1409[2], Civil Code). "The action or defense for the declaration of
the inexistence of a contract does not prescribe" (Art. 1410, Ibid; Eugenio vs.
Perdido, 97 Phil. 41). Mere lapse of time cannot give efficacy to a void contract (
Tipton vs. Velasco, 6 Phil. 67).
The Appellate Court's finding that the price was not paid or that the statement in
the supposed contracts of sale (Exh. 6 to 26) as to the payment of the price was
simulated fortifies the view that the alleged sales were void. "If the price is
simulated, the sale is void ..." (Art. 1471, Civil Code).
A contract of sale is void and produces no effect whatsoever where the price,
which appears thereon as paid, has in fact never been paid by the purchaser to
the vendor (Ocejo, Perez & Co. vs. Flores and Bas, 40 Phil. 921; Mapalo vs.
Mapalo, L-21489, May 19, 1966, 64 O. G. 331, 17 SCRA 114, 122). Such a sale is
non-existent (Borromeo vs. Borromeo, 98 Phil. 432) or cannot be considered
consummated (Cruzado vs. Bustos and Escaler, 34 Phil. 17; Garanciang vs.
Garanciang, L-22351, May 21, 1969, 28 SCRA 229).
The foregoing discussion disposes of whatever legal issues were raised by
appellant Catindig which are interwoven with her factual contentions, including
the issue as to whether she is entitled to demand the execution of a notarized
deed of sale for the 14/16 pro indiviso portion of the fishpond. She is not entitled
because, as already held, the alleged sales in her favor are void.
And in view of the result arrived at in this case, the trial court and the Court of
Appeals did not err in awarding to the respondents the sum of one thousand
pesos as attorney's fees (See art. 2208, Civil Code).
Mrs. Catindig, in her thirteenth assignment of error, which is partly a
reproduction of her ninth assignment of error in the Appellate Court, injected
new matters not raised in that Court.
She contends that inasmuch as the fishpond was placed under receivership by
virtue of the trial court's order of January 15, 1964 (Annex D of her brief not 162
included in the Record on Appeal), she should not answer for the reasonable
Sales
value of the use and compensation of the fishpond from the time it was placed in
the receiver's possession.
She also contends that she is entitled to the rental value of the 2/16 portion sold
to her by German Ramirez and the 3/16 share of Ines Roque and the heirs of
Roberto Roque and that the latter should restore to her the possession of the
two parcels of riceland located at Barrio Pitpitan, Bulacan, Bulacan, the
possession of which was provisionally exchanged for Mrs. Catindig's possession
of their 3/16 share.
She further contends that the land taxes paid by her should be deducted from
the annual rental of P6,000 (not P600 as erroneously stated on page 88 of her
brief).
The respondents, in their reply brief and rejoinder, did not answer those
contentions. That silence or omission may be construed as an admission of their
merit.
To do justice in this case, we have to resolve those alternative points raised by
the appellant. "It is a cherished rule of procedure that a court should always
strive to settle the entire controversy in a single proceeding leaving no root or
branch to bear the seeds of future litigation" (Marquez vs. Marquez, 73 Phil. 74, 78).
We hold that, as a matter of fairness and equity or to avoid unjust enrichment,
the liability of Mrs. Catindig for the reasonable value of the use and occupation of
the fishpond should be limited to the period from October 1, 1951 up to the time
in January, 1964 when she turned over the fishpond to the receiver, namely, the
deputy clerk of court of the Court of First Instance of Bulacan, Malolos Branch I.
It is the receiver who should deliver to the respondents the possession of the
fishpond which apparently has been in custodia legis.
From the compensation of P6,000 per annum which Mrs. Catindig is obligated to
pay to the respondents, should be deducted the 2/16 portion of said
compensation, corresponding to the share of German Ramirez, from October 1,
1951 to January, 1964. Thereafter, Mrs. Catindig is entitled to demand the 2/16
share in the net fruits or earnings of the fishpond from the receiver until the said
share is redeemed by the respondents.
Ines Roque and the heirs of Roberto Roque should deliver to Mrs. Catindig the
possession of the two parcels of riceland already mentioned and account for the
fruits thereof beginning January, 1964 when Mrs. Catindig ceased to have
possession of their 3/16 share. The trial court should hold a hearing to determine
the amount of the net fruits which Mrs. Catindig is entitled to receive from the
said co-owners. She has the right to retain the 3/16 portion of the annual rental
of P6,000 corresponding to the shares of Ines Roque and the heirs of Roberto
Roque.
Moreover, the respondents (except German Ramirez), as owners of the fishpond,
should reimburse Mrs. Catindig for the amount of the land taxes advanced by her
(See Exh. 27; Par. II [iii], Lease Contract, Exh. C-1). "Any person who is constrained
to pay the taxes of another shall be entitled to reimbursement from the latter"
(Art. 2175, Civil Code; See art. 597). One situation envisaged in that provision is
when the possessor of land under lease or otherwise has to pay the taxes to
prevent a seizure of the property by the government, the owner having become
delinquent in the payment of the land tax (p. 72, Report of the Code
Commission).
One last point should be resolved. The Court of Appeals and the trial court, in
sanctioning the respondents' right to redeem from Mrs. Catindig the 2/16 share
sold to her by German Ramirez, relied on article 1088 of the Civil Code which
refers to the sale by any of the heirs of his hereditary rights to a stranger. That
article has no relevant application to this case.
Inasmuch as the fishpond is under co-ownership, not co-heirship, and what are
involved herein are the shares of co-owners, not the hereditary rights of co-heirs,
it is article 1620 of the Civil Code that is applicable. Article 1620 provides that "a
co-owner of a thing may exercise the right of redemption in case the shares of all
the other co-owners or of any of them, are sold to a third person." The period for
exercising the right of legal redemption is that fixed in article 1623 of the Civil
Code, not the period fixed in article 1524 of the Spanish Civil Code.
WHEREFORE, the judgment of the trial court and the Court of Appeals is affirmed
with the following modifications:
1. The receiver (not Asuncion Meneses Vda. de Catindig) should deliver the
possession of the fishpond to the respondents or their duly authorized
representative, together with 14/16 of the net earnings of the fishpond from
January 15, 1964 up to the time the possession is delivered to the respondents.
2. The receiver should deliver to Mrs. Catindig a 2/16 share of the net earnings of
the fishpond, corresponding to the share of German Ramirez, from January 15,
1964 up to the time the said share is redeemed from her.
3. From the annual compensation of P6,000 a year due from Mrs. Catindig for the
use and enjoyment of the fishpond from October 1, 1951 up to January 15, 1964
163
(when the fishpond was placed under receivership) should be deducted (a) 2/16
Sales
which correspond to the share of German Ramirez, (b) 3/16 which correspond to SPS. RAMON LEQUIN and VIRGINIA LEQUIN,
the shares of Ines Roque and the heirs of Roberto Roque, and (c) 14/16 of the Petitioners,
- versus -
realty taxes on the fishpond paid by Mrs. Catindig (See Exh. 27).
SPS. RAYMUNDO VIZCONDE and SALOME LEQUIN VIZCONDE,
4. Ines Roque and the heirs of Roberto Roque should deliver to Mrs. Catindig the
Respondents.
possession of her two parcels of riceland located at Barrio Pitpitan, Bulacan,
Bulacan, render an accounting of the fruits thereof from January 15, 1964 up to The Case
the time the possession is delivered and pay to her the value of the net fruits  
thereof. For that purpose, the trial court should hold the appropriate hearing. No This is an appeal under Rule 45 from the Decision[1] dated July 20, 2006
of the Court of Appeals (CA) in CA-G.R. CV No. 83595, which declared the Kasulatan
costs.
ng Bilihang Tuluyan ng Lupa[2](Kasulatan) valid as between the parties, but required
SO ORDERED.
respondents to return the amount of PhP 50,000 to petitioners. Also assailed is
the March 30, 2007 CA Resolution[3] denying petitioners motion for
reconsideration.
 
 
The Facts
 
Petitioner Ramon Lequin, husband of petitioner Virginia Lequin, is the
brother of respondent Salome L. Vizconde and brother-in-law of respondent
Raymundo Vizconde. With this consanguine and affinity relation, the instant case
developed as follows:
 
In 1995, petitioners, residents of Diamond Court, Brixton Ville
Subdivision, Camarin, Caloocan City, bought the subject lot consisting of 10,115
square meters from one Carlito de Leon (de Leon). The sale was negotiated by
respondent Raymundo Vizconde. The subject lot is located near the
Sto. Rosario to Magsaysay road in Aliaga, Nueva Ecija. Adjacent thereto and 
located in between the subject lot and the road is a dried up canal (or sapang
patay in the native language).
 
In 1997, respondents represented to petitioners that they had also
bought from Carlito de Leon a 1,012-square meter lot adjacent to petitioners
property and built a house thereon. As later confirmed by de Leon, however, the
1,012-square meter lot claimed by respondents is part of the 10,115-square
meter lot petitioners bought from him. Petitioners believed the story of
respondents, since it was Raymundo who negotiated the sale of their lot with de
Leon. With the consent of respondents, petitioners then constructed their house
on the 500-square meter half-portion of the 1,012 square-meter lot claimed by
respondents, as this was near the road. Respondents residence is on the
remaining 512 square meters of the lot. 164
Sales
  1.                  Declaring the KASULATAN NG TULUYANG
Given this situation where petitioners house stood on a portion of the lot BILIHAN dated February 12, 2000 as NULL and
allegedly owned by respondents, petitioners consulted a lawyer, who advised VOID; and
them that the 1,012-square meter lot be segregated from the subject lot whose  
title they own and to make it appear that they are selling to respondents 512 2.                  Ordering the defendants:
square meters thereof. This sale was embodied in the February 12, 2000 Kasulatan  
where it was made to appear that respondents paid PhP 15,000 for the purchase (a) to return to the plaintiffs the
of the 512-square meter portion of the subject lot. In reality, the consideration of amount of FIFTY THOUSAND PESOS which they
PhP 15,000 was not paid to petitioners.Actually, it was petitioners who paid have paid in the simulated deed of sale plus an
respondents PhP 50,000 for the 500-square meter portion where petitioners built interest of 12% per annum to commence from
their house on, believing respondents representation that the latter own the the date of the filing of this case;
1,012-square meter lot.  
  (b) To pay the plaintiffs moral
In July 2000, petitioners tried to develop the dried up canal located damages in the amount of Php50,000.00;
between their 500-square meter lot and the public road. Respondents objected,  
claiming ownership of said dried up canal or sapang patay. (c) To pay exemplary damages of
  Php50,000.00;
This prompted petitioners to look into the ownership of the dried up  
canal and the 1,012 square-meter lot claimed by respondents. Carlito de Leon (d) To pay attorneys fees in the
told petitioners that what he had sold to respondents was the dried up canal or amount of Php10,000.00; and
sapang patay and that the 1,012-square meter lot claimed by respondents really  
belongs to petitioners. (e)          To pay the costs of suit.
   
Thus, on July 13, 2001, petitioners filed a Complaint[4] for Declaration of SO ORDERED.[6]
Nullity of Contract, Sum of Money and Damages against respondents with the Regional Trial  
Court (RTC), Branch 28 in Cabanatuan City, praying, among others, for the  
declaration of the February 12, 2000 Kasulatan as null and void ab initio, the return of The RTC found the Kasulatan allegedly conveying 512 square meters to
PhP 50,000 they paid to respondents, and various damages.The case was respondents to be null and void due to: (1) the vitiated consent of petitioners in
docketed as Civil Case No. 4063. the execution of the simulated contract of sale; and (2) lack of consideration,
  since it was shown that while petitioners were ostensibly conveying to
The Ruling of the RTC respondents 512 square meters of their property, yet the consideration of PhP
  15,000 was not paid to them and, in fact, they were the ones who paid
On July 5, 2004, after due trial on the merits with petitioners presenting respondents PhP 50,000. The RTC held that respondents were guilty of
three witnesses and respondents only one witness, the trial court rendered a fraudulent misrepresentation.
Decision[5] in favor of petitioners. The decretal portion reads:  
  Aggrieved, respondents appealed the above RTC Decision to the CA.
   
WHEREFORE, viewed from the foregoing, judgment is The Ruling of the CA
hereby rendered in favor of the plaintiffs and against the  
defendants as follows: The appellate court viewed the case otherwise. On July 20, 2006, it
  rendered the assailed Decision granting respondents appeal and declaring as 165
Sales
valid the Kasulatan. The fallo reads: On March 30, 2007, the CA denied petitioners Motion for
  Reconsideration of the above decision through the assailed resolution. Hence,
WHEREFORE, premises considered, the Appeal is petitioners went to this Court.
GRANTED. The Kasulatan ng Bilihang Tuluyan dated February  
12, 2000 is declared valid. However, Spouses Raymundo The Issues
Vizconde and Salome Lequin Vizconde are hereby ordered to  
return to the plaintiffs the amount of P50,000.00 without  
interest. I
   
SO ORDERED.[7] THE HONORABLE COURT OF APPEALS, WITH ALL DUE RESPECT,
  ERRED IN NOT CLEARLY STATING IN THE ASSAILED DECISION
  AND RESOLUTION THE FACTS AND LAW ON WHICH THE SAME
In reversing and vacating the RTC Decision, the CA found no simulation WERE BASED;
in the contract of sale, i.e., Kasulatan. Relying on Manila Banking Corporation v. Silverio,[8]  
 the appellate court pointed out that an absolutely simulated contract takes place II
when the parties do not intend at all to be bound by it, and that it is characterized  
by the fact that the apparent contract is not really desired or intended to produce THE HONORABLE COURT OF APPEALS, WITH ALL DUE RESPECT,
legal effects or in any way alter the juridical situation of the parties. It read the ERRED IN NOT GIVING DUE CREDENCE TO THE FINDINGS OF
sale contract (Kasulatan) as clear and unambiguous, for respondents (spouses FACTS OF THE TRIAL COURT AND HOW THE LATTER
Vizconde) were the buyers and petitioners (spouses Lequin) were the APPRECIATED THE TESTIMONIES GIVEN BY THE WITNESSES;
sellers. Such being the case, petitioners are, to the CA, the owners of the 1,012-  
square meter lot, and as owners they conveyed the 512-square meter portion to III
respondents.  
  THE HONORABLE COURT OF APPEALS, WITH ALL DUE RESPECT,
The CA viewed petitioners claim that they executed the sale contract to ERRED IN FINDING THAT THERE WAS NO FRAUD ON THE PART
make it appear that respondents bought the property as mere gratuitous OF THE RESPONDENT-VIZCONDES;
allegation. Besides, the sale contract was duly notarized with respondents  
claiming the 512-square meter portion they bought from petitioners and not the IV
whole 1,012-square meter lot as alleged by petitioners.  
  THE HONORABLE COURT OF APPEALS, WITH ALL DUE RESPECT,
Moreover, the CA dismissed allegations of fraud and machinations ERRED IN CONSIDERING THAT THE KASULATAN NG BILIHANG
against respondents to induce petitioners to execute the sale contract, there TULUYAN IS A VALID CONTRACT OF SALE;
being no evidence to show how petitioners were defrauded and much less the  
machinations used by respondents. It ratiocinated that the allegation of V
respondents telling petitioners that they own the 1,012-square meter lot and for  
which petitioners sold them 512 square meters thereof does not fall in the THE HONORABLE COURT OF APPEALS, WITH ALL DUE RESPECT,
concept of fraud. Anent the PhP 50,000 petitioners paid to respondents for the ERRED IN NOT CONSIDERING THAT THE RESPONDENTS DID
500-square meter portion of the 1,012-square meter lot claimed by respondents, NOT HAVE THE FINANCIAL CAPACITY TO PURCHASE
the CA ruled that the receipt spoke for itself and, thus, required respondents to THE SUBJECT LAND FROM THE PETITIONERS.[9]
return the amount to petitioners.  
    166
Sales
 
 
The Courts Ruling
The petition is meritorious.
 
The issues boil down to two core questions: whether or not the Kasulatan
covering the 512 square-meter lot is a valid contract of sale; and who is the legal
owner of the other 500 square-meter lot.
 
We find for petitioners.
 
The trial court found, inter alia, lack of consideration in the contract of sale
while the appellate court, in reversing the decision of the trial court, merely ruled
that the contract of sale is not simulated. With the contrary rulings of the courts a
quo, the Court is impelled to review the records to judiciously resolve the petition.
It is true that this Court is not a trier of facts, but there are
recognized exceptions to this general rule, such as when the appellate court had
ignored, misunderstood, or misinterpreted cogent facts and circumstances
which, if considered, would change the outcome of the case; or when its findings
were totally devoid of support; or when its judgment was based on a
misapprehension of facts.[10]
 
As may be noted, the CA, without going into details, ruled that the
contract of sale was not simulated, as it was duly notarized, and it clearly showed
petitioners as sellers, and respondents as buyers, of the 512-square meter lot,
subject matter of the sale. But the CA misappreciated the evidence duly adduced
during the trial on the merits.
 
 
 
As established during the trial, petitioners bought the entire subject
property consisting of 10,115 square meters from Carlito de Leon. The title of the
subject property was duly transferred to petitioners names. Respondents, on the
other hand, bought the dried up canal consisting of 1,012 square meters from de
Leon. This dried up canal is adjacent to the subject property of petitioners and is
the lot or area between the subject property and the public road (Sto. Rosario to
Magsaysay).
The affidavit or Sinumpaang Salaysay[11] of de Leon attests to the foregoing
facts. Moreover, de Leons testimony in court confirmed and established such
facts. These were neither controverted nor assailed by respondents who did not
present any countervailing evidence.
Before this factual clarification was had, respondents, however, made a
claim against petitioners in 1997when subject lot was re-surveyed by
petitionersthat respondents also bought a 1,012 square-meter lot from de
Leon. Undeniably, the 1,012 square meters was a portion of the 10,115 square
meters which de Leon sold to petitioners.
Obviously, petitioners respected respondents claimif not, to maintain
peace and harmonious relationsand segregated the claimed portion. Whether
bad faith or ill-will was involved or an honest erroneous belief by respondents on
their claim, the records do not show. The situation was further complicated by
the fact that both parties built their respective houses on the 1,012 square-meter
portion claimed by respondents, it being situated near the public road.
 
 
 
To resolve the impasse on respondents claim over 1,012 square meters
of petitioners property and the latters house built thereon, and to iron out their
supposed respective rights, petitioners consulted a notary public, who advised
and proposed the solution of a contract of sale which both parties consented to
and is now the object of the instant action. Thus, the contract of sale was
executed on February 12, 2000 with petitioners, being the title holders of the
subject property who were ostensibly selling to respondents 512 square meters
of the subject property while at the same time paying PhP 50,000 to respondents
for the other 500 square-meter portion.
 
From the above considerations, we conclude that the appellate courts
finding that there was no fraud or fraudulent machinations employed by
respondents on petitioners is bereft of factual evidentiary support. We sustain
petitioners contention that respondents employed fraud and machinations to
induce them to enter into the contract of sale. As such, the CAs finding of fact
must give way to the finding of the trial court that the Kasulatan has to be annulled
for vitiated consent.
 
Anent the first main issue as to whether the Kasulatan over the 512-square
meter lot is voidable for vitiated consent, the answer is in the affirmative.
A contract, as defined in the Civil Code, is a meeting of minds, with 167
Sales
respect to the other, to give something or to render some service.[12] For a
contract to be valid, it must have three essential elements: (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.
 
The requisites of consent are (1) it should be intelligent or with an exact
notion of the matter to which it refers; (2) it should be free; and (3) it should be
spontaneous. In De Jesus v. Intermediate Appellate Court,[13] it was explained that
intelligence in consent is vitiated by error, freedom by violence, intimidation or
undue influence, and spontaneity by fraud.
 
Article (Art.) 1330 of the Civil Code provides that when consent is given
through fraud, the contract is voidable.
 
Tolentino defines fraud as every kind of deception whether in the form
of insidious machinations, manipulations, concealments or misrepresentations,
for the purpose of leading another party into error and thus execute a particular
act.[14] Fraud has a determining influence on the consent of the prejudiced party,
as he is misled by a false appearance of facts, thereby producing error on his part
in deciding whether or not to agree to the offer.
 
One form of fraud is misrepresentation through insidious words or
machinations. Under Art. 1338 of the Civil Code, there is fraud when, through
insidious words or machinations of one of the contracting parties, the other is
induced to enter into a contract which without them he would not have agreed
to. Insidious words or machinations constituting deceit are those that ensnare,
entrap, trick, or mislead the other party who was induced to give consent which
he or she would not otherwise have given.
 
Deceit is also present when one party, by means of concealing or
omitting to state material facts, with intent to deceive, obtains consent of the
other party without which, consent could not have been given. Art. 1339 of the
Civil Code is explicit that failure to disclose facts when there is a duty to reveal
them, as when the parties are bound by confidential relations, constitutes fraud.
 
 
 
From the factual milieu, it is clear that actual fraud is present in this
case. The sale between petitioners and de Leon over the 10,115 square-meter lot
was negotiated by respondent Raymundo Vizconde. As such, Raymundo was fully
aware that what petitioners bought was the entire 10,115 square meters and that
the 1,012-square meter lot which he claims he
also bought from de Leon actually forms part of petitioners lot. It cannot be
denied by respondents that the lot which they actually bought, based on the
unrebutted testimony and statement of de Leon, is the dried up canal which is
adjacent to petitioners 10,115-square meter lot. Considering these factors, it is
clear as day that there was deception on the part of Raymundo when he
misrepresented to petitioners that the 1,012-square meter lot he bought from de
Leon is a separate and distinct lot from the 10,115-square meter lot the
petitioners bought from de Leon. Raymundo concealed such material fact from
petitioners, who were convinced to sign the sale instrument in question and,
worse, even pay PhP 50,000 for the 500 square-meter lot which petitioners
actually own in the first place.
 
There was vitiated consent on the part of petitioners. There was fraud in
the execution of the contract used on petitioners which affected their
consent. Petitioners reliance and belief on the wrongful claim by respondents
operated as a concealment of a material fact in their agreeing to and in readily
executing the contract of sale, as advised and proposed by a notary
public. Believing that Carlito de Leon indeed sold a 1,012-square meter portion of
the subject property to respondents, petitioners signed the contract of sale based
on respondents representations. Had petitioners known, as they eventually
would sometime in late 2000 or early 2001 when they made the necessary
inquiry from Carlito de Leon, they would not have entered or signed the contract
of sale, much less pay PhP 50,000 for a portion of the subject lot which they fully
own. Thus, petitioners consent was vitiated by fraud or fraudulent machinations
of Raymundo. In the eyes of the law, petitioners are the rightful and legal owners
of the subject 512 square-meter lot anchored on their purchase thereof from de
Leon. This right must be upheld and protected.
On the issue of lack of consideration, the contract of sale or Kasulatan
states that respondents paid petitioners PhP 15,000 for the 512-square meter
portion, thus:
 
Na kaming magasawang Ramon Lequin at Virginia R.
Lequin, nawang may sapat na gulang, pilipino at nakatira sa 9
Diamond Court, Brixton Ville Subdivision, Camarin, Kalookan
City, alang-alang sa halagang LABINGLIMANG LIBONG PISO
(P 15,000.00) salaping pilipino na binayaran sa amin ng
buong kasiyahang loob namin ng magasawang Raymundo
Vizconde at Salome Lequin, nawang may sapat na gulang,
pilipino at nakatira sa Sto. Rosario, Aliaga, Nueva Ecija, ay amin
naman ngayon inilipat, ibinigay at ipinagbili ng bilihang tuluyan 168
Sales
sa naulit na magasawang Raymundo Vizconde at Salome
Lequin, at sa kanilang mga tagapagmana ang x x x.[15]
 
 
On its face, the above contract of sale appears to be supported by a
valuable consideration. We, however, agree with the trial courts finding that this
is a simulated sale and unsupported by any consideration, for respondents never
paid the PhP 15,000 purported purchase price.
 
Section 9 of Rule 130 of the Revised Rules on Evidence gives both the
general rule and exception as regards written agreements, thus:
SEC. 9. Evidence of written agreements.When the terms of an
agreement have been reduced to writing, it is considered as
containing all the terms agreed upon and there can be, between
the parties and their successors in interest, no evidence of such
terms other than the contents of the written agreement.
 
However, a party may present evidence to modify,
explain or add to the terms of the written agreement if he puts
in issue in his pleading:
 
(a) An intrinsic ambiguity, mistake or imperfection in
written agreement;
(b) The failure of the written agreement to express
the true intent and agreement of the parties thereto;
(c) The validity of the written agreement; or
(d) The existence of other terms agreed to by the
parties or their successors in interest after the execution of the
written agreement.
 
The term agreement includes wills.
The second exception provided for the acceptance of parol evidence
applies to the instant case. Lack of consideration was proved by petitioners
evidence aliunde showing that the Kasulatan did not express the true intent and
agreement of the parties. As explained above, said sale contract was fraudulently
entered into through the misrepresentations of respondents causing petitioners
vitiated consent.
 
Moreover, the evidence of petitioners was uncontroverted as
respondents failed to adduce any proof that they indeed paid PhP 15,000 to
petitioners. Indeed, having asserted their purchase of the 512-square meter
portion of petitioners based on the Kasulatan, it behooves upon respondents to
prove such affirmative defense of purchase. Unless the party asserting the
affirmative defense of an issue sustains the burden of proof, his or her cause will
not succeed. If he or she fails to establish the facts of which the matter asserted
is predicated, the complainant is entitled to a verdict or decision in his or her
favor.[16]
 
In the instant case, the record is bereft of any proof of payment by
respondents and, thus, their affirmative defense of the purported purchase of
the 512-square meter portion fails. Thus, the clear finding of the trial court:
2. x x x [I]t was established by the plaintiffs [petitioners]
that they were the ones who paid the defendants the amount of
FIFTY THOUSAND PESOS (Php50,000.00) and execute a deed of
sale also in favor of the defendants. In a simple logic, where can
you find a contract that a VENDOR will convey his real property
and at the same time pay the VENDEE a certain amount of
money without receiving anything in return?[17]
 
 
There can be no doubt that the contract of sale or Kasulatan lacked the
essential element of consideration. It is a well-entrenched rule that where the
deed of sale states that the purchase price has been paid but in fact has never
been paid, the deed of sale is null and void ab initio for lack of consideration.[18]
 Moreover, Art. 1471 of the Civil Code, which provides that if the price is
simulated, the sale is void, also applies to the instant case, since the price
purportedly paid as indicated in the contract of sale was simulated for no
payment was actually made.[19]
 
Consideration and consent are essential elements in a contract of
sale. Where a partys consent to a contract of sale is vitiated or where there is lack
of consideration due to a simulated price, the contract is null and void ab initio.
 
Anent the second issue, the PhP 50,000 paid by petitioners to
respondents as consideration for the transfer of the 500-square meter lot to
petitioners must be restored to the latter. Otherwise, an unjust enrichment
situation ensues. The facts clearly show that the 500-square meter lot is legally
owned by petitioners as shown by the testimony of de Leon; therefore, they have
no legal obligation to pay PhP 50,000 therefor. Art. 22 of the Civil Code provides
that every person who through an act or performance by another, or any other169
Sales
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. Considering that
the 512 square-meter lot on which respondents house is located is clearly owned
by petitioners, then the Court declares petitioners legal ownership over said 512
square-meter lot. The amount of PhP 50,000 should only earn interest at the legal
rate of 6% per annum from the date of filing of complaint up to finality of
judgment and not 12% since such payment is neither a loan nor a forbearance of
credit.[20] After finality of decision, the amount of PhP 50,000 shall earn interest of
12% per annum until fully paid.
 
 
The award of moral and exemplary damages must be reinstated in view
of the fraud or fraudulent machinations employed by respondents on
petitioners. The grant of damages in the concept of attorneys fees in the amount
of PhP 10,000 must be maintained considering that petitioners have to incur
litigation expenses to protect their interest in conformity to Art. 2208(2)[21] of the
Civil Code.
 
Considering that respondents have built their house over the 512-square
meter portion legally owned by petitioners, we leave it to the latter what course
of action they intend to pursue in relation thereto. Such is not an issue in this
petition.
 
WHEREFORE, the instant petition is hereby GRANTED. Accordingly, the
CA Decision dated July 20, 2006 and Resolution dated March 30, 2007 in CA-G.R.
CV No. 83595 are hereby REVERSED and SET ASIDE. The Decision of the RTC,
Branch 28 in Cabanatuan City in Civil Case No. 4063 is REINSTATED with the
 MODIFICATION that the amount of fifty thousand pesos (PhP 50,000) which
respondents must return to petitioners shall earn an interest of 6% per annum
from the date of filing of the complaint up to the finality of this Decision, and 12%
from the date of finality of this Decision until fully paid.
 
No pronouncement as to costs.
 
