1. G.R. No. 143513            November 14, 2001
60 hectare-
POLYTECHNIC UNIVERSITY OF THE
PHILIPPINES, petitioner,
vs.
COURT OF APPEALS and FIRESTONE CERAMICS,
INC., respondents.
x---------------------------------------------------------x
G.R. No. 143590                        November 14, 2001
NATIONAL DEVELOPMENT
CORPORATION, petitioner,
vs.
FIRESTONE CERAMICS, INC., respondents.
A litigation is not simply a contest of litigants before the
bar of public opinion; more than that, it is a pursuit of
justice through legal and equitable means. To prevent
the search for justice from evolving into a competition for
public approval, society invests the judiciary with
complete independence thereby insulating it from
demands expressed through any medium, the press not
excluded. Thus, if the court would merely reflect, and
worse, succumb to the great pressures of the day, the
end result, it is feared, would be a travesty of justice.
In the early sixties, petitioner National Development
Corporation (NDC), a government owned and controlled
corporation created under CA 182 as amended by CA
311 and PD No. 668, had in its disposal a ten (10)-
hectare property located along Pureza St., Sta. Mesa,
Manila. The estate was popularly known as the NDC
compound and covered by Transfer Certificates of Title
Nos. 92885, 110301 and 145470.
Sometime in May 1965 private respondent Firestone
Ceramics Inc. (FIRESTONE) manifested its desire to
lease a portion of the property for its ceramic
manufacturing business. On 24 August 1965 NDC and
FIRESTONE entered into a contract of lease
denominated as Contract No. C-30-65 covering a portion
of the property measured at 2.90118 hectares for use as
a manufacturing plant for a term of ten (10) years,
renewable for another ten (10) years under the same
terms and conditions. In consequence of the agreement,
FIRESTONE constructed on the leased premises
several warehouses and other improvements needed for
the fabrication of ceramic products.
Three and a half (3-1/2) years later, or on 8 January
1969, FIRESTONE entered into a second contract of
lease with NDC over the latter's four (4)-unit pre-
fabricated reparation steel warehouse stored in Daliao,
Davao. FIRESTONE agreed to ship the warehouse to
Manila for eventual assembly within the NDC compound.
The second contract, denominated as Contract No. C-
26-68, was for similar use as a ceramic manufacturing
plant and was agreed expressly to be "co-extensive with
the lease of LESSEE with LESSOR on the 2.
lot."
On 31 July 1974 the parties signed a similar contract
concerning a six (6)-unit pre-fabricated steel warehouse
which, as agreed upon by the parties, would expire on 2
December 1978. Prior to the expiration of the
aforementioned contract, FIRESTONE wrote NDC
requesting for an extension of their lease agreement.
Consequently on 29 November 1978 the Board of
Directors of NDC adopted Resolution No. 11-78-117
extending the term of the lease, subject to several
conditions among which was that in the event NDC "with
the approval of higher authorities, decide to dispose and
sell these properties including the lot, priority should be
given to the LESSEE" (underscoring supplied). On 22
December 1978, in pursuance of the resolution, the
parties entered into a new agreement for a ten-year
lease of the property, renewable for another ten (10)
years, expressly granting FIRESTONE the first option to
purchase the leased premises in the event that it
decided "to dispose and sell these properties including
the lot . . . . "
The contracts of lease conspicuously contain an
identically worded provision requiring FIRESTONE to
construct buildings and other improvements within the
leased premises worth several hundred thousands of
pesos.
The parties' lessor-lessee relationship went smoothly
until early 1988 when FIRESTONE, cognizant of the
impending expiration of their lease agreement with NDC,
informed the latter through several letters and telephone
calls that it was renewing its lease over the property.
While its letter of 17 March 1988 was answered by
Antonio A. Henson, General Manager of NDC, who
promised immediate action on the matter, the rest of its
communications remained unacknowledged. 
FIRESTONE's predicament worsened when rumors of
NDC's supposed plans to dispose of the subject property
in favor of petitioner Polytechnic University of the
Philippines (PUP) came to its knowledge. Forthwith,
FIRESTONE served notice on NDC conveying its desire
to purchase the property in the exercise of its contractual
right of first refusal.
Apprehensive that its interest in the property would be
disregarded, FIRESTONE instituted an action for
specific performance to compel NDC to sell the leased
property in its favor. FIRESTONE averred that it was
pre-empting the impending sale of the NDC compound
to petitioner PUP in violation of its leasehold rights over
the 2.60-hectare property and the warehouses thereon
which would expire in 1999. FIRESTONE likewise
prayed for the issuance of a writ of preliminary injunction
to enjoin NDC from disposing of the property pending
the settlement of the controversy.
In support of its complaint, FIRESTONE adduced in
evidence a letter of Antonio A. Henson dated 15 July
1988 addressed to Mr. Jake C. Lagonera, Director and
Special Assistant to Executive Secretary Catalino
Macaraeg, reviewing a proposed memorandum order
submitted to then President Corazon C. Aquino
transferring the whole NDC compound, including the
leased property, in favor of petitioner PUP. Attached to
the letter was a draft of the proposed memorandum
order as well as a summary of existing leases on the
subject property. The survey listed FIRESTONE as
lessee of a portion of the property, placed at
29,000 square meters, whose contract with NDC was set
to expire on 31 December 1989 renewable for another
ten (10) years at the option of the lessee. The report
expressly recognized FIRESTONE's right of first refusal
to purchase the leased property "should the lessor
decide to sell the same."
Meanwhile, on 21 February 1989 PUP moved to
intervene and asserted its interest in the subject
property, arguing that a "purchaser pendente lite of
property which is subject of a litigation is entitled to
intervene in the proceedings." PUP referred
to Memorandum Order No. 214 issued by then President
Aquino ordering the transfer of the whole NDC
compound to the National Government, which in turn
would convey the aforementioned property in favor of
PUP at acquisition cost. The issuance was supposedly
made in recognition of PUP's status as the "Poor Man's
University" as well as its serious need to extend its
campus in order to accommodate the growing student
population. The order of conveyance of the 10.31-
hectare property would automatically result in the
cancellation of NDC's total obligation in favor of the
National Government in the amount of P57,193,201.64.
Convinced that PUP was a necessary party to the
controversy that ought to be joined as party defendant in
order to avoid multiplicity of suits, the trial court granted
PUP's motion to intervene. FIRESTONE moved for
reconsideration but was denied. On certiorari, the Court
of Appeals affirmed the order of the trial court.
FIRESTONE came to us on review but in a Resolution
dated 11 July 1990 we upheld PUP's inclusion as party-
defendant in the present controversy.
Following the denial of its petition, FIRESTONE
amended its complaint to include PUP and Executive
Secretary Catalino Macaraeg, Jr., as party-defendants,
and sought the annulment of Memorandum Order No.
214. FIRESTONE alleged that although Memorandum
Order No. 214 was issued "subject to such liens/leases
existing [on the subject property]," PUP disregarded and
violated its existing lease by increasing the rental rate
at P200,000.00 a month while demanding that it vacated
the premises immediately. FIRESTONE prayed that in
the event Memorandum Order No. 214 was not declared
unconstitutional, the property should be sold in its favor
at the price for which it was sold to PUP - P554.74 per
square meter or for a total purchase price
of P14,423,240.00.
Petitioner PUP, in its answer to the amended complaint,
argued in essence that the lease contract covering the
property had expired long before the institution of the
complaint, and that further, the right of first refusal
invoked by FIRESTONE applied solely to the six-unit
pre-fabricated warehouse and not the lot upon which it
stood.
After trial on the merits, judgment was rendered
declaring the contracts of lease executed between
FIRESTONE and NDC covering the 2.60-hectare
property and the warehouses constructed thereon valid
and existing until 2 June 1999. PUP was ordered and
directed to sell to FIRESTONE the "2.6 hectare leased
premises or as may be determined by actual verification
and survey of the actual size of the leased properties
where plaintiff's fire brick factory is located" at P1,500.00
per square meter considering that, as admitted by
FIRESTONE, such was the prevailing market price
thereof.
The trial court ruled that the contracts of lease executed
between FIRESTONE and NDC were interrelated and
inseparable because "each of them forms part of the
integral system of plaintiff's brick manufacturing plant x x
x if one of the leased premises will be taken apart or
otherwise detached from the two others, the purpose of
the lease as well as plaintiff's business operations would
be rendered useless and inoperative." It thus decreed
that FIRESTONE could exercise its option to purchase
the property until 2 June 1999 inasmuch as the 22
December 1978 contract embodied a covenant to renew
the lease for another ten (10) years at the option of the
lessee as well as an agreement giving the lessee the
right of first refusal.
The trial court also sustained the constitutionality
of Memorandum Order No. 214 which was not per
se hostile to FIRESTONE's property rights, but deplored
as prejudicial thereto the "very manner with which
defendants NDC and PUP interpreted and applied the
same, ignoring in the process that plaintiff has existing
contracts of lease protectable by express provisions in
the Memorandum No. 214 itself." It further explained that
the questioned memorandum was issued "subject to
such liens/leases existing thereon" and petitioner PUP
was under express instructions "to enter, occupy and
take possession of the transferred property subject to
such leases or liens and encumbrances that may be
existing thereon" (italics supplied).
Petitioners PUP, NDC and the Executive Secretary
separately filed their Notice of Appeal, but a few days
thereafter, or on 3 September 1996, perhaps realizing
the groundlessness and the futility of it all, the Executive
Secretary withdrew his appeal.
Subsequently, the Court of Appeals affirmed the
decision of the trial court ordering the sale of the
property in favor of FIRESTONE but deleted the award
of attorney's fees in the amount of Three Hundred
Thousand Pesos (P300,000.00). Accordingly,
FIRESTONE was given a grace period of six (6) months
from finality of the court's judgment within which to
purchase the property in questioned in the exercise of its
right of first refusal. The Court of Appeals observed that
as there was a sale of the subject property, NDC could
not excuse itself from its obligation TO OFFER THE
PROPERTY FOR SALE FIRST TO FIRESTONE
BEFORE IT COULD TO OTHER PARTIES. The Court of
Appeals held: "NDC cannot look to Memorandum Order
No. 214 to excuse or shield it from its contractual
obligations to FIRESTONE. There is nothing therein that
allows NDC to disavow or repudiate the solemn
engagement that it freely and voluntarily undertook, or
agreed to undertake."
PUP moved for reconsideration asserting that in ordering
the sale of the property in favor of FIRESTONE the
courts a quo  unfairly created a contract to sell between
the parties. It argued that the "court cannot substitute or
decree its mind or consent for that of the parties in
determining whether or not a contract (has been)
perfected between PUP and NDC." PUP further
contended that since "a real property located in Sta.
Mesa can readily command a sum of P10,000.00 per
square (meter)," the lower court gravely erred in ordering
the sale of the property at only P1,500.00 per square
meter. PUP also advanced the theory that the enactment
of Memorandum Order No. 214 amounted to a
withdrawal of the option to purchase the property
granted to FIRESTONE. NDC, for its part, vigorously
contended that the contracts of lease executed between
the parties had expired without being renewed by
FIRESTONE; consequently, FIRESTONE was no longer
entitled to any preferential right in the sale or disposition
of the leased property.
We do not see it the way PUP and NDC did. It is
elementary that a party to a contract cannot unilaterally
withdraw a right of first refusal that stands upon valuable
consideration. That principle was clearly upheld by the
Court of Appeals when it denied on 6 June 2000 the twin
motions for reconsideration filed by PUP and NDC on
the ground that the appellants failed to advance new
arguments substantial enough to warrant a reversal of
the Decision sought to be reconsidered. On 28 June
2000 PUP filed an urgent motion for an additional period
of fifteen (15) days from 29 June 2000 or until 14 July
2000 within which to file a Petition for Review on
Certiorari of the Decision of the Court of Appeals.
On the last day of the extended period PUP filed
its Petition for Review on Certiorari assailing
the Decision of the Court of Appeals of 6 December
1999 as well as the Resolution of 6 June 2000 denying
reconsideration thereof. PUP raised two issues: (a)
whether the courts a quo erred when they "conjectured"
that the transfer of the leased property from NDC to PUP
amounted to a sale; and, (b) whether FIRESTONE can
rightfully invoke its right of first refusal. Petitioner posited
that if we were to place our imprimatur on the decisions
of the courts a quo, "public welfare or specifically the
constitutional priority accorded to education" would
greatly be prejudiced.
Paradoxically, our paramount interest in education does
not license us, or any party for that matter, to destroy the
sanctity of binding obligations. Education may be
prioritized for legislative or budgetary purposes, but we
doubt if such importance can be used to confiscate
private property such as FIRESTONE's right of first
refusal.
On 17 July 2000 we denied PUP's motion for extension
of fifteen (15) days within which to appeal inasmuch as
the aforesaid pleading lacked an affidavit of service of
copies thereof on the Court of Appeals and the adverse
party, as well as written explanation for not filing and
serving the pleading personally.
Accordingly, on 26 July 2000 we issued
a Resolution dismissing PUP's Petition for Review for
having been filed out of time. PUP moved for
reconsideration imploring a resolution or decision on the
merits of its petition. Strangely, about the same time,
several articles came out in the newspapers assailing
the denial of the petition. The daily papers reported that
we unreasonably dismissed PUP's petition on technical
grounds, affirming in the process the decision of the trial
court to sell the disputed property to the prejudice of the
government in the amount of P1,000,000,000.00. 
Counsel for petitioner PUP, alleged that the trial court
and the Court of Appeals "have decided a question of
substance in a way definitely not in accord with law or
jurisprudence."
At the outset, let it be noted that the amount
of P1,000,000,000.00 as reported in the papers was way
too exaggerated, if not fantastic. We stress that NDC
itself sold the whole 10.31-hectare property to PUP at
only P57,193,201.64 which represents NDC's obligation
to the national government that was, in exchange,
written off. The price offered per square meter of the
property was pegged at P554.74. FIRESTONE's leased
premises would therefore be worth only P14,423,240.00.
From any angle, this amount is certainly far below the
ballyhooed price of P1,000,000,000.00.
On 4 October 2000 we granted PUP's Motion for
Reconsideration to give it a chance to ventilate its right,
if any it still had in the leased premises, thereby paving
the way for a reinstatement of its Petition for Review. In
its appeal, PUP took to task the courts a quo for
supposedly "substituting or decreeing its mind or
consent for that of the parties (referring to NDC and
PUP) in determining whether or not a contract of sale
was perfected." PUP also argued that inasmuch as "it is
the parties alone whose minds must meet in reference to
the subject matter and cause," it concluded that it was
error for the lower courts to have decreed the existence
of a sale of the NDC compound thus allowing
FIRESTONE to exercise its right of first refusal.
On the other hand, NDC separately filed its own Petition
for Review and advanced arguments which, in fine,
centered on whether or not the transaction between
petitioners NDC and PUP amounted to a sale
considering that "ownership of the property remained
with the government." Petitioner NDC introduced the
novel proposition that if the parties involved are both
government entities the transaction cannot be legally
called a sale.
In due course both petitions were consolidated.
We believe that the courts a quo did not hypothesize,
much less conjure, the sale of the disputed property by
NDC in favor of petitioner PUP. Aside from the fact that
the intention of NDC and PUP to enter into a contract of
sale was clearly expressed in the Memorandum Order
No. 214, a close perusal of the circumstances of this
case strengthens the theory that the conveyance of the
property from NDC to PUP was one of absolute sale, for
a valuable consideration, and not a mere paper transfer
as argued by petitioners.
A contract of sale, as defined in the Civil Code, is a
contract where one of the parties obligates himself to
transfer the ownership of and to deliver a determinate
thing to the other or others who shall pay therefore a
sum certain in money or its equivalent. It is therefore a
general requisite for the existence of a valid and
enforceable contract of sale that it be mutually
obligatory, i.e., there should be a concurrence of the
promise of the vendor to sell a determinate thing and the
promise of the vendee to receive and pay for the
property so delivered and transferred. The Civil Code
provision is, in effect, a "catch-all" provision which
effectively brings within its grasp a whole gamut of
transfers whereby ownership of a thing is ceded for a
consideration.
Contrary to what petitioners PUP and NDC propose,
there is not just one party involved in the questioned
transaction. Petitioners NDC and PUP have their
respective charters and therefore each possesses a
separate and distinct individual personality. The inherent
weakness of NDC's proposition that there was no sale
as it was only the government which was involved in the
transaction thus reveals itself. Tersely put, it is not
necessary to write an extended dissertation on
government owned and controlled corporations and their
legal personalities. Beyond cavil, a government owned
and controlled corporation has a personality of its own,
distinct and separate from that of the government. The
intervention in the transaction of the Office of the
President through the Executive Secretary did not
change the independent existence of these entities. The
involvement of the Office of the President was limited to
brokering the consequent relationship between NDC and
PUP. But the withdrawal of the appeal by the Executive
Secretary is considered significant as he knew, after a
review of the records, that the transaction was subject to
existing liens and encumbrances, particularly the priority
to purchase the leased premises in favor of
FIRESTONE.