SO ORDERED.
HEIRS OF DR. MARIO S. INTAC and ANGELINA MENDOZA-INTAC, Petitioners, 
vs.
COURT OF APPEALS and SPOUSES MARCELO ROY, JR. and JOSEFINA
MENDOZA-ROY and SPOUSES DOMINADOR LOZADA and MARTINA MENDOZA
-LOZADA, Respondents.
This is a Petition for Review on Certiorari under Rule 45 assailing the February 16,
2006 Decision1 of the Court of Appeals (CA), in CA G.R. CV No. 75982, which
modified the April 30, 2002 Decision2 of the Regional Trial Court, Branch 220,
Quezon City ( RTC), in Civil Case No. Q-94-19452, an action for cancellation of
transfer certificate of title and reconveyance of property.
The Facts
From the records, it appears that Ireneo Mendoza (Ireneo), married to Salvacion
Fermin (Salvacion), was the owner of the subject property, presently covered by
TCT No. 242655 of the Registry of Deeds of Quezon City and situated at No. 36,
Road 8, Bagong Pag-asa, Quezon City, which he purchased in 1954. Ireneo had
two children: respondents Josefina and Martina (respondents), Salvacion being
their stepmother. When he was still alive, Ireneo, also took care of his niece,
Angelina, since she was three years old until she got married. The property was
then covered by TCT No. 106530 of the Registry of Deeds of Quezon City. On
October 25, 1977, Ireneo, with the consent of Salvacion, executed a deed of
absolute sale of the property in favor of Angelina and her husband, Mario
(Spouses Intac). Despite the sale, Ireneo and his family, including the
respondents, continued staying in the premises and paying the realty taxes. After
Ireneo died intestate in 1982, his widow and the respondents remained in the
premises.3 After Salvacion died, respondents still maintained their residence
there. Up to the present, they are in the premises, paying the real estate taxes
thereon, leasing out portions of the property, and collecting the rentals.4
The Dispute
The controversy arose when respondents sought the cancellation of TCT No.
242655, claiming that the sale was only simulated and, therefore, void. Spouses
Intac resisted, claiming that it was a valid sale for a consideration.
On February 22, 1994, respondents filed the Complaint for Cancellation of
Transfer Certificate of Title (TCT) No. 2426555 against Spouses Intac before the
RTC. The complaint prayed not only for the cancellation of the title, but also for its
reconveyance to them. Pending litigation, Mario died on May 20, 1995 and was
substituted by his heirs, his surviving spouse, Angelina, and their children,
namely, Rafael, Kristina, Ma. Tricia Margarita, Mario, and Pocholo, all surnamed
Intac (petitioners).
Averments of the Parties
In their Complaint, respondents alleged, among others, that when Ireneo was still170
Sales
alive, Spouses Intac borrowed the title of the property (TCT No. 106530) from him
to be used as collateral for a loan from a financing institution; that when Ireneo
informed respondents about the request of Spouses Intac, they objected because
the title would be placed in the names of said spouses and it would then appear
that the couple owned the property; that Ireneo, however, tried to appease them,
telling them not to worry because Angelina would not take advantage of the
situation considering that he took care of her for a very long time; that during his
lifetime, he informed them that the subject property would be equally divided
among them after his death; and that respondents were the ones paying the real
estate taxes over said property.
It was further alleged that after the death of Ireneo in 1982, a conference among
relatives was held wherein both parties were present including the widow of
Ireneo, Salvacion; his nephew, Marietto Mendoza (Marietto); and his brother,
Aurelio Mendoza (Aurelio). In the said conference, it was said that Aurelio
informed all of them that it was Ireneo’s wish to have the property divided among
his heirs; that Spouses Intac never raised any objection; and that neither did they
inform all those present on that occasion that the property was already sold to
them in 1977.6
Respondents further alleged that sometime in 1993, after the death of Salvacion,
rumors spread in the neighborhood that the subject property had been
registered in the names of Spouses Intac; that upon verification with the Office of
the Register of Deeds of Quezon City, respondents were surprised to find out that
TCT No. 106530 had indeed been cancelled by virtue of the deed of absolute sale
executed by Ireneo in favor of Spouses Intac, and as a result, TCT No. 242655 was
issued in their names; that the cancellation of TCT No. 106530 and the
subsequent issuance of TCT No. 242655 were null and void and had no legal
effect whatsoever because the deed of absolute sale was a fictitious or simulated
document; that the Spouses Intac were guilty of fraud and bad faith when said
document was executed; that Spouses Intac never informed respondents that
they were already the registered owners of the subject property although they
had never taken possession thereof; and that the respondents had been in
possession of the subject property in the concept of an owner during Ireneo’s
lifetime up to the present.
In their Answer,7 Spouses Intac countered, among others, that the subject
property had been transferred to them based on a valid deed of absolute sale
and for a valuable consideration; that the action to annul the deed of absolute
sale had already prescribed; that the stay of respondents in the subject premises
was only by tolerance during Ireneo’s lifetime because they were not yet in need
of it at that time; and that despite respondents’ knowledge about the sale that
took place on October 25, 1977, respondents still filed an action against them.
Ruling of the RTC
On April 30, 2002, the RTC rendered judgment in favor of respondents and
against Spouses Intac. The dispositive portion of its Decision reads:
WHEREFORE, premises considered, judgment is hereby rendered:
(1) Declaring the Deed of Absolute Sale executed by Ireneo Mendoza in
favor of Mario and Angelina Intac dated October 25, 1977 as an
equitable mortgage;
(2) Ordering the Register of Deeds of Quezon City to cancel Transfer
Certificate Title No. 242655 and, in lieu thereof, issue a new Transfer
Certificate of Title in the name of Ireneo Mendoza; and
(3) Ordering defendants to pay plaintiffs the amount of Thirty Thousand
Pesos (Php30,000.00) as and for attorney’s fees.
The other claims for damages are hereby denied for lack of merit.
SO ORDERED.8
The RTC ruled, among others, that the sale between Ireneo and Salvacion, on one
hand, and Spouses Intac was null and void for being a simulated one considering
that the said parties had no intention of binding themselves at all. It explained
that the questioned deed did not reflect the true intention of the parties and
construed the said document to be an equitable mortgage on the following
grounds: 1 the signed document did not express the real intention of the
contracting parties because Ireneo signed the said document only because he
was in urgent need of funds; 2 the amount of ₱60,000.00 in 1977 was too
inadequate for a purchase price of a 240-square meter lot located in Quezon
City; 3 Josefina and Martina continued to be in possession of the subject property
from 1954 and even after the alleged sale took place in 1977 until this case was
filed in 1994; and 4 the Spouses Intac started paying real estate taxes only in
1999. The RTC added that the Spouses Intac were guilty of fraud because they
effected the registration of the subject property even though the execution of the
deed was not really intended to transfer the ownership of the subject property.
Ruling of the CA
On appeal, the CA modified the decision of the RTC. The CA ruled that the RTC
erred in first declaring the deed of absolute sale as null and void and then
interpreting it to be an equitable mortgage. The CA believed that Ireneo agreed to
have the title transferred in the name of the Spouses Intac to enable them to
facilitate the processing of the mortgage and to obtain a loan. This was the exact
reason why the deed of absolute sale was executed. Marietto testified that Ireneo
never intended to sell the subject property to the Spouses Intac and that the
deed of sale was executed to enable them to borrow from a bank. This fact was
confirmed by Angelina herself when she testified that she and her husband
mortgaged the subject property sometime in July 1978 to finance the
construction of a small hospital in Sta. Cruz, Laguna.
The CA further observed that the conduct of Spouses Intac belied their claim of171
Sales
ownership. When the deed of absolute sale was executed, Spouses Intac never
asserted their ownership over the subject property, either by collecting rents, by
informing respondents of their ownership or by demanding possession of the
land from its occupants. It was not disputed that it was respondents who were in
possession of the subject property, leasing the same and collecting rentals.
Spouses Intac waited until Ireneo and Salvacion passed away before they
disclosed the transfer of the title to respondents. Hence, the CA was of the view
that the veracity of their claim of ownership was suspicious.
Moreover, wrote the CA, although Spouses Intac claimed that the purchase of the
subject property was for a valuable consideration (P60,000.00), they admitted
that they did not have any proof of payment. Marietto, whose testimony was
assessed by the RTC to be credible, testified that there was no such payment
because Ireneo never sold the subject property as he had no intention of
conveying its ownership and that his only purpose in lending the title was to help
Spouses Intac secure a loan. Thus, the CA concluded that the deed of absolute
sale was a simulated document and had no legal effect.
Finally, the CA stated that even assuming that there was consent, the sale was
still null and void because of lack of consideration. The decretal portion of the CA
Decision reads:
WHEREFORE, in view of the foregoing premises, the decision of the Regional Trial
Court of Quezon City, Branch 220, is AFFIRMED with modifications, as follows:
1. The Deed of Absolute Sale dated October 25, 1977 executed by Ireneo
Mendoza and Salvacion Fermen in favor of Spouses Mario and Angelina
Intac is hereby declared NULL AND VOID;
2. the Register of Deed[s] of Quezon City is ordered to cancel TCT No.
242655 and, in lieu thereof, issue a new one and reinstate Ireneo
Mendoza as the registered owner;
3. The defendant appellants are hereby ordered to pay the plaintiff
appellees the amount of thirty thousand pesos (Php30,000.00) as and for
attorney’s fees; and
4. The other claims for damages are denied for lack of merit.
SO ORDERED.9
Not in conformity, petitioners filed this petition for review anchored on the
following
ASSIGNMENT OF ERRORS
I really a valid sale, it was just and proper for Spouses Intac to divulge the
THE HONORABLE COURT OF APPEALS GRAVELY ERRED WHEN IT
AFFIRMED THE DECISION OF THE REGIONAL TRIAL COURT DATED
FEBRUARY 16, 2006 WHICH WAS CONTRARY TO THE APPLICABLE LAWS
AND EXISTING JURISPRUDENCE.
II
THE HONORABLE COURT OF APPEALS GRAVELY ERRED WHEN IT
CLEARLY OVERLOOKED, MISUNDERSTOOD AND/OR MISAPPLIED THE
EVIDENCE PRESENTED IN THE COURT A QUO.10
Petitioners’ position
Petitioners primarily argue that the subject deed of sale was a valid and binding
contract between the parties. They claim that all the elements of a valid contract
of sale were present, to wit: [a] consent or meeting of the minds, that is, consent
to transfer ownership in exchange of price; [b] determinate subject matter; and
[c] price certain in money or its equivalent.
Petitioners claim that respondents have validly gave their consent to the
questioned sale of the subject property. In fact, it was Ireneo and Salvacion who
approached them regarding their intention to sell the subject property. Ireneo
and Salvacion affixed their signatures on the questioned deed and never brought
any action to invalidate it during their lifetime. They had all the right to sell the
subject property without having to inform their children of their intention to sell
the same. Ordinary human experience dictates that a party would not affix his or
her signature on any written instrument which would result in deprivation of
one’s property right if there was really no intention to be bound by it. A party
would not keep silent for several years regarding the validity and due execution
of a document if there was an issue on the real intention of the vendors. The
signatures of Ireneo and Salvacion meant that they had knowingly and willfully
entered into such agreement and that they were prepared for the consequences
of their act.
Respondents’ Position
Respondents are of the position that the RTC and the CA were correct in ruling
that the questioned deed of absolute sale was a simulated one considering that
Ireneo and Salvacion had no intention of selling the subject property. The true
intention rather was that Spouses Intac would just borrow the title of the subject
property and offer it as a collateral to secure a loan. No money actually changed
hands.
According to respondents, there were several circumstances which put in doubt
the validity of the deed of absolute sale. First, the parties were not on equal
footing because Angelina was a doctor by profession while Ireneo and Salvacion
were less educated people who were just motivated by their trust, love and
affection for her whom they considered as their own child. Second, if there was
conveyance to respondents, being compulsory heirs, but they did not. Third,
Ireneo and Salvacion did nothing to protect their interest because they banked
on the representation of Spouses Intac that the title would only be used to
facilitate a loan with a bank. Fourth, Ireneo and Salvacion remained in possession
of the subject property without being disturbed by Spouses Intac. Fifth, the price 172
Sales
of the sale was inadequate and inequitable for a prime property located in Pag-
asa, Quezon City. Sixth, Ireneo and Salvacion had no intention of selling the
subject property because they had heirs who would inherit the same. Seventh,
the Spouses Intac abused the trust and affection of Ireneo and Salvacion by
arrogating unto themselves the ownership of the subject property to the
prejudice of his own children, Josefina and Martina.
Finally, petitioners could not present a witness to rebut Marietto’s testimony
which was straightforward and truthful.
The Court’s Ruling
Basically, the Court is being asked to resolve the issue of whether the Deed of
Absolute Sale,11 dated October 25, 1977, executed by and between Ireneo
Mendoza and Salvacion Fermin, as vendors, and Mario Intac and Angelina Intac,
as vendees, involving the subject real property in Pagasa, Quezon City, was a
simulated contract or a valid agreement.
The Court finds no merit in the petition.
A contract, as defined in the Civil Code, is a meeting of minds, with respect to the
other, to give something or to render some service. Article 1318 provides:
Art. 1318. There is no contract unless the following requisites concur:
(1) Consent of the contracting parties;
(2) Object certain which is the subject matter of the contract;
(3) Cause of the obligation which is established.
Accordingly, for a contract to be valid, it must have three essential elements: (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.12
All these elements must be present to constitute a valid contract. Consent is
essential to the existence of a contract; and where it is wanting, the contract is
non-existent. In a contract of sale, its perfection is consummated at the moment
there is a meeting of the minds upon the thing that is the object of the contract
and upon the price. Consent is manifested by the meeting of the offer and the
acceptance of the thing and the cause, which are to constitute the contract.
In this case, the CA ruled that the deed of sale executed by Ireneo and Salvacion
was absolutely simulated for lack of consideration and cause and, therefore, void.
Articles 1345 and 1346 of the Civil Code provide:
Art. 1345. Simulation of a contract may be absolute or relative. The former takes
place when the parties do not intend to be bound at all; the latter, when the
parties conceal their true agreement.
Art. 1346. An absolutely simulated or fictitious contract is void. A relative
simulation, when it does not prejudice a third person and is not intended for any
purpose contrary to law, morals, good customs, public order or public policy
binds the parties to their real agreement.
If the parties state a false cause in the contract to conceal their real agreement,
the contract is only relatively simulated and the parties are still bound by their
real agreement. Hence, where the essential requisites of a contract are present
and the simulation refers only to the content or terms of the contract, the
agreement is absolutely binding and enforceable between the parties and their
successors in interest.13
In absolute simulation, there is a colorable contract but it has no substance as
the parties have no intention to be bound by it. "The main characteristic of an
absolute simulation is that the apparent contract is not really desired or intended
to produce legal effect or in any way alter the juridical situation of the parties."14
 "As a result, an absolutely simulated or fictitious contract is void, and the parties
may recover from each other what they may have given under the contract."15
In the case at bench, the Court is one with the courts below that no valid sale of
the subject property actually took place between the alleged vendors, Ireneo and
Salvacion; and the alleged vendees, Spouses Intac. There was simply no
consideration and no intent to sell it.
Critical is the testimony of Marietto, a witness to the execution of the subject
absolute deed of sale. He testified that Ireneo personally told him that he was
going to execute a document of sale because Spouses Intac needed to borrow
the title to the property and use it as collateral for their loan application. Ireneo
and Salvacion never intended to sell or permanently transfer the full ownership
of the subject property to Spouses Intac. Marietto was characterized by the RTC
as a credible witness.
Aside from their plain denial, petitioners failed to present any concrete evidence
to disprove Marietto’s testimony. They claimed that they actually paid
P150,000.00 for the subject property. They, however, failed to adduce proof, even
by circumstantial evidence, that they did, in fact, pay it. Even for the consideration
of P60,000.00 as stated in the contract, petitioners could not show any tangible
evidence of any payment therefor. Their failure to prove their payment only
strengthened Marietto’s story that there was no payment made because Ireneo
had no intention to sell the subject property.
Angelina’s story, except on the consideration, was consistent with that of
Marietto. Angelina testified that she and her husband mortgaged the subject
property sometime in July 1978 to finance the construction of a small hospital in
Sta. Cruz, Laguna. Angelina claimed that Ireneo offered the property as he was in
deep financial need.
Granting that Ireneo was in financial straits, it does not prove that he intended to
sell the property to Angelina. Petitioners could not adduce any proof that they
lent money to Ireneo or that he shared in the proceeds of the loan they had
obtained. And, if their intention was to build a hospital, could they still afford to
lend money to Ireneo? And if Ireneo needed money, why would he lend the title
to Spouses Intac when he himself could use it to borrow money for his needs?173 If
Sales
Spouses Intac took care of him when he was terminally ill, it was not surprising
for Angelina to reciprocate as he took care of her since she was three (3) years
old until she got married. Their caring acts for him, while they are deemed
services of value, cannot be considered as consideration for the subject property
for lack of quantification and the Filipino culture of taking care of their elders.
Thus, the Court agrees with the courts below that the questioned contract of sale
was only for the purpose of lending the title of the property to Spouses Intac to
enable them to secure a loan. Their arrangement was only temporary and could
not give rise to a valid sale. Where there is no consideration, the sale is null and
void ab initio. In the case of Lequin v. Vizconde,16 the Court wrote:
There can be no doubt that the contract of sale or Kasulatan lacked the essential
element of consideration. It is a well-entrenched rule that where the deed of sale
states that the purchase price has been paid but in fact has never been paid, the
deed of sale is null and void ab initio for lack of consideration. Moreover, Art.
1471 of the Civil Code, which provides that "if the price is simulated, the sale is
void," also applies to the instant case, since the price purportedly paid as
indicated in the contract of sale was simulated for no payment was actually
made.
Consideration and consent are essential elements in a contract of sale.1âwphi1
 Where a party’s consent to a contract of sale is vitiated or where there is lack of
consideration due to a simulated price, the contract is null and void ab initio.
[Emphases supplied]
More importantly, Ireneo and his family continued to be in physical possession of
the subject property after the sale in 1977 and up to the present. They even went
as far as leasing the same and collecting rentals. If Spouses Intac really purchased
the subject property and claimed to be its true owners, why did they not assert
their ownership immediately after the alleged sale took place? Why did they have
to assert their ownership of it only after the death of Ireneo and Salvacion? One
of the most striking badges of absolute simulation is the complete absence of any
attempt on the part of a vendee to assert his right of dominion over the property.
17
On another aspect, Spouses Intac failed to show that they had been paying the
real estate taxes of the subject property. They admitted that they started paying
the real estate taxes on the property for the years 1996 and 1997 only in 1999.
They could only show two (2) tax receipts (Real Property Tax Receipt No. 361105,
dated April 21, 1999, and Real Property Tax Receipt No. 361101, dated April 21,
1999).18 Noticeably, petitioners’ tax payment was just an afterthought. The non-
payment of taxes was also taken against the alleged vendees in the case of Lucia
Carlos Aliño v. Heirs of Angelica A. Lorenzo.19 Thus,
Furthermore, Lucia religiously paid the realty taxes on the subject lot from 1980
to 1987.While tax receipts and declarations of ownership for taxation purposes
are not, in themselves, incontrovertible evidence of ownership, they constitute at
least proof that the holder has a claim of title over the property, particularly when
accompanied by proof of actual possession. They are good indicia of the
possession in the concept of owner, for no one in his right mind would be paying
taxes for a property that is not in his actual or at least constructive possession.
The voluntary declaration of a piece of property for taxation purposes manifests
not only one's sincere and honest desire to obtain title to the property and
announces his adverse claim against the State and all other interested parties,
but also the intention to contribute needed revenues to the Government. Such
an act strengthens one's bona fide claim of acquisition of ownership.
On the other hand, respondent heirs failed to present evidence that Angelica,
during her lifetime, paid the realty taxes on the subject lot. They presented only
two tax receipts showing that Servillano, Sr. belatedly paid taxes due on the
subject lot for the years 1980-1981 and part of year 1982 on September 8, 1989,
or about a month after the institution of the complaint on August 3, 1989, a clear
indication that payment was made as an afterthought to give the semblance of
truth to their claim.
Thus, the subsequent acts of the parties belie the intent to be bound by the deed
of sale. [Emphases supplied]
The primary consideration in determining the true nature of a contract is the
intention of the parties. If the words of a contract appear to contravene the
evident intention of the parties, the latter shall prevail. Such intention is
determined not only from the express terms of their agreement, but also from
the contemporaneous and subsequent acts of the parties.20 As heretofore
shown, the contemporaneous and subsequent acts of both parties in this case,
point to the fact that the intention of Ireneo was just to lend the title to the
Spouses Intac to enable them to borrow money and put up a hospital in Sta.
Cruz, Laguna. Clearly, the subject contract was absolutely simulated and,
therefore, void.
In view of the foregoing, the Court finds it hard to believe the claim of the
Spouses Intac that the stay of Ireneo and his family in the subject premises was
by their mere tolerance as they were not yet in need of it. As earlier pointed out,
no convincing evidence, written or testimonial, was ever presented by petitioners
regarding this matter. It is also of no moment that TCT No. 106530 covering the
subject property was cancelled and a new TCT (TCT No. 242655)21 was issued in
their names. The Spouses Intac never became the owners of the property despite
its registration in their names. After all, registration does not vest title.
As a logical consequence, petitioners did not become the owners of the subject
property even after a TCT had been issued in their names. After all, registration
does not vest title. Certificates of title merely confirm or record title already
existing and vested. They cannot be used to protect a usurper from the true
owner, nor can they be used as a shield for the commission of fraud, or to permit 174
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one to enrich oneself at the expense of others. Hence, reconveyance of the
subject property is warranted.22
The Court does not find acceptable either the argument of the Spouses Intac that
respondents’ action for cancellation of TCT No. 242655 and the reconveyance of
the subject property is already barred by the Statute of Limitations. The reason is
that the respondents are still in actual possession of the subject property. It is a
well-settled doctrine that "if the person claiming to be the owner of the property
is in actual possession thereof, the right to seek reconveyance, which in effect
seeks to quiet title to the property, does not prescribe."23 In Lucia Carlos Aliño, it
was also written:
The lower courts fault Lucia for allegedly not taking concrete steps to recover the
subject lot, demanding its return only after 10 years from the registration of the
title. They, however, failed to consider that Lucia was in actual possession of the
property.
It is well-settled that an action for reconveyance prescribes in 10 years, the
reckoning point of which is the date of registration of the deed or the date of
issuance of the certificate of title over the property. In an action for
reconveyance, the decree of registration is highly regarded as incontrovertible.
What is sought instead is the transfer of the property or its title, which has been
erroneously or wrongfully registered in another person's name, to its rightful or
legal owner or to one who has a better right.
However, in a number of cases in the past, the Court has consistently ruled that if
the person claiming to he the owner of the property is in actual possession
thereof, the right to seek reconveyance, which in effect seeks to quiet title to the
property, does not prescribe. The reason for this is that one who is in actual
possession of a piece of land claiming to be the owner thereof may wait until his
possession is disturbed or his title is attacked before taking steps to vindicate his
right. The reason being, that his undisturbed possession gives him the continuing
right to seek the aid of a court of equity to ascertain the nature of the adverse
claim of a third party and its effect on his title, which right can be claimed only by
one who is in possession. Thus, considering that Lucia continuously possessed
the subject lot, her right to institute a suit to clear the cloud over her title cannot
he barred by the statute of limitations.:24[Emphases supplied]
WHEREFORE, the petition is DENIED.
SO ORDERED.
CLARA M. BALATBAT, petitioner, 
vs.
COURT OF APPEALS and Spouses JOSE REPUYAN and AURORA REPUYAN, 
respondents.
Petitioner Clara M. Balatbat instituted this petition for review pursuant to Rule 45
of the Revised Rules of Court seeking to set aside the decision dated August 12,
1992 of the respondent Court of Appeals in CA-GR. CV No. 29994 entitled
"Alexandra Balatbat and Clara Balatbat, plaintiffs-appellants versus Jose Repuyan
and Aurora Repuyan, defendants-appellees", the dispositive portion of which
reads: 1
WHEREFORE, the judgment appealed from is affirmed with the
modification that the awards of P10,000.00 for attorney's fees
and P5,000.00 as costs of litigation are deleted.
SO ORDERED.
The records show the following factual antecedents:
It appears that on June 15, 1977, Aurelio A. Roque filed a complaint for partition
docketed as Civil Case No. 109032 against Corazon Roque, Alberto de los Santos,
Feliciano Roque, Severa Roque and Osmundo Roque before the then Court of
First Instance of Manila, Branch IX. 2 Defendants therein were declared in default
and plaintiff presented evidence ex-parte. On March 29, 1979, the trial court
rendered a decision in favor of plaintiff Aurelio A. Roque, the pertinent portion of
which reads: 3
From the evidence, it has been clearly established that the lot in
question covered by Transfer Certificate of Title No. 51330 was
acquired by plaintiff Aurelio Rogue and Maria Mesina during
their conjugal union and the house constructed thereon was
likewise built during their marital union. Out of their union,
plaintiff and Maria Mesina had four children, who are the
defendants in this case. When Maria Mesina died on August 28,
1966, the only conjugal properties left are the house and lot
above stated of which plaintiff herein, as the legal spouse, is
entitled to one-half share pro-indiviso thereof. With respect to the
one-half share pro-indiviso now forming the estate of Maria
Mesina, plaintiff and the four children, the defendants here, are
175
each entitled to one-fifth (1/5) share pro-indiviso. The deceased
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wife left no debt.
Wherefore, judgment is hereby rendered ordering the partition
of the properties, subject matter of this case consisting of the
house and lot, in the following manner:
1. Of the house and lot forming the conjugal properties, plaintiff
is entitled to one-half share pro-indiviso thereof while the other
half forms the estate of the deceased Maria Mesina;
2. Of the Estate of deceased Maria Mesina, the same is to be
divided into five (5) shares and plaintiff and his four children are
entitled each to one-fifth share thereof pro-indiviso.
Plaintiff claim for moral, exemplary and actual damages and
attorney's fees not having been established to the satisfaction
of the Court, the same is hereby denied.
Without pronouncement as to costs.
SO ORDERED
On June 2, 1979, the decision became final and executory. The corresponding
entry of judgment was made on March 29, 1979. 4
On October 5, 1979, the Register of Deeds of Manila issued a Transfer Certificate
of Title No. 135671 in the name of the following persons in the following
proportions: 5
Aurelio A. Roque 6/10 share
Severina M. Roque 1/10 share
Osmundo M. Roque 1/10 share
Feliciano M. Roque 1/10 share
Corazon M. Roque 1/10 share
On April 1, 1980, Aurelio A. Rogue sold his 6/10 share in T.C.T. No. 135671 to
spouses Aurora Tuazon-Repuyan and Jose Repuyan as evidenced by ."Deed of
Absolute Sale." 6
On July 21, 1980, Aurora Tuazon Repuyan caused the annotation of her affidavit
of adverse claim 7 on the Transfer Certificate of Title No. 135671, 8 to wit:
Entry No. 5627/T-135671 — NOTICE OF ADVERSE CLAIM — Filed
by Aurora Tuazon Repuyan, married, claiming among others
that she bought 6/10 portion of the property herein described
from Aurelio Roque for the amount of P50,000.00 with a down
payment of P5,000.00 and the balance of P45,000.00 to be paid
after the partition and subdivision of the property herein
described, other claims set forth in Doc. No. 954, page 18, Book
94 of ________________ 64 _______ PEDRO DE CASTRO, Notary
Public of Manila.
Date of instrument — July 21, 1980
Date of inscription — July 21, 1980 at 3:35 p.m.
TERESITA H. NOBLEJAS
Acting Register of Deeds
By:
RAMON D. MACARICAN
Acting Second Deputy
On August 20, 1980, Aurelio A. Roque filed a complaint for "Rescission of
Contract" docketed as Civil Case No. 134131 against spouses Aurora Tuazon-
Repuyan and Jose Repuyan before Branch IV of the then Court of First Instance of
Manila. The complaint is grounded on spouses Repuyan's failure to pay the
balance of P45,000.00 of the purchase price. 9 On September 5, 1980, spouses
Repuyan filed their answer with counterclaim. 10
In the meantime, the trial court issued an order in Civil Case No. 109032 (Partition
case) dated February 2, 1982, to wit: 11
In view of all the foregoing and finding that the amount of
P100,000.00 as purchase price for the sale of the parcel of land
covered by TCT No. 51330 of the Registry of Deeds of Manila
consisting of 84 square meters situated in Callejon Sulu, District
of Santa Cruz, Manila, to be reasonable and fair, and
considering the opportunities given defendants to sign the deed
of absolute sale voluntarily, the Court has no alternative but to
order, as it hereby orders, the Deputy Clerk of this Court to sign
the deed of absolute sale for and in behalf of defendants
pursuant to Sec. 10, Rule 39 of the Rules of Court, in order to
effect the partition of the property involved in this case.
SO ORDERED.
A deed of absolute sale was executed on February 4, 1982 between
Aurelio S. Roque, Corazon Roque, Feliciano Roque, Severa Roque and
Osmundo Roque and Clara Balatbat, married to Alejandro Balatbat. 12On
April 14, 1982, Clara Balatbat filed a motion for the issuance of a writ of
possession which was granted by the trial court on September 14, 1982
176
"subject, however, to valid rights and interest of third persons over the
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same portion thereof, other than vendor or any other person or persons
privy to or claiming any rights or interests under it." The corresponding
writ of possession was issued on September 20, 1982. 13
On May 20, 1982, petitioner Clara Balatbat filed a motion to intervene in Civil
Case No. 134131 14 which was granted as per court's resolution of October 21,
1982. 15 However, Clara Balatbat failed to file her complaint in intervention. 16 On
April 15, 1986, the trial court rendered a decision dismissing the complaint, the
pertinent portion of which reads: 17
The rescission of contracts are provided for in the laws and
nowhere in the provision of the Civil Code under the title
Rescissible Contracts does the circumstances in the case at bar
appear to have occurred, hence, the prayer for rescission is
outside the ambit for which rescissible [sic] could be granted.
The Intervenor — Plaintiff, Clara Balatbat, although allowed to
intervene, did not file her complaint in intervention.
Consequently, the plaintiff having failed to prove with sufficient
preponderance his action, the relief prayed for had to be
denied. The contract of sale denominated as "Deed of Absolute
Sale" (Exh. 7 and sub-markings) being valid and enforceable, the
same pursuant to the provisions of Art. 1159 of the Civil Code
which says:
Obligations arising from contracts have the
force of law between the contracting parties
and should be complied with in good faith.
has the effect of being the law between the parties and should
be complied with. The obligation of the plaintiff under the
contract being to have the land covered by TCT No. 135671
partitioned and subdivided, and title issued in the name of the
defendant buyer (see page 2 par. C of Exh. 7-A) plaintiff had to
comply thereto to give effect to the contract.
WHEREFORE, judgment is rendered against the plaintiff, Aurelio
A. Roque, and the plaintiff in intervention, Clara Balatbat, and in
favor of the defendants, dismissing the complaint for lack of
merit, and declaring the Deed of Absolute Sale dated April 1,
1980 as valid and enforceable and the plaintiff is, as he is
hereby ordered, to partition and subdivide the land covered by
T.C.T. No. 135671, and to aggregate therefrom a portion
equivalent to 6/10 thereof, and cause the same to be titled in
the name of the defendants, and after which, the defendants,
and after which, the defendants, and after which, the
defendants, and after which, the defendants to pay the plaintiff
the sum of P45,000.00. Considering further that the defendants
suffered damages since they were forced to litigate
unnecessarily, by way of their counterclaim, plaintiff is hereby
ordered to pay defendants the sum of P15,000.00 as moral
damages, attorney's fees in the amount of P5,000.00.
Costs against plaintiff.
SO ORDERED.
On March 3, 1987, petitioner Balatbat filed a notice of lis pendens in Civil Case
No. 109032 before the Register of Deeds of Manila. 18
On December 9, 1988, petitioner Clara Balatbat and her husband, Alejandro
Balatbat filed the instant complaint for delivery of the owners duplicate copy of
T.C.T. No. 135671 docketed as Civil Case No. 88-47176 before Branch 24 of the
Regional Trial Court of Manila against private respondents Jose Repuyan and
Aurora Repuyan. 19
On January 27, 1989, private respondents filed their answer with affirmative
defenses and compulsory counterclaim. 20
On November 13, 1989, private respondents filed their memorandum 21 while
petitioners filed their memorandum on November 23, 1989. 22
On August 2, 1990, the Regional Trial Court of Manila, Branch 24, rendered a
decision dismissing the complaint, the dispositive portion of which reads : 23
Considering all the foregoing, this Court finds that the plaintiffs
have not been able to establish their cause of action against the
defendants and have no right to the reliefs demanded in the
complaint and the complaint of the plaintiff against the
defendants is hereby DISMISSED. On the counterclaim, the
plaintiff are ordered to pay defendants the amount of Ten
Thousand Pesos by way of attorney's fees, Five Thousand Pesos
as costs of litigation and further to pay the costs of the suit.
SO ORDERED.
Dissatisfied, petitioner Balatbat filed an appeal before the respondent Court of177
Appeals which rendered the assailed decision on August 12, 1992, to wit: 24
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WHEREFORE, the judgment appealed from is affirmed with the
modification that the awards of P10,000.00 for attorney's fees
and P5,000.00 as costs of litigation are deleted.
SO ORDERED.
On March 22, 1993, the respondent Court of Appeals denied petitioner's motion
for reconsideration. 25
Hence, this petition for review.
Petitioner raised the following issues for this Court's resolution:
I vendor Roque cannot demand payment of the balance unless and until the
WHETHER OR NOT THE ALLEGED SALE TO THE PRIVATE
RESPONDENTS WAS MERELY EXECUTORY AND NOT A
CONSUMMATED TRANSACTION?
II
WHETHER OR NOT THERE WAS A DOUBLE SALE AS
CONTEMPLATED UNDER ART. 1544 OF THE CIVIL CODE?
III
WHETHER OR NOT PETITIONER WAS A BUYER IN GOOD FAITH
AND FOR VALUE?
IV
WHETHER OR NOT THE COURT OF APPEALS ERRED IN GIVING
WEIGHT AND CONSIDERATION TO THE EVIDENCE OF THE
PRIVATE RESPONDENTS WHICH WERE NOT OFFERED?
Petitioner asseverates that the respondent Court of Appeals committed grave
abuse of discretion tantamount to lack or excess of jurisdiction in affirming the
appealed judgment considering (1) that the alleged sale in favor of the private
respondents Repuyan was merely executory; (2) that there is no double sale; (3)
that petitioner is a buyer in good faith and for value; and (4) that private
respondents did not offer their evidence during the trial.
Contrary to petitioner's contention that the sale dated April 1, 1980 in favor of
private respondents Repuyan was merely executory for the reason that there
was no delivery of the subject property and that consideration/price was not fully
paid, we find the sale as consummated, hence, valid and enforceable. In a
decision dated April 15, 1986 of the Regional Trial Court of Manila Branch IV in
Civil Case No. 134131, the Court dismissed vendor's Aurelio Roque complaint for
rescission of the deed of sale and declared that the Sale dated April 1, 1980, as
valid and enforceable. No appeal having been made, the decision became final
and executory. It must be noted that herein petitioner Balatbat filed a motion for
intervention in that case but did not file her complaint in intervention. In that
case wherein Aurelio Roque sought to rescind the April 1, 1980 deed of sale in
favor of the private respondents for non-payment of the P45,000.00 balance, the
trial court dismissed the complaint for rescission. Examining the terms and
conditions of the "Deed of Sale" dated April 1, 1980, the P45,000.00 balance is
payable only "after the property covered by T.C.T. No. 135671 has been
partitioned and subdivided, and title issued in the name of the BUYER" hence,
property has been subdivided and titled in the name of private respondents.
Devoid of any stipulation that "ownership in the thing shall not pass to the
purchaser until he has fully paid the price" 26, ownership in thing shall pass from
the vendor to the vendee upon actual or constructive delivery of the thing sold
even if the purchase price has not yet been fully paid. The failure of the buyer has
not yet been fully paid. The failure of the buyer to make good the price does not,
in law, cause the ownership to revest to the seller unless the bilateral contract of
sale is first rescinded or resolved pursuant to Article 1191 of the New Civil Code. 2
7Non-payment only creates a right to demand the fulfillment of the obligation or
to rescind the contract.
With respect to the non-delivery of the possession of the subject property to the
private respondent, suffice it to say that ownership of the thing sold is acquired
only from the time of delivery thereof, either actual or constructive. 28Article 1498
of the Civil Code provides that — when the sale is made through a public
instrument, the execution thereof shall be equivalent to the delivery of the thing
which is the object of the contract, if from the deed the contrary does not appear
or cannot be inferred. 29 The execution of the public instrument, without actual
delivery of the thing, transfers the ownership from the vendor to the vendee,
who may thereafter exercise the rights of an owner over the same. 30 In the
instant case, vendor Roque delivered the owner's certificate of title to herein
private respondent. It is not necessary that vendee be physically present at every
square inch of the land bought by him, possession of the public instrument of the
land is sufficient to accord him the rights of ownership. Thus, delivery of a parcel
of land may be done by placing the vendee in control and possession of the land
(real) or by embodying the sale in a public instrument (constructive). The
provision of Article 1358 on the necessity of a public document is only for 178
convenience, not for validity or enforceability. It is not a requirement for the
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validity of a contract of sale of a parcel of land that this be embodied in a public
instrument. 31
A contract of sale being consensual, it is perfected by the mere consent of the
parties. 32 Delivery of the thing bought or payment of the price is not necessary
for the perfection of the contract; and failure of the vendee to pay the price after
the execution of the contract does not make the sale null and void for lack of
consideration but results at most in default on the part of the vendee, for which
the vendor may exercise his legal remedies. 33
Article 1544 of the New Civil Code provides:
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 movable 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 present the oldest title,
provided there is good faith.
Article 1544 of the Civil Code provides that in case of double sale of an
immovable property, ownership shall be transferred (1) to the person acquiring it
who in good faith first recorded it in the Registry of Property; (2) in default
thereof, to the person who in good faith was first in possession; and (3) in default
thereof, to the person who presents the oldest title, provided there is good faith.  could have discovered that the subject property was already sold to the private
34
In the case at bar, vendor Aurelio Roque sold 6/10 portion of his share in TCT No.
135671 to private respondents Repuyan on April 1, 1980. Subsequently, the same
lot was sold again by vendor Aurelio Roque (6/10) and his children (4/10),
represented by the Clerk of Court pursuant to Section 10, Rule 39 of the Rules of
Court, on February 4, 1982. Undoubtedly, this is a case of double sale
contemplated under Article 1544 of the New Civil Code.
This is an instance of a double sale of an immovable property hence, the
ownership shall vests in the person acquiring it who in good faith first recorded it
in the Registry of Property. Evidently, private respondents Repuyan's caused the
annotation of an adverse claim on the title of the subject property denominated
as Entry No. 5627/T-135671 on July 21, 1980. 35 The annotation of the adverse
claim on TCT No. 135671 in the Registry of Property is sufficient compliance as
mandated by law and serves notice to the whole world.
On the other hand, petitioner filed a notice of lis pendens only on February 2, 1982.
Accordingly, private respondents who first caused the annotation of the adverse
claim in good faith shall have a better right over herein petitioner. Moreover, the
physical possession of herein petitioners by virtue of a writ of possession issued
by the trial court on September 20, 1982 is "subject to the valid rights and
interest of third persons over the same portion thereof, other than vendor or any
other person or persons privy to or claiming any rights to interest under it." 36 As
between two purchasers, the one who has 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. 37 Further, even in default of the
first registrant or first in possession, private respondents have presented the
oldest title. 38 Thus, private respondents who acquired the subject property in
good faith and for valuable consideration established a superior right as against
the petitioner.
Evidently, petitioner cannot be considered as a buyer in good faith. In the
complaint for rescission filed by vendor Aurelio Roque on August 20, 1980, herein
petitioner filed a motion for intervention on May 20, 1982 but did not file her
complaint in intervention, hence, the decision was rendered adversely against
her. If petitioner did investigate before buying the land on February 4, 1982, she
should have known that there was a pending case and an annotation of adverse
claim was made in the title of the property before the Register of Deeds and she
respondents. It is incumbent upon the vendee of the property to ask for the
delivery of the owner's duplicate copy of the title from the vendor. A purchaser of
a valued piece of property cannot just close his eyes to facts which should put a
reasonable man upon his guard and then claim that he acted in good faith and
under the belief that there were no defect in the title of the vendor. 39 One who
purchases real estate with knowledge of a defect or lack of title in his vendor
cannot claim that he has acquired title thereto in good faith as against the true
owner of the land or of an interest therein; and the same rule must be applied to
one who has knowledge of facts which should have put him upon such inquiry
and investigation as might be necessary to acquaint him with the defects in the179
title of his vendor. Good faith, or the want of it is not a visible, tangible fact that
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can be seen or touched, but rather a state or condition of mind which can only be
judged of by actual or fancied tokens or signs. 40
In fine, petitioner had nobody to blame but herself in dealing with the disputed
property for failure to inquire or discover a flaw in the title to the property, thus,
it is axiomatic that — culpa lata dolo aequiparatur — gross negligence is equivalent to
intentional wrong.
IN VIEW OF THE FOREGOING PREMISES, this petition for review is hereby
DISMISSED for lack of merit. No pronouncement as to costs.
IT IS SO ORDERED.
ISAAC BAGNAS, ENCARNACION BAGNAS, SILVESTRE BAGNAS MAXIMINA
BAGNAS, SIXTO BAGNAS and AGATONA ENCARNACION, petitioners, 
vs.
HON. COURT OF APPEALS, ROSA L. RETONIL TEOFILO ENCARNACION, and
JOSE B. NAMBAYAN respondents.
The facts underlying this appeal by certiorari are not in dispute. Hilario Mateum of
Kawit, Cavite, died on March 11, 1964, single, without ascendants or descendants,
and survived only by collateral relatives, of whom petitioners herein, his first
cousins, were the nearest. Mateum left no will, no debts, and an estate consisting
of twenty-nine parcels of land in Kawit and Imus, Cavite, ten of which are involved
in this appeal. 1
On April 3, 1964, the private respondents, themselves collateral relatives of
Mateum though more remote in degree than the petitioners, 2 registered with
the Registry of Deeds for the Province of Cavite two deeds of sale purportedly
executed by Mateum in their (respondents') favor covering ten parcels of land.
Both deeds were in Tagalog, save for the English descriptions of the lands
conveyed under one of them; and each recited the reconsideration of the sale to
be" ... halagang ISANG PISO (Pl.00), salaping Pilipino, at mga naipaglingkod,
ipinaglilingkod sa aking kapakanan ..." ("the sum of ONE PESO Pl.00), Philippine
Currency, and services rendered, being rendered and to be rendered for my
benefit"). One deed was dated February 6,1963 and covered five parcels of land,
and the other was dated March 4, 1963, covering five other parcels, both,
therefore, antedating Mateum's death by more than a year. 3 It is asserted by the
petitioners, but denied by the respondents, that said sales notwithstanding,
Mateum continued in the possession of the lands purportedly conveyed until his
death, that he remained the declared owner thereof and that the tax payments
thereon continued to be paid in his name. 4 Whatever the truth, however, is not
crucial. What is not disputed is that on the strength of the deeds of sale, the
respondents were able to secure title in their favor over three of the ten parcels
of land conveyed thereby. 5
On May 22,1964 the petitioners commenced suit against the respondents in the
Court of First Instance of Cavite, seeking annulment of the deeds of sale as
fictitious, fraudulent or falsified, or, alternatively, as donations void for want of
acceptance embodied in a public instrument. Claiming ownership pro indiviso of the
180
lands subject of the deeds by virtue of being intestate heirs of Hilario Mateum,
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the petitioners prayed for recovery of ownership and possession of said lands,