True that there may be instances when a particular deed
does not disclose the real intentions of the parties, but
their action may nevertheless indicate that a binding
obligation has been undertaken. Since the conduct of
the parties to a contract may be sufficient to establish
the existence of an agreement and the terms thereof, it
becomes necessary for the courts to examine the
contemporaneous behavior of the parties in establishing
the existence of their contract.
The preponderance of evidence shows that NDC sold to
PUP the whole NDC compound, including the leased
premises, without the knowledge much less consent of
private respondent FIRESTONE which had a valid and
existing right of first refusal.
All three (3) essential elements of a valid sale, without
which there can be no sale, were attendant in the
"disposition" and "transfer" of the property from NDC to
PUP - consent of the parties, determinate subject
matter, and  consideration therefor.
Consent to the sale is obvious from the prefatory clauses
of Memorandum Order No. 214 which explicitly states
the acquiescence of the parties to the sale of the
property -
WHEREAS, PUP has expressed its willingness
to acquire said NDC properties and NDC has
expressed its willingness to sell the properties to
PUP (underscoring supplied).
Furthermore, the cancellation of NDC's liabilities in favor
of the National Government in the amount
of P57,193,201.64 constituted the "consideration" for the
sale. As correctly observed by the Court of Appeals-
The defendants-appellants' interpretation that
there was a mere transfer, and not a sale, apart
from being specious sophistry and a mere play
of words, is too strained and hairsplitting. For it
is axiomatic that every sale imposes upon the
vendor the obligation to transfer ownership as
an essential element of the contract. Transfer of
title or an agreement to transfer title for a price
paid, or promised to be paid, is the very essence
of sale (Kerr & Co. v. Lingad, 38 SCRA
524; Schmid & Oberly, Inc., v. RJL Martinez
Fishing Corp., 166 SCRA 493). At whatever
legal angle we view it, therefore, the inescapable
fact remains that all the requisites of a valid sale
were attendant in the transaction between co-
 defendants-appellants NDC and PUP
concerning the realities subject of the present
suit.
What is more, the conduct of petitioner PUP immediately
after the transaction is in itself an admission that there
was a sale of the NDC compound in its favor. Thus, after
the issuance of Memorandum Order No. 214 petitioner
PUP asserted its ownership over the property by posting
notices within the compound advising residents and
occupants to vacate the premises. In its Motion for
Intervention petitioner PUP also admitted that its
interest as a "purchaser pendente lite" would be better
protected if it was joined as party-defendant in the
controversy thereby confessing that it
indeed purchased the property.
In light of the foregoing disquisition, we now proceed to
determine whether FIRESTONE should be allowed to
exercise its right of first refusal over the property. Such
right was expressly stated by NDC and FIRESTONE in
par. XV of their third contract denominated as A-10-78
executed on 22 December 1978 which, as found by the
courts a quo, was interrelated to and inseparable from
their first contract denominated as C-30-65 executed on
24 August 1965 and their second contract denominated
as C-26-68 executed on 8 January 1969. Thus -
Should the LESSOR desire to sell the leased premises
during the term of this Agreement, or any extension
thereof, the LESSOR shall first give to the LESSEE,
which shall have the right of first option to purchase the
leased premises subject to mutual agreement of both
parties.
In the instant case, the right of first refusal is an integral
and indivisible part of the contract of lease and is
inseparable from the whole contract. The consideration
for the right is built into the reciprocal obligations of the
parties. Thus, it is not correct for petitioners to insist that
there was no consideration paid by FIRESTONE to
entitle it to the exercise of the right, inasmuch as the
stipulation is part and parcel of the contract of lease
making the consideration for the lease the same as that
for the option.
It is a settled principle in civil law that when a lease
contract contains a right of first refusal, the lessor is
under a legal duty to the lessee not to sell to anybody at
any price until after he has made an offer to sell to the
latter at a certain price and the lessee has failed to
accept it. The lessee has a right that the lessor's first
offer shall be in his favor.
The option in this case was incorporated in the contracts
of lease by NDC for the benefit of FIRESTONE which, in
view of the total amount of its investments in the
property, wanted to be assured that it would be given the
first opportunity to buy the property at a price for which it
would be offered. Consistent with their agreement, it was
then implicit for NDC to have first offered the leased
premises of 2.60 hectares to FIRESTONE prior to the
sale in favor of PUP. Only if FIRESTONE failed to
exercise its right of first priority could NDC lawfully sell
the property to petitioner PUP.
It now becomes apropos to ask whether the courts a
quo  were correct in fixing the proper consideration of the
sale at P1,500.00 per square meter. In contracts of sale,
the basis of the right of first refusal must be the current
offer of the seller to sell or the offer to purchase of the
prospective buyer. Only after the lessee-grantee fails to
exercise its right under the same terms and within the
period contemplated can the owner validly offer to sell
the property to a third person, again, under the same
terms as offered to the grantee. It appearing that the
whole NDC compound was sold to PUP for P554.74 per
square meter, it would have been more proper for the
courts below to have ordered the sale of the property
also at the same price. However, since FIRESTONE
never raised this as an issue, while on the other hand it
admitted that the value of the property stood
at P1,500.00 per square meter, then we see no
compelling reason to modify the holdings of the courts a
quo that the leased premises be sold at that price.
Our attention is invited by petitioners to Ang Yu
Asuncion v. CA in concluding that if our holding in Ang
Yu would be applied to the facts of this case then
FIRESTONE's "option, if still subsisting, is not
enforceable," the option being merely a preparatory
contract which cannot be enforced.
The contention has no merit. At the heels of Ang
Yu came Equatorial Realty Development, Inc., v.
Mayfair Theater, Inc., where after much deliberation we
declared, and so we hold, that a right of first refusal is
neither "amorphous nor merely preparatory" and can be
enforced and executed according to its terms. Thus,
in Equatorial we ordered the rescission of the sale which
was made in violation of the lessee's right of first refusal
and further ordered the sale of the leased property in
favor of Mayfair Theater, as grantee of the right.
Emphatically, we held that "(a right of first priority) should
be enforced according to the law on contracts instead of
the panoramic and indefinite rule on human relations."
We then concluded that the execution of the right of first
refusal consists in directing the grantor to comply with
his obligation according to the terms at which he should
have offered the property in favor of the grantee and at
that price when the offer should have been made.
One final word. Petitioner PUP should be cautioned
against bidding for public sympathy by bewailing the
dismissal of its petition before the press. Such advocacy
is not likely to elicit the compassion of this Court or of
any court for that matter. An entreaty for a favorable
disposition of a case not made directly through pleadings
and oral arguments before the courts do not persuade
us, for as judges, we are ruled only by our forsworn duty
to give justice where justice is due.
WHEREFORE, the petitions in G.R. No. 143513 and
G.R. No. 143590 are DENIED. Inasmuch as the first
contract of lease fixed the area of the leased premises at
2.90118 hectares while the second contract placed it at
2.60 hectares, let a ground survey of the leased
premises be immediately conducted by a duly licensed,
registered surveyor at the expense of private respondent
FIRESTONE CERAMICS, INC., within two (2) months
from finality of the judgment in this case. Thereafter,
private respondent FIRESTONE CERAMICS, INC., shall
have six (6) months from receipt of the approved survey
within which to exercise its right to purchase the leased
property at P1,500.00 per square meter, and petitioner
Polytechnic University of the Philippines is ordered to
reconvey the property to FIRESTONE CERAMICS, INC.,
in the exercise of its right of first refusal upon payment of
the purchase price thereof.
SO ORDERED.
2. G.R. No. 148516               December 27, 2007
MANUEL LUIS SANCHEZ Petitioner, vs.
MAPALAD REALTY CORPORATION, Respondent.
DECISION
KAPAG ang isang kasunduan ng bilihan ay may
kaakibat na pandaraya at napatunayang huwad, ang
bumili ay walang nakamit na titulo ng pag-aari. Ang
bentahan ng apat na parsela ng mamahaling lupa sa
Roxas Boulevard na isinuko ng dating kasamahan
ng Pangulong Marcos sa pamahalaang Aquino ay
nagtataglay ng mga palatandaan ng isang
malakihang pandaraya na isinagawa mismo ng mga
taong hinirang ng Presidential Commission on Good
Government (PCGG) upang pangalagaan ang pag-
aari ng isang na-sequester na kumpanya.
Ang mga ito ay dapat ibalik sa pamahalaan
hanggang di pa tiyak ang tunay na may-ari. Hindi
kanais-nais na nagpakahirap ang PCGG sa pagbawi
ng nasabing pag-aari para lamang mawala ito dahil
sa manipulasyon ng isang di mapagkakatiwalaang
opisyal.
Where a deed of sale was attended by fraud and proved
to be fictitious, the buyer acquired no title to the subject
property. The sale of four parcels of prime land along
Roxas Boulevard surrendered by a former associate of
President Marcos to the Aquino government bears the
earmarks of a grand scam perpetrated by the very same
persons appointed by the Presidential Commission on
Good Government (PCGG) to safeguard the assets of
the sequestered companies.
They must be restored to the custody of the government
until their true owner is finally determined. It would be
odious to have the PCGG work so hard to recover them
only to have them lost due to manipulation of an
unscrupulous official.
This petition for review on certiorari seeks a reversal of
the Decision of the Court of Appeals (CA) which
reversed and set aside that of the Regional Trial Court
(RTC), Branch 135, Makati City in an action for
annulment of deed of sale and reconveyance filed by
respondent Mapalad Realty Corporation (Mapalad, for
brevity).
Petitioner Manuel Luis Sanchez, who bought the
properties during the pendency of the case at the trial
court, intervened in the appeal before the CA.
The Facts
The facts, as gleaned from the records, are as follows:
Respondent Mapalad was the registered owner of four
(4) parcels of land located along Roxas Boulevard,
Baclaran, Parañaque. The properties, covered by
Transfer Certificates of Title (TCT) Nos. S-81403, S-
81404, S-81405 and S-81406 have a total land area of
4,038 square meters.
On March 21, 1986, shortly after the February 1986
EDSA Revolution, Jose Y. Campos executed an
affidavit admitting, among others, that Mapalad was one
of the companies he held in trust for former President
Ferdinand E. Marcos. Campos turned over all assets,
properties, records and documents pertaining to
Mapalad to the new administration led by then President
Corazon C. Aquino.
On March 23, 1986, the PCGG issued writs of
sequestration for Mapalad and all its properties.
On August 2, 1992, the PCGG appointed Rolando E.
Josef as Vice President/Treasurer and General Manager
of Mapalad. He immediately conducted an inventory of
the assets of the corporation. This was when it was
discovered that four (4) TCTs were missing, namely,
TCT Nos. S-81403, S-81404, S-81405, and S-81406.
Josef inquired on the whereabouts of these missing
TCTs from Luis R. Narciso, an employee of Port Center
Development Corporation, a sister company of Mapalad.
Josef was informed that Mapalad’s former director and
general manager, Felicito L. Manalili (GM Manalili) took
the said missing TCTs sometime in July 1992.
On September 8, 1992, Narciso executed an
affidavit stating that the missing TCTs were taken from
him by GM Manalili.
Josef personally talked to GM Manalili to inquire about
what happened to the titles he took from Narciso. GM
Manalili promised to return the titles as soon as he found
them. He never did, despite repeated demands on him.
On November 16, 1992, Felimon Oliquiano, Jr.,
president of Nordelak Development Corporation
(Nordelak, for brevity), filed a notice of adverse
claim over the subject properties based on a deed of
sale purportedly executed on November 2, 1989 by
Miguel Magsaysay in his capacity as president and
board chairman of Mapalad, selling the four lots to
Nordelak for the total purchase price of ₱20,190,000.00.
This deed of sale was notarized by Elpidio T. Clemente
as Document No. 121, Page 26, Book No. 82 Series of
1989.
Josef notified the Register of Deeds (RD) of Parañaque
by three successive letters dated November 18,
December 7 and 8, 1992 that the owner’s duplicate
copies of four (4) TCTs in the name of Mapalad were
missing, and requested the RD not to entertain any
transaction, particularly any attempt to transfer
ownership thereof, or annotate any encumbrance or lien
of any kind on these four TCTs.
Since Josef’s letters to the RD were not verified, the RD
instructed him to submit a verified petition or cancellation
of adverse claim; Josef complied.
On December 22, 1992, Mapalad filed with the RD a
verified petition for cancellation of adverse claim
annotated on its titles by Nordelak. The petition also
included a notice of loss of the owners’ duplicate copies
of the TCTs concerned. This was annotated on the titles
as Entry No. 154431 on the next day.
On January 14, 1993, Mapalad discovered, after
verification with the records of the RD, that its titles to
the four (4) properties were cancelled as early as
December 22, 1992. In lieu of them, TCT Nos. 68493,
68494, 68495, and 68496 in the name of Nordelak were
issued by virtue of another deed of sale also dated
November 2, 1989 and purportedly signed by the same
Miguel Magsaysay in his capacity as president and
chairman of the board of Mapalad.
Although this document was also notarized by the same
Elpidio T. Clemente, bearing the same Document No.
121, Page 26, Book No. 82, Series of 1989, the amount
indicated in this deed of sale as total purchase price was
₱7,268,400.00 instead of ₱20,190,000.00 as earlier
annotated in the title per the adverse claim on November
16, 1992. In other words, there were two deeds of
absolute sale, bearing the same dates, involving the
same parties, the same parcel of land, and notarized by
the same Notary Public under identical notarial entries,
with different considerations or purchase price.
Way back October 13, 1978, A. Magsaysay, Inc., a
corporation controlled by Miguel Magsaysay, acquired
ownership of all shares of stock of Mapalad.
On December 3, 1982, however, A. Magsaysay, Inc.
sold all its shares to Novo Properties, Inc. Miguel
Magsaysay also sold his one and only share to Novo
Properties, Inc., thus completely terminating any and all
rights or interest he used to have over the properties of
Mapalad.
Immediately upon learning of the cancellation of
Mapalad’s four TCTs, Josef conferred with Miguel
Magsaysay to find out whether the latter indeed signed
the purported deeds of absolute sale both dated
November 2, 1989.
Magsaysay denied having signed those deeds.
On January 19, 1993, the PCGG asked the Parañaque
RD to immediately recall, revoke and cancel the four (4)
titles that were issued in favor of Nordelak.
On January 22, 1993, the PCGG issued a writ of
injunction, enjoining and restraining the Parañaque RD
from entertaining and processing any document or
transaction relative to the titles in the name of Nordelak.
This PCGG injunction was annotated on the titles as
Entry No. 93-14786.
On January 25, 1993, the RD in turn requested Nordelak
to surrender the titles issued in its name, but Nordelak
refused to comply.
On February 3, 1993, Mapalad commenced, before the
RTC, Makati City, the present action for annulment of
deed of sale and reconveyance of title with damages
against Nordelak, that is now the subject of this petition.
Mapalad’s complaint alleged that: (a) the deed of sale is
falsified and a forgery; (b) defendant Felicito L.
Manalili conspired and confederated with the other
defendants to defraud Mapalad by fabricating a fictitious,
spurious and falsified deed of sale; and (c) there is
another deed of absolute sale with the same date of
November 2, 1989 and also bearing the purported
signature of Miguel Magsaysay, but the two deeds of
sale differ in the amounts of consideration, one for
₱20,190,000.00 and the other for ₱7,268,400.00, which
was used in the transfer of Mapalad’s titles in favor of
Nordelak.
Mapalad prayed for judgment: (a) declaring the two (2)
deeds of absolute sale null and void; (b) ordering
Nordelak to reconvey the four (4) parcels of land in favor
of Mapalad; (c) ordering the Register of Deeds to cancel
TCT Nos. 68493, 68494, 68495, and 68496, and in lieu
thereof, to issue replacement titles in the name of
Mapalad; and (d) ordering Nordelak to pay exemplary
damages, attorney’s fees and costs of suit.
On February 22, 1993, a notice of lis pendens was
annotated as Entry No. 93-91718 on the TCTs in
Nordelak’s name.
On March 4, 1993, the RD, through the Office of the
Solicitor General, filed its answer alleging that when the
requirements of registration are complied with, the duty
of the register of deeds becomes simply ministerial.
On April 26, 1993, Nordelak and its president, Oliquiano
filed their answer with special and affirmative defenses,
alleging that Nordelak is a buyer in good faith, and that it
never dealt with defendant Manalili in the purchase of
the subject properties.
Defendant Manalili, however, failed to file any answer
within the reglementary period. The RTC declared him in
default despite Section 14, Rule 18 of the Rules of Court
stating that "when a complaint states a common cause
of action against several defendants, some of whom
answer, and the others fail to do so, the court shall try
the case against all upon the answers thus filed and
render judgment upon the evidence presented x x x."
On October 24, 1994, while the case was still pending
before the RTC, Nordelak sold the subject properties for
₱50,000,000.00 to a certain Manuel Luis S. Sanchez,
now petitioner before Us.
RTC Judgment
On December 6, 1994, ruling that Mapalad failed to
adduce positive proof of forgery, the RTC upheld the
validity of the deed of absolute sale as a notarial
document and rendered judgment with the
following fallo:
WHEREFORE, premises considered, for failure of
plaintiff to establish preponderance of evidence to
support its herein Complaint, the above-entitled case is
ordered DISMISSED for lack of cause of action and for
being without merit.
On the other hand, judgment is hereby rendered in favor
of defendants against the plaintiff by way of
counterclaim, for the latter to pay actual and
compensatory damages in favor of private defendants
(excluding public defendant Register of deeds of
Parañaque herein represented by the Office of the
Solicitor General) the sum of ₱50,000.00; attorney’s fees
in the sum of ₱30,000.00; and the costs of the
proceedings.
Furthermore, Entry No. 15431 re a Verified Petition for
cancellation of the adverse claim annotated at the back
of TCT Nos. S-81403, S-81404, S-81405, and S-81406,
(Exhs. "O," "P," "Q," and "R") filed by Rolando E. Josef,
V/P-General Manager of Mapalad Realty Corporation
inscribed on December 17, 1992 is ordered
CANCELLED.
SO ORDERED.
On December 19, 1994, upon Nordelak’s manifestation,
the RTC issued a Supplemental Decision cancelling the
notice of lis pendens annotated as Entry No. 93-91718
at the back of Nordelak’s TCTs Nos. 68493, 68494,
68495, and 68496, and also lifting the restraining order
issued by the PCGG annotated on the said titles as
Entry No. 93-14786.
On December 29, 1994 and January 2, 1995, Mapalad
filed a motion for reconsideration and supplemental
motion for reconsideration, respectively, to which an
opposition was filed by Nordelak on January 13, 1995.
On January 2, 1995, the RTC issued an order denying
the twin motions for reconsideration. Mapalad then
seasonably appealed to the CA.
Having previously bought the properties from Nordelak
during the pendency of the case with the RTC, petitioner
Sanchez moved to be joined with Nordelak as party
defendant-appellee before the CA. The CA granted the
motion to intervene.
CA Disposition
Finding merit in the appeal, the CA disposed of it, as
follows:
WHEREFORE, premises considered, the assailed
decision is REVERSED and SET ASIDE and a new one
entered ̶
1. DECLARING as null and void the deed of
absolute sale dated 02 November 1989
executed by and between Mapalad Realty
Corporation and Nordelak Development
Corporation;
2. DECLARING as null and void the deed of
absolute sale dated 24 October 1994 executed
by and between Nordelak Development
Corporation and Manuel Luis S. Sanchez;
3. ORDERING the Register of Deeds of
Parañaque to cancel TCT Nos. 68493, 68494,
68495, and 68496 and in lieu thereof, to issue
new certificates of title covering the subject
properties in the name of Mapalad Realty
Corporation.
Further, appellee Nordelak is ordered to pay appellant
₱100,000.00 as attorney’s fees.
SO ORDERED.
This ruling was arrived at after the CA’s re-evaluation of
the entire records, finding clear evidence of fraud in
obtaining the certificates of title over the disputed
properties, to wit:
First. Miguel A. Magsaysay was no longer appellant
Mapalad’s President and Chairman of the Board when
the subject deed of absolute sale was executed on 02
November 1989. The evidence shows that by virtue of a
Deed of Sale of Shares of Stock dated 03 December
1982, Miguel Magsaysay ceded and sold his one and
only share of stock in Mapalad Realty Corporation in
favor of Novo Properties, Inc. x x x. And in his testimony,
Miguel Magsaysay denied having affixed his signature
on the questioned deed of sale and categorically stated
that he ceased to be connected with appellant Mapalad
after the sale of his share in 1982.
xxxx
Second. The Deed of Absolute Sale indicating a
consideration of ₱7,268,400.00, which was the basis for
the issuance of Transfer Certificates of Title Nos. 68493,
68494, 68495, and 68496 in the name of appellee
Nordelak is dated 02 November 1989 but was only
registered more than three (3) years later. This bolsters
the testimony of Luis R. Narciso that the owner’s
duplicate original of appellant Mapalad’s titles were
taken from him by defendant Felicito Manalili in July
1992 and were never returned. Obviously, Manalili got
the titles for the purpose of registering the fictitious deed
of absolute sale because under the Property
Registration Decree (P.D. 1529), no voluntary instrument
shall be registered by the Register of Deeds unless the
owner’s duplicate is presented with the instrument of
transfer.
Third. Atty. Elpidio T. Clemente, the Notary Public who
notarized the questioned Deed of Absolute Sale, did not
submit a copy of said deed in the Notarial Section of the
Regional Trial Court of Manila.
xxxx
x x x. As pointed out by appellant Mapalad in its brief,
the notary public notarized two separate deeds of sale
"referring to the same parcels of land on the very same
day, and made only one and the same entry for the two
documents in his notarial registry. In fact, NOT ONE
witness was ever presented by defendants-appellees to
explain these highly anomalous documentations.
Fourth. There was no consideration for the deed of sale.
On this point, Rolando Josef testified that appellant
Mapalad did not receive any amount with respect to the
alleged transaction involving the sale of its properties.
This was not disputed by the appellees. Since the
alleged consideration is in the millions of pesos, it can be
assumed that payment was made by check. It was easy
enough for appellee Nordelak to have presented the
cancelled check. Its failure to do so speaks volumes of
truth of Josef’s testimony. x x x.
Fifth. In the questioned deed of sale, Nordelak was
represented by one Felimon R. Oliquiano, Jr., in his
capacity as President of the corporation. Thus, he was in
the best position to testify on the validity of the
questioned deed of sale and categorically state that it
was Magsaysay who signed the deed of sale and refute
Magsaysay’s testimony. But he was never presented
and the failure to present him was never explained. In
fact, no one was presented to testify having negotiated
with and concluded the transaction with Magsaysay or
that he personally saw Magsaysay sign the deed of sale.
Defendant-appellee Nordelak presented only two
witnesses both of whom were not connected Nordelak
and, in fact, did not know Mapalad.
xxxx
We therefore find that the execution of the deed of
absolute sale was attended by fraud, hence, a nullity.
Thus, appellee Nordelak never acquired title over the
subject properties. And given the evidence on record,
We are left to wonder in no small measure how the court
a quo could have upheld the validity of the questioned
deed of sale. The transaction has all the earmarks of a
grand scam perpetrated by the very same persons
appointed by PCGG to safeguard the assets of
sequestered companies.
The CA further ruled that petitioner Sanchez, who was a
transferee pendente lite, was not a buyer in good faith,
having purchased the property with an annotation of a
notice of lis pendens.
Without prior motion for reconsideration of the CA
decision, intervenor-appellee Sanchez elevated the case
to Us, raising the following assignment of errors:
I
CONTRARY TO THE EXPRESS FINDINGS OF
THE TRIAL COURT THAT THE QUESTIONED
DEED OF SALE IS GENUINE, VALID AND
SUBSISTING, THE COURT OF APPEALS
RULED THAT THERE WAS FRAUD ON THE
PART OF NORDELAK IN OBTAINING THE
CERTIFICATES OF TITLES OVER THE
DISPUTED PROPERTY, AND
CONSEQUENTLY THE QUESTIONED DEED
IS FICTITIOUS.
II
COROLLARILY, CONTRARY TO THE
EXPRESS FINDINGS OF THE TRIAL COURT
THAT NORDELAK IS A BUYER IN GOOD
FAITH AND FOR VALUE, THE COURT OF
APPEALS RULED OTHERWISE. (Underscoring
supplied)
Issues
Two critical issues are plainly posed for our
determination. First, on whether or not there was a valid
sale between Mapalad and Nordelak. Second, whether
or not petitioner Sanchez acquired valid title over the
properties as innocent purchaser for value despite a
defect in Nordelak’s title.
A procedural issue was raised by the Solicitor General in
his Comment, too: whether or not petitioner may raise
questions of fact in the present petition.
We shall resolve them in the reverse order, dealing with
the procedural ahead of the substantive question.
Our Ruling
I. The case falls within the exception to the rule that
factual issues may not be entertained by this Court.
In petitions for review on certiorari such as in the present
case, the findings of fact of the CA are generally
conclusive on this Court, save for the following admitted
exceptions:
(1) the factual findings of the Court of Appeals
and the trial court are contradictory;
(2) the findings are grounded entirely on
speculation, surmises or conjectures;
(3) the inference made by the Court of Appeals
from its findings of fact is mainly mistaken,
absurd or impossible;
(4) there is grave abuse of discretion in the
appreciation of facts;
(5) the appellate court, in making its findings,
goes beyond the issues of the case and such
findings are contrary to the admissions of both
appellant and appellee;
(6) the judgment of the Court of Appeals is
premised on a misapprehension of facts;
(7) the Court of Appeals fails to notice certain
relevant facts which, if properly considered, will
justify a different conclusion; and
(8) the findings of fact of the Court of Appeals
are contrary to those of the trial court or are
mere conclusions without citation of specific
evidence, or where the facts set forth by the
petitioner are not disputed by respondent, or
where the findings of fact of the Court of
Appeals are premised on the absence of
evidence but are contradicted by the evidence
on record.
We note that the basis for the trial court’s disposition in
favor of Nordelak is Mapalad’s apparent failure to
adduce sufficient evidence to prove that Miguel
Magsaysay’s signatures on the two deeds of sale by
Mapalad in favor of Nordelak were forged.
The CA, however, went beyond the mere determination
of whether the signatures of Miguel Magsaysay were
forged or not. It looked into the validity of the deed of
absolute sale as a whole, based on the testimonies of
Miguel Magsaysay himself, quoted in its decision, as
follows:
Atty Calabio: x x x I am showing to you this Deed of
Absolute Sale marked as Exhibit "D," there is here
appearing on page 3 above the typewritten name Miguel
A. Magsaysay, is this your signature?
A: No, definitely not, so far away from my signature, not
even in forgery; and besides I am not the president when
it was sold already.
Q: So on the date herein November 2, 1989, you were
no longer president, Sir?
A: No, I have nothing to do with them, of the corporation,
after the sale in 1982.
Atty. Calabio: Likewise, showing to you the Deed of
Absolute Sale, also dated November 2, 1989, previously
marked as Exhibit "F," specifically on page 3, Sir, there
is a signature also above the typewritten name, Miguel
Magsaysay?
A: Definitely, this is not my signature, and besides I am
not the president anymore. It looks exactly like the other
one.
Atty. Calabio: Which for purposes of identification, Your
Honor, may I respectfully request that his also be
encircled and marked as Exhibit "F-1"?
Aside from categorically denying under oath that the
signatures appearing on the deeds of absolute sale were
his, witness Miguel Magsaysay gave another reason
why it was impossible for those signatures to be his.
According to him, he was no longer connected in any
way whatsoever with Mapalad, when it supposedly sold
the properties. He divested himself of all his interests in
Mapalad way back in 1982. There was no reason for him
to sign the subject deeds of absolute sale as president
and chairman of the board of Mapalad in 1989. This was
another basis for Mapalad to convince the appellate
court that the signatures purporting to be those of
Magsaysay on the questioned deeds of sale were not
written by him.
We sustain the CA finding and conclusion.
While there have been guidelines cited in the
petition24 used by this Court in determining what
constitutes sufficient proof to establish whether a
signature was forged, it does not preclude a party from
adducing other possible proofs to establish whether a
particular signature is genuine or not.
In the case at bench, not only did Magsaysay disown the
signatures appearing on the deed of sale, he cited a
valid legal reason for him not to have signed such
document at all. He had no more power and authority to
sign for and in behalf of Mapalad because as early as
1982, he had already divested himself of all his interests
in said corporation. His testimonies in this case
constitute sufficient basis for the Court to conclude that
the signatures appearing on the two deeds of sale
(Exhibits "D" and "F") were not his signatures.
This factual determination on the genuineness or forgery
of the signatures purporting to be those of Miguel
Magsaysay on the subject deeds of sale is most crucial.
When compared with this one, all other factual issues
raised in the petition become immaterial, such as:
whether the owner’s duplicate copies of the TCT were
voluntarily delivered to, or surreptitiously taken from
Mapalad’s custodian of such documents; whether the
deeds of sale were in fact notarized by Atty. Elpidio
Clemente considering that these documents do not exist
in the archives or files in the notarial registry; or even
whether there were two or only one document purporting
to be the deed of absolute sale dated November 2,
1989.
There is, therefore, no cogent reason for this Court to
delve further into these other factual matters.
II. There can be no valid contract of sale between
Mapalad and Nordelak.
A contract is defined as a juridical convention manifested
in legal form, by virtue of which one or more persons
bind themselves in favor of another, or others, or
reciprocally, to the fulfillment of a prestation to give, to
do, or not to do. There can be no contract unless the
following concur: (a) consent of the contracting parties;
(b) object certain which is the subject matter of the
contract; (c) cause of the obligation which is established.
Specifically, by the contract of sale, one of the
contracting parties obligates himself to transfer
ownership of and to deliver a determinate thing and the
other party to pay therefor a price certain in money or its
equivalent.
The essential requisites of a valid contract of sale are:
(1) Consent of the contracting parties by virtue
of which the vendor obligates himself to transfer
ownership of and to deliver a determinate thing,
and the vendee obligates himself to pay therefor
a price certain in money or its equivalent.
(2) Object certain which is the subject matter of
the contract. The object must be licit and at the
same time determinate or, at least, capable of
being made determinate without the necessity of
a new or further agreement between the parties.
(3) Cause of the obligation which is established.
The cause as far as the vendor is concerned is
the acquisition of the price certain in money or
its equivalent, which the cause as far as the
vendee is concerned is the acquisition of the
thing which is the object of the contract.
Contracts of sale are perfected by mere consent, which
is manifested by the meeting of the offer and the
acceptance upon the thing and the cause which are to
constitute the contract.
Consent may be given only by a person with the legal
capacity to give consent. In the case of juridical persons
such as corporations like Mapalad, consent may only be
granted through its officers who have been duly
authorized by its board of directors.
In the present case, consent was purportedly given by
Miguel Magsaysay, the person who signed for and in
behalf of Mapalad in the deed of absolute sale dated
November 2, 1989. However, as he categorically stated
on the witness stand during trial, he was no longer
connected with Mapalad on the said date because he
already divested all his interests in said corporation as
early as 1982. Even assuming, for the sake of argument,
that the signatures purporting to be his were genuine, it
would still be voidable for lack of authority resulting in his
incapacity to give consent for and in behalf of the
corporation.
On this score, the contract of sale may be annulled for
lack of consent on the part of Mapalad.
The CA also noted that the alleged contract of sale on
November 2, 1989 had no consideration. There was no
payment effected by Nordelak for this transaction. Josef
testified that no funds were infused into Mapalad’s
coffers on account of this transaction. This testimony
remained uncontroverted. In fact, the CA further noted
that Nordelak could have easily produced the cancelled
check before the trial court, if there was any. Again,
Nordelak did not.
The third element for a valid contract of sale is likewise
lacking.
Lack of consideration makes a contract of sale fictitious.
A fictitious sale is void ab initio.
The alleged deed of absolute sale dated November 2,
1989 notwithstanding, the contract of sale between
Mapalad and Nordelak is not only voidable on account of
lack of valid consent on the part of the purported seller,
but also void ab initio for being fictitious on account of
lack of consideration.
Despite a void sale between Mapalad and Nordelak,
may petitioner still claim valid title to the subject
properties?
III. Petitioner as transferee pendente lite merely
steps into the shoes of his predecessor-in-interest
who had no valid title.
As We have said, Nordelak did not acquire ownership or
title over the four properties subject of this case because
the contract of sale between Mapalad and Nordelak was
not only voidable but also void ab inito. Not having any
title to the property, Nordelak had nothing to transfer to
petitioner Sanchez.
Nemo dat non quod habet. Hindi maibibigay ng isang
tao ang hindi kanya.  No one can give what he does not
have.
Petitioner acquired the property subject of litigation
during the pendency of the case in the trial court. It is
undisputed that notices of lis pendens were annotated
on the TCTs in Nordelak’s name covering the subject
properties as Entry No. 93-91718.
In Lim v. Vera Cruz, this Court explained:
Lis pendens is a Latin term which literally means a
pending suit. Notice of lis pendens is filed for the
purpose of warning all persons that the title to certain
property is in litigation and that if they purchase the
same, they are in danger of being bound by an adverse
judgment. The notice is, therefore, intended to be a
warning to the whole world that one who buys the
property does so at his own risk. This is necessary in
order to save innocent third persons from any
involvement in any future litigation concerning the
property.
By virtue of the notice of lis pendens annotated on the
four TCTs in this case, petitioner had notice that the
property he was intending to buy is under litigation. He
is, therefore, a transferee pendente lite who, as held by
this Court in Voluntad v. Dizon, stands exactly in the
shoes of the transferor and is bound by any judgment or
decree which may be rendered for or against the
transferor.
Under the circumstances petitioner cannot acquire any
better right than his predecessor, Nordelak.1âwphi1 No
river or stream can rise higher than its source. Walang
ilog o batis na ang taas ay higit sa kanyang
pinagmulan.  There is thus no question that a judgment
of reconveyance can be legally enforced by Mapalad
against petitioner as transferee pendente lite of
Nordelak.
The four parcels of land surrendered by former Marcos
associate Jose Y. Campos and sequestered by the
PCGG must eventually be returned to their rightful
owners. If forfeiture proceedings in the Marcos ill-gotten
wealth cases prosper, and these properties are finally
shown to form part of such ill-gotten wealth, these
properties should go to the Filipino people. If they are
not ill-gotten, they should be turned over to the
Marcoses. But definitely, these properties cannot be
transferred to Nordelak nor to petitioner Manuel Luis
Sanchez.
WHEREFORE, the petition is hereby DENIED and the
appealed Court of Appeals decision AFFIRMED in toto.
SO ORDERED.
3. [G.R. No. 125531. February 12, 1997.]
JOVAN LAND, Petitioner, v. COURT OF APPEALS
and EUGENIO QUESADA, INC., Respondents.
SYLLABUS
1. CIVIL LAW; CONTRACT; CONSTRUED. — In the
case of Ang Yu Asuncion v. Court of Appeals, 238
SCRA 602 (1994), this Court held that: ". . . [A] contract
(Art. 1157, Civil Code), . . . is a meeting of minds
between two persons whereby one binds himself, with
respect to the other, to give something or to render some
service . . . 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 . . . The perfection of the contract takes place