accounting of the fruits thereof and damages. Although the complaint originally
sought recovery of all the twenty-nine parcels of land left by Mateum, at the pre-
trial the parties agreed that the controversy be limited to the ten parcels subject
of the questioned sales, and the Trial Court ordered the exclusion of the nineteen
other parcels from the action. 6 Of the ten parcels which remained in litigation,
nine were assessed for purposes of taxation at values aggregating P10,500 00.
The record does not disclose the assessed value of the tenth parcel, which has an
area of 1,443 square meters. 7
In answer to the complaint, the defendants (respondents here) denied the
alleged fictitious or fraudulent character of the sales in their favor, asserting that
said sales were made for good and valuable consideration; that while "... they
may have the effect of donations, yet the formalities and solemnities of donation
are not required for their validity and effectivity, ... that defendants were
collateral relatives of Hilario Mateum and had done many good things for him,
nursing him in his last illness, which services constituted the bulk of the
consideration of the sales; and (by way of affirmative defense) that the plaintiffs
could not question or seek annulment of the sales because they were mere
collateral relatives of the deceased vendor and were not bound, principally or
subsidiarily, thereby. 8
After the plaintiffs had presented their evidence, the defendants filed a motion
for dismissal in effect, a demurrer to the evidence reasserting the defense set up
in their answer that the plaintiffs, as mere collateral relatives of Hilario Mateum,
had no light to impugn the latter's disposition of his properties by means of the
questioned conveyances and submitting, additionally, that no evidence of fraud
maintaining said transfers had been presented. 9
The Trial Court granted the motion to dismiss, holding (a) on the authority of
Armentia vs. Patriarca, 10 that the plaintiffs, as mere collateral relatives, not
forced heirs, of Hilario Mateum, could not legally question the disposition made
by said deceased during his lifetime, regardless of whether, as a matter of
objective reality, said dispositions were valid or not; and (b) that the plaintiffs
evidence of alleged fraud was insufficient, the fact that the deeds of sale each
stated a consideration of only Pl.00 not being in itself evidence of fraud or
simulation. 11
On appeal by the plaintiffs to the Court of Appeals, that court affirmed, adverting
with approval to the Trial Court's reliance on the Armentia ruling which, it would
appear, both courts saw as denying, without exception, to collaterals, of a
decedent, not forced heirs, the right to impugn the latter's dispositions inter vivos
 of his property. The Appellate Court also analyzed the testimony of the plaintiffs'
witnesses, declared that it failed to establish fraud of any kind or that Mateum
had continued paying taxes on the lands in question even after executing the
deeds conveying them to the defendants, and closed with the statement that "...
since in duly notarized and registered deeds of sale consideration is presumed,
we do not and it necessary to rule on the alternative allegations of the appellants
that the said deed of sale were (sic) in reality donations. 12
One issue clearly predominates here. It is whether, in view of the fact that, for
properties assuredly worth in actual value many times over their total assessed
valuation of more than P10,000.00, the questioned deeds of sale each state a
price of only one peso (P1.00) plus unspecified past, present and future services
to which no value is assigned, said deeds were void or inexistent from the
beginning ("nulo") or merely voidable, that is, valid until annulled. If they were
only voidable, then it is a correct proposition that since the vendor Mateum had
no forced heirs whose legitimes may have been impaired, and the petitioners, his
collateral relatives, not being bound either principally or subsidiarily to the terms
of said deeds, the latter had and have no actionable right to question those
transfers.
On the other hand, if said deeds were void ab initio because to all intents and
purposes without consideration, then a different legal situation arises, and quite
another result obtains, as pointed out by the eminent civil law authority, Mr.
Justice J.B.L. Reyes who, in his concurring opinion in Armentia, said:
I ... cannot bring myself to agree to the proposition that the
heirs intestate would have no legal standing to contest the
conveyance made by the deceased if the same were made
without any consideration, or for a false and fictitious
consideration. For under the Civil Code of the Philippines, Art.
1409, par. 3, contracts with a cause that did not exist at the time
of the transaction are inexistent and void from the beginning.
The same is true of contracts stating a false cause
(consideration) unless the persons interested in upholding the
contract should prove that there is another true and lawful
consideration therefor. (lbid., Art. 1353). 181
If therefore the contract has no causa or consideration, or the 
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causa is false and fictitious (and no true hidden causa is proved)
the property allegedly conveyed never really leaves the
patrimony of the transferor, and upon the latter's death without
a testament, such property would pass to the transferor's heirs
intestate and be recoverable by them or by the Administrator of
the transferor's estate. In this particular regard, I think
Concepcion vs. Sta. Ana, 87 Phil. 787 and Sobs vs. Chua Pua
Hermanos, 50 Phil. 536, do not correctly state the present law,
and must be clarified.
To be sure the quoted passage does not reject and is not to be construed as
rejecting the Concepcion and Solisrulings 13 as outrightly erroneous, far from it. On
the contrary, those rulings undoubtedly read and applied correctly the law extant
in their time: Art. 1276 of the Civil Code of 1889 under which the statement of a
false cause in a contract rendered it voidable only, not void ab initio. In observing
that they "... do not correctly state the present law and must be clarified," Justice
Reyes clearly had in mind the fact that the law as it is now (and already was in the
time Armentia) no longer deems contracts with a false cause, or which are
absolutely simulated or fictitious, merely voidable, but declares them void, i.e.,
inexistent ("nulo") unless it is shown that they are supported by another true and
lawful cause or consideration. 14 A logical consequence of that change is the
juridical status of contracts without, or with a false, cause is that conveyances of
property affected with such a vice cannot operate to divest and transfer
ownership, even if unimpugned. If afterwards the transferor dies the property
descends to his heirs, and without regard to the manner in which they are called
to the succession, said heirs may bring an action to recover the property from the
purported transferee. As pointed out, such an action is not founded on fraud, but
on the premise that the property never leaves the estate of the transferor and is
transmitted upon his death to heirs, who would labor under no incapacity to
maintain the action from the mere fact that they may be only collateral relatives
and bound neither principally or subsidiarily under the deed or contract of
conveyance.
In Armentia the Court determined that the conveyance questioned was merely
annullable not void ab initio, and that the plaintiff s action was based on fraud
vitiating said conveyance. The Court said:
Hypothetically admitting the truth of these allegations (of
plaintiffs complaint), the conclusion is irresistible that the sale is
merely voidable. Because Marta Armentia executed the
document, and this is not controverted by plaintiff. Besides, the
fact that the vendees were minors, makes the contract, at worst,
annullable by them, Then again, inadequacy of consideration
does not imply total want of consideration. Without more, the
parted acts of Marta Armentia after the sale did not indicate
that the said sale was void from the being.
The sum total of all these is that, in essence, plaintiffs case is
bottomed on fraud, which renders the contract voidable.
It therefore seems clear that insofar as it may be considered as setting or
reaffirming precedent, Armentia only ruled that transfers made by a decedent in
his lifetime, which are voidable for having been fraudulently made or obtained,
cannot be posthumously impugned by collateral relatives succeeding to his
estate who are not principally or subsidiarily bound by such transfers. For the
reasons already stated, that ruling is not extendible to transfers which, though
made under closely similar circumstances, are void ab initio for lack or falsity of
consideration.
The petitioners here argue on a broad front that the very recitals of the
questioned deeds of sale reveal such want or spuriousness of consideration and
therefore the void character of said sales. They:
1. advert to a decision of the Court of Appeals in Montinola vs. Herbosa (59 O.G. No.
47, pp, 8101, 8118) holding that a price of P l.00 for the sale of things worth at
least P20,000.00 is so insignificant as to amount to no price at all, and does not
satisfy the law which, while not requiring for the validity of a sale that the price be
adequate, prescribes that it must be real, not fictitious, stressing the obvious
parallel between that case and the present one in stated price and actual value of
the property sold;
2. cite Manresa to the same effect: that true price, which is essential to the
validity of a sale, means existent, real and effective price, that which does not
consist in an insignificant amount as, say, P.20 for a house; that it is not the same
as the concept of a just price which entails weighing and measuring, for economic
equivalence, the amount of price against all the factors that determine the value
of the thing sold; but that there is no need of such a close examination when the
immense disproportion between such economic values is patent a case of
insignificant or ridiculous price, the unbelievable amount of which at once points
182
out its inexistence; 15
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3. assert that Art. 1458 of the Civil Code, in prescribing that a sale be for a ... price
certain in money or its equivalent ... requires that "equivalent" be something
representative of money, e.g., a check or draft, again citing Manresa 16 to the
effect that services are not the equivalent of money insofar as said requirement
is concerned and that a contract is not a true sale where the price consists of
services or prestations;
4. once more citing Manresa 17 also point out that the "services" mentioned in the
questioned deeds of sale are not only vague and uncertain, but are unknown and
not susceptible of determination without the necessity of a new agreement
between the parties to said deeds.
Without necessarily according all these assertions its full concurrence, but upon
the consideration alone that the apparent gross, not to say enormous,
disproportion between the stipulated price (in each deed) of P l.00 plus
unspecified and unquantified services and the undisputably valuable real estate
allegedly sold worth at least P10,500.00 going only by assessments for tax
purposes which, it is well-known, are notoriously low indicators of actual value
plainly and unquestionably demonstrates that they state a false and fictitious
consideration, and no other true and lawful cause having been shown, the Court
finds both said deeds, insofar as they purport to be sales, not merely voidable,
but void ab initio.
Neither can the validity of said conveyances be defended on the theory that their
true causa is the liberality of the transferor and they may be considered in reality
donations 18 because the law 19 also prescribes that donations of immovable
property, to be valid, must be made and accepted in a public instrument, and it is
not denied by the respondents that there has been no such acceptance which
they claim is not required. 20
The transfers in question being void, it follows as a necessary consequence and
conformably to the concurring opinion in Armentia, with which the Court fully
agrees, that the properties purportedly conveyed remained part of the estate of
Hilario Mateum, said transfers notwithstanding, recoverable by his intestate
heirs, the petitioners herein, whose status as such is not challenged.
The private respondents have only themselves to blame for the lack of proof that
might have saved the questioned transfers from the taint of invalidity as being
fictitious and without ilicit cause; proof, to be brief, of the character and value of
the services, past, present, and future, constituting according to the very terms of
said transfers the principal consideration therefor. The petitioners' complaint
(par. 6) 21 averred that the transfers were "... fraudulent, fictitious and/or falsified
and (were) ... in reality donations of immovables ...," an averment that the private
respondents not only specifically denied, alleging that the transfers had been
made "... for good and valuable consideration ...," but to which they also
interposed the affirmative defenses that said transfers were "... valid, binding and
effective ...," and, in an obvious reference to the services mentioned in the deeds,
that they "... had done many good things to (the transferor) during his lifetime,
nursed him during his ripe years and took care of him during his previous and
last illness ...," (pars. 4, 6, 16 and 17, their answer).lâwphî1.ñèt 22 The onus,
therefore, of showing the existence of valid and illicit consideration for the
questioned conveyances rested on the private respondents. But even on a
contrary assumption, and positing that the petitioners initially had the burden of
showing that the transfers lacked such consideration as they alleged in their
complaint, that burden was shifted to the private respondents when the
petitioners presented the deeds which they claimed showed that defect on their
face and it became the duty of said respondents to offer evidence of existent
lawful consideration.
As the record clearly demonstrates, the respondents not only failed to offer any
proof whatsoever, opting to rely on a demurrer to the petitioner's evidence and
upon the thesis, which they have maintained all the way to this Court, that
petitioners, being mere collateral relatives of the deceased transferor, were
without right to the conveyances in question. In effect, they gambled their right to
adduce evidence on a dismissal in the Trial Court and lost, it being the rule that
when a dismissal thus obtained is reversed on appeal, the movant loses the right
to present evidence in his behalf. 23
WHEREFORE, the appealed Decision of the Court of Appeals is reversed. The
questioned transfers are declared void and of no force or effect. Such certificates
of title as the private respondents may have obtained over the properties subject
of said transfers are hereby annulled, and said respondents are ordered to
return to the petitioners possession of an the properties involved in tills action, to
account to the petitioners for the fruits thereof during the period of their
possession, and to pay the costs. No damages, attorney's fees or litigation
expenses are awarded, there being no evidence thereof before the Court.
SO ORDERED.
183
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IMELDA ONG, ET AL., petitioners,  Maruzzo and held that the Quitclaim Deed is equivalent to a Deed of Sale and,
vs.
ALFREDO ONG, ET AL., respondents.
This is a petition for review on certiorari of the decision, dated June 20, 1984, of
the Intermediate Appellate Court, in AC-G.R. No. CV-01748, affirming the
judgment of the Regional Trial Court of Makati, Metro Manila. Petitioner Imelda
Ong assails the interpretation given by respondent Appellate Court to the
questioned Quitclaim Deed.
Records show that on February 25, 1976 Imelda Ong, for and in consideration of
One (P1.00) Peso and other valuable considerations, executed in favor of private
respondent Sandra Maruzzo, then a minor, a Quitclaim Deed whereby she
transferred, released, assigned and forever quit-claimed to Sandra Maruzzo, her
heirs and assigns, all her rights, title, interest and participation in the ONE-HALF
(½) undivided portion of the parcel of land, particularly described as follows:
A parcel of land (Lot 10-B of the subdivision plan (LRC) Psd
157841, being a portion of Lot 10, Block 18, Psd-13288, LRC
(GLRC) Record No. 2029, situated in the Municipality of Makati,
Province of Rizal, Island of Luzon ... containing an area of ONE
HUNDRED AND TWENTY FIVE (125) SQUARE METERS, more or
less.
On November 19, 1980, Imelda Ong revoked the aforesaid Deed of Quitclaim
and, thereafter, on January 20, 1982 donated the whole property described above
to her son, Rex Ong-Jimenez.
On June 20, 1983, Sandra Maruzzo, through her guardian (ad litem) Alfredo Ong,
filed with the Regional Trial Court of Makati, Metro Manila an action against
petitioners, for the recovery of ownership/possession and nullification of the
Deed of Donation over the portion belonging to her and for Accounting.
In their responsive pleading, petitioners claimed that the Quitclaim Deed is null
and void inasmuch as it is equivalent to a Deed of Donation, acceptance of which
by the donee is necessary to give it validity. Further, it is averred that the donee,
Sandra Maruzzo, being a minor, had no legal personality and therefore incapable
of accepting the donation.
Upon admission of the documents involved, the parties filed their responsive
memoranda and submitted the case for decision.
On December 12, 1983, the trial court rendered judgment in favor of respondent
hence, there was a valid conveyance in favor of the latter.
Petitioners appealed to the respondent Intermediate Appellate Court. They
reiterated their argument below and, in addition, contended that the One (P1.00)
Peso consideration is not a consideration at all to sustain the ruling that the Deed
of Quitclaim is equivalent to a sale.
On June 20, 1984, respondent Intermediate Appellate Court promulgated its
Decision affirming the appealed judgment and held that the Quitclaim Deed is a
conveyance of property with a valid cause or consideration; that the
consideration is the One (P1.00) Peso which is clearly stated in the deed itself;
that the apparent inadequacy is of no moment since it is the usual practice in
deeds of conveyance to place a nominal amount although there is a more
valuable consideration given.
Not satisfied with the decision of the respondent Intermediate Appellate Court,
petitioners came to Us questioning the interpretation given by the former to this
particular document.
On March 15, 1985, respondent Sandra Maruzzo, through her guardian ad litem
Alfredo Ong, filed an Omnibus Motion informing this Court that she has reached
the age of majority as evidenced by her Birth Certificate and she prays that she
be substituted as private respondent in place of her guardian ad litem Alfredo Ong.
On April 15, 1985, the Court issued a resolution granting the same.
A careful perusal of the subject deed reveals that the conveyance of the one- half
(½) undivided portion of the above-described property was for and in
consideration of the One (P 1.00) Peso and the other valuable considerations (emphasis
supplied) paid by private respondent Sandra Maruzzo through her
representative, Alfredo Ong, to petitioner Imelda Ong. Stated differently, the
cause or consideration is not the One (P1.00) Peso alone but also the other
valuable considerations. As aptly stated by the Appellate Court-
... although the cause is not stated in the contract it is presumed
that it is existing unless the debtor proves the contrary (Article
1354 of the Civil Code). One of the disputable presumptions is
that there is a sufficient cause of the contract (Section 5, (r), Rule
131, Rules of Court). It is a legal presumption of sufficient cause
or consideration supporting a contract even if such cause is not
stated therein (Article 1354, New Civil Code of the Philippines.)
184
This presumption cannot be overcome by a simple assertion of
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lack of consideration especially when the contract itself states whereas fraud or bad faith may render either rescissible or voidable, although
that consideration was given, and the same has been reduced valid until annulled, a contract concerning an object certain entered into with a
into a public instrument with all due formalities and solemnities. cause and with the consent of the contracting parties, as in the case at bar."
To overcome the presumption of consideration the alleged lack WHEREFORE. the appealed decision of the Intermediate Appellate Court should
of consideration must be shown by preponderance of evidence be, as it is hereby AFFIRMED, with costs against herein petitioners.
in a proper action. (Samanilla vs, Cajucom, et al., 107 Phil. 432). SO ORDERED.
The execution of a deed purporting to convey ownership of a realty is in itself
prima facie evidence of the existence of a valuable consideration, the party
alleging lack of consideration has the burden of proving such allegation.
(Caballero, et al. vs. Caballero, et al., (CA), 45 O.G. 2536).
Moreover, even granting that the Quitclaim deed in question is a donation, Article
741 of the Civil Code provides that the requirement of the acceptance of the
donation in favor of minor by parents of legal representatives applies only to
onerous and conditional donations where the donation may have to assume
certain charges or burdens (Article 726, Civil Code). The acceptance by a legal
guardian of a simple or pure donation does not seem to be necessary (Perez vs.
Calingo, CA-40 O.G. 53). Thus, Supreme Court ruled in Kapunan vs. Casilan and
Court of Appeals, (109 Phil. 889) that the donation to an incapacitated donee
does not need the acceptance by the lawful representative if said donation does
not contain any condition. In simple and pure donation, the formal acceptance is
not important for the donor requires no right to be protected and the donee
neither undertakes to do anything nor assumes any obligation. The Quitclaim
now in question does not impose any condition.
The above pronouncement of respondent Appellate Court finds support in the
ruling of this Court in Morales Development Co., Inc. vs. CA, 27 SCRA 484, which states that
"the major premise thereof is based upon the fact that the consideration stated
in the deeds of sale in favor of Reyes and the Abellas is P1.00. It is not unusual,
however, in deeds of conveyance adhering to the Anglo-Saxon practice of stating
that the consideration given is the sum of P1.00, although the actual
consideration may have been much more. Moreover, assuming that said
consideration of P1.00 is suspicious, this circumstance, alone, does not
necessarily justify the inference that Reyes and the Abellas were not purchasers
in good faith and for value. Neither does this inference warrant the conclusion
that the sales were null and void ab initio. Indeed, bad faith and inadequacy of the
monetary consideration do not render a conveyance inexistent, for the assignor's 185
liberality may be sufficient cause for a valid contract (Article 1350, Civil Code),
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MARGARITA SANTOS, ET AL., plaintiffs-appellants,  proof of that fact could not be made because of the destruction of the notarial
vs.
AGUSTIN ACOSTA, ET AL., defendants-appellees.
This is an appeal from a judgment against the plaintiffs in an action brought by
them to recover possession of a parcel of land which was bought at execution
sale by the defendant Braulio Viangson, and to recover damages from the
defendant, Agustin Acosta, the sheriff who executed the sale.
The plaintiffs claim the land as the heirs of Mauricio Tiongson, who died in
December, 1887, alleging that the land in question is a part of his estate.
The defendant insist that the land belonged to Fruto de los Santos at the time
when it was levied upon and sold in the year 1910 to Braulio Viangson, the
principal defendant, in satisfaction of a judgment against Santos in the Court of
First Instance of Bataan.
The evidence of record discloses that the land in question had been in
possession of Fruto de los Santos for more than twenty years prior to the date of
the execution sale, except for a period of less than three years, during which it
was in the possession of one Simeon Roberto and his heirs. This short
interruption of the possession of Santos resulted from the fact that some time in
the latter part of the year 1905 or early in the year 1906 Santos sold the land to
Roberto from whose heirs he repurchased it in May, 1909.
The plaintiffs, while they do not deny that Santos had possession of the property
for this long period of years, insist that he held it merely as sort of executor or
trustee, under the will of their father Mauricio Tiongson, deceased, who died in
the year 1887, leaving, as they allege, a will under the terms of which Santos
came into possession of the land and held it in trust to apply the annual income
to the celebration of masses for the soul of the testator.
In support of their contentions they offered in evidence a private document
purporting to be the original last will and testament of Mauricio Tiongson, in
which Santos is named as executor, and a certain parcel of land set apart for the
purpose of providing a perpetual fund for the celebration of the annual masses
for the soul of the testator. This document does not appear to have been
executed before a notary nor recorded in any protocol (protocolizado); and as the
trial judge correctly indicated, it could not have had the effect of a valid will,
under the law in existence at the date of its execution.
Santos could not therefor have acquired any right to take possession of any of
the property as executor, trustees, or by any other right of title whatsoever
arising under and by virtue of this invalid instrument. Furthermore some doubt is
cast upon the genuineness of this alleged last will and testament by the attempt
of the plaintiffs to avoid the legal consequences flowing from the fact that no
record of this alleged will appears to have been made in any protocol, by the bold
assertion that it was in fact entered in the proper protocol (protocolizado) but that
archives during the Revolution. We need not dwell on the manifest incongruity,
under the former notarial system, of a claim of the destruction of the notarial
records of a document alleged to have been duly entered in those records 
(protocolizado), and the production of the alleged original document with nothing
thereon to show that it ever had been given notarial registry (protocolizado).
An attempt was also made by the oral testimony of several witnesses to prove
that the possession of the land by Santos had been that of an executor or
trustee, and not that of a claimant of ownership in himself. Santos was the chief
witness called for that purpose, but he admitted not only that he had sold the
land in 1905 or 1906, to raise money for his own use, to Simeon Roberto from
whose heirs he repurchase it in 1909; but that on another occasion he mortgaged
it to secure a loan of money which he borrowed to meet a personal obligation
which was pressing him at that time. It appears furthermore that the plaintiffs
knew that Santos was dealing with the land in this way and that they made no
objection at that time, or as Santos claims, that they expressly assented thereto.
This testimony, from the mouth of their own witness, not only fail to sustain the
contention of plaintiffs that Santos held the lands as a mere administrator or
trustee, but goes far to establish the contention of the defendants, that during
the more than twenty years of his occupation of the land prior to the execution
sale (counting in this term the occupation for some three years of Simeon
Roberto, and his heirs, from whom Santos repurchased it) he held possession
under a claim of absolute ownership with a right to sell or mortgage it as he saw
fit.
It does not satisfactorily appear how Santos originally came into possession of
this land. It appears that his wife had some hereditary interest in the estate of the
former owner, and it may have been acquired in the course of some settlement
or partition of this estate. It may have been acquired by purchase from the heirs.
We are of opinion how ever, that in the absence of satisfactory proof to the
contrary, a fair presumption arises that he did in fact acquire title, and was in
possession under such title for a long period of years with the knowledge and
consent of the plaintiffs.
Certain it is that those plaintiffs could not have successfully attacked the title of
this land when it was in the possession of Roberto and his heirs; and Santos,
when he repurchased the land from Roberto's heirs, bought all their right, title
and interest therein. There is nothing in the record, except the unsupported oral
testimony of Santos, which tends to sustain a finding that thereafter Santos
parted with the title and held the land, not as owner but as trustee. The trial
judge gave no credence to this testimony and we are inclined to agree with him.
The burden of proof rested on the plaintiffs to establish title in themselves. This
they attempted to do by proof that Santos had taken and occupied the premises 186
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as executor or trustee. But on the whole record, we think that they have failed to
establish their allegations in this regard by a preponderance of the evidence.
We do not deny the possibility that notwithstanding the invalidity of the alleged
will, Santos may have gone into possession originally under some agreement
with the heirs, for the purpose of carrying out what they believed to be the
wished of their ancestor, but we do not think that the evidence in support of that
theory is of sufficient weight to justify us in reversing the court below and
depriving the defendant of his title and possession acquired at an execution sale
of the land as the property of Santos.
Having arrived at this conclusion, it is not necessary for us to consider or decide
any questions which might be raised as to the effect by way of estoppel of the
conduct of the plaintiffs in clothing Santos with the symbols of ownership of the
land.
The judgment entered in the court below should be affirmed with the costs of
this instance against the appellants. So ordered.
GAMALIEL C. VILLANUEVA and IRENE C. VILLANUEVA, petitioners, 
vs.
COURT OF APPEALS, SPOUSES JOSE and LEONILA DELA CRUZ, and SPOUSES GUIDO
and FELICITAS PILE, respondents.
The main issue here is whether a contract of sale has been perfected under the
attendant facts and circumstances.
The petition filed on December 18, 1992 assails the Decision 1 of respondent Court of
Appeals promulgated on October 23, 1992 in CA-G.R. CV No. 30741 rendered by the
Eleventh Division 2 dismissing the appeal of petitioners and affirming the decision in
Civil Case No. Q-50844 dated December 28, 1990 of the Regional Trial Court, Branch
83 of Quezon City, presided by Judge Estrella T. Estrada. The dispositive portion of the
affirmed decision of the RTC reads: 3
WHEREFORE, judgment is hereby rendered dismissing plaintiff's
instant action for specific performance. However, defendant Jose de
la Cruz is hereby ordered to refund or re imburse the amount of
Ten Thousand Pesos (P10,000.00) to plaintiff Irene Villanueva.
The parties' other claims for damages and attorney's fees are also
hereby dismissed for being necessary consequences of litigation.
No pronouncement as to costs.
The Facts
The factual antecedents of this case as found by the trial court were reproduced in the
assailed Decision, 4 as follows: 5
. . .plaintiff (and now petitioner) Gamaliel Villanueva has been a
tenant-occupant of a unit in the 3-door apartment building erected
on a parcel of land owned by defendants-spouses (now private
respondents) Jose Dela Cruz and Leonila dela Cruz, with an area of
403 square meters, more or less, located at Short Horn, Project 8,
Quezon City (Exhibit "L"), having succeeded in the occupancy of said
unit from the previous tenant Lolita Santos sometime in 1985.
About February of 1986, defendant Jose dela Cruz offered said
parcel of land with the 3-door apartment building for sale and
plaintiffs, son and mother, showed interest in the property. As an
initial step, defendant Jose dela Cruz gave plaintiff Irene Villanueva a
letter of authority dated February 12, 1986 (Exhibit "A") for her to
inspect the subject property. Because said property was in arrears
in the payment of the realty taxes, defendant Jose dela Cruz
187
approached plaintiff Irene Villanueva and asked for a certain
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amount to pay for the taxes so that the property would be cleared
of any incumbrance (sic). Plaintiff Irene Villanueva gave P10,000.00
on two occasions — P5,000.00 on July 15, 1986 (Exhibit "F") and
another P5,000.00 on October 17, 1986 (Exhibit "D"). It was agreed
by them that said P10,000.00 would form part of the sale price of
P550,000.00. Sometime thereafter, defendant Jose dela Cruz went
to plaintiff Irene Villanueva bringing with him Mr. Ben Sabio, a
tenant of one of the units in the 3-door apartment building located
on the subject property, and requested her and her son to allow
said Ben Sabio to purchase one-half (1/2) of the property where the
unit occupied by him pertained to which the plaintiffs consented, so
that they would just purchase the other half portion and would be
paying only P265,000.00, they having already given an amount of
P10,000.00 used for paying the realty taxes in arrears. Accordingly
the property was subdivided and two (2) separate titles were
secured by defendants Dela Cruz. Mr. Ben Sabio immediately made
payments by installments.
Sometime in March, 1987 or more specifically on March 6, 1987,
defendants Dela Cruz executed in favor of their co-defendants, the
spouses Guide Pili (sic) and Felicitas Pili (sic), a Deed of Assignment of
the other one-half portion of the parcel of land wherein plaintiff
Gamaliel Villanueva's apartment unit is situated, designated as Lot 3
-A of the Subdivision Plan (LRC) Psd-337290, Block 24, Pcs-4865, with
an area of 201.50 square meters, more or less, and covered by
Transfer Certificate of Title 332445, purportedly as full payment and
satisfaction of an indebtedness (sic) obtained from defendants Pili (
sic) (Exhibit "G"; Exhibit "3"). Consequently, Transfer Certificate of
Title No. 356040 was issued in the name of defendants Pili (sic) also
on March 6, 1987. Immediately thereafter, the plaintiffs came to
know of such assignment and transfer and issuance of a new
certificate of title in favor of defendants Pili (sic) so that plaintiff
Gamaliel Villanueva complained to the barangay captain of Bahay
Turo, Quezon City, on the ground that there was already an
agreement between defendants Dela Cruz and themselves that said
portion of the parcel of land owned by defendants Dela Cruz would
be sold to him. As there was no settlement arrived at, the plaintiffs
elevated their complaint to this Court through the instant action.
The trial court rendered its decision in favor of private respondents. An appeal was
duly brought to public respondent which as earlier stated affirmed the said decision.
Hence, this petition for review on certiorari under Rule 45 of the Rules of Court.
The Issues
The following errors are alleged to have been committed by public respondent: 6
I
The Court of Appeals erred in failing to find that there is a perfected
contract of sale of subject property between petitioners and
respondents spouses Dela Cruz.
II
The Court of Appeals erred in applying the Statute of Frauds in this
case when it is a contract of sale that was partly executed
III
The Court of Appeals erred in not finding that this being a case of
double sale of immovable property, although respondents spouses
Pili (sic) recorded the deed of assignment to them in the Registry of
Deeds they were not in good faith while (sic) petitioners as
purchasers thereof were in prior possession in good faith of the
property
IV
The Court of Appeals erred in failing to reverse and set aside the
appealed judgment of the trial court and rendering a judgment for
petitioners
In the opinion of this Court, these four issues may be summed up in a single question:
Under the factual circumstances of this case, was there a perfected contract of sale?
Petitioners contend that the adopted findings of facts of public respondent are
contradicted by its ruling that there is no agreement as to the price of the apartments.
They argue that on the basis of the facts found by public respondent, "the conclusion
is ineluctable that there was a perfected contract of sale of the subject property." 7
According to petitioners, private respondents had to secure their consent to enable
"Sabio to buy the one-half portion of the property where the unit Sabio was renting
pertains so that petitioners will pay only the balance of P265,000.00 for the purchase
of the other half after deducting the P10,000.00 petitioners advanced." 8 Public
respondent's conclusion that the P10,000.00 paid to petitioners was not intended as
part of the purchase price allegedly "collides" with its quoted findings, as follows: 9
It was agreed by them that said P10,000.00 would form part of the sale price of
P550,000.00. . . . defendant Jose de la Cruz . . . requested her and her
son to allow said Ben Sabio to purchase one-half (1/2) of the
188
property where the unit occupied by him pertained to which
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plaintiffs consented, so they would purchase the other half portion  that although its conclusion of law was correct, the trial court erred in its statement of
and would be paying only P265.000.00 they having already given an amount of
P10,000.00 used for paying the realty taxes in arrears. . . . (Emphasis in the
petition).
The Court's Ruling
The arguments of petitioners do not persuade us. While it is true that respondent
Court adopted the recitation of facts of the trial court, it nonetheless later corrected
the relevant portions thereof as it found that no perfected contract of sale was agreed
upon. Thus, public respondent explained: 10
Appellants' theory of earnest money cannot be sustained in view of
the catena of circumstance showing that the P10,000.00 given to
appellees was not intended to form part of the purchase price. As
the great commentator Manresa observes that the delivery of part
of the purchase price should not be understood as constituting
earnest money unless it be shown that such was the intention of
the parties (Manresa Commentaries on the Civil Code, 2d ed., Vol.
10, p. 85). Moreover, as can be gleaned from the records there was
no concrete agreement to the price and manner of payment:
Q Will you tell us why your transaction with
plaintiffs (petitioners herein) did not materialize?
A Because I have been returning to Mrs.
Villanueva and in fact we have executed a Deed of
Sale which was in fact not signed.
Q Why did you not sign the Deed of Sale you
mentioned?
A The Villanuevas told me to prepare the
documents involved in this transaction because
according to her (sic) she (sic) was only waiting for
the money to come but because I was then being
pressed by Felicitas Pile for the payment of my
loan. I was constrained to assign the property to
her.
Q What are your other reasons?
A Aside from that we were still huggling (sic) for the
purchase price then and since I was being
pressed by my creditor, I was forced to make the
assignment.
The most that public respondent can be faulted with is its failure to expressly state
the facts.
Was There a Perfected Contract of Sale?
Petitioners contend that private respondents' counsel admitted that "P10,000 is partial
or advance payment of the property (TSN, June 14 [should be 15], 4 (sic) 1990, pages 6
to 7)." Necessarily then, there must have been an agreement as to price. They cite
Article 1482 of the Civil Code which provides that "(w)henever earnest money is given
in a contract of sale, it shall be considered as part of the price and as proof of the
perfection of the contract." 11
Private respondents contradict this claim with the argument that "(w)hat was clearly
agreed (upon) between petitioners and respondents Dela Cruz was that the
P10,000.00 primarily intended as payment for realty tax was going to form part of the
consideration of the sale if and when the transaction would finally be consummated." 
12Private respondents insist that there "was no clear agreement as to the true amount
of consideration." 13
Generally, the findings of fact of the lower courts are entitled to great weight and not
disturbed except for cogent reasons. 14 Indeed, they should not be changed on appeal
in the absence of a clear showing that the trial court overlooked, disregarded, or
misinterpreted some facts of weight and significance, which if considered would have
altered the result of the case. 15 In this case, and subject to the above clarification
made by the appellate court, petitioners have failed to convince us to alter such
findings.
In fact, a review of the evidence merely strengthens the conclusions of public
respondent. We scoured the transcripts but we found that respondent dela Cruz
never testified that he (or his spouse Leonila) had agreed to a definite price for the
subject property. In fact, his testimony during the cross-examination firmly negated
any price agreement with petitioners because he and his wife quoted the price of
P575,000.00 and did not agree to reduce it to P550,000.00 as claimed by petitioner: 16
Q And despite the fact that the property was
mortgaged with Development Bank of Rizal you
still contrated (sic) Sandiego (sic) for the purpose
of selling the property?
A Yes, sir.
Q And did Sandiego (sic) agree as agent in selling
the property despite the fact that it was
mortgaged with the Development Bank of Rizal?
A Yes, sir.
189
Q Can you recall the condition you offered to
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Sandiego (sic) to act as your agent in selling the
same?
A He will get certain commission for the same.
Q Will you state the price and conditions set forth
in selling the property?
A P575 thousand, sir.
Q That is the same offer that was given to you by
plaintiff Mrs. Villanueva?
A I can not recall, I think so.
Q And you will agree with me that 1/2 of P575
thousand is how much (sic)?
ATTY. MANZO:
There (is) nothing to agree with you counsel.
ATTY. GUPIT:
And the offer to you, the agreed price between
you and Mrs. Villanueva is P275 thousand as
stated in the agreement that was prepared?
ATTY. MANZO:
Counsel is again assuming that there was an
agreement made already.
(ATTY. GUPIT:)
He answered there is a document between
Villanueva and Dela Cruz.
ATTY. (MANZO):
Let the witness be confronted by the document.
We are not unmindful of petitioner Irene Villanueva's claim that the parties agreed on
the sum of P550,000.00 follows: 17
ATTY. GUPIT
What was the result of the negotiations?
WITNESS (Irene Villanueva):
We agreed that he would sell the land to us for
the sum of, the amount of P550,000.00
xxx xxx xxx
WITNESS
After the Deed of Sale relative to the purchase of
the property was prepared, Mr. dela Cruz (private
respondent Jose) came to me and told me that he
talked with one of the tenants and he offered to
buy the portion he was occupying if I will agree
and I will cause the partition of the property
between us.
ATTY. GUPIT
Did you agree with the proposal of Mr. dela Cruz
that the portion of the property will be sold to
one of the ten-ants?
WITNESS
Yes(,) sir. I agreed because we are (sic) both
tenants.
ATTY. GUPIT
How about the price? How much are (sic) you
supposed to pay in order to complete your
payments?
WITNESS
We are (sic) supposed to divide the amount of
P550,000.00.
To settle the above conflicting claims of the parties, petitioners could have presented
the contract of sale allegedly prepared by private respondent Jose dela Cruz.
Unfortunately, the contract was not presented in evidence. However, petitioners aver
that even if the unsigned deed of sale was not produced, private respondent Jose dela
Cruz "admitted preparing (said) deed in accordance with their agreement." 18 This
"judicial admission" is allegedly the "best proof of its existence." 19 Further it was
"impossible" for petitioners to produce the same "since it was and remained in the
possession" of private respondent Jose dela Cruz. 20
We do not agree with petitioners. Assuming arguendo that such draft deed existed, it
does not necessarily follow that there was already a definite agreement as to the
price. If there was, why then did private respondent Jose de la Cruz not sign it? If
indeed the draft deed of sale was that important to petitioners' cause, they should
have shown some effort to procure it. They could have secured it through a subpoena
duces tecum or thru the use of one of the modes of discovery. But petitioners made no
such effort. And even if produced, it would not have commanded any probative value
as it was not signed.
As has been said in an old case, the price of the leased land not having been fixed, the
essential elements which give life to the contract were lacking. It follows that the
lessee cannot compel the lessor to sell the leased land to him. 21 The price must be
certain, it must be real, not fictitious. 22 It is not necessary that the certainty of the 190
price be actual or determined at the time of executing the contract. The fact that the
Sales
exact amount to be paid therefor is not precisely fixed, is no bar to an action to against petitioners.
recover such compensation, provided the contract, by its terms, furnishes a basis or SO ORDERED.
measure for ascertaining the amount agreed upon. 23 The price could be made certain
by the application of known factors; where, in a sale of coal, a basic price was fixed,
but subject to modification "in proportion to variations in calories and ash content,
and not otherwise," the price was held certain. 24 A contract of sale is not void for
uncertainty when the price, though not directly stated in terms of pesos and centavos,
can be made certain by reference to existing invoices identified in the agreement. In
this respect, the contract of sale is perfected. 25 The price must be certain, otherwise
there is no true consent between the parties. 26 There can be no sale without a price. 
27 In the instant case, however, what is dramatically clear from the evidence is that
there was no meeting of mind as to the price, expressly or impliedly, directly or
indirectly.
Sale is a consensual contract. He who alleges it must show its existence by competent
proof. Here, the very essential element of price has not been proven.
Lastly, petitioners' claim that they are ready to pay private respondents 28 is
immaterial and irrelevant as the latter cannot be forced to accept such payment, there
being no perfected contract of sale in the first place.
Applicability of Statute of Frauds and the Law on Double Sale
Petitioners contend that the statute of frauds does not apply because such statute
applies only to executory contracts whereas in this case the contract of sale had
already been partly executed. 29 Further, petitioners, citing Article 1544 of the Civil
Code asseverate that being in possession of the property in good faith therefore they
should be deemed the lawful owners thereof. 30 On the other hand, private
respondents counter that the contract in this case is a "mere executory contract and
not a completed or executed contract." 31
Both contentions are inaccurate. True, the statute of frauds applies only to executory
contracts and not to partially or completely executed ones. 32 However, there is no
perfected contract in this case, therefore there is no basis for the application of the
statute of frauds. The application of such statute presupposes the existence of a
perfected contract and requires only that a note or memorandum be executed in
order to compel judicial enforcement thereof. Also, the civil law rule on double sale
finds no application because there was no sale at all to begin with.
At bottom, what took place was only a prolonged negotiation to buy and to sell, and at
most, an offer and a counter-offer but no definite agreement was reached by the
parties. Hence, the rules on perfected contract of sale, statute of frauds and double
sale find no relevance nor application.
191
WHEREFORE, the Petition is DENIED and the assailed Decision is AFFIRMED. Costs
Sales
JOSE R. MORENO, JR., the building.
Petitioner,  
- versus -  3. Plaintiff is the
PRIVATE MANAGEMENT OFFICE (formerly, ASSET PRIVATIZATION owner of the Ground Floor,
TRUST), the 7th Floor and the
Respondent.  Penthouse of the J. Moreno
  Building and the lot on which
At bar is a Petition for Review on Certiorari of the Decision and it stands.
Resolution of the Court of Appeals in CA-G.R. CV No. 49227 dated January 30,  
2003 and July 31, 2003, respectively, reversing the decision of the Regional Trial 4. Defendant is the
Court of Makati, Branch 62, in Civil Case No. 93-2756 dated August 10, 1994. owner of the 2nd, 3rd, 4th, 5th
The bare facts are stated in the Joint Motion and Stipulation[1]   and 6th floors of the building,
dated March 11, 1994, viz.: the subject-matter (sic) of this
COME NOW the parties, through the undersigned suit.
counsel, to this Honorable Court respectfully make the following  
agreed statement of facts and issues: which were admitted in the Answer
  dated October 29, 1993;
1. The parties hereto hereby confirm  
the allegations contained in paragraphs 1, 2, 3 2. On February 13, 1993, the
and 4 of the Complaint, to wit: defendant called for a conference for the
  purpose of discussing plaintiffs right of first
1. Plaintiff is of legal refusal over the floors of the building owned
age, with residence at No. 700 by defendant. At said meeting, defendant
Gen. Malvar St., Malate, Manil informed plaintiff that the proposed purchase
a; while defendant is a price for said floors was TWENTY[-]ONE
juridical entity with powers to MILLION PESOS (P21,000,000.00);
sue and be sued under  
Proclamation No. 50 with 3. On February 22, 1993, defendant, in
offices at the 10th floor, a letter signed by its Trustee, Juan W. Moran,
BA Lepanto Building, informed plaintiff thru Atty. Jose Feria, Jr., that
8747 Paseo de Roxas, Makati, the Board of Trustees (BOT) of APT is in
Metro Manila, where it may agreement that Mr. Jose Moreno, Jr. has the
be served with summons, right of first refusal and requested plaintiff to
thru its Trustees. deposit 10% of the suggested indicative price
2. The subject-matter of P21.0 million on or before February 26, 1993
(sic) of this complaint is the J. which letter is attached hereto as Annex A and
Moreno Building (formerly made an integral part of this pleading;
known as 4. Plaintiff paid the P2.1 million
the North Davao Mining Build on February 26, 1993. A copy of the Official
ing) or more specifically, the 2 Receipt issued by defendant to plaintiff is
nd, 3rd, 4th, 5th and 6th floors of attached hereto as Annex B and made an 192
Sales
integral part of this pleading;
 