upon the concurrence of the essential elements thereof."
2. ID.; ID.; SALE; REQUISITES FOR VALIDITY. — It is
a fundamental principle that before contract of sale can
be valid, the following elements must be present, viz: (a)
consent or meeting of the minds; (b) determinate subject
matter; (3) price certain in money or its equivalent. Until
the contract of sale is perfected, it cannot, as an
independent source of obligations serve as a binding
juridical relation between the parties.
3. ID.; ID.; ID.; REAL PROPERTY, AS THE OBJECT;
REQUIREMENTS UNDER THE STATUTE OF
FRAUDS; NOT COMPLIED WITH IN CASE AT BAR. —
Although there was a series of communications through
letter-offers and rejections as evident from the facts of
this case, still it is undeniable that no written agreement
was reached between petitioner and private respondent
with regard to the sale of the realty. Hence, the alleged
transaction is unenforceable as the requirements under
the Statute of Frauds have not been complied with.
Under the said provision, an agreement for the sale of
real property or of an interest therein, to be enforceable,
must be in writing and subscribed by the party charged
or by an agent thereof.
4. REMEDIAL LAW; EVIDENCE; FACTUAL FINDINGS
OF THE TRIAL COURT; CONCLUSIVE UPON THE
SUPREME COURT; EXCEPTION. — The factual
findings of the trial court, especially as regards the
credibility of witnesses are conclusive upon this court,
unless the case falls under the jurisprudentially
established exceptions.
DECISION
This is a petition for review on certiorari to reverse and
set aside the decision of the Court of Appeals in C.A.-
G.R. CV No. 47515.
Petitioner Jovan Land, Inc. is a corporation engaged in
the real estate business. Its President and Chairman of
the Board of Directors is one Joseph Sy.
Private respondent Eugenio Quesada is the owner of the
Q Building located on an 801 sq. m. lot at the corner of
Mayhaligue Street and Rizal Avenue, Sta. Cruz, Manila.
The property is covered by TCT No. 77796 of the
Registry of Deeds of Manila.
Petitioner learned from co-petitioner Consolacion P.
Mendoza that private respondent was selling the
aforesaid Mayhaligue property. Thus, petitioner through
Joseph Sy made a written offer, dated July 27, 1987 for
P10.25 million. This first offer was not accepted by
Conrado Quesada, the General Manager of
private Respondent. Joseph Sy sent a second written
offer dated July 31, 1989 for the same price but inclusive
of an undertaking to pay the documentary stamp tax,
transfer tax, registration fees and notarial charges.
Check No. 247048, dated July 31, 1989, for one million
pesos drawn against the Philippine Commercial and
Industrial Bank (PCIB) was enclosed therewith as
earnest money. This second offer, with earnest money,
was again rejected by Conrado Quesada. Undaunted,
Joseph Sy, on August 10, 1989, sent a third written offer
for twelve million pesos with a similar check for one
million pesos as earnest money. Annotated on this third
letter-offer was the phrase "Received original, 9-4-89"
beside which appears the signature of Conrado
Quesada.
On the basis of this annotation which petitioner insists is
the proof that there already exists a valid, perfected
agreement to sell the Mayhaligue property, petitioner
filed with the trial court, a complaint for specific
performance and collection of sum of money with
damages. However, the trial court held that:
". . . the business encounters between Joseph Sy and
Conrado Quesada had not passed the negotiation stage
relating to the intended sale by the defendant
corporation of the property in question. . . . As the court
finds, there is nothing in the record to point that a
contract was ever perfected. In fact, there is nothing in
writing which is indispensably necessary in order that the
perfected contract could be enforced under the Statute
of Frauds."
Since the trial court dismissed petitioner’s complaint for
lack of cause of action, petitioner appealed to
respondent Court of Appeals before which it assigned
the following errors:
"1. The Court a quo failed to appreciate that there was
already a perfected contract of sale between Jovan
Land, Inc. and the [private respondent];
2. The Court a quo erred in its conclusion that there was
no implied acceptance of the offer by appellants to
appellee [private respondent];
3. The Court a quo was in error where it concluded that
the contract of sale was unenforceable;
4. The Court a quo failed to rule that appellant
[petitioner] Mendoza is entitled to her broker’s
commission."
Respondent court placed petitioner to task on their
assignment of errors and concluded that not any of them
justifies a reversal of the trial court decision.
We agree.
In the case of Ang Yu Asuncion v. Court of Appeals, we
held that:
". . . [A] contract (Art. 1157, Civil Code), . . . is a meeting
of minds between two persons whereby one binds
himself, with respect to the other, to give something or to
render some service . . . . 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 . . . . The perfection of the
contract takes place upon the concurrence of the
essential elements thereof."
Moreover, it is a fundamental principle that before
contract of sale can be valid, the following elements
must be present, viz: (a) consent or meeting of the
minds; (b) determinate subject matter; (3) price certain in
money or its equivalent. Until the contract of sale is
perfected, it cannot, as an independent source of
obligation, serve as a binding juridical relation between
the parties.
In the case at bench, Petitioner, anchors its main
argument on the annotation on its third letter-offer of the
phrase "Received original, 9-4-89," beside which
appears the signature of Conrado Quesada. It also
contends that the said annotation is evidence to show
that there was already a perfected agreement to sell as
respondent can be said to have accepted petitioner’s
payment in the form of a check which was enclosed in
the third letter.
However, as correctly elucidated by the Court of
Appeals:
"Sy insisted in his testimony that this offer of P12M was
accepted by Conrado Quesada but there is nothing
written or documentary to show that such offer was
accepted by Conrado Quesada. While Sy claimed that
the acceptance could be gleaned from the notation in the
third written offer, the court is not impressed thereon
however because the notation merely states as follows:
"Received Original, (S)-Conrado Quesada" and below
this signature is "9-4-89." As explained by Conrado
Quesada in his testimony what was received by him was
the original of the written offer.
The court cannot believe that this notation marked as
Exhibit D-2 would signify the acceptance of the offer.
Neither does it signify, as Sy had testified that the check
was duly received on said date. If this were true Sy, who
appears to be an intelligent businessman could have
easily asked Conrado Quesada to indicate on Exhibit D
the alleged fact of acceptance of said check. And better
still, Sy could have asked Quesada the acceptance in
writing separate of the written offer if indeed there was
an agreement as to the price of the proposed sale of the
property in question."
Clearly then, a punctilious examination of the receipt
reveals that the same can neither be regarded as a
contract of sale nor a promise to sell. Such an
annotation by Conrado Quesada amounts to neither a
written nor an implied acceptance of the offer of Joseph
Sy. It is merely a memorandum of the receipt by the
former of the latter’s offer. The requisites of a valid
contract of sale are lacking in said receipt and therefore
the "sale" is neither valid nor enforceable.
Although there was a series of communications through
letter-offers and rejections as evident from the facts of
this case, still it is undeniable that no written agreement
was reached between petitioner and private respondent
with regard to the sale of the realty. Hence, the alleged
transaction is unenforceable as the requirements under
the Statute of Frauds have not been complied with.
Under the said provision, an agreement for the sale of
real property or of an interest therein, to be enforceable,
must be in writing and subscribed by the party charged
or by an agent thereof.
Petitioner also asseverates that the failure of Conrado
Quesada to return the check for one million pesos,
translates to implied acceptance of its third letter-offer. It,
however, does not rebut the finding of the trial court that
private respondent was returning the check but petitioner
refused to accept the same and that when Conrado
Quesada subsequently sent it back to petitioner through
registered mail, the latter failed to claim its mail from the
post office.
Finally, we fittingly apply here the oft-repeated doctrine
that the factual findings of the trial court, especially as
regards the credibility of witnesses, are conclusive upon
this court, unless the case falls under the
jurisprudentially established exceptions. But this is a
case that tenders no exceptional circumstance; rather,
we find the observations of the trial court to be legally
sound and valid:
". . . Joseph Sy’s testimony is not impressive because of
several inconsistencies herein pointed out. On the
matter of earnest money, the same appears to be the
idea solely of the [petitioner], assuming that he had
intended to bind the [petitioner] corporation. In the
written second offer . . . he had stated that the check of
P1M had been enclosed (attached) therewith. The same
check . . . was again mentioned to be enclosed
(attached) in the third written offer under date August 10,
1989. . . . Sy testified in his direct examination that he
had personally given this check to Conrado Quesada.
But on cross examination, he reversed himself by saying
that the check was given thru his [co-petitioner]
Mendoza. Examining the third written offer, it appears
that when it was first typewritten, this P11M was noted to
have been corrected, and that as per his testimony, Sy
had increased it to P12M. This is the reason according
to Sy why there was a superimposition of the number
‘12’ over the number ‘11’ to mean P12M as the revised
consideration for the sale of the property in question"
Respondent court thus concluded that:
". . . [since] the matter of evaluation of the credibility of
witness[es] is addressed to the trial court and unless
clearly contrary to the records before Us, the findings of
the said court are entitled to great respondent on appeal,
. . . it was Joseph Sy’s idea to offer the earnest money,
and the evidence to show that Joseph Sy accepted the
same, is wanting. . . ."
and accordingly affirmed the trial court judgment
appealed from.
As shown elucidated above, we agree with the findings
and conclusions of the trial court and the respondent
court. Neither has petitioner posited any new issues in
the instant petition that warrant the further exercise by
this court of its review powers.
WHEREFORE, premises considered, this petition is
DENIED.
Costs against petitioner.
4. G.R. No. 115307 July 8, 1997
MANUEL LAO, petitioner,
vs.
COURT OF APPEALS and BETTER HOMES REALTY
& HOUSING CORPORATION, respondents.
As a general rule, the main issue in an ejectment suit is
possession de facto, not possession de jure. In the event
the issue of ownership is raised in the pleadings, such
issue shall be taken up only for the limited purpose of
determining who between the contending parties has the
better right to possession. However, where neither of the
parties objects to the allegation of the question of
ownership — which may be initially improvident or
improper — in an ejectment suit and, instead, both
present evidence thereon, argue the question in their
various submissions and participate in all aspects of the
trial without objecting to the Metropolitan (or Municipal)
Trial Court's jurisdiction to decide the question of
ownership, the Regional Trial Court — in the exercise of
its original jurisdiction as authorized by Section 11, Rule
40 of the Rules of Court — may rule on the issue and
the corollary question of whether the subject deed is one
of sale or of equitable mortgage.
These postulates are discussed by the Court as it
resolves this petition under Rule 45 seeking a reversal of
the December 21, 1993 Decision and April 28, 1994
Resolution of the Court of Appeals in CA-G.R. SP No.
92-14293.
The Antecedent Facts
The facts of this case are narrated by Respondent Court
of Appeals as follows:
On June 24, 1992, (herein Private Respondent
Better Homes Realty and Housing Corporation)
filed with the Metropolitan Trial Court of Quezon
City, a complaint for unlawful detainer, on the
ground that (said private respondent) is the owner
of the premises situated at Unit I, No. 21 N.
Domingo Street, Quezon City, evidenced by
Transfer Certificate of Title No. 22184 of the
Registry of Deeds of Quezon City; that (herein
Petitioner Manuel Lao) occupied the property
without rent, but on (private respondent's) pure
liberality with the understanding that he would
vacate the property upon demand, but despite
demand to vacate made by letter received by
(herein petitioner) on February 5, 1992, the (herein
petitioner) refused to vacate the premises.
In his answer to the complaint, (herein petitioner)
claimed that he is the true owner of the house and
lot located at Unit I, No. 21 N. Domingo Street,
Quezon City; that the (herein private respondent)
purchased the same from N. Domingo Realty and
Development Corporation but the agreement was
 actually a loan secured by mortgage; and that
plaintiff's cause of action is for accion publiciana,
outside the jurisdiction of an inferior court.
On October 9, 1992, the Metropolitan Trial Court of
Quezon City rendered judgment ordering the
(petitioner) to vacate the premises located at Unit I,
No. 21 N. Domingo Street, Quezon City; to pay
(private respondent) the sum of P300.00 a day
starting on January 31, 1992, as reasonable rent for
the use and occupation of the premises; to pay
plaintiff P5,000.00, as attorney's fees, and costs.
On appeal to the Regional Trial Court of Quezon
City,  on March 30, 1993, the latter court rendered
a decision reversing that of the Metropolitan Trial
Court, and ordering the dismissal of the (private
respondent's) complaint for lack of merit, with costs
taxed against (private respondent).
In its decision, the Regional Trial Court held that the
subject property was acquired by (private
respondent) from N. Domingo Realty and
Development Corporation, by a deed of sale, and
(private respondent) is now the registered owner
under Transfer Certificate of Title No. 316634 of the
Registry of Deeds of Quezon City, but in truth the
(petitioner) is the beneficial owner of the property
because the real transaction over the subject
property was not a sale but a loan secured by a
mortgage thereon.
The dispositive portion of the Regional Trial Court's
decision is quoted below:
WHEREFORE, judgment is hereby rendered
reversing the appealed decision and ordering the
dismissal of plaintiffs complaint for lack of merit,
with the costs taxed against it.
IT IS SO ORDERED.
On April 28, 1993, private respondent filed an appeal
with the Court of Appeals which reversed the decision of
the Regional Trial Court. The Respondent Court ruled:
The Metropolitan Trial Court has no jurisdiction to
resolve the issue of ownership in an action for
unlawful detainer (B.P. 129, Sec. 33 [2]; Cf. Alvir vs.
Vera, 130 SCRA 357). The jurisdiction of a court is
determined by the nature of the action alleged in
the complaint (Ching vs. Malaya, l53 SCRA 412). In
its complaint in the inferior court, the plaintiff
alleged that it is the owner of the premises located
at Unit I, No. 21 N. Domingo Street, Quezon City,
and that defendant's occupation is rent free and
based on plaintiffs pure liberality coupled with
defendant's undertaking to vacate the premises
upon demand, but despite demands, defendant has
refused to vacate. The foregoing allegations suffice
to constitute a cause of action for ejectment (Banco
de Oro vs. Court of Appeals, 182 SCRA 464).
The Metropolitan Trial Court is not ousted of
jurisdiction simply because the defendant raised the
question ownership (Bolus vs. Court of Appeals, 218
SCRA 798). The inferior court shall resolve the issue
of ownership only to determine who is entitled to the
possession of the premises (B.P. 129, Sec. 33[2];
Bolus vs. Court of Appeals, supra).
Here, the Metropolitan Trial Court ruled that as
owner, plaintiff (herein private respondent Better
Homes Realty and Housing Corporation) is entitled
to the possession of the premises because the
defendant's stay is by mere tolerance of the plaintiff
(herein private respondent).
On the other hand, the Regional Trial Court ruled
that the subject property is owned by the defendant,
(herein petitioner Manuel Lao) and, consequently,
dismissed the complaint for unlawful detainer. Thus,
the Regional Trial Court resolved the issue of
ownership, as if the case were originally before it as
an action for recovery of possession, or accion
publiciana, within its original jurisdiction. In an
appeal from a decision of the Municipal Trial Court,
or Metropolitan Trial Court, in an unlawful detainer
case, the Regional Trial Court is simply to determine
whether the inferior court correctly resolved the
issue of possession; it shall not delve into the issue
of ownership (Manuel vs. Court of Appeals, 199
SCRA 603). What the Regional Trial Court did was
to rule that the real agreement between the plaintiff
and the previous owner of the property was not a
sale, but an equitable mortgage. Defendant was only
a director of the seller corporation, and his claim of
ownership could not be true. This question could not
be determined summarily. It was not properly in
issue before the inferior court because, as aforesaid,
the only issue was possession de facto (Manlapaz
vs. Court of Appeals, 191 SCRA 795), or who has a
better right to physical possession (Dalida vs. Court
of Appeals, 117 SCRA 480). Consequently, the
Regional Trial Court erred in reversing the decision
of the Metropolitan Trial Court.
WHEREFORE, the Court hereby REVERSES the
decision of the Regional Trial Court. In lieu thereof,
We affirm the decision of the Metropolitan Trial Court
of Quezon City sentencing the defendant and all
persons claiming right under him to vacate the
premises situated at Unit I, No. 21 N. Domingo
Street, Quezon City, and to surrender possession to
the plaintiff; to pay plaintiff the sum of P300.00, a
day starting on January 31, 1992, until defendant
shall have vacated the premises; to pay plaintiff
P5,000.00 as attorneys fees, and costs.
SO ORDERED.
Manuel Lao's motion for reconsideration dated January
24, 1994 was denied by the Court of Appeals in its
Resolution promulgated on April 28, 1994. Hence, this
petition for review before this Court.
The Issues
Petitioner Manuel Lao raises three issues:
3.1 Whether or not the lower court can decide
on the issue of ownership in the present
ejectment case.
3.2 Whether or not private respondent had
acquired ownership over the property in
question.
3.3 Whether or not petitioner should be
ejected from the premises in question
The Court's Ruling
The petition for review is meritorious.
First Issue: Jurisdiction to Decide the Issue of
Ownership
The Court of Appeals held that as a general rule, the
issue in an ejectment suit is possession de facto, not
possession de jure, and that in the event the issue of
ownership is raised as a defense, the issue is taken up
for the limited purpose of determining who between the
contending parties has the better right to possession.
Beyond this, the MTC acts in excess of its jurisdiction.
However, we hold that this is not a hard and fast rule
that can be applied automatically to all unlawful detainer
cases.