5. Then on March 12, 1993, defendant
wrote plaintiff that its Legal Department has
questioned the basis for the computation of
the indicative price for the said floors. A copy
of the letter is attached hereto as Annex C and
made an integral part of this pleading;
 
6. On April 2, 1993, defendant wrote
plaintiff that the APT BOT has tentatively
agreed on a settlement price of P42,274,702.17
for the said floors. A copy of this
communication is attached hereto as Annex D
and made an integral part hereof;
 
7. The questions to be resolved by this
Honorable Court are:
 
7.01. Whether or not
there was a perfected
contract of sale over the said
floors for the amount of P
21.0 million, which will give
rise to a right on the part of
the plaintiff to demand that
the said floors be sold to him
for said amount;
7.02. Assuming that
there was a perfected
contract, whether or not
defendant can be bound by
the price of P21.0 million;
 
8. Both parties hereto hereby waive their
respective claims for damages, attorneys fees
and costs;
 
9. Rule 30 of the Revised Rules of Court
provides that:
 
SEC. 2. Agreed
statement of facts. The
parties to any action may
agree, in writing, upon the
facts involved in the litigation,
and require the judgment of
the court upon the facts
agreed upon, without the
introduction of evidence.
 
10. Both parties have agreed to submit this
stipulation and to request that a decision of
this Honorable Court be rendered on the basis
of the foregoing stipulation of facts and issues,
and after both parties have submitted their
respective memoranda.
 
PRAYER
 
WHEREFORE, it is respectfully prayed that judgment be
rendered on the basis of the agreed stipulation of facts and
issues, without the introduction of evidence in accordance with
Section 2, Rule 30 of the Revised Rules of Court, and after the
submission of the parties of their respective Memoranda.
x x x
On August 10, 1994, the trial court ruled in favor of petitioner Moreno, 
viz.:
WHEREFORE, judgment is hereby rendered in favor of plaintiff
and against defendant, ordering defendant to sell the 2nd, 3rd, 4
th, 5th and 6th floors of the J. Moreno Building to plaintiff at the
price of TWENTY[-]ONE MILLION (P21,000,000.00) PESOS; and
ordering defendant to endorse the transaction to the
Committee on Privatization, without costs.[2]
 
 
Respondent filed a Motion for Reconsideration.[3] On November 16,
1994, the trial court denied the motion for lack of merit.[4]
 
Respondent appealed with the Court of Appeals. From the time 193
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respondent filed its Notice of Appeal with the trial court, the parties submitted  
numerous motions, including petitioners Motion to Dismiss[5] dated July 8, 1996. THE PRINCIPLE OF ESTOPPEL SHOULD HAVE
Petitioner moved that the case be dismissed due to the failure of respondent to BEEN APPLIED BY THE COURT OF APPEALS TO
file its brief within the reglementary period. HOLD RESPONDENT APT (NOW PMO) TO ITS
  CONTRACT OF SALE WITH
On December 18, 1997, the Eighth Division of the appellate court PETITIONER MORENO CONSIDERING THAT:
granted[6] the motion to dismiss and denied[7] respondents motion for  
reconsideration. Respondent then filed a Petition for Review on Certiorari[8] with A. THERE IS NOTHING
this Court to reverse the dismissal of the appeal. On July 5, 1999, this Court, IRREGULAR OR
through a Resolution[9] of the Third Division, reversed the resolution dismissing UNCONSCIONABLE IN THE
the appeal on the ground that the appeal raises substantial issues justifying a ACTS OF THE AGENTS OF
review of the case on the merits. RESPONDENT APT (NOW
  PMO) IN CONNECTION WITH
On January 30, 2003, the appellate court found that there was no THE PERFECTED AND
perfected contract of sale over the subject floors and reversed the ruling of the PARTIALLY EXECUTED
trial court, viz.: CONTRACT OF SALE.
WHEREFORE, the appeal is hereby GRANTED. The  
assailed decision of the Regional Trial Court of Makati, Metro B. RESPONDENT APT (NOW
Manila, Branch 62, rendered in Civil Case No. 93-2756 is hereby PMO) HAS DESCENDED TO
REVERSED and SET ASIDE and a new one is entered DISMISSING THE LEVEL OF A PRIVATE
the instant complaint.[10] INDIVIDUAL OR ENTITY
  BOUND BY VALID
Petitioner moved for reconsideration but the motion was denied by the CONTRACTUAL OBLIGATIONS
appellate court in its questioned Resolution[11] dated July 31, 2003. Hence, this WHEN IT ENGAGED IN
Petition contending that: PROPRIETARY AND/OR
  COMMERCIAL FUNCTIONS.
IN REVERSING THE TRIAL COURTS DECISION DATED 10 AUGUST  
1994, THE COURT OF APPEALS DECIDED ISSUES NOT IN  
ACCORDANCE WITH LAW AND THE APPLICABLE DECISIONS OF  
THE HONORABLE COURT CONSIDERING THAT:  
  III
I  
  THE COURT OF APPEALS ERRED WHEN IT
GIVEN THE UNDISPUTED FACTS OF THE RULED THAT RESPONDENT APT (NOW PMO)
INSTANT CASE, IT IS CLEAR THAT THERE WAS A TIMELY RAISED THE ISSUES ON THE ALLEGED
PERFECTED, VALID AND BINDING CONTRACT REQUIREMENT OF APPROVAL FOR THE
OF SALE BETWEEN PETITIONER MORENO AND INDICATED PRICE AND THE ALLEGED
RESPONDENT APT (NOW PMO) WITH RESPECT UNCONSCIONABLY LOW PRICE FOR THE SALE
TO THE SUBJECT PROPERTY. OF THE SUBJECT PROPERTY, CONSIDERING
  THAT SAID ISSUES WERE NEVER RAISED IN THE
II PROCEEDINGS BEFORE THE TRIAL COURT AND 194
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DO NOT BEAR RELEVANCE OR CLOSE
RELATION TO THE ISSUES RAISED IN THE
PROCEEDINGS BEFORE THE COURT OF
APPEALS.
 
IV
 
THE COURT OF APPEALS ERRED IN RULING
THAT THE BRIEF FILED BY RESPONDENT APT
(NOW PMO) DID NOT VIOLATE SECTION 1(F) OF
THE RULES OF COURT WHICH SHOULD HAVE
WARRANTED A DISMISSAL OF RESPONDENT
APTS (NOW PMO) APPEAL.[12]
 
 
The hinge issue is whether there was a perfected contract of sale over the
subject floors at the price of P21,000,000.00.
A 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.[13] Consent
is manifested by the meeting of the offer and the acceptance upon the thing and
the cause which are to constitute the contract. The offer must be certain and
the acceptance absolute.[14]
 
To reach that moment of perfection, the parties must agree on the same
thing in the same sense,[15] so that their minds meet as to all the terms.[16] They
must have a distinct intention common to both and without doubt or difference;
until all understand alike, there can be no assent, and therefore no contract.[17]  floors of the building in question is P21 Million.
The minds of parties must meet at every point; nothing can be left open for
further arrangement.[18] So long as there is any uncertainty or indefiniteness, or
future negotiations or considerations to be had between the parties, there is not
a completed contract, and in fact, there is no contract at all.[19]
 
Contract formation undergoes three distinct stages preparation or
negotiation, perfection or birth, and consummation. Negotiation begins from the
time the prospective contracting parties manifest their interest in the contract
and ends at the moment of agreement of the parties. The perfection or birth of
the contract takes place when the parties agree upon all the essential elements
thereof. The last stage is the consummation of the contract wherein the parties
fulfill or perform the terms agreed upon, culminating in its extinguishment.[20]
 Once there is concurrence of the offer and acceptance of the object and cause,
the stage of negotiation is finished. This situation does not obtain in the case at
bar. The letter of February 22, 1993 and the surrounding circumstances clearly
show that the parties are not past the stage of negotiation, hence there could not
have been a perfected contract of sale.
 
The letter[21] is clear evidence that respondent did not intend to sell the
subject floors at the price certain of P21,000,000.00, viz.:
22 February 1993
 
ATTY. JOSE FERIA, JR.
FERIA, FERIA, LUGTU & LAO
Ferlaw Building, 336 Cabildo Street
Intramuros, Manila
 
Dear Atty. Feria:
 
During its meeting on February 19, 1993, our Board reviewed
your letter of February 18, 1993.
 
We are pleased to inform you that the Board is in agreement
that Mr. Jose Moreno, Jr. has the right of first refusal. This will be
confirmed by our Board during the next board meeting
on February 26, 1993. In the meantime, please advise Mr.
Moreno that the suggested indicative price for APTs five (5)
 
If Mr. Moreno is in agreement, he should deposit with APT the
amount of P2.1 Million equivalent to 10% of the price on or
before February 26, 1993. The balance will be due within fifteen
(15) days after Mr. Moreno receives the formal notice of
approval of the indicative price.
 
If you or Mr. Moreno have (sic) any question, please let me
know.
 
Very truly yours,
  195
 
Sales
(Signed)
JUAN W. MORAN
Associate Executive Trustee
 
The letter clearly states that P21,000,000.00 is merely a suggested
indicative price of the subject floors as it was yet to be approved by the Board of
Trustees. Before the Board could confirm the suggested indicative price, the
Committee on Privatization must first approve the terms of the sale or
disposition. The imposition of this suspensive condition finds basis under
Proclamation No. 50[22]which vests in the Committee the power to approve the
sale of government assets, including the price of the asset to be sold, viz.:
ARTICLE II. COMMITTEE ON PRIVATIZATION
x x x
 
SECTION 5. POWERS AND FUNCTIONS. The Committee shall
have the following powers and functions:
 
(1) x x x x Provided, further, that any such
independent disposition shall be undertaken
with the prior approval of the Committee and
in accordance with the general disposition
guidelines as the Committee may provide;
Provided, finally, that in every case the sale or
disposition shall be approved by the
Committee with respect to the buyer and price
only;
 
x x x
 
(4) To approve or disapprove, on behalf of the
National Government and without need of any
further approval or other action from any
other government institution or agency, the
sale or disposition of such assets, in each case
on terms and to purchasers recommended by
the Trust or the government institution, as the
case may be, to whom the disposition of such
assets may have been delegated; Provided
that, the Committee shall not itself undertake
the marketing of any such assets, or
participate in the negotiation of their sale;
x x x
ARTICLE III. ASSET PRIVATIZATION TRUST
 
x x x
 
SECTION 12. POWERS. The Trust shall, in the discharge of its
responsibilities, have the following powers:
 
x x x
(2) Subject to its having received the prior
written approval of the Committee to sell such
asset at a price and on terms of payment and
to a party disclosed to the Committee, to sell
each asset referred to it by the Committee to
such party and on such terms as in its
discretion are in the best interest of the
National Government, and for such purpose to
execute and deliver, on behalf and in the name
of the National Government. Such deeds of
sale, contracts and other instruments as
may be necessary or appropriate to convey
title to such assets;
Petitioner construes Section 12, Article III of the Proclamation differently.
He argues that what the law says is that even before respondent sells or offers
for sale a government asset, the terms thereof have already been previously
approved by the Committee,[23] i.e., [s]ubject to its having received the prior 
written approval of the Committee to sell such an asset at a price and on terms of
payment and to a party disclosed to the Committee, to sell each asset referred to
it by the Committee to such party and on such terms as in its discretion are in the
best interest of the National Government.[24] Thus, the Committees approval of
the suggested indicative price of P21,000,000.00 is not necessary.
 
We are not persuaded.
If we adopt the argument of petitioner, Section 12, Article III would nullify
the power granted to the Committee under Section 5 (4), Article II of the same
Proclamation. Under Section 5 (4), the Committee has the power to approve or
disapprove, on behalf of the National Government and without need of any 196
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further approval or other action from any other government institution or
agency, the sale or disposition of such assets, in each case on terms and to
purchasers recommended by the Trust or the government institution, as the
case may be, to whom the disposition of such assets may have been delegated;
Provided that, the Committee shall not itself undertake the marketing of any such
assets, or participate in the negotiation of their sale.[25] The law is clear that the
Trust shall recommend the terms for the Committees approval or disapproval,
and not the other way around.
 
It is a basic canon of statutory construction that in interpreting a statute,
care should be taken that every part thereof be given effect, on the theory that it
was enacted as an integrated measure and not as a hodge-podge of conflicting
provisions. The rule is that a construction that would render a provision
inoperative should be avoided; instead, apparently inconsistent provisions
should be reconciled whenever possible as parts of a coordinated and
harmonious whole.[26]
 
To bolster the argument that the Committees approval may be
dispensed with, petitioner also cites Opinion No. 27, Series of 1989, of the
Secretary of Justice which recognizes a case where the Committee may delegate
to respondent the power to approve the sale or disposition of assets with a
transfer price not exceeding P60,000,000.00.[27]
The argument fails to impress. The Opinion involves a case where no
material discretion is involved in the disposition of assets pursuant to the subject
proposal and the act which could be delegated, as opined, is ministerial. The
Opinion further notes that the criteria and guidelines stated therein are concrete
and definite enough that once these criteria and guidelines are present in a
particular case, the APT is practically left with no choice in the disposition of the
assets involved and that all that the APT shall do in disposing off an asset
thereunder is ascertain whether a prospective buyer and the price he offers
satisfy such conditions. Petitioner failed to show that the case at bar is of the
same nature that is, that the disposition of the subject floors partakes of the
nature of a ministerial act which has been defined as one performed under a
given state of facts, in a prescribed manner, in obedience to the mandate of legal
authority, without regard to the exercise of judgment upon the propriety or
impropriety of the act done.
 
Petitioner further argues that the suggested indicative price of P
21,000,000.00 is not a proposed price, but the selling price indicative of the value
at which respondent was willing to sell.[28]Petitioner posits that under Section 14,
Rule 130 of the Revised Rules of Court, the term should be taken in its ordinary
and usual acceptation and should be taken to mean as a price which is indicated
or specified which, if accepted, gives rise to a meeting of minds.[29] This was the
same construction adopted by the trial court, viz.:
Going to defendants main defense that P21 Million was
a suggested indicative price we have to find out exactly what
indicative means. Webster Comprehensive Dictionary,
International Edition, gives us a graphic meaning that everybody
can understand, when it says that to indicate is [t]o point out;
direct attention[;] to indicate the correct page[.] Indicative is
merely the adjective of the verb to indicate. x x x when the price
of P21 [M]illion was indicated then it becomes the indicative
price the correct price, no ifs[,] no buts.[30] (emphases in the original)
 
 
We do not agree.
Under the same section and rule invoked by petitioner, the terms of a
writing are presumed to have been used in their primary and general
acceptation, but evidence is admissible to show that they have a local, technical,
or otherwise peculiar signification, and were so used and understood in the
particular instance, in which case the agreement must be construed accordingly.
[31]
The reliance of the trial court in the Webster definition of the term
indicative, as also adopted by petitioner, is misplaced. The transaction at bar
involves the sale of an asset under a privatization scheme which attaches a
peculiar meaning or signification to the term indicative price. Under No. 6.1 of the
General Bidding Procedures and Rules[32] of respondent, an indicative price is a
ball-park figure and [respondent] supplies such a figure purely to define the ball-
park.[33] The plain contention of petitioner that the transaction involves an
ordinary armslength sale of property is unsubstantiated and leaves much to be
desired. This case sprung from a case of specific performance initiated by
petitioner who has the burden to prove that the case should be spared from the
application of the technical terms in the sale and disposition of assets under
privatization. Petitioner failed to discharge the burden.
 
It appears in the case at bar that petitioners construction of the letter of
February 22, 1993 that his assent to the suggested indicative price of P
21,000,000.00 converted it as the price certain, thus giving rise to a perfected
contract of sale[34] is petitioners own subjective understanding. As such, it is not
shared by respondent. Under American jurisprudence, mutual assent is judged197
by anobjective standard, looking to the express words the parties used in the
Sales
contract.[35] Under the objective theory of contract, understandings and beliefs
are effective only if shared.[36] Based on the objective manifestations of the
parties in the case at bar, there was no meeting of the minds. That the letter
constituted a definite, complete and certain offer is the subjective belief of
petitioner alone.The letter in question is a mere evidence of a memorialization of
inconclusive negotiations, or a mere agreement to agree, in which material term
is left for future negotiations.[37] It is a mere evidenceof the parties preliminary
transactions which did not crystallize into a perfected contract. Preliminary
negotiations or an agreement still involving future negotiations is not the
functional equivalent of a valid, subsisting agreement.[38] For a valid contract to
have been created, the parties must have progressed beyond this stage of
imperfect negotiation. But as the records would show, the parties are yet
undergoing the preliminary steps towards the formation of a valid contract.
Having thus established that there is no perfected contract of sale in the case at
bar, the issue on estoppel is now moot and academic.
 
Finally, petitioner contends that the appellate court should have
dismissed the appeal of respondent on the procedural technicality that the
Appellants Brief does not have page references to the record in its Statement of
Facts, Statement of the Case and Arguments in the Appellants Brief.[39]
 
We find no reason to reverse the ruling of the appellate court which has
judiciously explained why the appeal should not be dismissed on this ground, viz.:
x x x x Procedural rules are required to be followed as a
general rule, but they may be relaxed to relieve a litigant of an
injustice not commensurate with the degree of his
noncompliance with the procedure required. In this case,
[respondents] brief does not substantially violate our
procedural rules. Besides, the merits of its arguments will show
that the trial court seriously erred in issuing its assailed
decision.[40]
 
 
IN VIEW WHEREOF, the assailed Decision and Resolution of the Court of
Appeals in CA-G.R. CV No. 49227 dated January 30, 2003 and July 31, 2003,
respectively, are AFFIRMED.
 
SO ORDERED.
SPS. JORGE NAVARRA and CARMELITA BERNARDO NAVARRA and RRRC
DEVELOPMENT CORPORATION,
Petitioners,
- versus -
PLANTERS DEVELOPMENT BANK and ROBERTO GATCHALIAN REALTY, INC.,
Respondents.
Assailed and sought to be set aside in this petition for review under Rule 45 of the
Rules of Court is the decision[1] dated September 27, 2004 of the Court of Appeals (CA)
in CA-G.R. CV No. 50002, as reiterated in its resolution[2] dated May 8, 2006, denying
reconsideration thereof. The challenged decision reversed that of the Regional Trial
Court (RTC) of Makati City, Branch 66, in its Civil Case No. 16917, an action for Specific
Performance and Injunction thereat commenced by the herein petitioners against the
respondents. The Makati RTC ruled that a perfected contract of sale existed in favor of
Jorge Navarra and Carmelita Bernardo Navarra (Navarras) over the properties
involved in the suit and accordingly ordered Planters Development Bank (Planters
Bank) to execute the necessary deed of sale therefor. The CA reversed that ruling.
Hence, this recourse by the petitioners.
 
The facts:
 
The Navarras are the owners of five (5) parcels of land located at B.F. Homes,
Paraaque and covered by Transfer Certificates of Title (TCT) Nos. S-58017, S-58011, S-
51732, S-51733 and A-14574. All these five (5) parcels of land are the subject of this
controversy.
 
On July 5, 1982, the Navarras obtained a loan of P1,200,000.00 from Planters
Bank and, by way of security therefor, executed a deed of mortgage over
their aforementioned five (5) parcels of land. Unfortunately, the couple failed to pay
their loan obligation. Hence, Planters Bank foreclosed on the mortgage and the
mortgaged assets were sold to it for P1,341,850.00, it being the highest bidder in the
auction sale conducted on May 16, 1984. The one-year redemption period expired
without the Navarras having redeemed the foreclosed properties.
 
On the other hand, co-petitioner RRRC Development Corporation (RRRC) is a
real estate company owned by the parents of Carmelita Bernardo Navarra. RRRC itself
obtained a loan from Planters Bank secured by a mortgage over another set of
properties owned by RRRC. The loan having been likewise unpaid, Planters Bank
similarly foreclosed the mortgaged assets of RRRC. Unlike the Navarras, however,
RRRC was able to negotiate with the Bank for the redemption of its foreclosed
properties by way of a concession whereby the Bank allowed RRRC to refer to it would
-be buyers of the foreclosed RRRC properties who would remit their payments directly
to the Bank, which payments would then be considered as redemption price for RRRC. 198
Eventually, the foreclosed properties of RRRC were sold to third persons whose
Sales
payments therefor, directly made to the Bank, were in excess by P300,000.00 for the
redemption price.
In the meantime, Jorge Navarra sent a letter to Planters Bank, proposing to
repurchase the five (5) lots earlier auctioned to the Bank, with a request that he be
given until August 31, 1985 to pay the down payment of P300,000.00. Dated July 18,
1985 and addressed to then Planters Bank President Jesus Tambunting, the letter
reads in full:
This will formalize my request for your kind consideration
in allowing my brother and me to buy back my house and lot and
my restaurant building and lot together with the adjacent road lot.
 
Since my brother, who is working in Saudi Arabia, has
accepted this arrangement only recently as a result of my urgent
offer to him, perhaps it will be safe for us to set August 31, 1985 as
the last day for the payment of a P300,000.00 downpayment. I hope
you will grant us the opportunity to raise the funds within this
period, which includes an allowance for delays.
 
The purchase price, I understand, will be based on the
redemption value plus accrued interest at the prevailing rate up to
the date of our sales contract. Maybe you can give us a long term
payment scheme on the basis of my brothers annual savings of
roughly US$30,000.00 everytime he comes home for his home
leave.
 
I realize that this is not a regular transaction but I am
seeking your favor to give me a chance to reserve whatever values I
can still recover from the properties and to avoid any legal
complications that may arise as a consequence of the total loss of
the Balangay lot. I hope that you will extend to me your favorable
action on this grave matter.
 
 
In response, Planters Bank, thru its Vice-President Ma. Flordeliza Aguenza,
wrote back Navarra via a letter dated August 16, 1985, thus:
 
Regarding your letter dated July 18, 1985, requesting that we give up
to August 31, 1985 to buy back your house and lot and restaurant
and building subject to a P300,000.00 downpayment on the
purchase price, please be advised that the Collection Committee
has agreed to your request.
Please see Mr. Rene Castillo, Head, Acquired Assets Unit,
as soon as possible for the details of the transaction so that they
may work on the necessary documentation.
 
Accordingly, Jorge Navarra went to the Office of Mr. Rene Castillo on August
20, 1985, bringing with him a letter requesting that the excess payment of P300,000.00
in connection with the redemption made by the RRRC be applied as down payment for
the Navarras repurchase of their foreclosed properties.
 
Because the amount of P300,000.00 was sourced from a different
transaction between RRRC and Planters Bank and involved different debtors, the Bank
required Navarra to submit a board resolution from RRRC authorizing him to
negotiate for and its behalf and empowering him to apply the excess amount of P
300,000.00 in RRRCs redemption payment as down payment for the repurchase of the
Navarras foreclosed properties.
 
Meanwhile, titles to said properties were consolidated in the name of
Planters Bank, and on August 27, 1985, new certificates of title were issued in its
name, to wit: TCT Nos. 97073, 97074, 97075, 97076 and 97077.
 
Then, on January 21, 1987, Planters Bank sent a letter to Jorge Navarra
informing him that it could not proceed with the documentation of the proposed
repurchase of the foreclosed properties on account of his non- compliance with the
Banks request for the submission of the needed board resolution of RRRC.
 
In his reply-letter of January 28, 1987, Navarra claimed having already
delivered copies of the required board resolution to the Bank. The Bank, however, did
not receive said copies. Thus, on February 19, 1987, the Bank sent a notice to the
Navarrras demanding that they surrender and vacate the properties in question for
their failure to exercise their right of redemption.
 
Such was the state of things when, on June 31, 1987, in the RTC of Makati
City, the Navarras filed their complaint for Specific Performance with Injunction against
Planters Bank. In their complaint docketed in said court as Civil Case No. 16917 and
raffled to Branch 66 thereof, the Navarras, as plaintiffs, alleged that a perfected
contract of sale was made between them and Planters Bank whereby they would
repurchase the subject properties for P1,800,000.00 with a down payment of P
300,000.00.
 
In its Answer, Planters Bank asserted that there was no perfected contract of
sale because the terms and conditions for the repurchase have not yet been agreed
upon.
On September 9, 1988, a portion of the lot covered by TCT No. 97077 199
Sales
(formerly TCT No. A-14574) was sold by Planters Bank to herein co-respondent
Roberto Gatchalian Realty, Inc. (Gatchalian Realty). Consequently, TCT No. 97077 was
cancelled and TCT No. 12692 was issued in the name of Gatchalian Realty. This
prompted the Navarras to amend their complaint by impleading Gatchalian Realty as
additional defendant.
 
In a decision dated July 10, 1995, the trial court ruled that there was a
perfected contract of sale between the Navarras and Planters Bank, and accordingly
rendered judgment as follows:
 
WHEREFORE, in view of the foregoing, judgment is hereby
rendered ordering:
a)                  the cancellation of the Deed of Absolute Sale
(Exh. 2) over lot 4137-C between defendant
Planters Development Bank and defendant
Roberto Gatchalian Realty Corporation (RGRI)
with the vendor bank refunding all the payments
made by the vendee RGRI without interest less
the five percent (5%) brokers commission:
 
b)                  the defendant Planters Development Bank to
execute the Deed of Absolute Sale over the lots
covered by TCT Nos. 97073, 97074, 97075, 97076,
and 97077 in favor of all the plaintiffs for a
consideration of ONE MILLION EIGHT HUNDRED
THOUSAND (P1,800,000.00) less the
downpayment of P300,000.00 plus interest at the
rate of twenty five percent (25%) per year for five
(5) years to be paid in full upon the execution of
the contract;
c)                  the defendant Planters Development Bank the
amount of TEN THOUSAND PESOS (P10,000.00)
by way of attorneys fees.
 
d)                  No costs.
 
SO ORDERED.
 
Therefrom, Planters Bank and Gatchalian Realty separately went on appeal
to the CA whereat their appellate recourse were consolidated and docketed as CA-G.R.
CV No. 50002.
 
As stated at the threshold hereof, the appellate court, in its decision
of September 27, 2004, reversed that of the trial court and ruled that there was no
perfected contract of sale between the parties. Partly says the CA in its decision:
 
The Court cannot go along with the deduction of the trial court that
the response of Planters Bank was favorable to Jorge Navarras
proposal and that the P300,000.00 in its possession is a down
payment and as such sufficient bases to conclude that there was a
valid and perfected contract of sale. Based on the turn of events
and the tenor of the communications between the offerors and the
creditor bank, it appears that there was not even a perfected
contract to sell, much less a perfected contract of sale.
Article 1319 cited by the trial court provides that the acceptance to
an offer must be absolute. Simply put, there must be unqualified
acceptance and no condition must tag along. But Jorge Navarra in
trying to convince the bank to agree, had himself laid out terms in
offering (1) a downpayment of P300,000.00 and setting (2) as
deadline August 31, 1985 for the payment thereof. Under these
terms and conditions the bank indeed accepted his offer, and these
are essentially the contents of Exhibits J and K.
 
But was there compliance? According to the evidence on file the
P300,000.00, if at all, was given beyond the agreed period. The court
a quo missed the fact that the said amount came from the excess of
the proceeds of the sale to the Pea spouses which Jorge Navarra
made to appear was made before the deadline he set of August 31,
1985. But this is athwart Exhibits M-1 and N, the Contract to Sell and
the Deed of Sale between RRRC and the Peas, for these were
executed only on September 13, 1985 and October 7,
1985 respectively.
xxx xxx xxx
 
There were two separate and independent loans secured by distinct
mortgages on different lots and their only commonality is the
relationship of the Navarras and Bernardo families. It is thus
difficult to conceive and to conclude that such Byzantine
arrangement was acquiesced to and provided for in that single and
simple letter of the bank.
 
With their motion for reconsideration having been denied by the CA in its
resolution of May 8, 2006, petitioners are now with this Court via this recourse on their
submission that the CA erred - 200
Sales
I This will formalize my request for your kind consideration
 
XXX IN CONCLUDING THAT THERE WAS NO PERFECTED CONTRACT
TO REPURCHASE THE FORECLOSED PROPERTIES BETWEEN THE
PETITIONERS AND THE PRIVATE RESPONDENT PLANTERS
DEVELOPMENT BANK, AS CORRECTLY FOUND BY THE TRIAL COURT.
 
II
 
XXX IN HOLDING THAT THE PARTIES NEVER GOT PAST THE
NEGOTIATION STAGE.
 
While the question raised is essentially one of fact, of which the Court
normally eschews from, yet, given the conflicting factual findings of the trial and
appellate courts, the Court shall go by the exception[3] to the general rule and proceed
to make its own assessment of the evidence.
 
We DENY.
 
Petitioners contend that a perfected contract of sale came into being when
respondent Bank, thru a letter dated August 16, 1985, formally accepted the offer of
the Navarras to repurchase the subject properties.
 
In general, contracts undergo three distinct stages, to wit: negotiation,
perfection or birth, and consummation. Negotiation begins from the time the
prospective contracting parties manifest their interest in the contract and ends at the
moment of their agreement. Perfection or birth of the contract takes place when the
parties agree upon the essential elements of the contract, i.e., consent, object and
price. Consummation occurs when the parties fulfill or perform the terms agreed
upon in the contract, culminating in the extinguishment thereof.[4]
 
A negotiation is formally initiated by an offer which should be certain with
respect to both the object and the cause or consideration of the envisioned contract.
In order to produce a contract, there must be acceptance, which may be express or
implied, but it must not qualify the terms of the offer. The acceptance of an offer must
be unqualified and absolute to perfect the contract. In other words, it must be
identical in all respects with that of the offer so as to produce consent or meeting of
the minds.[5]
 
Here, the Navarras assert that the following exchange of correspondence
between them and Planters Bank constitutes the offer and acceptance, thus:
 
Letter dated July 18, 1985 of Jorge Navarra:
in allowing my brother and me to buy back my house and lot and
my restaurant building and lot together with the adjacent road lot.
 
Since my brother, who is working in Saudi Arabia, has
accepted this arrangement only recently as a result of my urgent
offer to him, perhaps it will be safe for us to set August 31, 1985 as
the last day for the payment of a P300,000.00 downpayment. I hope
you will grant us the opportunity to raise the funds within this
period, which includes an allowance for delays.
 
The purchase price, I understand, will be based on the
redemption value plus accrued interest at the prevailing rate up to
the date of our sales contract. Maybe you can give us a long term
payment scheme on the basis of my brothers annual savings of
roughly US$30,000.00 everytime he comes home for his home
leave.
 
I realize that this is not a regular transaction but I am
seeking your favor to give me a chance to reserve whatever values I
can still recover from the properties and to avoid any legal
complications that may arise as a consequence of the total loss of
the Balangay lot. I hope that you will extend to me your favorable
action on this grave matter.
 
Letter dated August 16, 1985 of Planters Bank
Regarding your letter dated July 18, 1985, requesting that we give up
to August 31, 1985 to buy back your house and lot and restaurant
and building subject to a P300,000.00 downpayment on the
purchase price, please be advised that the Collection Committee
has agreed to your request.
 
Please see Mr. Rene Castillo, Head, Acquired Assets
Unit, as soon as possible for the details of the transaction so
that they may work on the necessary documentation.
(Emphasis ours)
 
Given the above, the basic question that comes to mind is: Was the offer
certain and the acceptance absolute enough so as to engender a meeting of the
minds between the parties? Definitely not.
While the foregoing letters indicate the amount of P300,000.00 as down
payment, they are, however, completely silent as to how the succeeding installment
payments shall be made. At most, the letters merely acknowledge that the down 201
Sales
payment of P300,000.00 was agreed upon by the parties. However, this fact cannot
lead to the conclusion that a contract of sale had been perfected. Quite recently, this
Court held that before a valid and binding contract of sale can exist, the manner of
payment of the purchase price must first be established since the agreement on the
manner of payment goes into the price such that a disagreement on the manner of
payment is tantamount to a failure to agree on the price.[6]
 
Too, the Navarras letter/offer failed to specify a definite amount of the
purchase price for the sale/repurchase of the subject properties. It merely stated that
the purchase price will be based on the redemption value plus accrued interest at the
prevailing rate up to the date of the sales contract. The ambiguity of this statement
only bolsters the uncertainty of the Navarras so-called offer for it leaves much rooms
for such questions, as: what is the redemption value? what prevailing rate of interest
shall be followed: is it the rate stipulated in the loan agreement or the legal rate? when
will the date of the contract of sale be based, shall it be upon the time of the execution
of the deed of sale or upon the time when the last installment payment shall have
been made? To our mind, these questions need first to be addressed, discussed and
negotiated upon by the parties before a definite purchase price can be arrived at.
 
Significantly, the Navarras wrote in the same letter the following:
 
Maybe you can give us a long-term payment scheme on
the basis of my brothers annual savings of roughly US$30,000.00
every time he comes home for his home leave.
 
Again, the offer was not clear insofar as concerned the exact number of
years that will comprise the long-term payment scheme. As we see it, the absence of a
stipulated period within which the repurchase price shall be paid all the more adds to
the indefiniteness of the Navarras offer.
 
Clearly, then, the lack of a definite offer on the part of the spouses could not
possibly serve as the basis of their claim that the sale/repurchase of their foreclosed
properties was perfected. The reason is obvious: one essential element of a contract
of sale is wanting: the price certain. There can be no contract of sale unless the
following elements concur: (a) consent or meeting of the minds; (b) determinate
subject matter; and (c) price certain in money or its equivalent. Such contract is born
or perfected from the moment there is a meeting of minds upon the thing which is the
object of the contract and upon the price.[7] Here, what is dramatically clear is that
there was no meeting of minds vis-a-vis the price, expressly or impliedly, directly or
indirectly.
Further, the tenor of Planters Banks letter-reply negates the contention of
the Navarras that the Bank fully accepted their offer. The letter specifically stated that
there is a need to negotiate on the other details of the transaction[8]  before the sale may be
formalized. Such statement in the Banks letter clearly manifests lack of agreement
between the parties as to the terms of the purported contract of sale/repurchase,
particularly the mode of payment of the purchase price and the period for its
payment. The law requires acceptance to be absolute and unqualified. As it is, the
Banks letter is not the kind which would constitute acceptance as contemplated by law
for it does not evince any categorical and unequivocal undertaking on the part of the
Bank to sell the subject properties to the Navarras.
 
The Navarras attempt to prove the existence of a perfected contract of sale
all the more becomes futile in the light of the evidence that there was in the first place
no acceptance of their offer. It should be noted that aside from their first letter
dated July 18, 1985, the Navarras wrote another letter dated August 20, 1985, this time
requesting the Bank that the down payment of P300,000.00 be instead taken from the
excess payment made by the RRRC in redeeming its own foreclosed properties. The
very circumstance that the Navarras had to make this new request is a clear indication
that no definite agreement has yet been reached at that point. As we see it, this
request constitutes a new offer on the part of the Navarras, which offer was again
conditionally accepted by the Bank as in fact it even required the Navarras to submit a
board resolution of RRRC before it could proceed with the proposed sale/repurchase.
The eventual failure of the spouses to submit the required board resolution precludes
the perfection of a contract of sale/repurchase between the parties. As earlier
mentioned, contracts are perfected when there is concurrence of the parties wills,
manifested by the acceptance by one of the offer made by the other.[9] Here, there
was no concurrence of the offer and acceptance as would result in a perfected
contract of sale.
 
Evidently, what transpired between the parties was only a prolonged
negotiation to buy and to sell, and, at the most, an offer and a counter-offer with no
definite agreement having been reached by them. With the hard reality that no
perfected contract of sale/repurchase exists in this case, any independent transaction
between the Planters Bank and a third-party, like the one involving the Gatchalian
Realty, cannot be affected.
 
WHEREFORE, the petition is DENIED and the assailed decision and resolution
of the Court of Appeals are AFFIRMED.
 
No pronouncement as to costs.
 
SO ORDERED.
202
Sales
ADELAIDA AMADO AND THE HEIRS AND/OR ESTATE OF THE LATE JUDGE NOE
AMADO,
Petitioners,
- versus -
RENATO SALVADOR,
Respondent.
 
This is a Petition for Review on Certiorari under Rule 45 of the Rules of Court, assailing
the Decision dated 25 August 2005 rendered by the Court of Appeals in CA-G.R. CV No.
71816.[1] In reversing the Decision,[2] dated 28 November 2000, of the Regional Trial
Court (RTC), Branch 76, of San Mateo, Rizal, the Court of Appeals declared that the late
Judge Noe Amado (Judge Amado), the petitioners predecessor-in-interest, already sold
the subject property to respondent, Renato Salvador (Salvador).
 
Petitioners are the heirs of the late Judge Amado, who was the owner of a parcel of
land situated at Barangay Burgos, Rodriguez, Rizal, with an area of 5,928 square
meters.[3] The property subject of the present controversy is a portion thereof,
consisting of 1,106 square meters and registered under Original Certificate of Title
(OCT) No. N-191954-A with the Registry of Deeds of Rizal[4] in the name of
Judge Amado.
 