Section 11, Rule 40 of the Rules of Court provides that
"[a] case tried by an inferior court without jurisdiction
over the subject matter shall be dismissed on appeal by
the Court of First Instance. But instead of dismissing the
case, the Court of First Instance, in the exercise of its
original jurisdiction, may try the case on the merits if the
parties therein file their pleadings and go to the trial
without any objection to such jurisdiction." After a
thorough review of the records of this case, the Court
finds that the respondent appellate court failed to apply
this Rule and erroneously reversed the RTC Decision.
Respondent Court cites Alvir vs. Vera to support its
Decision. On the contrary, we believe such case
buttresses instead the Regional Trial Court's decision.
The cited case involves an unlawful detainer suit where
the issue of possession was inseparable from the issue
of transfer of ownership, and the latter was determinable
only after an examination of a contract of sale involving
the property in question. The Court ruled that where a
"case was tried and heard by the lower court in the
exercise of its original jurisdiction by common assent of
the parties by virtue of the issues raised . . . and the
proofs presented by them," any dismissal on the ground
of lack of jurisdiction "would only lead to needless delays
and multiplicity of suits." The Court held:
In actions of forcible entry and detainer, the main
issue is possession de facto, independently of any
claim of ownership or possession de jure that either
party may set forth in his pleading. . . . Defendant's
claim of ownership of the property from which
plaintiff seeks to eject him is not sufficient to divest
the inferior court of its jurisdiction over the action of
forcible entry and detainer. However, if it appears
during the trial that the principal issue relates to the
ownership of the property in dispute and any
question of possession which maybe involved
necessarily depends upon the result of the inquiry
into the title, previous rulings of this Court are that
the jurisdiction of the municipal or city court is lost
and the action should be dismissed.
We have at bar a case where, in effect, the
question of physical possession could not properly
be determined without settling that of lawful or de
jure possession and of ownership and hence,
following early doctrine, the jurisdiction of the
municipal court over the ejectment case was lost
and the action should have been dismissed. As a
consequence, respondent court would have no
jurisdiction over the case on appeal and it should
have dismissed the case on appeal from the
municipal trial court. However, in line with Section
11, Rule 40 of the Revised Rules of Court, which
reads —
Sec. 11. Lack of Jurisdiction. — A case tried
by an inferior court without jurisdiction over
the subject matter shall be dismissed on
appeal by the Court of First Instance. But
instead of dismissing the case, the Court of
First Instance in the exercise of its original
jurisdiction, may try the case on the merits if
the parties therein file their pleadings and go
to trial without objection to such jurisdiction.
this Court held in Saliwan vs. Amores, 51 SCRA
329, 337, that dismissal "on the said ground of lack
of appellate jurisdiction on the part of the lower
court flowing from the municipal court's loss of
jurisdiction would lead only to needless delay and
multiplicity of suits in the attainment of the same
result and ignores, as above stated, that the case
was tried and heard by the lower court in the
exercise of its original jurisdiction by common
assent of the parties by virtue of the issues raised
by the parties and the proof presented by them
thereon."
This pronouncement was reiterated by this Court
through Mr. Justice Teodoro R. Padilla in Consignado
vs. Court of Appeals  as follows:
 As the MTC of Laguna had no jurisdiction over the
unlawful detainer case in view of the raised question
of title or ownership over the property in dispute, the
RTC of Laguna also had no appellate jurisdiction to
decide the case on the merits. It should have
dismissed the appeal. However, it
had original jurisdiction to pass upon the
controversy. It is to be noted, in this connection, that
in their respective memoranda filed with the RTC of
Laguna, the petitioners and private respondents did
not object to the said court exercising its original
jurisdiction pursuant to the aforequoted provisions of
Section 11, Rule 40 of the Rules of Court.
xxx xxx xxx
Petitioners now contend, among others, that the
Court of Appeals erred in resolving the question of
ownership as if actual title, not mere possession of
subject premises, is involved in the instant case.
The petitioner's contention is untenable. Since the
MTC and RTC of Laguna decided the question of
ownership over the property in dispute, on appeal
the Court of Appeals had to review and resolve also
the issue of ownership. . . .
It is clear, therefore, that although an action for unlawful
detainer "is inadequate for the ventilation of issues
involving title or ownership of controverted real property,
[i]t is more in keeping with procedural due process that
where issues of title or ownership are raised in the
summary proceedings for unlawful detainer, said
proceeding should be dismissed for lack of jurisdiction,
unless, in the case of an appeal from the inferior court to
the Court of First Instance, the parties agree to the latter
Court hearing the case in its original jurisdiction in
accordance with Section 11, Rule 40 . . ."  Court decided the issue of ownership, justify the review
In the case at bar, a determination of the issue of
ownership is indispensable to resolving the rights of both
parties over the property in controversy, and is
inseparable from a determination of who between them
has the right to possess the same. Indeed, the very
complaint for unlawful detainer filed in the Metropolitan
Trial Court of Quezon City is anchored on the alleged
ownership of private respondent over the subject
premises.  The parties did not object to the incongruity of
a question of ownership being brought in an ejectment
suit. Instead they both submitted evidence on such
question, and the Metropolitan Trial Court decided on
the issue. These facts are evident in the Metropolitan
Trial Court's decision:
From the records of the case, the evidence
presented and the various arguments advanced by
the parties, the Court finds that the property subject
matter of this case is in the name of (herein private
respondent) Better Homes and Realty Housing
Corporation; that the Deed of Absolute Sale which
was the basis for the issuance of said TCT No.
22184 is between N. Domingo Realty and
Development Corporation and Better Homes Realty
and Housing Corporation which was signed by
Artemio S. Lao representing the seller N. Domingo
and Realty Development Corporation; that a Board
Resolution of N. Domingo and Realty and
Development Corporation (Exhibit "D" position
paper) shows that the Directors of the Board of the
N. Domingo Realty and Development Corporation
passed a resolution selling apartment units I and F
located at No. 21 N. Domingo St., Quezon City and
designating the (herein petitioner) with his brother
Artemio S. Lao as signatories to the Deed of Sale.
The claim therefore of the (herein petitioner) that he
owns the property is not true . . .
When the MTC decision was appealed to the Regional
Trial Court, not one of the parties questioned the
Metropolitan Trial Court's jurisdiction to decide the issue
of ownership. In fact, the records show that both
petitioner and private respondent discussed the issue in
their respective pleadings before the Regional Trial
Court.  They participated in all aspects of the trial without
objection to its jurisdiction to decide the issue of
ownership. Consequently, the Regional Trial Court aptly
decided the issue based on the exercise of its original
jurisdiction as authorized by Section 11, Rule 40 of the
Rules of Court.
This Court further notes that in both of the contending
parties' pleadings filed on appeal before the Court of
Appeals, the issue of ownership was likewise amply
discussed.  The totality of evidence presented was
sufficient to decide categorically the issue of ownership.
These considerations, taken together with the fact that
both the Metropolitan Trial Court and the Regional Trial
of the lower courts' findings of fact and decision on the
issue of ownership. This we now do, as we dispose of
the second issue and decide the case with finality to
spare the parties the time, trouble and expense of
undergoing the rigors of another suit where they will
have to present the same evidence all over again and
where, in all probability, the same ultimate issue of
ownership will be brought up on appeal.
Second Issue: Absolute Sale or Equitable
Mortgage?
Private Respondent Better Homes Realty and Housing
Corporation anchored its right in the ejectment suit on a
contract of sale in which petitioner (through their family
corporation) transferred the title of the property in
question. Petitioner contends, however that their
transaction was not an absolute sale, but an equitable
mortgage.
In determining the nature of a contract, the Court looks
at the intent of the parties and not at the nomenclature
used to describe it. Pivotal to deciding this issue is the
true aim and purpose of the contracting parties as shown
by the terminology used in the covenant, as well as "by
their conduct, words, actions and deeds prior to, during
and immediately after executing the agreement." In this
regard, parol evidence becomes admissible to prove the
true intent and agreement of the parties which the Court
will enforce even if the title of the property in question
has already been registered and a new transfer
certificate of title issued in the name of the transferee.
In Macapinlac vs. Gutierrez Repide, which involved an
identical question, the Court succintly stated:
. . . This conclusion is fully supported by the
decision in Cuyugan vs. Santos (34 Phil., 100),
where this court held that a conveyance in the
form of a contract of sale with pacto de retro will
be treated as a mere mortgage, if really
executed as security for a debt,  and that this fact
can be shown by oral evidence apart from the
instrument of conveyance, a doctrine which has
been followed in the later cases of Villa vs.
Santiago (38 Phil., 157), and Cuyugan vs.
Santos (39 Phil., 970).
xxx xxx xxx
In the first place, it must be borne in mind that
the equitable doctrine which has been so fully
stated above, to the effect that any conveyance
intended as security for a debt will be held in
effect to be a mortgage, whether so actually
expressed in the instrument or not, operates
regardless of the form of the agreement chosen
by the contracting parties as the repository of
their will. Equity looks through the form and
considers the substance; and no kind of
engagement can be adopted which will enable
the parties to escape from the equitable doctrine
to which reference is made. In other words, a
conveyance of land, accompanied by
registration in the name of the transferee and
the issuance of a new certificate, is no more
secured from the operation of this equitable
doctrine than the most informal conveyance that
could be devised.  brother were in such "dire need of money" that they
The law enumerates when a contract may be presumed
to be an equitable mortgage:
(1) When the price of a sale with right to
repurchase is unusually inadequate;
(2) When the vendor remains in possession as
lessee or otherwise;
(3) When upon or after the expiration of the right
repurchase another instrument extending the
period of redemption or granting a new period is
executed;
(4) When the purchaser retains for himself a part
of the purchase price;
(5) When the vendor binds himself to pay the
taxes on the thing sold;
(6) In any other case where it may be fairly
inferred that the real intention of the parties is
that the transaction shall secure the payment of
a debt or the performance of any other
obligation.
xxx xxx xxx 
The foregoing presumption applies also to a "contract
purporting to be an absolute sale." 
Applying the preceding principles to the factual milieu of
this case, we find the agreement between the private
respondent and N. Domingo Realty & Housing
Corporation, as represented by petitioner, manifestly one
of equitable mortgage. First, possession of the property
in the controversy remained with Petitioner Manuel Lao
who was the beneficial owner of the property, before,
during and after the alleged sale. It is settled that
a "pacto de retro sale should be treated as a mortgage
where the (property) sold never left the possession of
the vendors." Second, the option given to Manuel Lao to
purchase the property in controversy had been extended
twice  through documents executed by Mr. Tan Bun Uy,
President and Chairman of the Board of Better Homes
Realty & Housing Corporation. The wording of the first
extension is a refreshing revelation that indeed the
parties really intended to be bound by a loan with
mortgage, not by a pacto de retro. It reads, "On June 10,
88, this option is extended for another sixty days to
expired (sic) on Aug. 11, 1988. The purchase price is
increased to P137,000.00. Since Mr. Lao borrow (sic)
P20,000.00 from me."  These extensions clearly
represent the extension of time to pay the loan given to
Manuel Lao upon his failure to pay said loan on its
maturity. Mr. Lao was even granted an additional loan of
P20,000.00 as evidenced by the above-quoted
document. Third, unquestionably, Manuel Lao and his
mortgaged their townhouse units registered under the
name of N. Domingo Realty Corporation, the family
corporation put up by their parents, to Private
Respondent Better Homes Realty & Housing
Corporation. In retrospect, it is easy to blame Petitioner
Manuel Lao for not demanding a reformation of the
contract to reflect the true intent of the parties. But this
seeming inaction is sufficiently explained by the Lao
brothers' desperate need for money, compelling them to
sign the document purporting to be a sale after they
were told that the same was just for "formality."  In fact,
this Court, in various cases involving the same situation,
had occasion to state:
. . . In Jayme, et al. v. Salvador, et al., this Court
upheld a judgment of the Court of First Instance of
 Iloilo which found the transaction between the
parties to be a loan instead of a sale of real
property notwithstanding the terminology used in
the document, after taking into account the
surrounding circumstances of the transaction. The
Court through Justice Norberto Romualdez stated
that while it was true that plaintiffs were aware of
the contents of the contracts, the preponderance of
the evidence showed however that they signed
knowing that said contracts did not express their
real intention, and if they did so notwithstanding
this, it was due to the urgent necessity of obtaining
fund. "Necessitous men are not, truly speaking,
free men; but to answer a present emergency, will
submit to any terms that the crafty may impose
upon them."  some two days before such supposed sale
Moreover, since the borrower's urgent need for money
places the latter at a disadvantage vis-a-vis the lender
who can thus dictate the terms of their contract, the
Court, in case of an ambiguity, deems the contract to be
one which involves the lesser transmission of rights and
interest over the property in controversy.  indeed thankful that it was able to purchase the
As aptly found and concluded by the regional trial court:
The evidence of record indicates that while as of
April 4, 1988 (the date of execution of the Deed
of Absolute Sale whereby the N. Domingo and
Realty & Development Corporation purportedly
sold the townhouse and lot subject of this suit to
[herein private respondent Better Homes Realty
& Housing Corporation] for P100,000.000) said
N. Domingo Realty & Development Corporation
(NDRDC, for short) was the registered owner of
the subject property under Transfer Certificate of
Title (TCT) No. 316634 of the Registry of Deeds
for Quezon City, (herein petitioner Manuel Lao)
in fact was and has been since 1975 the
beneficial owner of the subject property and,
thus, the same was assigned to him by the
NDRDC, the family corporation set up by his
parents and of which (herein petitioner) and his
siblings are directors. That the parties' real
transaction or contract over the subject property
was not one of sale but, rather, one of loan
secured, by a mortgage thereon is unavoidably
inferrable from the following facts of record, to
(herein petitioner's) possession of the subject
property, which started in 1975 yet, continued
and remained even after the alleged sale of April
4, 1988; (herein private respondent) executed
an option to purchase in favor (herein petitioner)
as early as April 2, 1988 or two days before
(herein private respondent) supposedly acquired
ownership of the property; the said option was
renewed several times and the price was
increased with each renewal (thus, the original
period for the exercise of the option was up to
June 11, 1988 and the price was P109,000.00;
then, on June 10, 1988, the option was
extended for 60 days or until August 11, 1988
and the price was increased to P137,000.00;
and then on August 11, 1988, the option was
again extended until November 11,1988 and the
price was increased to P158,840.00); and, the
Deed of Absolute Sale of April 4, 1988 was
registered and the property transferred in the
name of (private respondent) only on May 10,
1989, per TCT No. 22184 of the Registry of
Deeds for Quezon City (Arts. 1602, nos. 2, 3, &
6, & 1604, Civil Code). Indeed, if it were true, as
it would have the Court believe, that (private
respondent) was so appreciative of (petitioner's)
alleged facilitation of the subject property's sale
to it, it is quite strange why (private respondent)
would have been minded and inclined to
execute an option to purchase allowing
(petitioner) to acquire the property — the very
same property it was still hoping to acquire at
the time. Certainly, what is more likely and thus
credible is that, if (private respondent) was
property, it would not given (petitioner) any
option to purchase at all . . . 
Based on the conduct of the petitioner and private
respondent and even the terminology of the second
option to purchase, we rule that the intent and
agreement between them was undoubtedly one of
equitable mortgage and not of sale.
Third Issue: Should Petitioner Be Ejected?
We answer in the negative. An action for unlawful
detainer is grounded on Section 1, Rule 70 of the Rules
of Court which provides that:
. . . a landlord, vendor, vendee, or other person
against whom the possession of any land or
building is unlawfully withheld after the
expiration or termination of the right to hold
possession, by virtue of any contract, express or
implied, or the legal representatives or assigns
of any such landlord, vendor, vendee, or other
person, may, at any time within one (1) year
after such unlawful deprivation or withholding of
possession, bring an action in the proper inferior
court against the person or persons unlawfully
withholding or depriving of possession, or any
person or persons claiming under them, for the
restitution of such possession, together with
damages and costs . . . .
Based on the previous discussion, there was no sale of
the disputed property. Hence, it still belongs to
petitioner's family corporation, N. Domingo Realty &
Development Corporation. Private respondent, being a
mere mortgagee, has no right to eject petitioner. Private
respondent, as a creditor and mortgagee, " . . . cannot
appropriate the things given by way of pledge
or mortgage, or dispose of them. Any stipulation to the
contrary is null and void." 