Salvador alleges that in or around September 1979, Judge Amado agreed to sell to him
the subject property for P60.00 per square meter, or in the total sum of P66,360.00,
payable in cash or construction materials which would be delivered to Judge Amado,
or to whomsoever the latter wished during his lifetime.[5] Salvador though failed to
state the terms of payment, such as the period within which the payment was
supposed to be completed, or how much of the payment should be made in cash. In
view of the sale in his favor, Salvador undertook the transfer and relocation of about
five squatter families residing on the subject property. Thereafter,
Judge Amado allowed Salvador to take possession of the subject property and to build
thereon a residential structure, office, warehouse, perimeter fence and a deep well
pump.[6] Salvador claims that by October 1980, he had already given
Judge Amado total cash advances of P30,310.93 and delivered construction materials
amounting to P36,904.45, the total of which exceeded the agreed price for the subject
property.[7]
According to the petitioners, on the other hand, Judge Amado let Salvador
use the subject property, upon the request of the latters father and grandfather, who
were Judge Amados friends.Salvador used the subject property for his business of
manufacturing hollow blocks.[8]
The petitioners maintain that the cash advances and the various construction
materials were received by Judge Amado from Salvador in connection with a loan
agreement, and not as payment for the sale of the subject property. Petitioners
offered in evidence a loan agreement executed on 15 August
1980 wherein Salvador and Judge Amado and their respective spouses appeared as co
-borrowers with Capitol City Development Bank as lender. The property belonging to
Judge Amado was used as collateral, while Salvador undertook the obligation to
construct a perimeter fence over Judge Amados land covered by OCT No. N-191954-A
and to deliver hollow blocks to Judge Amados son, Valeriano Amado. Petitioners aver
that Salvador and Judge Amado agreed to divide the proceeds of the loan among
themselves. Since the bank delivered the proceeds of the loan to Salvador,
Judge Amados share in the proceeds were paid to him in several installments, some of
which Salvador alleged were payments for the sale of the subject property.[9]
 
Petitioners assert that when Salvadors business folded up, he failed to pay
his share of the monthly amortization of the loan with the bank. Judge Amado paid the
loan to prevent the foreclosure of his mortgaged property. Salvador also allowed his
brother Lamberto Salvador to occupy the premises without the consent of
Judge Amado.[10]
 
On 4 November 1983, Judge Amado sent a demand letter
to Salvador directing the latter to vacate the subject property,[11]
 which Salvador merely ignored.[12]
 
Judge Amado filed an ejectment suit against Salvador before the Municipal
Trial Court (MTC) of Rodriguez, Rizal, docketed as Civil Case No. 700. During the
hearing before the MTC, Salvador and his brother, Lamberto Salvador, defendants
therein, stated in their Answer with Counterclaim that a balance of P4,040.62 from the
purchase price of the subject property was left unpaid due to the failure of
Judge Amado to execute and deliver a deed of sale.[13] In a Decision dated 16 July 1990,
the MTC dismissed the ejectment suit on the ground of lack of jurisdiction because
of Salvadors claim of ownership over the subject property.[14] The case was appealed
to the RTC and docketed as Civil Case No. 704. The RTC affirmed the dismissal of
Judge Amados ejectment suit by the MTC based on lack of jurisdiction.[15]
 
On 22 August 1996, Salvador filed before the RTC Civil Case No. 1252, an
action for specific performance with damages against the petitioners.[16] As evidence
that the sale of the subject property was perfected between Judge Amado and
himself, Salvador presented a note written by Judge Amado, which reads[17]:
 
San Mateo
October 1, 1980
Dear Reny,
Meron naniningil sa akin ng P500.00 kayat ako ay bigyan ng ganoong halaga ngayon.
Hindi ko nilagdaan iyong papel na dala ni Kapitan Maeng at ito ay nasa akin pa.
203
Saka ko na ibabalik iyon pa
Sales
gang aking plano ay napaayos ko na. Ang lupa ay gagawin kong dalawang lote. the petitioners filed a counterclaim against Salvador. It also gave great weight to the
tax declarations presented by Salvador and his efforts to relocate the five squatter
Ako,
families which previously resided on the subject property as proof of
Noe Amado
ownership. Lastly, the Court of Appeals awarded Salvador P100,000.00 as moral
 
damages and P100,000.00 as exemplary damages. The dispositive part of the said
 
Decision reads:
Salvador also offered in evidence the testimony of Ismael Angeles to prove that
 
Judge Amado agreed to sell the subject property to him.
1. Ordering [herein petitioners] to execute a Deed of Sale in favor of
 
[herein respondent Salvador] covering the parcel of land with an area
To prove that he paid the purchase price, Salvador submitted the following
of 1,106 square meters located at 18 Amado-Liamzon Street, Brgy.
documents showing he paid cash and delivered construction materials to
Burgos, Rodriguez, Rizal which is a portion of the 5,928 square meter
Judge Amado: (1) a statement of account of cash advances made from 1 September
parcel of land in the name of Judge Noe Amado, married
1979 to 23 September 1980 in the total amount of P30,310.93[18]; (2) statements of
to Adelaida A. Amado in the Registration Book as Original Certificate of
account of construction materials delivered from 23 August 1979 to 20 October 1979
Title No. ON-191954-A of the Register of Deeds
with a total cost of P17,656.85, from 26 December 1979 to 25 August 1980 with a total
of Rizal, Marikina Branch;
cost of P1,711.20, and from 26 August 1980 to 24 September 1980 with a total cost of 
 
P10,447.40[19]; (3) Invoice No. 50 dated 8 December 1980 for construction materials
2. Ordering the [petitioners] to deliver to [Salvador] the Original
worth P924.00[20]; and (4) delivery receipts of construction materials from 21
Certificate of Title No. ON-191954-A of the Register of Deeds
November 1979 to 6 January 1981 with a total cost of P1,665.00.[21]
of Rizal, Marikina Branch, bearing page number 54-A, Book A-6, and
 
execute receipts and other documents which may be necessary for
The RTC dismissed Salvadors complaint in Civil Case No. 1252. The trial court
the registration and titling of the parcel of land in [Salvador]s name;
observed that it was not indicated in the documentary evidence presented
and
by Salvador that the money and construction materials were intended as payment for
 
the subject property. It gave little probative value to tax declarations in the name
3. Ordering the [petitioners] to pay [Salvador] P100,000.00 as moral
of Salvador since they referred to the improvements on the land and not the land
damages, P100,000.00 as exemplary damages, and costs of suits.[24]
itself. The testimonial evidence given by Ismael Angeles was considered insufficient to
 
prove the fact of sale because the witness failed to categorically state that a sale
 
transaction had taken place between Salvador and Judge Amado. Moreover, the RTC
Hence, the present petition. Petitioners rely on the following grounds:[25]
held that Salvador was disqualified under the Dead Mans Statute[22] from testifying on
 
any matter of fact involving a transaction between him and Judge Amado which
I
occurred before the death of the latter.[23]
 
 
THE COURT A QUO ERRED ON A QUESTION OF LAW IN REVERSING
Salvador appealed the Decision of the RTC in Civil Case No. 1252 before the
THE TRIAL COURTS DECISION AND HOLDING THAT RESPONDENT
Court of Appeals.
HAS SUCCESSFULLY DISCHARGED THE BURDEN OF EVIDENCE THAT
 
THERE WAS A SALE OF LOT, THE CONSIDERATION OF WHICH WAS
In reversing the decision of the RTC of San Mateo, the Court of Appeals found
TO BE PAID IN CASH AND CONSTRUCTION MATERIALS
that Salvador paid for the subject land with cash advances and construction materials,
 
since petitioners failed to present any evidence showing that the construction
II
materials Salvador delivered to Judge Amado had been paid for. It construed as
 
adequate proof of the sale the handwritten note of Judge Amadowherein the latter
THE COURT A QUO ERRED ON A QUESTION OF LAW IN HOLDING
promised to sign an unidentified deed after the subdivision of an unnamed property,
THAT RESPONDENT WAS NOT DISQUALIFIED TO TESTIFY UNDER
in light of Ismael Angeles testimony that Judge Amado had promised to sign a deed of
THE DEAD MANS STATUTE AS PROVIDED IN SECTION 23, RULE 130
sale over the subject property in favor of Salvador. According to the appellate court,
OF THE RULES OF COURT
the testimony of Salvador was not barred by Section 23, Rule 130 of the Rules of 204
 
Court, also known as the Dead Mans Statute, and was, therefore, admissible because
Sales
III
THE COURT A QUO ERRED ON A QUESTION OF LAW IN RULING
THAT PETITIONERS ARE LIABLE FOR MORAL OR EXEMPLARY
DAMAGES IN THE TOTAL AMOUNT OF P200,000.00[26]
 
 
The petition at bar is meritorious.
 
The main controversy in the petition is whether or not there was a perfected
contract of sale of the subject property. In resolving this issue, this Court would
necessarily re-examine the factual findings of the Court of Appeals, as well as the
contrary findings of the trial court. It is a recognized principle that while this Court is
not a trier of facts and does not normally embark on the evaluation of evidence
adduced during trial, this rule allows exceptions,[27] such as when the findings of the
trial court and the Court of Appeals are conflicting or contradictory.[28]
A contract of sale is perfected by mere consent, upon a meeting of the minds
in the offer and the acceptance thereof based on subject matter, price and terms of
payment.[29] Until the contract of sale is perfected, it cannot, as an independent source
of obligation, serve as a binding juridical relation between the parties.[30]
 
Consent is essential for the existence of a contract, and where it is absent,
the contract is non-existent. Consent in contracts presupposes the following
requisites: (1) it should be intelligent or with an exact notion of the matter to which it
refers; (2) it should be free; and (3) it should be spontaneous.[31] Moreover, a definite
agreement on the manner of payment of the price is an essential element in the
formation of a binding and enforceable contract of sale.[32] This is so because the
agreement as to the manner of payment goes into the price such that a disagreement
on the manner of payment is tantamount to a failure to agree on the price or
consideration.[33]
 
In the present case, Salvador fails to allege the manner of payment of the
purchase price on which the parties should have agreed. No period was set within
which the payment must be made. Of the purchase price of P66,360.00, which the
parties purportedly agreed upon, the amount which should be paid in cash and the
amount for construction materials was not determined. This means that the parties
had no exact notion of the consideration for the contract to which they supposedly
gave their consent. Thus, such failure is fatal to Salvadors claim that a sale had been
agreed upon by the parties.
Furthermore, after carefully examining the records, serious doubts became
apparent as to whether cash advances and deliveries of construction materials
evidenced by numerous statements of accounts and delivery receipts were actually
intended as payment for the land.
First of all, the statements of accounts and the delivery receipts do not
indicate that the construction materials or the cash advances were made in
connection with the sale of the subject property.Any doubt as to the real meaning of
the contract must be resolved against the person who drafted the instrument and is
responsible for the ambiguity thereof.[34] Since Salvador prepared these statements of
accounts and therefore caused the ambiguity, he cannot benefit from the resulting
ambiguity. Salvador is hardly an ignorant and illiterate person; rather, he is a
businessman engaged in manufacturing and distributing construction materials and
operates no less than two branches. It should have been noted in the statement of
accounts, or even in another document, that the cash advances and deliveries of
construction materials were made in connection with a transaction as important as a
sale of land. As they are, the statements of accounts and especially the
straightforward delivery receipts are insufficient proof that Judge Amado sold his
property to Salvador.
Secondly, one of the delivery receipts presented by Salvador as Annex I of his
Complaint in RTC Civil Case No. 1252 was partially paid.[35] If Judge Amado had already
agreed that the construction materials delivered to him and his family constituted the
payment for the subject property, the act of partially paying for construction materials
would be incongruous to such intention.
 
Thirdly, Salvador himself gave conflicting statements on whether he has
completed payment. Among the findings of fact made by the MTC in its Decision dated
16 July 1990 in Civil Case No. 700, based on the very statements made by the Salvador
brothers in their Answer with Counterclaim, was that Salvador paid Judge Amado P
62,319.38 in cash and construction materials for the subject property, and a balance
of P4,040.62 was left unpaid due to the failure of Judge Amado to execute and deliver
the deed of sale.[36] However, in the proceedings before the RTC in Civil Case No.
1252, Salvador claimed that he paid Judge Amado P67,215.38 in cash and construction
materials, which was more than the purchase price of P66,360.00 upon which they
agreed.[37]
 
Lastly, Salvador again contradicts himself as to the date he supposedly
completed the payments for the subject property. In his Complaint in Civil Case No.
1252, he alleges that by October 1980, he had already fully paid Judge Amado P
67,215.38 in cash and construction materials.[38] Yet in the same pleading, he included
11 separate deliveries of construction materials made from 8 December 1980 to 6
January 1981 as evidence of payment.[39]
This Court cannot presume the existence of a sale of land, absent any direct
proof of it. The construction of the terms of a contract, which would amount to
205
impairment or loss of rights, is not favored. Conservation and preservation, not waiver
Sales
or abandonment or forfeiture of a right, is the rule.[40] While it is apparent
that Salvador paid cash advances and delivered construction materials to
Judge Amado, this fact alone does not attest to the existence of a sale of land. In truth,
the inconsistent statements made by Salvador regarding the amount paid to
Judge Amado, the date when he was supposed to have completed the payment, and
the dissimilarity between the price allegedly agreed upon and the amount supposedly
paid show the absence of a uniform intention to apply these cash advances and
construction materials as payment for the purchase of the subject property. Absent
any tangible connection with the sale of land, these transactions stand by themselves
as loans and purchases of construction materials.
Other than the statements of accounts and delivery receipts scrutinized
above, the other pieces of evidence that Salvador offered are similarly inadequate to
establish his allegation of a perfected sale.
 
Salvador presented as evidence of a perfected sale a handwritten note dated
1 October 1980 as Annex GG of the Complaint dated 16 August 1996, written by
Judge Amado, wherein the latter asked Salvador for P500.00. In the same note,
Judge Amado informed Salvador that he had not yet signed an unidentified document,
which he promised to sign after his plan to divide a certain parcel of land was
completed.[41] This note is not conclusive proof of the existence of a perfected sale.
What this note proves is that Judge Amado was hesitant to sign the unidentified
document and was still waiting for the completion of his plan to divide the land
referred to in the note. To say that the document is the deed of sale and the land is
the subject property claimed by Salvador would be based on pure surmise and
conjecture without a more specific reference to them in the note. Moreover, the P
500.00 which Judge Amado was demanding from Salvador could not have been
payment pursuant to the purported sale of the subject property. The list of cash
advances, which were supposedly part of the payment for the subject property, made
by Salvador to Judge Amado from 1 September 1979 to 23 September 1980 and
attached as Annex D of his Complaint in Civil Case No. 1252, did not include the P
500.00 which Judge Amado demanded from Salvador on 1 October 1980.
 
The testimony of Ismael Angeles is likewise insufficient to support the
allegation that Judge Amado agreed to sell the subject property to Salvador. The
factual findings of the trial court, especially as regards the credibility of witnesses, are
conclusive upon this court.[42] The findings of fact and assessment of credibility of
witnesses is a matter best left to the trial court because of its unique position of
having observed that elusive and incommunicable evidence of the witnesses
deportment on the stand while testifying, which opportunity is denied to the appellate
courts. Only the trial judge can observe the furtive glance, blush of conscious shame,
hesitation, flippant or sneering tone, calmness, sigh or the scant or full realization of
an oath--all of which are useful for an accurate determination of a witness honesty
and sincerity.[43] Thus, the assessment by the RTC of Angeles testimony, which it
deemed insufficient, is entitled to great respect:
 
Moreover, [herein respondent Salvador]s corroborative
testimonial evidence, that is, the testimony of one Ismael Angeles, is
likewise deemed insufficient as even that witness failed to
categorically state any sale transaction of the lot between
[respondent] Salvador and the late Judge Amado, as in fact, Mr.
Angeles manifested uncertainty when he said siguro
nagkaroon sila ng bilihan.
 
The findings of the trial court are well supported by the records of this
case. At the time that Judge Amado and Salvador allegedly entered into the sale
agreement, Ismael Angeles testified that I was inside the house, but I did not hear
their conversation because I was far from them.[44]
 
Even if Ismael Angeles testimony was given full credence, it would still be
insufficient to establish that a sale agreement was perfected between Salvador and
Judge Amado. His testimony that Judge Amado ordered the preparation of the deed of
sale only proves that Judge Amado and Salvador were in the process of negotiating
the sale of the subject property, not that they had already set and agreed to the terms
and conditions of the sale.[45] In fact, Ismael Angeles testimony that
Judge Amado refused to sign the contract reinforces the fact that the latter had not
consented to the sale of the subject property.[46]
 
In addition, Salvadors act of relocating the squatter families formerly residing on the
subject property[47] is not substantial proof of ownership. Such act is only consistent
with the petitioners allegations that Salvador was allowed to use the subject property
for his business, and it would redound to his benefit to relocate the squatters
previously occupying it.
 
From the evidence presented, an agreement of sale of the subject property
between him and Judge Amado had not yet reached the stage of perfection. The
stages of a contract are, thus, explained:
 
A contract undergoes various stages that include its
negotiation or preparation, its perfection and, finally, its
consummation. Negotiation covers the period from the time the
prospective contracting parties indicate interest in the contract to the
time the contract is concluded (perfected). The perfection of the
contract takes place upon the concurrence of the essential elements
thereof. A contract which is consensual as to perfection is so established
upon a mere meeting of the minds, i.e. the concurrence of offer and
acceptance, on the object and on the cause thereof. x x x. The stage of 206
Sales
consummation begins when the parties perform their respective petitioners were not under any obligation to execute a Deed of Sale or
undertakings under the contract culminating in the extinguishment guarantee Salvadors possession of the property. Absent any wrongful act which may
thereof. be attributed to petitioners, an award of moral damages is inappropriate.
  The award of exemplary damages is also improper. Exemplary damages are
Until the contract is perfected, it cannot, as an independent awarded only when a wrongful act is accompanied by bad faith or when the guilty
source of obligation, serve as a binding juridical relation. In sales, party acted in a wanton, fraudulent, reckless or malevolent manner.[53] Moreover,
particularly, to which the topic for discussion about the case at bench where a party is not entitled to actual or moral damages, an award of exemplary
belongs, the contract is perfected when a person, called the seller, damages is likewise baseless.[54] As this Court has found, petitioners refusal to turn
obligates himself, for a price certain, to deliver and to transfer over the subject property to Salvador is justified and cannot be the basis for the award
ownership of a thing or right to another, called the buyer, over which of exemplary damages.
the latter agrees.[48]  
  IN VIEW OF THE FOREGOING, the instant Petition is GRANTED and the
  assailed Decision of the Court of Appeals in CA-G.R. No. 71816, promulgated on 25
In the present case, the terms of payment have not even been alleged. No positive August 2005, is REVERSED AND SET ASIDE. The Order dated 28 November 2000 of
proof was adduced that Judge Amado had fully accepted Salvadors sketchy the Rizal RTC is REINSTATED. Renato Salvador and Lamberto Salvador are ordered to
proposal. Even if the handwritten note actually referred to the subject property, it vacate the subject property.
merely points to the fact that the parties were, at best, negotiating a contract of  
sale. At the time it was written, on 1 October 1980, Judge Amado had not expressed SO ORDERED.
his unconditional acceptance of Salvadors offer. He merely expressed that he was
considering the sale of the subject property, but it was nevertheless clear that he still
was unprepared to sign the contract. Salvador himself admitted before the MTC in
Civil Case No. 700 that the sale agreement did not push through as he testified that I
considered that dead investment because our sale did not materialize because he
always made promises.[49]
 
Absent the valid sale agreement between Salvador and Judge Amado,
the formers possession of the subject property hinges on the permission and goodwill
of Judge Amado and the petitioners, as his successors-in-interest. In the demand letter
dated 4 November 1983, Judge Amado had already directed Salvador to vacate the
subject property. Thus, there is no more basis for Salvador and his
brother, Lamberto Salvador, to retain possession over it, and such possession must
now be fully surrendered to the petitioners.
 
The Court of Appeals imposed moral damages and exemplary damages in
view of the petitioners refusal to execute a Deed of Sale and the social humiliation
suffered by Salvador due to his ouster from the property.[50] Since petitioners had no
demandable obligation to deliver the subject property, the award of moral and
exemplary damages, as well as cost of suit, in favor of Salvador is without legal basis.
 
Moral damages may be recovered if they were the proximate result of
defendants wrongful acts or omissions.[51] Two elements are required. First, the act or
omission must be the proximate result of the physical suffering, mental anguish,
fright, serious anxiety, besmirched reputation, wounded feelings, moral shock, social
humiliation and similar injury. Second, the act must be wrongful.[52] In this case, 207
Sales
BOSTON BANK OF THE PHILIPPINES, (formerly BANK
OF COMMERCE),
Petitioner
- versus -
PERLA P. MANALO and CARLOS MANALO, JR.,
 
Before us is a Petition for Review on Certiorari of the Decision[1] of the Court of
Appeals (CA) in CA-G.R. CV No. 47458 affirming, on appeal, the Decision[2] of the
Regional Trial Court (RTC) of Quezon City, Branch 98, in Civil Case No. Q-89-3905.
The Antecedents
 
The Xavierville Estate, Inc. (XEI) was the owner of parcels of land in Quezon City,
known as the Xavierville Estate Subdivision, with an area of 42 hectares. XEI
caused the subdivision of the property into residential lots, which was then
offered for sale to individual lot buyers.[3]
On September 8, 1967, XEI, through its General Manager, Antonio
Ramos, as vendor, and The Overseas Bank of Manila (OBM), as vendee, executed
a Deed of Sale of Real Estate over some residential lots in the subdivision,
including Lot 1, Block 2, with an area of 907.5 square meters, and Lot 2, Block 2,
with an area of 832.80 square meters. The transaction was subject to the
approval of the Board of Directors of OBM, and was covered by real estate
mortgages in favor of the Philippine National Bank as security for its account
amounting to P5,187,000.00, and the Central Bank of the Philippines as security
for advances amounting to P22,185,193.74.[4] Nevertheless, XEI continued selling
the residential lots in the subdivision as agent of OBM.[5]
 
Sometime in 1972, then XEI president Emerito Ramos, Jr. contracted the
services of Engr. Carlos Manalo, Jr. who was in business of drilling deep water
wells and installing pumps under the business name Hurricane Commercial, Inc.
For P34,887.66, Manalo, Jr. installed a water pump at Ramos residence at the
corner of Aurora Boulevard and Katipunan Avenue, Quezon City. Manalo, Jr. then
proposed to XEI, through Ramos, to purchase a lot in the Xavierville subdivision,
and offered as part of the downpayment the P34,887.66 Ramos owed him. XEI,
through Ramos, agreed. In a letter dated February 8, 1972, Ramos requested
Manalo, Jr. to choose which lots he wanted to buy so that the price of the lots and
the terms of payment could be fixed and incorporated in the conditional sale.[6]
 Manalo, Jr. met with Ramos and informed him that he and his wife Perla had
chosen Lots 1 and 2 of Block 2 with a total area of 1,740.3 square meters.
 
In a letter dated August 22, 1972 to Perla Manalo, Ramos confirmed the
reservation of the lots. He also pegged the price of the lots at P200.00 per square
meter, or a total of P348,060.00, with a 20% down payment of the purchase price
amounting to P69,612.00 less the P34,887.66 owing from Ramos, payable on or
before December 31, 1972; the corresponding Contract of Conditional Sale would
then be signed on or before the same date, but if the selling operations of XEI
resumed after December 31, 1972, the balance of the downpayment would fall
due then, and the spouses would sign the aforesaid contract within five (5) days
from receipt of the notice of resumption of such selling operations. It was also
stated in the letter that, in the meantime, the spouses may introduce
improvements thereon subject to the rules and regulations imposed by XEI in the
subdivision. Perla Manalo conformed to the letter agreement.[7]
 
The spouses Manalo took possession of the property on September 2,
1972, constructed a house thereon, and installed a fence around the perimeter of
the lots.
In the meantime, many of the lot buyers refused to pay their monthly
installments until they were assured that they would be issued Torrens titles over
the lots they had purchased.[8] The spouses Manalo were notified of the
resumption of the selling operations of XEI.[9] However, they did not pay the
balance of the downpayment on the lots because Ramos failed to prepare a
contract of conditional sale and transmit the same to Manalo for their
signature. On August 14, 1973, Perla Manalo went to the XEI office and requested
that the payment of the amount representing the balance of the downpayment
be deferred, which, however, XEI rejected. On August 10, 
1973, XEI furnished her with a statement of their account as of July 31, 1973,
showing that they had a balance of P34,724.34 on the downpayment of the two
lots after deducting the account of Ramos, plus P3,819.68[10] interest thereon
from September 1, 1972 to July 31, 1973, and that the interests on the unpaid
balance of the purchase price of P278,448.00 from September 1, 1972 to July 31,
1973 amounted to P30,629.28.[11] The spouses were informed that they were
being billed for said unpaid interests.[12]
 
On January 25, 1974, the spouses Manalo received another statement of
account from XEI, inclusive of interests on the purchase price of the lots.[13] In a
letter dated April 6, 1974 to XEI, Manalo, Jr. stated they had not yet received the
notice of resumption of Leis selling operations, and that there had been no
arrangement on the payment of interests; hence, they should not be charged
with interest on the balance of the downpayment on the property.[14] Further,
they demanded that a deed of conditional sale over the two lots be transmitted 208
Sales
to them for their signatures. However, XEI ignored the demands. Consequently,
the spouses refused to pay the balance of the downpayment of the purchase
price.[15]
 
Sometime in June 1976, Manalo, Jr. constructed a business sign in the
sidewalk near his house. In a letter dated June 17, 1976, XEI informed Manalo, Jr.
that business signs were not allowed along the sidewalk. It demanded that he
remove the same, on the ground, among others, that the sidewalk was not part
of the land which he had purchased on installment basis from XEI.[16] Manalo, Jr.
did not respond. XEI reiterated its demand on September 15, 1977.[17]
 
Subsequently, XEI turned over its selling operations to OBM, including
the receivables for lots already contracted and those yet to be sold.[18]
 On December 8, 1977, OBM warned Manalo, Jr., that putting up of a business
sign is specifically prohibited by their contract of conditional sale and that his
failure to comply with its demand would impel it to avail of the remedies as
provided in their contract of conditional sale.[19]
 
Meanwhile, on December 5, 1979, the Register of Deeds issued Transfer
Certificate of Title (TCT) No. T-265822 over Lot 1, Block 2, and TCT No. T-265823
over Lot 2, Block 2, in favor of the OBM.[20] The lien in favor of the Central Bank of
the Philippines was annotated at the dorsal portion of said title, which was later
cancelled on August 4, 1980.[21]
 
Subsequently, the Commercial Bank of Manila (CBM) acquired the
Xavierville Estate from OBM. CBM wrote Edilberto Ng, the president of Xavierville
Homeowners Association that, as of January 31, 1983, Manalo, Jr. was one of the
lot buyers in the subdivision.[22] CBM reiterated in its letter to Ng that, as
of January 24, 1984, Manalo was a homeowner in the subdivision.[23]
 
In a letter dated August 5, 1986, the CBM requested Perla Manalo to stop
any on-going construction on the property since it (CBM) was the owner of the lot
and she had no permission for such construction.[24] She agreed to have a
conference meeting with CBM officers where she informed them that her
husband had a contract with OBM, through XEI, to purchase the property. When
asked to prove her claim, she promised to send the documents to CBM. However,
she failed to do so.[25] On September 5, 1986, CBM reiterated its demand that it
be furnished with the documents promised,[26] but Perla Manalo did not respond.
On July 27, 1987, CBM filed a complaint[27] for unlawful detainer against
the spouses with the Metropolitan Trial Court of Quezon City. The case was
docketed as Civil Case No. 51618. CBM claimed that the spouses had been
unlawfully occupying the property without its consent and that despite its
demands, they refused to vacate the property. The latter alleged that they, as
vendors, and XEI, as vendee, had a contract of sale over the lots which had not
yet been rescinded.[28]
 
While the case was pending, the spouses Manalo wrote CBM to offer an
amicable settlement, promising to abide by the purchase price of the property (P
313,172.34), per agreement with XEI, through Ramos. However, on July 28, 1988,
CBM wrote the spouses, through counsel, proposing that the price of P1,500.00
per square meter of the property was a reasonable starting point for negotiation
of the settlement.[29] The spouses rejected the counter proposal,[30] emphasizing
that they would abide by their original agreement with XEI. CBM moved to
withdraw its complaint[31]because of the issues raised.[32]
 
In the meantime, the CBM was renamed the Boston Bank of
the Philippines. After CBM filed its complaint against the spouses Manalo, the
latter filed a complaint for specific performance and damages against the bank
before the Regional Trial Court (RTC) of Quezon City on October 31, 1989.
 
The plaintiffs alleged therein that they had always been ready, able and
willing to pay the installments on the lots sold to them by the defendants remote
predecessor-in-interest, as might be or stipulated in the contract of sale, but no
contract was forthcoming; they constructed their house worth P2,000,000.00 on
the property in good faith; Manalo, Jr., informed the defendant, through its
counsel, on October 15, 1988 that he would abide by the terms and conditions of
his original agreement with the defendants predecessor-in-interest; during the
hearing of the ejectment case on October 16, 1988, they offered to pay P
313,172.34 representing the balance on the purchase price of said lots; such
tender of payment was rejected, so that the subject lots could be sold at
considerably higher prices to third parties.
 
Plaintiffs further alleged that upon payment of the P313,172.34, they
were entitled to the execution and delivery of a Deed of Absolute Sale covering
the subject lots, sufficient in form and substance to transfer title thereto free and
clear of any and all liens and encumbrances of whatever kind and nature.[33] The
plaintiffs prayed that, after due hearing, judgment be rendered in their favor, to
wit:
WHEREFORE, it is respectfully prayed that after due
hearing: 209
Sales
 
(a) The defendant should be ordered to execute and
deliver a Deed of Absolute Sale over subject lots in favor of the
plaintiffs after payment of the sum of P313,172.34, sufficient in
form and substance to transfer to them titles thereto free and
clear of any and all liens and encumbrances of whatever kind or
nature;
 
(b) The defendant should be held liable for moral and
exemplary damages in the amounts of P300,000.00 and P
30,000.00, respectively, for not promptly executing and
delivering to plaintiff the necessary Contract of Sale,
notwithstanding repeated demands therefor and for having
been constrained to engage the services of undersigned counsel
for which they agreed to pay attorneys fees in the sum of P
50,000.00 to enforce their rights in the premises and
appearance fee of P500.00;
 
(c) And for such other and further relief as may be just
and equitable in the premises.[34]
 
In its Answer to the complaint, the defendant interposed the following
affirmative defenses: (a) plaintiffs had no cause of action against it because the
August 22, 1972 letter agreement between XEI and the plaintiffs was not binding
on it; and (b) it had no record of any contract to sell executed by it or its
predecessor, or of any statement of accounts from its predecessors, or records of
payments of the plaintiffs or of any documents which entitled them to the
possession of the lots.[35] The defendant, likewise, interposed counterclaims for
damages and attorneys fees and prayed for the eviction of the plaintiffs from the
property.[36]
Meanwhile, in a letter dated January 25, 1993, plaintiffs, through counsel,
proposed an amicable settlement of the case by paying P942,648.70,
representing the balance of the purchase price of the two lots based on the
current market value.[37] However, the defendant rejected the same and insisted
that for the smaller lot, they pay P4,500,000.00, the current market value of the
property.[38]The defendant insisted that it owned the property since there was no
contract or agreement between it and the plaintiffs relative thereto.
 
During the trial, the plaintiffs adduced in evidence the separate
Contracts of Conditional Sale executed between XEI and Alberto Soller;[39] Alfredo
Aguila,[40] and Dra. Elena Santos-Roque[41]to prove that XEI continued selling
residential lots in the subdivision as agent of OBM after the latter had acquired
the said lots.
 
For its part, defendant presented in evidence the letter dated August 22,
1972, where XEI proposed to sell the two lots subject to two suspensive
conditions: the payment of the balance of the downpayment of the property, and
the execution of the corresponding contract of conditional sale. Since plaintiffs
failed to pay, OBM consequently refused to execute the corresponding contract
of conditional sale and forfeited the P34,877.66 downpayment for the two lots,
but did not notify them of said forfeiture.[42] It alleged that OBM considered the
lots unsold because the titles thereto bore no annotation that they had been sold
under a contract of conditional sale, and the plaintiffs were not notified of XEIs
resumption of its selling operations.
 
On May 2, 1994, the RTC rendered judgment in favor of the plaintiffs and
against the defendant. The fallo of the decision reads:
 
WHEREFORE, judgment is hereby rendered in favor of
the plaintiffs and against the defendant
(a) Ordering the latter to execute and deliver a Deed of
Absolute Sale over Lot 1 and 2, Block 2 of the Xavierville Estate
Subdivision after payment of the sum of P942,978.70 sufficient
in form and substance to transfer to them titles thereto free
from any and all liens and encumbrances of whatever kind and
nature.
 
(b) Ordering the defendant to pay moral and exemplary
damages in the amount of P150,000.00; and
(c) To pay attorneys fees in the sum of P50,000.00 and
to pay the costs.
 
SO ORDERED.[43]
 
 
The trial court ruled that under the August 22, 1972 letter agreement of XEI
and the plaintiffs, the parties had a complete contract to sell over the lots, and
that they had already partially consummated the same. It declared that the 210
Sales
failure of the defendant to notify the plaintiffs of the resumption of its selling
operations and to execute a deed of conditional sale did not prevent the
defendants obligation to convey titles to the lots from acquiring binding effect.
Consequently, the plaintiffs had a cause of action to compel the defendant to
execute a deed of sale over the lots in their favor.
 