Other Matters

Private respondent in his memorandum also contends

that (1) petitioner is not the real party in interest and (2)
the petition should be dismissed for "raising/stating facts
not so found by the Court of Appeals." These deserve
scant consideration. Petitioner was impleaded as party
defendant in the ejectment suit by private respondent
itself. Thus, private respondent cannot question his
standing as a party. As such party, petitioner should be
allowed to raise defenses which negate private
respondent's right to the property in question. The
second point is really academic. This ponencia relies on
the factual narration of the Court of Appeals and not on
the "facts" supplied by petitioner.

WHEREFORE, the petition is hereby GRANTED. The

challenged Decision of the Court of Appeals is
REVERSED and SET ASIDE. The decision of the
Regional Trial Court of Quezon City ordering the
dismissal of the complaint for ejectment is REINSTATED
and AFFIRMED. No pronouncement as to costs.

SO ORDERED.
6. G.R. No. 126376               November 20, 2003
SPOUSES BERNARDO BUENAVENTURA and
CONSOLACION JOAQUIN, SPOUSES JUANITO
EDRA and NORA JOAQUIN, SPOUSES RUFINO
VALDOZ and EMMA JOAQUIN, and NATIVIDAD
JOAQUIN, petitioners,
vs.
COURT OF APPEALS, SPOUSES LEONARDO
JOAQUIN and FELICIANA LANDRITO, SPOUSES
FIDEL JOAQUIN and CONCHITA BERNARDO,
SPOUSES TOMAS JOAQUIN and SOLEDAD
ALCORAN, SPOUSES ARTEMIO JOAQUIN and
SOCORRO ANGELES, SPOUSES ALEXANDER
MENDOZA and CLARITA JOAQUIN, SPOUSES
TELESFORO CARREON and FELICITAS JOAQUIN,
SPOUSES DANILO VALDOZ and FE JOAQUIN, and
SPOUSES GAVINO JOAQUIN and LEA
ASIS, respondents.
DECISION
The Case
This is a petition for review on certiorari  to annul the
Decision dated 26 June 1996 of the Court of Appeals in
CA-G.R. CV No. 41996. The Court of Appeals affirmed
the Decision dated 18 February 1993 rendered by
Branch 65 of the Regional Trial Court of Makati ("trial
court") in Civil Case No. 89-5174. The trial court
dismissed the case after it found that the parties
executed the Deeds of Sale for valid consideration and
that the plaintiffs did not have a cause of action against
the defendants.
The Facts
The Court of Appeals summarized the facts of the case
as follows:
Defendant spouses Leonardo Joaquin and Feliciana
Landrito are the parents of plaintiffs Consolacion, Nora,
Emma and Natividad as well as of defendants Fidel,
Tomas, Artemio, Clarita, Felicitas, Fe, and Gavino, all
surnamed JOAQUIN. The married Joaquin children are
joined in this action by their respective spouses.
Sought to be declared null and void ab initio are certain
deeds of sale of real property executed by defendant
parents Leonardo Joaquin and Feliciana Landrito in
favor of their co-defendant children and the
corresponding certificates of title issued in their names,
to wit:
1. Deed of Absolute Sale covering Lot 168-C-7
of subdivision plan (LRC) Psd-256395 executed
on 11 July 1978, in favor of defendant Felicitas
Joaquin, for a consideration of ₱6,000.00 (Exh.
"C"), pursuant to which TCT No. [36113/T-172]
was issued in her name (Exh. "C-1");
2. Deed of Absolute Sale covering Lot 168-I-3 of
subdivision plan (LRC) Psd-256394 executed on
7 June 1979, in favor of defendant Clarita
Joaquin, for a consideration of ₱1[2],000.00
(Exh. "D"), pursuant to which TCT No. S-109772
was issued in her name (Exh. "D-1");
3 Deed of Absolute Sale covering Lot 168-I-1 of
subdivision plan (LRC) Psd-256394 executed on
12 May 1988, in favor of defendant spouses
Fidel Joaquin and Conchita Bernardo, for a
consideration of ₱54,[3]00.00 (Exh. "E"),
pursuant to which TCT No. 155329 was issued
to them (Exh. "E-1");
4. Deed of Absolute Sale covering Lot 168-I-2 of
subdivision plan (LRC) Psd-256394 executed on
12 May 1988, in favor of defendant spouses
Artemio Joaquin and Socorro Angeles, for a
consideration of ₱[54,3]00.00 (Exh. "F"),
pursuant to which TCT No. 155330 was issued
to them (Exh. "F-1"); and
5. Absolute Sale of Real Property covering Lot
168-C-4 of subdivision plan (LRC) Psd-256395
executed on 9 September 1988, in favor of
Tomas Joaquin, for a consideration of
₱20,000.00 (Exh. "G"), pursuant to which TCT
No. 157203 was issued in her name (Exh. "G-
1").
6. Deed of Absolute Sale covering Lot 168-C-1
of subdivision plan (LRC) Psd-256395 executed
on 7 October 1988, in favor of Gavino Joaquin,
for a consideration of ₱25,000.00 (Exh. "K"),
pursuant to which TCT No. 157779 was issued
in his name (Exh. "K-1").]
In seeking the declaration of nullity of the aforesaid
deeds of sale and certificates of title, plaintiffs, in their
complaint, aver:
- XX-
The deeds of sale, Annexes "C," "D," "E," "F," and "G,"
[and "K"] are simulated as they are, are NULL AND
VOID AB INITIO because –
a) Firstly, there was no actual valid
consideration for the deeds of sale xxx over the
properties in litis;
b) Secondly, assuming that there was
consideration in the sums reflected in the
questioned deeds, the properties are more than
three-fold times more valuable than the measly
sums appearing therein;
 c) Thirdly, the deeds of sale do not reflect and
express the true intent of the parties (vendors
and vendees); and
d) Fourthly, the purported sale of the
properties in litis was the result of a deliberate
conspiracy designed to unjustly deprive the rest
of the compulsory heirs (plaintiffs herein) of their
legitime.
- XXI -
Necessarily, and as an inevitable consequence, Transfer
Certificates of Title Nos. 36113/T-172, S-109772,
155329, 155330, 157203 [and 157779] issued by the
Registrar of Deeds over the properties in litis xxx are
NULL AND VOID AB INITIO.
Defendants, on the other hand aver (1) that plaintiffs do
not have a cause of action against them as well as the
requisite standing and interest to assail their titles over
the properties in litis; (2) that the sales were with
sufficient considerations and made by defendants
parents voluntarily, in good faith, and with full knowledge
of the consequences of their deeds of sale; and (3) that
the certificates of title were issued with sufficient factual
and legal basis. (Emphasis in the original)
The Ruling of the Trial Court
Before the trial, the trial court ordered the dismissal of
the case against defendant spouses Gavino Joaquin and
Lea Asis. Instead of filing an Answer with their co-
defendants, Gavino Joaquin and Lea Asis filed a Motion
to Dismiss. In granting the dismissal to Gavino Joaquin
and Lea Asis, the trial court noted that "compulsory heirs
have the right to a legitime but such right is contingent
since said right commences only from the moment of
death of the decedent pursuant to Article 777 of the Civil
Code of the Philippines."
After trial, the trial court ruled in favor of the defendants
and dismissed the complaint. The trial court stated:
In the first place, the testimony of the defendants,
particularly that of the xxx father will show that the
Deeds of Sale were all executed for valuable
consideration. This assertion must prevail over the
negative allegation of plaintiffs.
And then there is the argument that plaintiffs do not have
a valid cause of action against defendants since there
can be no legitime to speak of prior to the death of their
parents. The court finds this contention tenable. In
determining the legitime, the value of the property left at
the death of the testator shall be considered (Art. 908 of
the New Civil Code). Hence, the legitime of a
compulsory heir is computed as of the time of the death
of the decedent. Plaintiffs therefore cannot claim an
impairment of their legitime while their parents live.
All the foregoing considered, this case is DISMISSED.
In order to preserve whatever is left of the ties that
should bind families together, the counterclaim is
likewise DISMISSED.
No costs.
SO ORDERED.
The Ruling of the Court of Appeals
The Court of Appeals affirmed the decision of the trial
court. The appellate court ruled:
To the mind of the Court, appellants are skirting the real
and decisive issue in this case, which is, whether xxx
they have a cause of action against appellees.
Upon this point, there is no question that plaintiffs-
appellants, like their defendant brothers and sisters, are
compulsory heirs of defendant spouses, Leonardo
Joaquin and Feliciana Landrito, who are their parents.
However, their right to the properties of their defendant
parents, as compulsory heirs, is merely inchoate and
vests only upon the latter’s death. While still alive,
defendant parents are free to dispose of their properties,
provided that such dispositions are not made in fraud of
creditors.
Plaintiffs-appellants are definitely not parties to the
deeds of sale in question. Neither do they claim to be
creditors of their defendant parents. Consequently, they
cannot be considered as real parties in interest to assail
the validity of said deeds either for gross inadequacy or
lack of consideration or for failure to express the true
intent of the parties. In point is the ruling of the Supreme
Court in Velarde, et al. vs. Paez, et al., 101 SCRA 376,
thus:
The plaintiffs are not parties to the alleged deed of sale
and are not principally or subsidiarily bound thereby;
hence, they have no legal capacity to challenge their
validity.
Plaintiffs-appellants anchor their action on the supposed
impairment of their legitime by the dispositions made by
their defendant parents in favor of their defendant
brothers and sisters. But, as correctly held by the court a
quo, "the legitime of a compulsory heir is computed as of
the time of the death of the decedent. Plaintiffs therefore
cannot claim an impairment of their legitime while their
parents live."
With this posture taken by the Court, consideration of the
errors assigned by plaintiffs-appellants is
inconsequential.
WHEREFORE, the decision appealed from is hereby
AFFIRMED, with costs against plaintiffs-appellants.
SO ORDERED.
Hence, the instant petition.
Issues
Petitioners assign the following as errors of the Court of
Appeals:
1. THE COURT OF APPEALS ERRED IN NOT
HOLDING THAT THE CONVEYANCE IN
QUESTION HAD NO VALID CONSIDERATION.
2. THE COURT OF APPEALS ERRED IN NOT
HOLDING THAT EVEN ASSUMING THAT
THERE WAS A CONSIDERATION, THE SAME
IS GROSSLY INADEQUATE.
3. THE COURT OF APPEALS ERRED IN NOT
HOLDING THAT THE DEEDS OF SALE DO
NOT EXPRESS THE TRUE INTENT OF THE
PARTIES.
4. THE COURT OF APPEALS ERRED IN NOT
HOLDING THAT THE CONVEYANCE WAS
PART AND PARCEL OF A CONSPIRACY
AIMED AT UNJUSTLY DEPRIVING THE REST
OF THE CHILDREN OF THE SPOUSES
LEONARDO JOAQUIN AND FELICIANA
LANDRITO OF THEIR INTEREST OVER THE
SUBJECT PROPERTIES.
5. THE COURT OF APPEALS ERRED IN NOT
HOLDING THAT PETITIONERS HAVE A
GOOD, SUFFICIENT AND VALID CAUSE OF
ACTION AGAINST THE PRIVATE
RESPONDENTS.
The Ruling of the Court
We find the petition without merit.
We will discuss petitioners’ legal interest over the
properties subject of the Deeds of Sale before
discussing the issues on the purported lack of
consideration and gross inadequacy of the prices of the
Deeds of Sale.
Whether Petitioners have a legal interest over the
properties subject of the Deeds of Sale
Petitioners’ Complaint betrays their motive for filing this
case. In their Complaint, petitioners asserted that the
"purported sale of the properties in litis was the result of
a deliberate conspiracy designed to unjustly deprive the
rest of the compulsory heirs (plaintiffs herein) of their
legitime." Petitioners’ strategy was to have the Deeds of
Sale declared void so that ownership of the lots would
eventually revert to their respondent parents. If their
parents die still owning the lots, petitioners and their
respondent siblings will then co-own their parents’ estate
by hereditary succession.
It is evident from the records that petitioners are
interested in the properties subject of the Deeds of Sale,
but they have failed to show any legal right to the
properties. The trial and appellate courts should have
dismissed the action for this reason alone. An action
must be prosecuted in the name of the real party-in-
interest.
[T]he question as to "real party-in-interest" is whether he
is "the party who would be benefitted or injured by the
judgment, or the ‘party entitled to the avails of the suit.’"
xxx
In actions for the annulment of contracts, such as this
action, the real parties are those who are parties to the
agreement or are bound either principally or subsidiarily
or are prejudiced in their rights with respect to one of the
contracting parties and can show the detriment which
would positively result to them from the contract even
though they did not intervene in it (Ibañez v. Hongkong &
Shanghai Bank, 22 Phil. 572 [1912]) xxx.
These are parties with "a present substantial interest, as
distinguished from a mere expectancy or future,
contingent, subordinate, or consequential interest…. The
phrase ‘present substantial interest’ more concretely is
meant such interest of a party in the subject matter of
the action as will entitle him, under the substantive law,
to recover if the evidence is sufficient, or that he has the
legal title to demand and the defendant will be protected
in a payment to or recovery by him."
Petitioners do not have any legal interest over the
properties subject of the Deeds of Sale. As the appellate
court stated, petitioners’ right to their parents’ properties
is merely inchoate and vests only upon their parents’
death. While still living, the parents of petitioners are free
to dispose of their properties. In their overzealousness to
safeguard their future legitime, petitioners forget that
theoretically, the sale of the lots to their siblings does not
affect the value of their parents’ estate. While the sale of
the lots reduced the estate, cash of equivalent value
replaced the lots taken from the estate.
Whether the Deeds of Sale are void for lack of
consideration
Petitioners assert that their respondent siblings did not
actually pay the prices stated in the Deeds of Sale to
their respondent father. Thus, petitioners ask the court to
declare the Deeds of Sale void.
A contract of sale is not a real contract, but a consensual
contract. As a consensual contract, a contract of sale
becomes a binding and valid contract upon the meeting
of the minds as to price. 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. If the real price is not
stated in the contract, then the contract of sale is valid
but subject to reformation. If there is no meeting of the
minds of the parties as to the price, because the price
stipulated in the contract is simulated, then the contract
is void. Article 1471 of the Civil Code states that if the
price in a contract of sale is simulated, the sale is void.
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.
Petitioners failed to show that the prices in the Deeds of
Sale were absolutely simulated. To prove simulation,
petitioners presented Emma Joaquin Valdoz’s testimony
stating that their father, respondent Leonardo Joaquin,
told her that he would transfer a lot to her through a
deed of sale without need for her payment of the
purchase price. The trial court did not find the allegation
of absolute simulation of price credible. Petitioners’
failure to prove absolute simulation of price is magnified
by their lack of knowledge of their respondent siblings’
financial capacity to buy the questioned lots. On the
other hand, the Deeds of Sale which petitioners
presented as evidence plainly showed the cost of each
lot sold. Not only did respondents’ minds meet as to the
purchase price, but the real price was also stated in the
Deeds of Sale. As of the filing of the complaint,
respondent siblings have also fully paid the price to their
respondent father.
Whether the Deeds of Sale are void for gross
inadequacy of price
Petitioners ask that assuming that there is consideration,
the same is grossly inadequate as to invalidate the
Deeds of Sale.
Articles 1355 of the Civil Code states:
Art. 1355. Except in cases specified by law, lesion or
inadequacy of cause shall not invalidate a contract,
unless there has been fraud, mistake or undue influence.
(Emphasis supplied)
Article 1470 of the Civil Code further provides:
Art. 1470. Gross inadequacy of price does not affect a
contract of sale, except as may indicate a defect in the
consent, or that the parties really intended a donation or
some other act or contract. (Emphasis supplied)
Petitioners failed to prove any of the instances
mentioned in Articles 1355 and 1470 of the Civil Code
which would invalidate, or even affect, the Deeds of
Sale. Indeed, there is no requirement that the price be
equal to the exact value of the subject matter of sale. All
the respondents believed that they received the
commutative value of what they gave. As we stated in
Vales v. 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.
(Emphasis in the original)
Moreover, the factual findings of the appellate court are
conclusive on the parties and carry greater weight when
they coincide with the factual findings of the trial court.
This Court will not weigh the evidence all over again
unless there has been a showing that the findings of the
lower court are totally devoid of support or are clearly
erroneous so as to constitute serious abuse of
discretion. In the instant case, the trial court found that
the lots were sold for a valid consideration, and that the
defendant children actually paid the purchase price
stipulated in their respective Deeds of Sale. Actual
payment of the purchase price by the buyer to the seller
is a factual finding that is now conclusive upon us.
WHEREFORE, we AFFIRM the decision of the Court of
Appeals in toto.
SO ORDERED.
5. G.R. No. 136427               December 17, 2002
SONIA F. LONDRES, ARMANDO V. FUENTES, CHI-
CHITA FUENTES QUINTIA, ROBERTO V. FUENTES,
LEOPOLDO V. FUENTES, OSCAR V. FUENTES and
MARILOU FUENTES ESPLANA Petitioners,
vs.
THE COURT OF APPEALS, THE DEPARTMENT OF
PUBLIC WORKS AND HIGHWAYS, THE
DEPARTMENT OF TRANSPORTATION AND
COMMUNICATIONS, ELENA ALOVERA SANTOS and
CONSOLACION ALIVIO ALOVERA, Respondents.
DECISION
Before us is a petition for review on certiorari of the
March 17, 1997 Decision and the November 16, 1998
Resolution of the Court of Appeals in CA-G.R. CV No.
35540 entitled "Londres vs. Alovera".  The assailed
decision affirmed the validity of the Absolute Sale dated
April 24, 1959 vesting ownership of two parcels of land,
Lots 1320 and 1333, to private respondents. The same
decision also ordered public respondents to pay just
compensation to private respondents. The questioned
resolution denied the motion for reconsideration of
petitioners.
The Antecedent Facts
The present case stemmed from a battle of ownership
over Lots 1320 and 1333 both located in Barrio Baybay,
Roxas City, Capiz. Paulina Arcenas ("Paulina" for
brevity) originally owned these two parcels of land. After
Paulina’s death, ownership of the lots passed to her
daughter, Filomena VidaI ("Filomena" for brevity). The
surviving children of Filomena, namely, Sonia Fuentes
Londres ("Sonia" for brevity), Armando V. Fuentes, Chi-
Chita Fuentes Quintia, Roberto V. Fuentes, Leopoldo V.
Fuentes and Marilou Fuentes Esplana ("petitioners" for
brevity) now claim ownership over Lots 1320 and 1333.
On the other hand, private respondents Consolacion
Alivio Alovera ("Consolacion" for brevity) and Elena
Alovera Santos ("Elena" for brevity) anchor their right of
ownership over Lots 1320 and 1333 on the Absolute
Sale executed by Filomena on April 24, 1959 ("Absolute
Sale" for brevity). Filomena sold the two lots in favor of
Consolacion and her husband, Julian Alovera ("Julian"
for brevity). Elena is the daughter of Consolacion and
Julian (deceased).
On March 30, 1989, petitioners filed a complaint for the
declaration of nullity of contract, damages and just
compensation. Petitioners sought to nullify the Absolute
Sale conveying Lots 1320 and 1333 and to recover just
compensation from public respondents Department of
Public Works and Highways ("DPWH" for brevity) and
Department of Transportation and Communication
("DOTC" for brevity). The case was raffled to the
Regional Trial Court, Branch 18, Roxas City, Capiz and
docketed as Civil Case No. V-5668.
In their Complaint, petitioners claimed that as the
surviving children of Filomena, they are the owners of
Lots 1320 and 1333. Petitioners claimed that these two
lots were never sold to Julian. Petitioners doubt the
validity of the Absolute Sale because it was tampered.
The cadastral lot number of the second lot mentioned in
the Absolute Sale was altered to read Lot 1333 when it
was originally written as Lot 2034. Petitioners pointed
out that Lot 2034, situated in Barrio Culasi, Roxas City,
Capiz, was also owned by their grandmother, Paulina.
Petitioners alleged that it was only recently that they
learned of the claim of private respondents when
Consolacion filed a petition for the judicial reconstitution
of the original certificates of title of Lots 1320 and 1333
with the Capiz Cadastre. Upon further inquiry, petitioners
discovered that there exists a notarized Absolute Sale
executed on April 24, 1959 registered only on
September 22, 1982 in the Office of the Register of
Deeds of Roxas City. The private respondents’ copy of
the Absolute Sale was tampered so that the second
parcel of lot sold, Lot 2034 would read as Lot 1333.
However, the Records Management and Archives Office
kept an unaltered copy of the Absolute Sale. This other
copy shows that the objects of the sale were Lots 1320
and 2034.
In their Answer, private respondents maintained that
they are the legal owners of Lots 1333 and 1320. Julian
purchased the lots from Filomena in good faith and for a
valid consideration. Private respondents explained that
Julian was deaf and dumb and as such, was placed in a
disadvantageous position compared to Filomena. Julian
had to rely on the representation of other persons in his
business transactions. After the sale, Julian and
Consolacion took possession of the lots. Up to now, the
spouses’ successors-in-interest are in possession of the
lots in the concept owners. Private respondents claimed
that the alteration in the Absolute Sale was made by
Filomena to make it conform to the description of the lot
in the Absolute Sale. Private respondents filed a
counterclaim with damages.
The cross-claim of petitioners against public
respondents was for the recovery of just compensation.
Petitioners claimed that during the lifetime of Paulina,
public respondents took a 3,200-square meter portion of
Lot 1320. The land was used as part of the Arnaldo
Boulevard in Roxas City without any payment of just
compensation. In 1988, public respondents also
appropriated a 1,786-square meter portion of Lot 1333
as a vehicular parking area for the Roxas City Airport.
Sonia, one of the petitioners, executed a deed of
absolute sale in favor of the Republic of the Philippines
over this portion of Lot 1333. According to petitioners,
the vendee agreed to pay petitioners P214,320.00.
Despite demands, the vendee failed to pay the stipulated
amount.
Public respondents in their Answer raised the following
defenses: (1) they have no capacity to sue and be sued
since they have no corporate personality separate and
distinct from the Government; (2) they cannot comply
with their undertaking since ownership over the portions
of land is disputed by private respondents and until the
issue of ownership is settled, petitioners have no cause
of action against public respondents; and (3) they are
not proper parties since they were not parties to the
Absolute Sale sought to be nullified.
On May 28, 1991, the trial court issued its decision
upholding the validity of the Absolute Sale. The
dispositive portion of the decision reads:
"IN VIEW OF ALL THE FOREGOING, judgment is
hereby rendered:
1. Declaring the Absolute Sale executed by
Filomina Vidal in favor of spouses Julian Alovera
and Consolacion Alivio on April 24, 1959 over
subject Lots 1320 and 1333 (Exh. 4) valid and
effective;
2. Declaring private defendants Consolacion
Alivio Alovera and Elena Alovera Santos legal
owners of subject Lots 1320 and 1333;
3. Ordering public defendants Department of
Public Works and Highways and Department of
Transportation and Communications to pay
jointly and severally private defendants
Consolacion Alivio Alovera and Elena Alovera
Santos just compensation of the 3,200-square
meter portion taken by the government from
subject Lot 1320 used as part of the Arnaldo
Boulevard in Roxas City, and the 1,786-square
meter portion also taken by the government from
subject Lot 1333 to be used as vehicle parking
area of the Roxas City Airport; and
4. Ordering the dismissal of the complaint for
lack of merit.
The cross-claim of private defendants against public
defendants and private defendants’ counterclaim for
damages against the plaintiffs are likewise ordered
dismissed. Costs against plaintiffs.
SO ORDERED."
Petitioners and private respondents appealed. On March
17, 1997, the Court of Appeals promulgated its decision
affirming the decision of the trial court, thus:
"PREMISES CONSIDERED, the decision appealed from
is hereby AFFIRMED.
SO ORDERED."
On November 16, 1998, the Court of Appeals denied the
respective motions for reconsideration of petitioners and
private respondents. The dispositive portion of the
resolution reads:
"WHEREFORE, for lack of merit, the two motions for
reconsideration are hereby DENIED.
SO ORDERED."
The Ruling of the Trial Court
The trial court ruled that the Absolute Sale is valid based
on the following facts:
"First, the description of subject Lot 1333, as appearing
in the Absolute Sale dated April 24, 1959 executed by
Filomena Vidal in favor of spouses Julian Alovera and
Consolacion Alivio (Exhs. 24 and 24-A), reads:
"2) A parcel of land (Lot No. 1333 of the Cadastral
Survey of Capiz), with the improvements thereon,
situated in the Barrio of Baybay, Municipality of Capiz
(now Roxas City). Bounded on the N. by the property of
Nemesio Fuentes; on the S. by the property of Rufo
Arcenas; on the E. by the property of Mateo Arcenas;
and on the W. by the property of Valeriano Arcenas;
containing an area of Eighteen Thousand Five Hundred
Fifty Seven (18,557) square meters, more or less. This
parcel of land is all rice land and the boundaries thereon
are visible consisting of stone monuments erected
thereon by the Bureau of Lands. It is declared under Tax
Dec. No. 336 in the name of Filomena Vidal and
assessed at P930.00."
In the Absolute Sale executed by the same parties on
the same date, the above-quoted description is the same
except the lot number, i.e., instead of the figure "1333"
what is written therein is the figure "1320";
Second, subject Lot 1333 is situated in Barangay
Baybay, Roxas City, whereas Lot 2034 which is the
second lot subject of the questioned absolute sale is
situated in Barangay Culasi, Roxas City as evidenced by
a certified true/xerox copy of a sketch plan (Exh. 29)
thereby indicating that said Lot 2034 in said Barangay
Culasi (Exh. 29-A).
Third, Lot 2034 was previously owned by Jose Altavas
(Exhs, 38 and 38-A) and later is owned in common by
Libertad Altavas Conlu, et al. (Exhs. 37 and 37-A) and
there is no convincing evidence showing that this lot was
ever owned, at one time or another, by Paulina Arcenas
or by Filomena Vidal or by plaintiffs, or their
predecessors-in-interest;
Fourth, the two lots have been the subject of the
transactions made by their former owner, Filomena
Vidal, with some persons, including spouses Julian
Alovera and defendant Consolacion Alivio;
Fifth, the subject two lots have been continuously
worked on since the early 1950’s up to the present by
Alejandro Berlandino, and later by his son, Zosimo
Berlandino, who were instituted therein as tenants by
Julian Alovera and the private defendants;
Sixth, these two lots have never been in the possession
of the plaintiffs."
The trial court further noted that while petitioners and
private respondents claimed that Lots 1320 and 1333
are titled, both failed to account for the certificates of
title. The trial court then concluded that there is merely a
disputable presumption that Lots 1320 and 1333 are
titled and covered by certificates of title. The trial court
further declared that ownership over the two lots can still
be acquired by ordinary prescription as in this case.
Private respondents and their predecessors-in-interest
have been in continuous possession of Lots 1320 and
1333 for nearly 30 years in good faith and with just title.
The tax declarations issued in the name of Consolacion
and the real estate taxes paid by private respondents
are strong evidence of ownership over Lots 1320 and
1333. Petitioners’ late filing of the complaint, 30 years
after the execution of the Absolute Sale or seven years
after the registration of the same, was considered by the
trial court as laches.
The trial court gave more credence to the explanation of
private respondents as to why the Absolute Sale was
altered. Consolacion noticed that the lot number of the
second parcel of and sold to them by Filomena under
the Absolute Sale appeared to be "Lot 2034" and not
"Lot 1333". Together with her husband, Julian,
Consolacion went to Filomena. It was Filomena who
erased "Lot 2034" in the deed of sale and changed it to
"Lot 1333". However, the copies of the document in the
custody of the Notary Public were not correspondingly
corrected. Consequently, the copies kept by the Records
Management and Archives Office still referred to the
second parcel of land sold as "Lot 2034".
Based on its factual findings, the trial court held that
private respondents are the legal owners of Lots 1320
and 1333. Private respondents are therefore entitled to
just compensation for the portions of land taken by
public respondents from the two lots. However, the trial
court ruled that private respondents could not recover
attorney’s fees since there was no indication that the
complaint was maliciously filed and intended to prejudice
private respondents. The trial court held that petitioners
filed the action in good faith, believing that they were the
real owners of the two lots.
The Ruling of the Court of Appeals
The Court of Appeals sustained the factual findings of
the trial court, specifically the six points enumerated by
the trial court establishing Lots 1320 and 1333 as the
objects of the Absolute Sale. Applying Article 1370 of the
Civil Code, the Court of Appeals agreed with the trial
court that there could be no room for interpretation as to
the intention of the parties on the objects of their
contract.
The Court of Appeals upheld the ruling of the trial court
that private respondents are not entitled to attorney’s
fees and damages. The Court of Appeals opined that
while there might have been incipient greed when the
DPWH and DOTC notified petitioners of the just
compensation from the government, there was,
however, no evidence that petitioners filed the complaint
in bad faith. There was nothing in the records to indicate
that petitioners had actual or constructive knowledge of
the sale of the two lots to Julian. The document on file
with the Records Management archives Office alluded to
a parcel of land denominated as Lot 2034 which is
different from the property in question, Lot 1333. It was
only during the hearing of the case that it was made
clear through the presentation of evidence that the lot
referred to in the Absolute Sale was Lot 1333, not Lot
2034, in addition to Lot 1320.
The Issues
Petitioners thus interposed this appeal, raising the
following errors allegedly committed by the Court of
Appeals:
"I.
THE COURT OF APPEALS ACTED WITH PATENT
GRAVE ABUSE OF DISCRETION IN NOT REVERSING
THE DECISION OF THE TRIAL COURT, INSOFAR AS
IT DECLARED VALID AND EFFECTIVE AN
ABSOLUTE SALE", PURPORTEDLY EXECUTED BY
FILOMENA VIDAL, PREDECESSOR-IN-INTEREST OF
PETITIONERS, IN FAVOR OF PRIVATE
RESPONDENT CONSOLACION ALIVIO AND HER
SPOUSE, JULIAN ALOVERA, ON 24 APRIL 1959,
OVER SUBJECT LOTS 1320 AND 1333.
II.
THE COURT OF APPEALS ACTED WITH PATENT
GRAVE ABUSE OF DISCRETION IN NOT REVERSING
THE DECISION OF THE TRIAL COURT, INSOFAR AS
IT DECLARED PRIVATE RESPONDENTS "LEGAL
OWNERS OF SUBJECT LOTS 1320 AND 1333".
 III.
THE COURT OF APPEALS ACTED WITH PATENT
GRAVE ABUSE OF DISCRETION IN NOT REVERSING
THE DECISION OF THE TRIAL COURT, INSOFAR AS
IT RULED THAT THE COMPENSATION FOR
PORTIONS OF THE SUBJECT LOTS TAKEN BY THE
PUBLIC RESPONDENTS BE PAID TO THE PRIVATE
RESPONDENTS AND NOT TO THE PETITIONERS.
IV.
THE COURT OF APPEALS ACTED WITH PATENT
GRAVE ABUSE OF DISCRETION IN NOT REVERSING
THE DECISION OF THE TRIAL COURT, INSOFAR AS
IT DISMISSED THE COMPLAINT IN CIVIL CASE NO.
V-5668, RTC-ROXAS CITY, BRANCH 18."
The Court’s Ruling
At the outset, it must be pointed out that this petition was
seasonably filed, contrary to private respondents’
contention that it was filed one day late. Petitioners had
until January 17, 1999 to file this petition, which was a
Sunday. Since the last day for filing this petition fell on a
Sunday, the time to file the petition would not have run
until the next working day. Petitioners filed the petition