Boston Bank appealed the decision to the CA, alleging that the lower
court erred in (a) not concluding that the letter of XEI to the spouses Manalo, was
at most a mere contract to sell subject to suspensive conditions, i.e., the payment
of the balance of the downpayment on the property and the execution of a deed
of conditional sale (which were not complied with); and (b) in awarding moral and
exemplary damages to the spouses Manalo despite the absence of testimony
providing facts to justify such awards.[44]
 
On September 30, 2002, the CA rendered a decision affirming that of the
RTC with modification. The fallo reads:
 
WHEREFORE, the appealed decision is AFFIRMED with
MODIFICATIONS that (a) the figure P942,978.70 appearing [in]
par. (a) of the dispositive portion thereof is changed to P
313,172.34 plus interest thereon at the rate of 12% per annum
from September 1, 1972 until fully paid and (b) the award of
moral and exemplary damages and attorneys fees in favor of
plaintiffs-appellees is DELETED.
 
SO ORDERED.[45]
 
 
The appellate court sustained the ruling of the RTC that the appellant
and the appellees had executed a Contract to Sell over the two lots but declared
that the balance of the purchase price of the property amounting to P278,448.00
was payable in fixed amounts, inclusive of pre-computed interests, from delivery
of the possession of the property to the appellees on a monthly basis for 120
months, based on the deeds of conditional sale executed by XEI in favor of other
lot buyers.[46] The CA also declared that, while XEI must have resumed its selling
operations before the end of 1972 and the downpayment on the property
remained unpaid as of December 31, 1972, absent a written notice of
cancellation of the contract to sell from the bank or notarial demand therefor as
required by Republic Act No. 6552, the spouses had, at the very least, a 60-day
grace period from January 1, 1973 within which to pay the same.
 
Boston Bank filed a motion for the reconsideration of the decision
alleging that there was no perfected contract to sell the two lots, as there was no
agreement between XEI and the respondents on the manner of payment as well
as the other terms and conditions of the sale. It further averred that its claim for
recovery of possession of the aforesaid lots in its Memorandum dated February
28, 1994filed before the trial court constituted a judicial demand for rescission
that satisfied the requirements of the New Civil Code. However, the appellate
court denied the motion.
 
Boston Bank, now petitioner, filed the instant petition for review on 
certiorari assailing the CA rulings. It maintains that, as held by the CA, the records
do not reflect any schedule of payment of the 80% balance of the purchase price,
or P278,448.00. Petitioner insists that unless the parties had agreed on the
manner of payment of the principal amount, including the other terms and
conditions of the contract, there would be no existing contract of sale or contract
to sell.[47] Petitioner avers that the letter agreement to respondent spouses dated
August 22, 1972 merely confirmed their reservation for the purchase of Lot Nos.
1 and 2, consisting of 1,740.3 square meters, more or less, at the price of P200.00
per square meter (or P348,060.00), the amount of the downpayment thereon and
the application of the P34,887.00 due from Ramos as part of such downpayment.
 
Petitioner asserts that there is no factual basis for the CA ruling that the
terms and conditions relating to the payment of the balance of the purchase
price of the property (as agreed upon by XEI and other lot buyers in the same
subdivision) were also applicable to the contract entered into between the
petitioner and the respondents. It insists that such a ruling is contrary to law, as it
is tantamount to compelling the parties to agree to something that was not even
discussed, thus, violating their freedom to contract. Besides, the situation of the
respondents cannot be equated with those of the other lot buyers, as, for one
thing, the respondents made a partial payment on the downpayment for the two
lots even before the execution of any contract of conditional sale.
 
Petitioner posits that, even on the assumption that there was a
perfected contract to sell between the parties, nevertheless, it cannot be
compelled to convey the property to the respondents because the latter failed to
pay the balance of the downpayment of the property, as well as the balance of
80% of the purchase price, thus resulting in the extinction of its obligation to
convey title to the lots to the respondents.
 
Another egregious error of the CA, petitioner avers, is the application of
Republic Act No. 6552. It insists that such law applies only to a perfected 211
Sales
agreement or perfected contract to sell, not in this case where the downpayment
on the purchase price of the property was not completely paid, and no
installment payments were made by the buyers.
 
Petitioner also faults the CA for declaring that petitioner failed to serve a
notice on the respondents of cancellation or rescission of the contract to sell, or
notarial demand therefor. Petitioner insists that its August 5, 1986 letter requiring
respondents to vacate the property and its complaint for ejectment in Civil Case
No. 51618 filed in the Metropolitan Trial Court amounted to the requisite
demand for a rescission of the contract to sell. Moreover, the action of the
respondents below was barred by laches because despite demands, they failed
to pay the balance of the purchase price of the lots (let alone the downpayment)
for a considerable number of years.
 
For their part, respondents assert that as long as there is a meeting of
the minds of the parties to a contract of sale as to the price, the contract is valid
despite the parties failure to agree on the manner of payment. In such a
situation, the balance of the purchase price would be payable on demand,
conformably to Article 1169 of the New Civil Code. They insist that the law does
not require a party to agree on the manner of payment of the purchase price as a
prerequisite to a valid contract to sell. The respondents cite the ruling of this
Court in Buenaventura v. Court of Appeals[48] to support their submission.
They argue that even if the manner and timeline for the payment of the
balance of the purchase price of the property is an essential requisite of a
contract to sell, nevertheless, as shown by their letter agreement of August 22,
1972 with the OBM, through XEI and the other letters to them, an agreement was
reached as to the manner of payment of the balance of the purchase price. They
point out that such letters referred to the terms of the  exceptions:
terms of the deeds of conditional sale executed by XEI in favor of the other lot
buyers in the subdivision, which contained uniform terms of 120 equal monthly
installments (excluding the downpayment, but inclusive of pre-computed
interests). The respondents assert that XEI was a real estate broker and knew
that the contracts involving residential lots in the subdivision contained uniform
terms as to the manner and timeline of the payment of the purchase price of said
lots.
 
Respondents further posit that the terms and conditions to be
incorporated in the corresponding contract of conditional sale to be executed by
the parties would be the same as those contained in the contracts of conditional
sale executed by lot buyers in the subdivision. After all, they maintain, the
contents of the corresponding contract of conditional sale referred to in
the August 22, 1972 letter agreement envisaged those contained in the contracts
of conditional sale that XEI and other lot buyers executed. Respondents cite the
ruling of this Court in Mitsui Bussan Kaisha v. Manila E.R.R. & L. Co.[49]
 
The respondents aver that the issues raised by the petitioner are factual,
inappropriate in a petition for review on certiorari under Rule 45 of the Rules of
Court. They assert that petitioner adopted a theory in litigating the case in the
trial court, but changed the same on appeal before the CA, and again in this
Court. They argue that the petitioner is estopped from adopting a new theory
contrary to those it had adopted in the trial and appellate courts. Moreover, the
existence of a contract of conditional sale was admitted in the letters of XEI and
OBM. They aver that they became owners of the lots upon delivery to them by
XEI.
 
The issues for resolution are the following: (1) whether the factual issues
raised by the petitioner are proper; (2) whether petitioner or its predecessors-in-
interest, the XEI or the OBM, as seller, and the respondents, as buyers, forged a
perfect contract to sell over the property; (3) whether 
petitioner is estopped from contending that no such contract was forged by the
parties; and (4) whether respondents has a cause of action against the petitioner
for specific performance.
The rule is that before this Court, only legal issues may be raised in a
petition for review on certiorari. The reason is that this Court is not a trier of facts,
and is not to review and calibrate the evidence on record. Moreover, the findings
of facts of the trial court, as affirmed on appeal by the Court of Appeals, are
conclusive on this Court unless the case falls under any of the following
 
(1) when the conclusion is a finding grounded entirely
on speculations, surmises and conjectures; (2) when the
inference made is manifestly mistaken, absurd or impossible; (3)
where there is a grave abuse of discretion; (4) when the
judgment is based on a misapprehension of facts; (5) when the
findings of fact are conflicting; (6) when the Court of Appeals, in
making its findings went beyond the issues of the case and the
same is contrary to the admissions of both appellant and
appellee; (7) when the findings are contrary to those of the trial
court; (8) when the findings of fact are conclusions without
citation of specific evidence on which they are based; (9) when 212
Sales
the facts set forth in the petition as well as in the petitioners
main and reply briefs are not disputed by the respondents; and
(10) when the findings of fact of the Court of Appeals are
premised on the supposed absence of evidence and
contradicted by the evidence on record.[50]
 
We have reviewed the records and we find that, indeed, the ruling of the
appellate court dismissing petitioners appeal is contrary to law and is not
supported by evidence. A careful examination of the factual backdrop of the case,
as well as the antecedental proceedings constrains us to hold that petitioner is
not barred from asserting that XEI or OBM, on one hand, and the respondents,
on the other, failed to forge a perfected contract to sell the subject lots.
 
It must be stressed that the Court may consider an issue not raised
during the trial when there is plain error.[51] Although a factual issue was not
raised in the trial court, such issue may still be considered and resolved by the
Court in the interest of substantial justice, if it finds that to do so is necessary to
arrive at a just decision,[52] or when an issue is closely related to an issue raised in
the trial court and the Court of Appeals and is necessary for a just and complete
resolution of the case.[53] When the trial court decides a case in favor of a party
on certain grounds, the Court may base its decision upon some other points,
which the trial court or appellate court ignored or erroneously decided in favor of
a party.[54]
 
In this case, the issue of whether XEI had agreed to allow the
respondents to pay the purchase price of the property was raised by the
parties. The trial court ruled that the parties had perfected a contract to sell, as
against petitioners claim that no such contract existed. However, in resolving the
issue of whether the petitioner was obliged to sell the property to the
respondents, while the CA declared that XEI or OBM and the respondents failed
to agree on the schedule of payment of the balance of the purchase price of the
property, it ruled that XEI and the respondents had forged a contract to sell;
hence, petitioner is entitled to ventilate the issue before this Court.
 
We agree with petitioners contention that, for a perfected contract of
sale or contract to sell to exist in law, there must be an agreement of the parties,
not only on the price of the property sold, but also on the manner the price is to
be paid by the vendee.
 
Under Article 1458 of the New Civil Code, in a contract of sale, whether
absolute or conditional, one of the contracting parties obliges himself to transfer
the ownership of and deliver a determinate thing, and the other to pay therefor a
price certain in money or its equivalent. A contract of sale is perfected at the
moment there is a meeting of the minds upon the thing which is the object of the
contract and the price. From the averment of perfection, the parties are bound,
not only to the fulfillment of what has been 
expressly stipulated, but also to all the consequences which, according to their
nature, may be in keeping with good faith, usage and law.[55] On the other hand,
when the contract of sale or to sell is not perfected, it cannot, as an independent
source of obligation, serve as a binding juridical relation between the parties.[56]
 
A definite agreement as to the price is an essential element of a binding
agreement to sell personal or real property because it seriously affects the rights
and obligations of the parties. Price is an essential element in the formation of a
binding and enforceable contract of sale. The fixing of the price can never be left
to the decision of one of the contracting parties. But a price fixed by one of the
contracting parties, if accepted by the other, gives rise to a perfected sale.[57]
 
It is not enough for the parties to agree on the price of the property. The
parties must also agree on the manner of payment of the price of the property to
give rise to a binding and enforceable contract of sale or contract to sell. This is
so because the agreement as to the manner of payment goes into the price, such
that a disagreement on the manner of payment is tantamount to a failure to
agree on the price.[58]
In a contract to sell property by installments, it is not enough that the parties
agree on the price as well as the amount of downpayment. The parties must,
likewise, agree on the manner of payment of the balance of the purchase price
and on the other terms and conditions relative to the sale. Even if the buyer
makes a downpayment or portion thereof, such payment cannot be considered
as sufficient proof of the perfection of any purchase and sale between the
parties. Indeed, this Court ruled in Velasco v. Court of Appeals[59] that:
 
It is not difficult to glean from the aforequoted
averments that the petitioners themselves admit that they and
the respondent still had to meet and agree on how and when
the down-payment and the installment payments were to be
paid. Such being the situation, it cannot, therefore, be said that
a definite and firm sales agreement between the parties had
been perfected over the lot in question. Indeed, this Court has
already ruled before that a definite agreement on the manner
of payment of the purchase price is an essential element in the
formation of a binding and enforceable contract of sale. The 213
Sales
fact, therefore, that the petitioners delivered to the respondent
the sum of P10,000.00 as part of the downpayment that they
had to pay cannot be considered as sufficient proof of the
perfection of any purchase and sale agreement between the
parties herein under article 1482 of the New Civil Code, as the
petitioners themselves admit that some essential matter the
terms of payment still had to be mutually covenanted.[60]
 
We agree with the contention of the petitioner that, as held by the CA,
there is no showing, in the records, of the schedule of payment of the balance of
the purchase price on the property amounting to P278,448.00. We have
meticulously reviewed the records, including Ramos February 8, 1972 and August
22, 1972 letters to respondents,[61] and find that said parties confined themselves
to agreeing on the price of the property (P348,060.00), the 20% downpayment of
the purchase price (P69,612.00), and credited respondents for the P34,887.00
owing from Ramos as part of the 20% downpayment. The timeline for the
payment of the balance of the downpayment (P34,724.34) was also agreed upon,
that is, on or before XEI resumed its selling operations, on or before December
31, 1972, or within five (5) days from written notice of such resumption of selling
operations. The parties had also agreed to incorporate all the terms and
conditions relating to the sale, inclusive of the terms of payment of the balance of
the purchase price and the other substantial terms and conditions in the
corresponding contract of conditional sale, to be later signed by the parties,
simultaneously with respondents settlement of the balance of the downpayment.
The February 8, 1972 letter of XEI reads:
Mr. Carlos T. Manalo, Jr.
Hurricane Rotary Well Drilling
Rizal Avenue Ext.,Caloocan City
 
Dear Mr. Manalo:
 
We agree with your verbal offer to exchange the
proceeds of your contract with us to form as a down payment
for a lot in our Xavierville Estate Subdivision.
 
Please let us know your choice lot so that we can fix the
price and terms of payment in our conditional sale.
Sincerely yours,
 
XAVIERVILLE ESTATE, INC.
 
(Signed)
EMERITO B. RAMOS, JR.
President
 
CONFORME:
(Signed)
CARLOS T. MANALO, JR.
Hurricane Rotary Well Drilling[62]
 
 
The August 22, 1972 letter agreement of XEI and the respondents reads:
 
Mrs. Perla P. Manalo
1548 Rizal Avenue Extension
Caloocan City
 
Dear Mrs. Manalo:
 
This is to confirm your reservation of Lot Nos. 1 and 2; Block 2
of our consolidation-subdivision plan as amended, consisting of
1,740.3 square meters more or less, at the price of P200.00 per
square meter or a total price of P348,060.00.
It is agreed that as soon as we resume selling operations, you
must pay a down payment of 20% of the purchase price of the
said lots and sign the corresponding Contract of Conditional
Sale, on or before December 31, 1972, provided, however, that if
we resume selling after December 31, 1972, then you must pay
the aforementioned down payment and sign the aforesaid
contract within five (5) days from your receipt of our notice of
resumption of selling operations.
 
In the meanwhile, you may introduce such improvements on
the said lots as you may desire, subject to the rules and
regulations of the subdivision.
 
If the above terms and conditions are acceptable to you, please
signify your conformity by signing on the space herein below 214
Sales
provided.
 
Thank you.
 
 
Very truly yours,
 
XAVIERVILLE ESTATE, INC. CONFORME:
By:
 
(Signed) (Signed)
EMERITO B. RAMOS, JR. PERLA P. MANALO
President Buyer[63]
Based on these two letters, the determination of the terms of payment
of the P278,448.00 had yet to be agreed upon on or before December 31, 1972, or even
afterwards, when the parties sign the corresponding contract of conditional sale.
 
Jurisprudence is that if a material element of a contemplated contract is
left for future negotiations, the same is too indefinite to be enforceable.[64] And
when an essential element of a contract is reserved for future agreement of the
parties, no legal obligation arises until such future agreement is concluded.[65]
 
So long as an essential element entering into the proposed obligation of
either of the parties remains to be determined by an agreement which they are
to make, the contract is incomplete and unenforceable.[66] The reason is that
such a contract is lacking in the necessary qualities of definiteness, certainty and
mutuality.[67]
 
There is no evidence on record to prove that XEI or OBM and the
respondents had agreed, after December 31, 1972, on the terms of payment of
the balance of the purchase price of the property and the other substantial terms
and conditions relative to the sale. Indeed, the parties are in agreement that
there had been no contract of conditional sale ever executed by XEI, OBM or
petitioner, as vendor, and the respondents, as vendees.[68]
 
The ruling of this Court in Buenaventura v. Court of Appeals has no bearing in
this case because the issue of the manner of payment of the purchase price of
the property was not raised therein.
 
We reject the submission of respondents that they and Ramos had
intended to incorporate the terms of payment contained in the three contracts of
conditional sale executed by XEI and other lot buyers in the corresponding
contract of conditional sale, which would later be signed by them.[69] We have
meticulously reviewed the respondents complaint and find no such allegation
therein.[70]Indeed, respondents merely alleged in their complaint that they were
bound to pay the balance of the purchase price of the property in
installments. When respondent Manalo, Jr. testified, he was never asked, on
direct examination or even on cross-examination, whether the terms of payment
of the balance of the purchase price of the lots under the contracts of conditional
sale executed by XEI and other lot buyers would form part of the corresponding
contract of conditional sale to be signed by them simultaneously with the
payment of the balance of the downpayment on the purchase price.
 
We note that, in its letter to the respondents dated June 17, 1976, or
almost three years from the execution by the parties of their August 22,
1972 letter agreement, XEI stated, in part, that respondents had purchased the
property on installment basis.[71] However, in the said letter, XEI failed to state a
specific amount for each installment, and whether such payments were to be
made monthly, semi-annually, or annually. Also, respondents, as plaintiffs below,
failed to adduce a shred of evidence to prove that they were obliged to pay the P
278,448.00 monthly, semi-annually or annually. The allegation that the payment
of the P278,448.00 was to be paid in installments is, thus, vague and indefinite. 
Case law is that, for a contract to be enforceable, its terms must be certain and explicit, not vague or
indefinite.[72]
 
There is no factual and legal basis for the CA ruling that, based on the
terms of payment of the balance of the purchase price of the lots under the
contracts of conditional sale executed by XEI and the other lot buyers,
respondents were obliged to pay the P278,448.00 with pre-computed interest of
12% per annum in 120-month installments. As gleaned from the ruling of the
appellate court, it failed to justify its use of the terms of payment under the three
contracts of conditional sale as basis for such ruling, to wit:
 
On the other hand, the records do not disclose the
schedule of payment of the purchase price, net of the
downpayment. Considering, however, the Contracts of
Conditional Sale (Exhs. N, O and P) entered into by XEI with
other lot buyers, it would appear that the subdivision lots sold
by XEI, under contracts to sell, were payable in 120 equal
monthly installments (exclusive of the downpayment but
including pre-computed interests) commencing on delivery of
the lot to the buyer.[73] 215
Sales
 
By its ruling, the CA unilaterally supplied an essential element to the
letter agreement of XEI and the respondents. Courts should not undertake to
make a contract for the parties, nor can it enforce one, the terms of which are in
doubt.[74] Indeed, the Court emphasized in Chua v. Court of Appeals[75] that it is not
the province of a court to alter a contract by construction or to make a new
contract for the parties; its duty is confined to the interpretation of the one which
they have made for themselves, without regard to its wisdom or folly, as the
court cannot supply material stipulations or read into contract words which it
does not contain.
 
Respondents, as plaintiffs below, failed to allege in their complaint that
the terms of payment of the P278,448.00 to be incorporated in the
corresponding contract of conditional sale were those contained in the contracts
of conditional sale executed by XEI and Soller, Aguila and Roque.[76] They likewise
failed to prove such allegation in this Court.
 
The bare fact that other lot buyers were allowed to pay the balance of
the purchase price of lots purchased by them in 120 or 180 monthly installments
does not constitute evidence that XEI also agreed to give the respondents the
same mode and timeline of payment of the P278,448.00.
 
Under Section 34, Rule 130 of the Revised Rules of Court, evidence that
one did a certain thing at one time is not admissible to prove that he did the
same or similar thing at another time, although such evidence may be received to
prove habit, usage, pattern of conduct or the intent of the parties.
Similar acts as evidence. Evidence that one did or did not do
a certain thing at one time is not admissible to prove that he did
or did not do the same or a similar thing at another time; but it
may be received to prove a specific intent or knowledge,
identity, plan, system, scheme, habit, custom or usage, and the
like.
 
However, respondents failed to allege and prove, in the trial court, that,
as a matter of business usage, habit or pattern of conduct, XEI granted all lot
buyers the right to pay the balance of the purchase price in installments of 120
months of fixed amounts with pre-computed interests, and that XEI and the
respondents had intended to adopt such terms of payment relative to the sale of
the two lots in question. Indeed, respondents adduced in evidence the three
contracts of conditional sale executed by XEI and other lot buyers merely to prove
that XEI continued to sell lots in the subdivision as sales agent of OBM after it
acquired said lots, not to prove usage, habit or pattern of conduct on the part of
XEI to require all lot buyers in the subdivision to pay the balance of the purchase
price of said lots in 120 months. It further failed to prive that the trial court
admitted the said deeds[77] as part of the testimony of respondent Manalo, Jr.[78]
Habit, custom, usage or pattern of conduct must be proved like any
other facts. Courts must contend with the caveat that, before they admit
evidence of usage, of habit or pattern of conduct, the offering party must
establish the degree of specificity and frequency of uniform response that
ensures more than a mere tendency to act in a given manner but rather, conduct
that is semi-automatic in nature. The offering party must allege and prove
specific, repetitive conduct that might constitute evidence of habit. The examples
offered in evidence to prove habit, or pattern of evidence must be numerous
enough to base on inference of systematic conduct. Mere similarity of contracts
does not present the kind of sufficiently similar circumstances to outweigh the
danger of prejudice and confusion.
 
In determining whether the examples are numerous enough, and
sufficiently regular, the key criteria are adequacy of sampling and uniformity of
response. After all, habit means a course of behavior of a person regularly
represented in like circumstances.[79] It is only when examples offered to
establish pattern of conduct or habit are numerous enough to lose an inference
of systematic conduct that examples are admissible. The key criteria are
adequacy of sampling and uniformity of response or ratio of reaction to
situations.[80]
 
There are cases where the course of dealings to be followed is defined
by the usage of a particular trade or market or profession. As expostulated by
Justice Benjamin Cardozo of the United States Supreme Court: Life casts the
moulds of conduct, which will someday become fixed as law. Law preserves the
moulds which have taken form and shape from life.[81] Usage furnishes a
standard for the measurement of many of the rights and acts of men.[82] It is also
well-settled that parties who contract on a subject matter concerning which
known usage prevail, incorporate such usage by implication into their agreement,
if nothing is said to be contrary.[83]
 
However, the respondents inexplicably failed to adduce sufficient
competent evidence to prove usage, habit or pattern of conduct of XEI to justify
the use of the terms of payment in the contracts of the other lot buyers, and thus
grant respondents the right to pay the P278,448.00 in 120 months, presumably
because of respondents belief that the manner of payment of the said amount is
not an essential element of a contract to sell. There is no evidence that XEI or 216
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OBM and all the lot buyers in the subdivision, including lot buyers who pay part a contract of conditional sale to the respondents. The respondents could have at
of the downpayment of the property purchased by them in the form of service, least consigned the balance of the downpayment after notice of the resumption
had executed contracts of conditional sale containing uniform terms and of the selling operations of XEI and filed an action to compel XEI or OBM to
conditions. Moreover, under the terms of the contracts of conditional sale transmit to them the said contract; however, they failed to do so.
executed by XEI and three lot buyers in the subdivision, XEI agreed to grant 120  
months within which to pay the balance of the purchase price to two of them, but As a consequence, respondents and XEI (or OBM for that matter) failed
granted one 180 months to do so.[84] There is no evidence on record that XEI to forge a perfected contract to sell the two lots; hence, respondents have no
granted the same right to buyers of two or more lots. cause of action for specific performance against petitioner. Republic Act No. 6552
  applies only to a perfected contract to sell and not to a contract with no binding and enforceable effect.
Irrefragably, under Article 1469 of the New Civil Code, the price of the  
property sold may be considered certain if it be so with reference to another IN LIGHT OF ALL THE FOREGOING, the petition is GRANTED. The
thing certain. It is sufficient if it can be determined by the stipulations of the Decision of the Court of Appeals in CA-G.R. CV No. 47458 is REVERSED and SET
contract made by the parties thereto[85] or by reference to an agreement ASIDE. The Regional Trial Court of Quezon City, Branch 98 is ordered to dismiss
incorporated in the contract of sale or contract to sell or if it is capable of being the complaint. Costs against the respondents.
ascertained with certainty in said contract;[86] or if the contract contains express  
or implied provisions by which it may be rendered certain;[87] or if it provides SO ORDERED.
some method or criterion by which it can be definitely ascertained.[88] As this
Court held in Villaraza v. Court of Appeals,[89] the price is considered certain if, by its
terms, the contract furnishes a basis or measure for ascertaining the amount
agreed upon.
 
We have carefully reviewed the August 22, 1972 letter agreement of the
parties and find no direct or implied reference to the manner and schedule of
payment of the balance of the purchase price of the lots covered by the deeds of
conditional sale executed by XEI and that of the other lot buyers[90] as basis for or
mode of determination of the schedule of the payment by the respondents of
the P278,448.00.
 
The ruling of this Court in Mitsui Bussan Kaisha v. Manila Electric Railroad and Light
Company[91] is not applicable in this case because the basic price fixed in the
contract was P9.45 per long ton, but it was stipulated that the price was subject
to modification in proportion to variations in calories and ash content, and not
otherwise. In this case, the parties did not fix in their letters-agreement, any
method or mode of determining the terms of payment of the balance of the
purchase price of the property amounting to P278,448.00.
 