the next working day, January 18, 1999. Plainly then, the
petition was filed on time.
The petition, however, must fail on substantive grounds.
Petitioners implore the Court to declare the Absolute
Sale void for failing to identify with certainty the two
parcels of land sold by Filomena, their mother, to private
respondents. However, there is no valid ground for
annulling the Absolute Sale. The Absolute Sale is clear
as to the first parcel of lot sold, which is Lot 1320. What
raises some doubt is the identity of the second parcel of
lot sold, Is it Lot 2034 as indicated in the registered copy
of the Absolute Sale? Or is it Lot 1333 as made to
appear in the copy of the Absolute Sale of private
respondents?
In civil cases, the party with the burden of proof must
establish his case by a preponderance of evidence.  By
"preponderance of evidence" is meant that the evidence
as a whole adduced by one side is superior to that of the
other. Petitioners have the burden of proving that Lot
2034 was the real object of the Absolute Sale and the
alteration of the same instrument was unauthorized,
warranting the absolute nullification of the sale. The trial
court and the Court of Appeals found the evidence of
private respondents far more convincing in explaining
the alteration in their copy of the Absolute Sale. Both
courts ruled that the correction was made by the parties
to reflect the true object of the sale, which was Lot 1333,
not Lot 2034. In arriving at this conclusion, the two
courts considered contemporaneous and subsequent
acts that indicate that what Filomena actually sold to
private respondents were Lots 1320 and 1333. These
factual findings are binding upon the Court.
As a rule, the appellate jurisdiction of the Court is limited
only to question of law. There is a question of law in a
given case when the doubt or difference arises as to
what the law is given a certain set of facts, and there is a
question of fact when the doubt arises as to the truth or
the falsity of the alleged facts. No exceptional
circumstances are present in this case that would justify
a re-evaluation of the factual findings of the trial court
and the Court of Appeals, findings that are duly
supported by evidence of record.
Petitioners insist that there is serious doubt as to the
identity of the objects of the Absolute Sale because the
descriptions of Lots 1320 and 1333 in the Absolute Sale
do not correspond to the technical descriptions of the
two lots as found by the Bureau of Lands. Petitioners
direct the Court’s attention to these discrepancies:
 TECHNICAL DESCRIPTION
Lot 1320, Cad-I 33,
C-01 Capiz Cadastre, Ap-06-004023
A PARCEL OF LAND (Lot 1320, Cad-133, C-
01, Capiz Cadastre, Ap-06-004023, situated in
the barrio of Baybay, municipality of Capiz
(Now Roxas City), province of Capiz, island of
Panay.
Bounded on the NE., along line 1-2 by Lot
1327; along line 2-3 by Lot 1328; along line 3-4
by Lot 1329; on the E., along line 4-5 by Lot
1326; on and the S., along line 5-6 by Lot
1325; along lines 6-7-8 by Lot 1321; on the W.,
along line 8-9 by Lot 1295; on the NW., along
lines 9-10-11 by Lot 1319; along line 11-12 by
Lot 1318; along line 12-13 by Lot 1328; on the
NE., along line 13-1 by Lot 1327, all of Cad-
133, Capiz Cadastre.
Beginning at point marked "1" on plan being N.
88-28 W., 651.78 meters from BBM No. 12,
Cad-133, Capiz Cadastre, thence
N. 85-01 E., 23.00 m. to point 2;
N. 83-40E., 19.03m. to point 4;
S. 84-22W., 61.31 m. to point 6;
S. 83-00 W., 145.33 m. to point 8;
N. 87-42 E., 26.49 m. to point 10;
N. 83-07 E., 31.86 m. to point 12;
N. 83-09 E., 76.04 m. to point 13;
S. 07-04E., 41. 88 m. to point 1.
Point of beginning;
Containing an area of TWENTY FIVE
THOUSAND SEVEN HUNDRED SEVENTY
FIVE (25,775) SQUARE METERS, more or
less.
DESCRIPTION PER ABSOLUTE SALE
1) A parcel of land (Lot No. 1320 of the
Cadastral Survey of Capiz), with the
improvements thereon, situated in the Barrio of
Baybay, Municipality of Capiz(now Roxas City).
Bounded on the N. by the property of Matea
Arcenas; on the S. by the property of Roque
Severino; on the E. by the property of Matea
Arcenas; the W. by the property of Damaso
Arches;
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containing an area of THIRTY THOUSAND
NINE HUNDRED FORTY FOUR (30,944)
SQUARE METERS, more or less. This parcel
of land is all rice land and the boundaries
thereon are visible consisting of stone
monuments erected thereon by the Bureau of
Lands. It is declared under Tax Dec. No. 4338
in the name of Filomena Vidal and assessed at
P1,550.00.
 TECHNICAL DESCRIPTION
Lot 1333, Cad-I 33, C-01
Capiz Cadastre, Ap-06-004022
A PARCEL OF LAND (Lot 1333, Cad-133, C-
01, Capiz Cadastre, Ap-06-004022, situated in
the barrio of Baybay, municipality of Capiz
(now Roxas City), province of Capiz, island of
Panay.
Bounded on the SE., along line 1-2 by Lot
1330; on the W., & NW., along lines2-3-4-5 by
Lot 1329; on the NW., along line 5-6 by Lot
1334; along line 6-7 by Lot 1335; on the NE., &
SE., along lines 7-8-1 by Lot 1332; all of Cad-
133, Capiz Cadastre.
Beginning at a point marked "1" on plan being
N. 78-44., 326.64 meters from BBM No. 12,
Cad-133, Capiz Cadastre, thence
S. 81-42 W., 59.67 meters to point 2;
N. 07-36 W., 46.62 meters to point 3;
N. 82-34 E., 84.29 meters to point 4;
N. 09-13 W., 40-05 meters to point 5;
N. 82-57 E., 59.24 meters to point 6;
N. 81-48 E., 18.71 meters to point 7;
S. 03-30 E., 95.46 meters to point 8;
S. 82-57 W., 94.35 meters to point 1;
Point of beginning.
Containing an area of TEN THOUSAND
EIGHT HUNDRED SIXTY less.
We are not persuaded. Petitioners rely on the technical
descriptions of Lots 1320 and 1333 that were issued by
the Bureau of Lands on November 8, 1988. It must be
pointed out that when private respondents and Filomena
executed the sale in 1959, they based the description of
the two lots on the tax declarations of Filomena. Early
tax declarations are, more often than not, based on
approximation or estimation rather than on
DESCRIPTION PER ABSOLUTE SALE
2) A parcel of land (Lot No. 1333 of the
Cadastral Survey of Capiz), with the
Improvements thereon, situated in the Barrio of
Baybay, Municipality of Capiz (now Roxas
City).
Bounded on the N. by the property of Nemesio
Fuentes; on the S. by the property of Rufo
Arcenas; on the E. by the property of Matea
Arcenas; and on the W. by the property of
Valeriano Arcenas;
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containing an area of EIGHTEEN THOUSAND
FIVE HUNDRED FIFTY (10,860) SQUARE
METERS, more or SEVEN (18,557) SQUARE
METERS, more or less. This parcel of land is
all rice land and the boundaries thereon are
visible consisting of stone monuments erected
thereon by the Bureau of Lands. It is declared
under Tax Dec. No. 4336 in the name of
Filomena Vidal and assessed at P930.00.
computation. This is understandably so because of the
absence then of technical knowledge in the accurate
measurement of lands. What really defines a piece of
land is not the area mentioned in its description, but the
boundaries therein laid down, as enclosing the land and
indicating its limits. In this case, the boundaries of the
two lots are sufficiently designated in the Absolute Sale,
leaving no room to doubt the identity of the objects of the
sale.
Petitioners anchor their right of ownership over Lots
1320 and 1333 as the sole heirs of their mother,
Filomena, who previously owned the lots. However,
Filomena had already ceded her right of ownership over
Lots 1320 and 1333 to private respondents when she
executed the Absolute Sale. A sale of real property is a
contract transferring dominion and other real rights in the
thing sold. Proof of the conveyance of ownership is the
fact that from the time of the sale, or after more than 30
years, private respondents have been in possession of
Lots 1320 and 1333. Petitioners on the other hand have
never been in possession of the two lots.
Filomena died sometime in 1985 and petitioners
instituted the complaint four years after Filomena’s
death. It is unthinkable for Filomena to have allowed
private respondents to enjoy ownership of Lots 1320 and
1333 if she never really intended to sell the two lots to
private respondents or if she had Lot 2034 in mind when
she signed the Absolute Sale. In the first place, Lot 2034
could not have been contemplated by the parties since
this parcel of land was never owned by Filomena, or by
her mother, Paulina. Secondly, Lot 2034 does not fit the
description of the second parcel of lot mentioned in the
Absolute Sale. The Absolute Sale describes the second
lot as located in Barangay Baybay, Roxas City. Lot 2034
is situated in Barangay Culasi, Roxas City.
In resolving the similar case of Atilano vs.
Atilano, where there was also a mistake in the
designation of the lot number sold, the Court took into
account facts and circumstances to uncover the true
intentions of the parties. The Court held that when one
sells or buys real property, 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. As long as the true
intentions of the parties are evident, the mistake will not
vitiate the consent of the parties, or affect the validity
and binding effect of the contract between them. In this
case, the evidence shows that the designation of the
second parcel of land sold as Lot 2034 was merely an
oversight or a typographical error. The intention of the
parties to the Absolute Sale became unmistakably clear
when private respondents, as vendees, took possession
of Lots 1320 and 1333 in the concept of owners without
the objection of Filomena, the vendor.
Petitioners harp on the fact that the notarized and
registered copy of the Absolute Sale should have, been
correspondingly corrected. Petitioners believe that the
notarized and archived copy should prevail. We
disagree. 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.  Being
consensual, a contract of sale has the force of law
between the contracting parties and they are expected to
abide in good faith with their respective contractual
commitments. Article 1358 of the Civil Code, which
requires certain contracts to be embodied in a public
instrument, is only for convenience, and registration of
the instrument is needed only to adversely affect third
parties. Formal requirements are, therefore, for the
purpose of binding or informing third parties. Non-
compliance with formal requirements does not adversely
affect the validity of the contract or the contractual rights
and obligations of the parties.
Petitioners fault the trial court for declaring that Lots
1333 and 1320 can be acquired by prescription even
though these lots are already covered by certificates of
title. The real issue in this case is the true intentions of
the parties to the Absolute Sale, not adverse
possession. The decisions of the trial court and the
Court of Appeals are clear on this point. In fact, the
Court of Appeals no longer dealt with the issue of
acquisitive prescription since it was already convinced
that private respondents’ right over Lots 1333 and 1320
emanates from the Absolute Sale.
In a desperate bid to compel the Court to disregard the
evidence of private respondents, petitioners question the
admissibility of the testimony of Consolacion on the
ground that it violates the Dead Man’s Statute.
Petitioners contend that Consolacion’s testimony as to
how the alteration of the Absolute Sale took place should
have been disregarded since at the time that
Consolacion testified, death had already sealed the lips
of Filomena, precluding petitioners from refuting
Consolacion’s version.
The contention is without basis. The Dead Man’s Statute
then embodied in Section 20 (a) of Rule 130 of the 1988
Rules of Court provides:
"SEC. 20. Disqualification by reason of interest or
relationship. - The following persons cannot testify as to
matters in which they are interested, directly or indirectly,
as herein enumerated:
(a) Parties or assignors of parties to a case, or persons
in whose behalf a case is prosecuted, against an
executor or administrator or other representative of a
deceased person, or against a person of unsound mind,
upon a claim or demand against the estate of such
deceased person or against such person of unsound
mind, cannot testify as to any matter of fact occurring
before the death of such deceased person or before
such person became of unsound mind;
xxx"
The foregoing prohibition applies to a case against the
administrator or representative of an estate upon a claim
against the estate of the deceased person. The present
case was not filed against the administrator of the
estate, nor was it filed upon claims against the estate
since it was the heirs of Filomena who filed the
complaint against private respondents. Even assuming
that Consolacion’s testimony was within the purview of
the Dead Man’s Statute, the fact that the counsel of
petitioners failed to timely object to the admissibility of
Consolacion’s testimony is a waiver of the
prohibition. The waiver was made more evident when the
counsel of petitioners cross-examined
Consolacion. Petitioners cannot now invoke the rule they
knowingly waived.
From the time of the execution of the Absolute Sale on
April 24, 1959, private respondents became the owners
of Lots 1320 and 1333. The expropriation of any portion
of the two lots from the time of the execution of the
Absolute Sale would necessarily entitle private
respondents to the payment of just compensation. We
cannot, however, agree with the trial court and the Court
of Appeals that public respondents could be ordered to
pay private respondents just compensation in the same
suit. Public respondents were impleaded in this case
when petitioners filed a cross-claim against them for just
compensation. The cross-claim should have been
dismissed, as it does not comply with Section 7 of Rule 6
of the 1988 Rules of Court. The rule provides:
"SEC. 7. Cross-claim. A cross-claim is any claim by one
party against a co-party arising out of the transaction or
occurrence that is the subject matter either of the original
action or of a counterclaim therein. Such cross-claim
may include a claim that the party against whom it is
asserted is or may be liable to the cross-claimant for all
or part of a claim asserted in the action against the
cross-claimant."
At any rate, private respondents are not left without any
recourse. They can file their claim for compensation with
the proper government agency. Public respondent
DPWH in its Comment points out that it is now public
respondent DOTC that has jurisdiction over the claim for
compensation since the portions of the properties
subject of this case were taken to form part of the
parking area of the Roxas Airport. In the same
Comment, public respondent DPWH concedes that they
have never denied their obligation from the very
beginning of this case. Public respondents were only
constrained to withhold payment of just compensation as
the reel owners of the lots In question were yet to be
declared by the Court. Since the issue of ownership has
been settled, private respondents can now rightfully
claim just compensation for the portions of Lots 1320
and 1333 taken by the government after the execution of
the Absolute Sale.
WHEREFORE, the Decision of the Court of Appeals in
CA-G.R. CV No. 35540 is hereby AFFIRMED with the
MODIFICATION that the cross-claim against public
respondents is DISMISSED. Costs against petitioners.
SO ORDERED.

Based on the foregoing rule, the cross-claim is proper

only when:

"1. It arises out of the subject matter of the

complaint.1âwphi1

2. It is filed against a co-party.

3. The cross-claimant stands to be prejudiced by

the filing of the action against him."

The three requisites are absent in this case. The cross-

claim for just compensation is a new matter raising a
new cause of action that must be litigated in a separate
action, not in the same action for the nullification of
contract. The purpose of a cross-claim is to avoid
multiplicity of suits. Multiplicity of suits should be avoided
if the filing of a separate and independent action to
recover a claim would entail proving exactly the same
claim in an existing action. However, when the causes of
action are distinct and separate from each other, as in
this case, the independent interest should be pursued in
another proceeding. Also, petitioners and public
respondents are not co-parties as they are not co-
plaintiffs. Lastly, petitioners, as cross-claimants, would
not be prejudiced by the filing of the action since they
are the plaintiffs in this case.