It bears stressing that the respondents failed and refused to pay the
balance of the downpayment and of the purchase price of the property
amounting to P278,448.00 despite notice to them of the resumption by XEI of its
selling operations. The respondents enjoyed possession of the property without
paying a centavo. On the other hand, XEI and OBM failed and refused to transmit 217
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LORENZO JOSE, petitioner,  essential element of the crime, and (2) erroneous denial of his motion to reopen
vs.
THE COURT OF APPEALS and THE PEOPLE OF THE PHILIPPINES, respondents.
Petitioner Lorenzo Jose who was convicted of illegal possession of explosives
(handgrenade) and sentenced to suffer imprisonment of five years, seeks a new
trial which was denied him by the Court of First Instance of Pampanga, Branch III,
and by respondent Court of Appeals.
Petitioner thus poses one legal issue for the Court to resolve, viz: did respondent
appellate court commit an error of law and gravely abuse its discretion when it
denied petitioner's motion for new trial "for the reception of (1) the written
permit of petitioner to possess and use handgrenade, and (2) the written
appointment of petitioner as PC agent with Code No. P-36-68 and code Name
'Safari' (both documents are dated 31 January 1968)"? 1
The following incidents are not in dispute:
On February 8, 1968, at the poblacion of Floridablanca, Pampanga, petitioner Jose
was arrested by the local police leading to the filing with the Court of First
Instance of Pampanga, Branch III of several criminal cases against him to wit:
illegal discharge of firearm (Crim. Case 6235), robbery (Crim. Case 6236) and
illegal possession of explosives (Crim. Case 6237). These three cases were jointly
tried after which the trial judge, Hon. Honorio Romero, in a decision dated
December 15, 1969, and promulgated on January 15, 1970 2 acquitted accused
Lorenzo Jose of illegal discharge of firearm and robbery, but convicted him for
illegal possession of the handgrenade that was found on his person at the time of
his arrest.
After promulgation of the judgment, petitioner on that same day filed his notice
of appeal. Nine days thereafter or more particularly on January 24, 1970,
petitioner filed a motion praying that the case be reopened to permit him to
present, pursuant to a reservation he had made in the course of the trial, a
permit to possess the handgrenade in question. The trial court in its order of
January 30, 1970 denied the motion mainly on the ground that it had lost
jurisdiction over the case in view of the perfection of the appeal by the accused
on the very date the decision was promulgated. 3
The records of Criminal Case 6237 were then elevated to the Court of Appeals
where petitioner as accused-appellant raised the issues of (1) an erroneous
conviction for illegal possession of explosives when there was no proof of an
the case for the reception of his permit to possess the handgrenade. 4 In his brief,
Lorenzo Jose prayed for his acquittal or in the alternative for the remand of the
case back to the trial court for a new trial.
Resolving the appeal, respondent Appellate Court, 5 rendered its decision of
March 8, 1972, affirming the findings of fact and the judgment of conviction of
the court a quo, and declaring that no reversible error was committed by the latter
when it denied the reopening of the case as the court had lost its "power to
change, modify, or alter its decision." 6
A motion for reconsideration and/or new trial was filed with a plea that
"assuming arguendo that the court a quo lacked jurisdiction to act upon appellant's
motion for new trial because of the perfection of the appeal, this Honorable
Court — before which said motion was reiterated and which has competence to
act thereon — should have granted the same if for no other reason than to
prevent a miscarriage of justice which is the inevitable result of its denial." 7 This
motion for reconsideration was denied in respondent court's resolution of April
3, 1974. 8
A second motion for reconsideration and/or new trial was filed by Lorenzo Jose 9 
but this was also denied by the appellate court in a Resolution promulgated on
July 24, 1974. 10
Forthwith, appellant Lorenzo Jose assisted by counsel, Atty. Francisco Carreon,
filed with Us this petition for review which We denied outright on September 6,
1974, "the question raised being factual and for insufficient showing that the
finding of facts by respondent court are unsupported by substantial evidence,
and for lack of merit."
A motion for reconsideration was filed by petitioner stressing that the following
grounds should justify this Court to review the ruling of respondent appellate
court to wit:
1. petitioners's plight is of compelling human and legal interest,
and his being imprisoned for five (5) years when there is
indubitable exculpatory evidence on hand is a result so harsh
that the Honorable Court may well undertake a review of the
case just to satisfy itself of the justice and inevitability of such a
result;
2. a question of substance not heretofore determined by the 218
Honorable Court is involved, as the evidence sought to be
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introduced at the new trial is, technically, not newly discovered:
and
3. the denial of a new trial in the circumstances mentioned in his
above-quoted statement of the main legal issue, is contrary to
the decisions of this Honorable Court because under these
decisions, the new trial should have been granted since there is
a 'strong, compelling reason' in this case for granting the relief
prayed for, such strong compelling reason being the very strong
probability of petitioner's acquittal if a new trial were granted.
(Workmen's Insurance Co. vs. Augusto, 40 SCRA 123; Sison vs.
Gatchalian, 51 SCRA 262; Rubio vs. Mariano 52 SCRA 338;
Montecines vs. Court of Appeals, 53 SCRA 14; Posadas vs. Court
of Appeals, L-38071, April 25, 1974; please see Annotation: 52
SCRA 346 ... (pp. 157-158, rollo)
The Solicitor General opposed the granting of the foregoing motion for
reconsideration claiming that there was neither a denial of "substantial justice
nor error of any sort on the part of respondent Court of Appeals, affirming the
judgment of convinction," and that it being admitted by petitioner that the
evidence sought to be introduced by him at the new trial is not newly discovered
evidence, the denial of the new trial "visibly papers as correct". This Opposition
drew a lengthy reply from petitioner's counsel.
On February 13, 1975, a Manifestation was submitted by the Solicitor General
informing the Court that in view of the " Persistence of accused petitioner
Lorenzo Jose both before this Honorable Court and respondent Court of Appeals
as to his alleged existing appointment as PC Agent and/or authority to
handgrenade," in the interest of justice, he was constrained to make pertinent
inquiries from the PC Chief, Gen. Fidel V. Ramos who in reply sent his letter dated
December 27, 1974 with enclosures, xerox copies of which are being attached to
the manifestation as Annexes A, B, C, C-1 and D. 11
Annex A of the above-mentioned Manifestation of the Solicitor General reads:
Solicitor General Estelito P. Mendoza
Padre Faura, Manila
Dear Solicitor General Mendoza:
With reference to your letter of December 5, 1974, please be
informed that Colonel Pedrito C. de Guzman who is now
Provincial of Sorsogon Constabulary Command, confirmed that
he executed an affidavit on May 4, 1974 at Sorsogon, Sorsogon
stating that he appointed Mr. Lorenzo Jose of Betis, Guagua,
Pampanga as PC Agent on January 31, 1968.
The incumbent Provincial Commander of Pampanga
Constabulary Command also confirmed the appointment of
Lorenzo Jose as PC agent during the year 1968.
Attached herewith pertinent papers related to the said
appointment.
Sincerely yours,
(Sgd.) FIDEL V. RAMOS
FIDEL V. RAMOS
Major General, AFP
Chief of Constabulary (p. 191, rollo)
Inclosure:
Appointmenmt paper
of subject person dtd
Jan. 31, 1968 with
Personal History
Statement
Annex B is the appointment dated January 31, 1968 of petitioner Lorenzo Jose as
a PC Agent of the Pampanga Constabulary Command with Code Number P-36-68
and Code Nanie "Safari" with expiration on December 31, 1968, the pertinent
portion of which We quote:
This Headquarters will, from time to time, provide our firearms
and such other equipment which it may deem necessary for
your personal protection on the need basis which will be
covered by separate written authority. (p. 192, rollo)
In a Resolution of February 21, 1975, the Court resolved to set aside the denial of
this petition for review, to give due course and consider the Petition as a special
civil action. In another Resolution of April 4, 1975, the parties were given time to
submit their respective memorandum.
This is a situation where a rigid application of rules of procedure must bow to the
overriding goal of courts of justice to render justice where justice is due-to secure
to every individual all possible legal means to prove his innocence of a crime of
which he is charged. The failure of the Court of Appeals to appreciate the merits
219
of the situation, involving as it does the liberty of an individual, thereby closing its
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ear to a plea that a miscarriage of justice be averted, constitutes a grave abuse of
discretion which calls for relief from this Court.
At the outset, We give due credit to the Solicitor General and his staff for
upholding the time-honored principle set forth in perspicuous terms by this
Court in Suarez vs. Platon, et al that a prosecuting officer, as the representative of a
sovereignty whose obligation and interest in a criminal prosecution is not that it
shall win a case but that justice shall be done, has the solemn responsibility to
assure the public that while guilt shall not escape, innocene shall not suffer. (69 Phil. 556, 564
-565, qouting Justice Sutherland of the U.S. Supreme Court in 69 U.S. Law Review,
June, 1935, No. 6, p. 309) The Solicitor General now concedes that the interests of
justice will best be served by remanding this case to the court of origin for a new
trial.
We do not question the correctness of the findings of the Court of Appeals that
the evidence sought to be presented by the petitioner do not fall under the
category of newly-discovered evidence because the same — his alleged
appointment as an agent of the Philippine Constabulary and a permit to possess
a handgrenade — were supposed to be known to petitioner and existing at the
time of trial and not discovered only thereafter.
It is indeed an established rule that for a new trial to be granted on the ground of
newly discovered evidence, it must be shown that (a) the evidence was
discovered after trial; (b) such evidence could not have been discovered and
produced at the trial even with the exercise of reasonable diligence; (c) the
evidence is material, not merely cumulative, corroborative, or impeaching; and
(d) it must go to the merits as ought to produce a different result if admitted. 12
However, petitioner herein does not justify his motion for a new trial on newly
discovered evidence, but rather on broader grounds of substantial justice under
Sec. 11, Rule 124 of the Rules of Court which provides:
Power of appellate court on appeal. — Upon appeal from a judgement
of the Court of First Instance, the appellate court may affirm or
modify the judgment and increase or reduce the penalty
imposed by the trial court, remand the case ito the Court of First
Instance for new trial or retrial, or dismiss the case.
Petitioner asserts, and correctly so, that the authority of respondent appellate
court over an appealed case is broad and ample enough to embrace situations as
the instant case where the court may grant a new trial or a retrial for reasons
other than that provided in Section 13 of the same Rule, or Section 2, Rule 121 of
the Rules of Court. 13While Section 13, Rule 124, and Section 2, Rule 121, provide
for specific grounds for a new trial, i.e. newly discovered evidence, and errors of
law or irregularities committed during the trial. Section 11, Rule 124 quoted
above does not so specify, thereby leaving to the sound discretion of the court
the determination, on a case to case basis, of what would constitute meritorious
circumstances warranting a new trial or re-trial.
Surely, the Rules of Court were conceived and promulgate to aid and not to
obstruct the proper administration of justice, to set forth guidelines in the
dispensation of justice but not to bind and chain the hand that dispense justice,
for otherwise, courts will be mere slaves to or robots of technical rules, shorn of
judicial discretion.
Thus, admittedly, courts may suspend its own rules or except a case from them
for the purposes of justice 14 or, in a proper case, disregard them. 15 In this
jurisdiction, in not a. few instances, 15* this Court ordered a new trial in criminal
cases on grounds not mentioned in the statute, vis retraction of witness, 16
 negligence or incompetency of counsel. 17 improvident plea of guilty, 18
 disqualification of an attorney de oficio to represent the accused in the trial
court, 19 and where a judgment was rendered on a stipulation of facts entered
into by both the prosecution and the defense. 20
Characteristically, a new trial has been described as a new invention to temper
the severity of a judgment or prevent the failure of justice. 21
Petitioner cites certain peculiar circumstances obtaining in the case now before
Us which may be classified as exceptional enough to warrant a new trial if only to
afford him an opportunity to establish his innocence of the crime charged.
Thus — petitioner was facing a criminal prosecution for illegal possession of a
handgrenade in the court below. He claimed to be an agent of the Philippine
Constabulary with a permit to possess explosives such as the handgrenade in
question. However, he found himself in a situation where he had to make a
choice — reveal his Identity as an undercover agent of the Philippine Constabulary
assigned to perform intelligence work on subversive activities and face possible
reprisals or even liquidation at the hands of the dissidents considering that
Floridablanca the site of the incident, was in the heart of "Huklandia", or ride on
the hope of a possible exoneration or acquittal based on insufficiency of the
evidence of the prosecution. Without revealing his Identity as an agent of the
Philippine Constabulary, he claimed before the trial judge that he had a permit220
to
possess the handgrenade and prayed for time to present the same. The permit
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however could not be produced because it would reveal his intelligence work
activities. Came the judgment of conviction and with it the staggering impact of a
five-year imprisonment. The competent authorities then realized that it was
unjust for this man to go to jail for a crime he had not committed, hence, came
the desired evidence concerning petitioner's appointment as a Philippine
Constabulary agent and his authority to possess a handgrenade for the
protection of his person, but, it was too late according to the trial court because
in the meantime the accused had perfected his appeal.
We find and hold that the above circumstances justify a reopening of petitioner's
cas to afford him the opportunity of producing exculpating exculpating evidence.
An outright acquittal from this Court which petitioner seeks as an alternative
relief is not As correctly stressed by the Solicitor General, the People is to be
given the chance of examining the documentary sought to be produced, and of
cross-examining the persons who executed the same, as well as the accused
himself, now petitioner, on his explanation for the non-production of the of the
evidence during the trial.
PREMISES CONSIDERED, We hereby set aside the judgment of conviction of the
herein petitioner, Lorenzo Jose, and remand the case to the court a quo for a new
trial only for purpose of allowing said accused to present additional evidence in
his defense. The trial court shall inform this Court of the final outcome of the
case within a reasonable time. Without pronouncement as to costs.
SO ORDERED.
LILY ELIZABETH BRAVO-GUERRERO, BEN MAURICIO P. BRAVO,[1] ROLAND P.
BRAVO, JR., OFELIA BRAVO-QUIESTAS, HEIRS OF CORPUSINIA BRAVO-
NIOR namely: GERSON U. NIOR, MARK GERRY B. NIOR, CLIFF
RICHARD B. NIOR, BRYAN B. NIOR, WIDMARK B. NIOR, SHERRY ANNE
B. NIOR, represented by LILY ELIZABETH BRAVO-GUERRERO as their
attorney-in-fact, and HONORABLE FLORENTINO A. TUASON, JR.,
Presiding Judge, Regional Trial Court, Branch 139, Makati City, 
petitioners, vs. EDWARD P. BRAVO, represented by his attorney-in-fact
FATIMA C. BRAVO, respondent, and DAVID B. DIAZ, JR., intervenor-
respondent.
The Case
Before the Court is a petition for review[2] assailing the Decision[3] of 21
December 2001 of the Court of Appeals in CA-G.R. CV No. 67794. The Court of
Appeals reversed the Decision[4] of 11 May 2000 of the Regional Trial Court of
Makati, Branch No. 139, in Civil Case No. 97-1379 denying respondents prayer to
partition the subject properties.
Antecedent Facts
Spouses Mauricio Bravo (Mauricio) and Simona[5] Andaya Bravo (Simona)
owned two parcels of land (Properties) measuring 287 and 291 square meters
and located along Evangelista Street, Makati City, Metro Manila. The Properties
are registered under TCT Nos. 58999 and 59000 issued by the Register of Deeds
of Rizal on 23 May 1958. The Properties contain a large residential dwelling, a
smaller house and other improvements.
Mauricio and Simona had three children - Roland, Cesar and Lily, all
surnamed Bravo. Cesar died without issue. Lily Bravo married David Diaz, and
had a son, David B. Diaz, Jr. (David Jr.). Roland had six children, namely, Lily
Elizabeth Bravo-Guerrero (Elizabeth), Edward Bravo (Edward), Roland Bravo, Jr.
(Roland Jr.), Senia Bravo, Benjamin Mauricio Bravo, and their half-sister, Ofelia
Bravo (Ofelia).
Simona executed a General Power of Attorney (GPA) on 17 June 1966
appointing Mauricio as her attorney-in-fact. In the GPA, Simona authorized
Mauricio to mortgage or otherwise hypothecate, sell, assign and dispose of any
and all of my property, real, personal or mixed, of any kind whatsoever and
wheresoever situated, or any interest therein xxx.[6] Mauricio subsequently
mortgaged the Properties to the Philippine National Bank (PNB) and
Development Bank of the Philippines (DBP) for P10,000 and P5,000, respectively.
[7]
On 25 October 1970, Mauricio executed a Deed of Sale with Assumption of
Real Estate Mortgage (Deed of Sale) conveying the Properties to Roland A. Bravo,
Ofelia A. Bravo and Elizabeth Bravo[8] (vendees). The sale was conditioned on the
221
payment of P1,000 and on the assumption by the vendees of the PNB and DBP
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mortgages over the Properties.
As certified by the Clerk of Court of the Regional Trial Court of Manila, the
Deed of Sale was notarized by Atty. Victorio Q. Guzman on 28 October 1970 and
entered in his Notarial Register.[9] However, the Deed of Sale was not annotated
on TCT Nos. 58999 and 59000. Neither was it presented to PNB and DBP. The
mortage loans and the receipts for loan payments issued by PNB and DBP
continued to be in Mauricios name even after his death on 20 November 1973.
Simona died in 1977.
On 23 June 1997, Edward, represented by his wife, Fatima Bravo, filed an
action for the judicial partition of the Properties. Edward claimed that he and the
other grandchildren of Mauricio and Simona are co-owners of the Properties by
succession. Despite this, petitioners refused to share with him the possession
and rental income of the Properties. Edward later amended his complaint to
include a prayer to annul the Deed of Sale, which he claimed was merely
simulated to prejudice the other heirs.
In 1999, David Jr., whose parents died in 1944 and who was subsequently
raised by Simona, moved to intervene in the case. David Jr. filed a complaint-in-
intervention impugning the validity of the Deed of Sale and praying for the
partition of the Properties among the surviving heirs of Mauricio and Simona. The
trial court allowed the intervention in its Order dated 5 May 1999.[10]
The Ruling of the Trial Court
The trial court upheld Mauricios sale of the Properties to the vendees. The
trial court ruled that the sale did not prejudice the compulsory heirs, as the
Properties were conveyed for valuable consideration. The trial court also noted
that the Deed of Sale was duly notarized and was in existence for many years
without question about its validity.
The dispositive portion of the trial courts Decision of 11 May 2000 reads:
WHEREFORE, premises considered, the Court hereby DENIES the JUDICIAL
PARTITION of the properties covered by TCT Nos. 58999 and 59000 registered
with the Office of the Register of Deeds of Rizal.
SO ORDERED.[11]
Dissatisfied, Edward and David Jr. (respondents) filed a joint appeal to the
Court of Appeals.
The Ruling of the Court of Appeals
Citing Article 166 of the Civil Code (Article 166), the Court of Appeals
declared the Deed of Sale void for lack of Simonas consent. The appellate court
held that the GPA executed by Simona in 1966 was not sufficient to authorize
Mauricio to sell the Properties because Article 1878 of the Civil Code (Article 1878)
requires a special power of attorney for such transactions. The appellate court
reasoned that the GPA was executed merely to enable Mauricio to mortgage the
Properties, not to sell them.
The Court of Appeals also found that there was insufficient proof that the
vendees made the mortgage payments on the Properties, since the PNB and DBP
receipts were issued in Mauricios name. The appellate court opined that the
rental income of the Properties, which the vendees never shared with
respondents, was sufficient to cover the mortgage payments to PNB and DBP.
The Court of Appeals declared the Deed of Sale void and ordered the
partition of the Properties in its Decision of 21 December 2001 (CA Decision), as
follows:
WHEREFORE, the decision of the Regional Trial Court of Makati City, Metro-
Manila, Branch 13[9] dated 11 May 2000[,] review of which is sought in these
proceedings[,] is REVERSED.
1. The Deed of Sale with Assumption of Real Estate Mortgage (Exh. 4)
dated 28 October 1970 is hereby declared null and void;
2. Judicial Partition on the questioned properties is hereby GRANTED in
the following manner:
A. In representation of his deceased mother, LILY BRAVO-DIAZ,
intervenor DAVID DIAZ, JR., is entitled to one-half (1/2)
interest of the subject properties;
B. Plaintiff-appellant EDWARD BRAVO and the rest of the five
siblings, namely: LILY ELIZABETH, EDWARD, ROLAND, JR.,
SENIA, BENJAMIN and OFELIA are entitled to one-sixth (1/6)
representing the other half portion of the subject
properties;
C. Plaintiff-appellant Edward Bravo, intervenor DAVID DIAZ, JR.,
SENIA and BENJAMIN shall reimburse the defendant-
appellees LILY ELIZABETH, OFELIA and ROLAND the sum of
One Thousand (P1,000.00) PESOS representing the
consideration paid on the questioned deed of sale with
assumption of mortgage with interest of six (6) percent per
annum effective 28 October 1970 until fully paid.
SO ORDERED.[12]
The Issues
Petitioners seek a reversal of the Decision of the Court of Appeals, raising
these issues:
1. WHETHER THE COURT OF APPEALS ERRED IN NOT UPHOLDING THE
VALIDITY AND ENFORCEMENT OF THE DEED OF SALE WITH
ASSUMPTION OF MORTGAGE.
2. WHETHER THE COURT OF APPEALS ERRED IN ORDERING THE PARTITION
OF THE PROPERTY IN QUESTION.[13]
At the least, petitioners argue that the subject sale is valid as to Mauricios
share in the Properties. 222
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On the other hand, respondents maintain that they are co-owners of the
Properties by succession. Respondents argue that the sale of the conjugal
Properties is void because: (1) Mauricio executed the Deed of Sale without
Simonas consent; and (2) the sale was merely simulated, as shown by the grossly
inadequate consideration Mauricio received for the Properties.
While this case was pending, Leonida Andaya Lolong (Leonida), David Jr.s
aunt, and Atty. Cendaa, respondents counsel, informed the Court that David Jr.
died on 14 September 2004. Afterwards, Leonida and Elizabeth wrote separate
letters asking for the resolution of this case. Atty. Cendaa later filed an urgent
motion to annotate attorneys lien on TCT Nos. 58999 and 59000. In its Resolution
dated 10 November 2004,[14] the Court noted the notice of David Jr.s death, the
letters written by Leonida and Elizabeth, and granted the motion to annotate
attorneys lien on TCT Nos. 58999 and 59000.
The Ruling of the Court
The petition is partly meritorious.
The questions of whether Simona consented to the Deed of Sale and
whether the subject sale was simulated are factual in nature. The rule is factual
findings of the Court of Appeals are binding on this Court. However, there are
exceptions, such as when the factual findings of the Court of Appeals and the trial
court are contradictory, or when the evidence on record does not support the
factual findings.[15] Because these exceptions obtain in the present case, the
Court will consider these issues.
On the Requirement of the Wifes Consent
We hold that the Court of Appeals erred when it declared the Deed of Sale
void based on Article 166, which states:
Art. 166. Unless the wife has been declared a non compos mentis or a spendthrift, or
is under civil interdiction or is confined in a leprosarium, the husband cannot
alienate or encumber any real property of the conjugal partnership without the
wifes consent. If she refuses unreasonably to give her consent, the court may
compel her to grant the same.
This article shall not apply to property acquired by the conjugal partnerships
before the effective date of this Code.
Article 166 expressly applies only to properties acquired by the conjugal
partnership after the effectivity of the Civil Code of the Philippines (Civil Code).
The Civil Code came into force on 30 August 1950.[16]Although there is no dispute
that the Properties were conjugal properties of Mauricio and Simona, the records
do not show, and the parties did not stipulate, when the Properties were
acquired.[17] Under Article 1413 of the old Spanish Civil Code, the husband could
alienate conjugal partnership property for valuable consideration without the
wifes consent.[18]
Even under the present Civil Code, however, the Deed of Sale is not void. It
is well-settled that contracts alienating conjugal real property without the wifes
consent are merely voidable under the Civil Code that is, binding on the parties
unless annulled by a competent court and not void ab initio.[19]
Article 166 must be read in conjunction with Article 173 of the Civil Code
(Article 173). The latter prescribes certain conditions before a sale of conjugal
property can be annulled for lack of the wifes consent, as follows:
Art. 173. The wife may, during the marriage and within ten years from the
transaction questioned, ask the courts for the annulment of any contract of the
husband entered into without her consent, when such consent is required, or any
act or contract of the husband which tends to defraud her or impair her interest
in the conjugal partnership property. Should the wife fail to exercise this right,
she or her heirs after the dissolution of the marriage, may demand the
value of property fraudulently alienated by the husband. (Emphasis supplied)
Under the Civil Code, only the wife can ask to annul a contract that disposes
of conjugal real property without her consent. The wife must file the action for
annulment during the marriage and within ten years from the questioned
transaction. Article 173 is explicit on the remedies available if the wife fails to
exercise this right within the specified period. In such case, the wife or her heirs
can only demand the value of the property provided they prove that the husband
fraudulently alienated the property. Fraud is never presumed, but must be
established by clear and convincing evidence.[20]
Respondents action to annul the Deed of Sale based on Article 166 must fail
for having been filed out of time. The marriage of Mauricio and Simona was
dissolved when Mauricio died in 1973. More than ten years have passed since the
execution of the Deed of Sale.
Further, respondents, who are Simonas heirs, are not the parties who can
invoke Article 166. Article 173 reserves that remedy to the wife alone. Only
Simona had the right to have the sale of the Properties annulled on the ground
that Mauricio sold the Properties without her consent.
Simona, however, did not assail the Deed of Sale during her marriage or
even after Mauricios death. The records are bereft of any indication that Simona
questioned the sale of the Properties at any time. Simona did not even attempt
to take possession of or reside on the Properties after Mauricios death. David Jr.,
who was raised by Simona, testified that he and Simona continued to live in
Pasay City after Mauricios death, while her children and other grandchildren
resided on the Properties.[21]
We also agree with the trial court that Simona authorized Mauricio to
dispose of the Properties when she executed the GPA. True, Article 1878 requires
a special power of attorney for an agent to execute a contract that transfers the
ownership of an immovable. However, the Court has clarified that Article 1878
refers to the nature of the authorization, not to its form.[22] Even if a document is
titled as a general power of attorney, the requirement of a special power of 223
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attorney is met if there is a clear mandate from the principal specifically
authorizing the performance of the act.[23]
In Veloso v. Court of Appeals,[24] the Court explained that a general power of
attorney could contain a special power to sell that satisfies the requirement of
Article 1878, thus:
An examination of the records showed that the assailed power of attorney was
valid and regular on its face. It was notarized and as such, it carries the
evidentiary weight conferred upon it with respect to its due execution. While it is
true that it was denominated as a general power of attorney, a perusal thereof
revealed that it stated an authority to sell, to wit:
2. To buy or sell, hire or lease, mortgage or otherwise hypothecate lands,
tenements and hereditaments or other forms of real property, more specifically
TCT No. 49138, upon such terms and conditions and under such covenants as my
said attorney shall deem fit and proper.
Thus, there was no need to execute a separate and special power of attorney
since the general power of attorney had expressly authorized the agent or
attorney in fact the power to sell the subject property. The special power of
attorney can be included in the general power when it is specified therein
the act or transaction for which the special power is required. (Emphasis
supplied)
In this case, Simona expressly authorized Mauricio in the GPA to sell, assign
and dispose of any and all of my property, real, personal or mixed, of any kind
whatsoever and wheresoever situated, or any interest therein xxx as well as to
act as my general representative and agent, with full authority to buy, sell,
negotiate and contract for me and in my behalf.[25] Taken together, these
provisions constitute a clear and specific mandate to Mauricio to sell the
Properties. Even if it is called a general power of attorney, the specific provisions
in the GPA are sufficient for the purposes of Article 1878. These provisions in the
GPA likewise indicate that Simona consented to the sale of the Properties.
Whether the Sale of the Properties was Simulated
or is Void for Gross Inadequacy of Price
We point out that the law on legitime does not bar the disposition of
property for valuable consideration to descendants or compulsory heirs. In a
sale, cash of equivalent value replaces the property taken from the estate.[26]
 There is no diminution of the estate but merely a substitution in values.
Donations and other dispositions by gratuitous title, on the other hand, must be
included in the computation of legitimes.[27]
Respondents, however, contend that the sale of the Properties was merely
simulated. As proof, respondents point to the consideration of P1,000 in the
Deed of Sale, which respondents claim is grossly inadequate compared to the
actual value of the Properties.
Simulation of contract and gross inadequacy of price are distinct legal
concepts, with different effects. When the parties to an alleged contract do not
really intend to be bound by it, the contract is simulated and void.[28] A simulated
or fictitious contract has no legal effect whatsoever[29] because there is no real
agreement between the parties.
In contrast, a contract with inadequate consideration may nevertheless
embody a true agreement between the parties. A contract of sale is a consensual
contract, which becomes valid and binding upon the meeting of minds of the
parties on the price and the object of the sale.[30] The concept of a simulated sale
is thus incompatible with inadequacy of price. When the parties agree on a price
as the actual consideration, the sale is not simulated despite the inadequacy of
the price.[31]
Gross inadequacy of price by itself will not result in a void contract. Gross
inadequacy of price does not even affect the validity of a contract of sale, unless it
signifies a defect in the consent or that the parties actually intended a donation
or some other contract.[32] Inadequacy of cause will not invalidate a contract
unless there has been fraud, mistake or undue influence.[33] In this case,
respondents have not proved any of the instances that would invalidate the Deed
of Sale.
Respondents even failed to establish that the consideration paid by the
vendees for the Properties was grossly inadequate. As the trial court pointed out,
the Deed of Sale stipulates that, in addition to the payment of P1,000, the
vendees should assume the mortgage loans from PNB and DBP. The
consideration for the sale of the Properties was thus P1,000 in cash and the
assumption of the P15,000 mortgage.
Respondents argue that P16,000 is still far below the actual value of the
Properties. To bolster their claim, respondents presented the following: (1) Tax
Declarations No. A-001-00905[34] and A-001-00906[35] for the year 1979, which
placed the assessed value of the Properties at P70,020 and their approximate
market value at P244,290; and (2) a certified copy of the Department of Finances
Department Order No. 62-97[36] dated 6 June 1997 and attached guidelines[37]
 which established the zonal value of the properties along Evangelista Street at P
15,000 per square meter.
The subject Deed of Sale, however, was executed in 1970. The valuation of
the Properties in 1979 or 1997 is of little relevance to the issue of whether P
16,000 was a grossly inadequate price to pay for the Properties in 1970. Certainly,
there is nothing surprising in the sharp increase in the value of the Properties
nine or twenty-seven years after the sale, particularly when we consider that the
Properties are located in the City of Makati.
More pertinent are Tax Declarations No. 15812[38] and No. 15813,[39] both
issued in 1967, presented by petitioners. These tax declarations placed the
assessed value of both Properties at P16,160. Compared to this, the price of P 224
Sales
16,000 cannot be considered grossly inadequate, much less so shocking to the
conscience[40] as to justify the setting aside of the Deed of Sale.
Respondents next contend that the vendees did not make the mortgage
payments on the Properties. Respondents allege that the rents paid by the
tenants leasing portions of the Properties were sufficient to cover the mortgage
payments to DBP and PNB.
Again, this argument does not help respondents cause. Assuming that the
vendees failed to pay the full price stated in the Deed of Sale, such partial failure
would not render the sale void. In Buenaventura v. Court of Appeals,[41] the Court held:
xxx If there is a meeting of the minds of the parties as to the price, the contract
of sale is valid, despite the manner of payment, or even the breach of that
manner of payment. xxx
It is not the act of payment of price that determines the validity of a contract of
sale. Payment of the price has nothing to do with the perfection of the contract.
Payment of the price goes into the performance of the contract. Failure to pay
the consideration is different from lack of consideration. The former results in a
right to demand the fulfillment or cancellation of the obligation under an existing
valid contract while the latter prevents the existence of a valid contract.
(Emphasis supplied.)
Neither was it shown that the rentals from tenants were sufficient to cover
the mortgage payments. The parties to this case stipulated to only one tenant, a
certain Federico M. Puno, who supposedly leased a room on the Properties for P
300 per month from 1992 to 1994.[42] This is hardly significant, when we consider
that the mortgage was fully paid by 1974. Indeed, the fact that the Properties
were mortgaged to DBP and PNB indicates that the conjugal partnership, or at
least Mauricio, was short of funds.
Petitioners point out that they were duly employed and had the financial
capacity to buy the Properties in 1970. Respondents did not refute this.
Petitioners presented 72 receipts[43] showing the mortgage payments made to
PNB and DBP, and the Release of the Real Estate Mortgage[44] (Mortgage Release)
dated 5 April 1974. True, these documents all bear Mauricios name. However,
this tends to support, rather than detract from, petitioner-vendees explanation
that they initially gave the mortgage payments directly to Mauricio, and then later
directly to the banks, without formally advising the bank of the sale. The last 3
mortgage receipts and the Mortgage Release were all issued in Mauricios name
even after his death in 1970. Obviously, Mauricio could not have secured the
Mortgage Release and made these last payments.
Presumption of Regularity and Burden of Proof
The Deed of Sale was notarized and, as certified by the Regional Trial Court
of Manila, entered in the notarial books submitted to that court. As a document
acknowledged before a notary public, the Deed of Sale enjoys the presumption of
regularity[45] and due execution.[46] Absent evidence that is clear, convincing and
more than merely preponderant, the presumption must be upheld.[47]
Respondents evidence in this case is not even preponderant. Respondents
allegations, testimony and bare denials cannot prevail over the documentary
evidence presented by petitioners. These documents the Deed of Sale and the
GPA which are both notarized, the receipts, the Mortgage Release and the 1967
tax declarations over the Properties support petitioners account of the sale.
As the parties challenging the regularity of the Deed of Sale and alleging its
simulation, respondents had the burden of proving these charges.[48]
 Respondents failed to discharge this burden. Consequentially, the Deed of Sale
stands.
On the Partition of the Property
Nevertheless, this Court finds it proper to grant the partition of the
Properties, subject to modification.
Petitioners have consistently claimed that their father is one of the vendees
who bought the Properties. Vendees Elizabeth and Ofelia both testified that the
Roland A. Bravo in the Deed of Sale is their father,[49]although their brother,
Roland Bravo, Jr., made some of the mortgage payments. Petitioners counsel,
Atty. Paggao, made the same clarification before the trial court.[50]
As Roland Bravo, Sr. is also the father of respondent Edward Bravo, Edward
is thus a compulsory heir of Roland Bravo, and entitled to a share, along with his
brothers and sisters, in his fathers portion of the Properties. In short, Edward and
petitioners are co-owners of the Properties.
As such, Edward can rightfully ask for the partition of the Properties. Any co-
owner may demand at any time the partition of the common property unless a
co-owner has repudiated the co-ownership.[51] This action for partition does not
prescribe and is not subject to laches.[52]
WHEREFORE, we REVERSE the Decision of 21 December 2001 of the Court of
Appeals in CA-G.R. CV No. 67794. We REINSTATE the Decision of 11 May 2000 of
the Regional Trial Court of Makati, Branch No. 139, in Civil Case No. 97-137,
declaring VALID the Deed of Sale with Assumption of Mortgage dated 28 October
1970, with the following MODIFICATIONS:
1. We GRANT judicial partition of the subject Properties in the following
manner:
a. Petitioner LILY ELIZABETH BRAVO-GUERRERO is entitled to one-third
(1/3) of the Properties;
b. Petitioner OFELIA BRAVO-QUIESTAS is entitled to one-third (1/3) of
the Properties; and
c. The remaining one-third (1/3) portion of the Properties should be
divided equally between the children of ROLAND BRAVO.
2. The other heirs of ROLAND BRAVO must reimburse ROLAND BRAVO, JR.
for whatever expenses the latter incurred in paying for and securing the225
release of the mortgage on the Properties.
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SO ORDERED.

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